E May Or May Not Happen

Another day, another drop. We also have an important result notice for a firm in which we own both common stock and a bond. Before hitting the results I want to share with you a Canadian company's plans for Covid-19 treatment based on cannabis for highly vulnerable populations with heart disease or diabetes, obesity, abnormal serum levels, or merely being older than 64. This trial, now in phase II, for CariolRx is being run by mini-cap Cardiol Therapeutics, now traded only in Toronto as CRDL. It is now in a phase 2/3 trial enrolling 422 US hospitalized Covid-19 patients in the current quarter.

If it works, which may or may not happen, this could lead an application with our FDA. And it could also lead to a major capital increase by listing on Nasdaq. By focusing on high-risk patients, CRDL is finding a niche.

While it all sounds slightly unlikely, my source is the extremely reliable Investor's Digest of Canada, with the write-up by its staff reporter Robin Poon. The share is now at C$4.10 which may be worth a be


Photo by Annie Spratt on Unsplash



*Vodafone, the UK listed global telco, reported today on the 2020-21 fiscal year and the news was not very good, so the share is down over 8%. There was also heavy options trading. VOD has gained 21% in the past 12 months so there is a certain amount of profit-taking goine on. But I think the main reason for the share drop (which was even bigger in Britain) is that VOD attempted to bamboozle its shareholders with claims that its results were good—when they weren't. It reports in Euros but is British.

We also own the Vodafone 6.25% bond of 2032, 92857WAB6, neither callable nor redeemable, and offers us a nifty return. It borrowed in dollars despite being British, how we got into this.

The massaging of numbers started with revenues, at euros 37.141 bn, down from prior FY levels of

37,871 bn. EBITDA (earnings before interest, taxes, depreciation, and amortization), which VOD brass focused on in the conference call, was euros 14.386 bn down from 14.881 in the prior FY. The EBITDA margin at 32.8% was lower than the 33.1 level of last year. Capital spending at euros 7.854 bn was up from the 7.411 level of the prior FY. Free cash flow came in at euros 5.019 bn down from prior FY 5.700, not including the Spectrum trades of US holdings against UK ones. Post-spectrum the cash flow shortfall was worse, at euros 3,11 bn from 4.949 bn. Return on capital pre-tax was 5.5% down from 6.3% the year before. The quarterly dividend was flat at 9 euro cents/sh.

The gloss on results is mainly thanks to the spin-off of its Vantage telephone towers in a euros 2.2 bn IPO. It also has seen its stock rise 21% in the last year.

The good news is that net debt was only euros 40.543 bn down from prior year's 42.047 bn. That is not much to hang your hat on. Of course, Covid-19 was the cause of much of the aggro, but VOD was supposed to gain from people being confined to their homes and using tech to stay in touch with companies, schools, and family. It didn't show up. VOD shut in about 400 retail stores in Europe because of Covid-19 and this may have cost it business.

VOD also trotted out predictions for 2021-2 which you can ponder, a euros 100 mn rise in free cash flow or a rise in adjusted cash flow of euros 400-800 mn. VOD did well in Germany and claims it is keeping its customer happy but this is a pricey market. It did less well in Spain and Italy where there is less competition, to my surprise. It plans more spinoffs of other European and African subs in the current year with EBITDA and free cash flow (EBITDA margin) both up in mid-single digits.

My bond from VOD which had been at my bank is no longer trackable there, but I still own it in my brokerage account.

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