Gross Income – Resource KT Mon, 20 Jun 2022 17:26:22 +0000 en-US hourly 1 Gross Income – Resource KT 32 32 Nestlé’s finance revenue of N4 billion pushes profit to N18 billion in Q1 Mon, 20 Jun 2022 16:14:00 +0000

Nestle Nigeria Plc achieved strong financial income of almost N4 billion in the first quarter, which helped boost the company’s profit by 45% to around N18 billion. The profit figure represents 45% of the N40 billion annual profit the company recorded at the end of the 2021 financial year.

The company’s first quarter interim report at the end of March 2022 shows a combination of growing revenues and slowing costs that define a promising year for the food and beverage company. The developments appear to have set the stage for a recovery in the business this year from last year, when earnings closed flat.

Nestlé is experiencing the first reasonable profit improvement in three years and is still on track to recover from a 14% profit decline in 2020. This year’s recovery is driven by accelerating revenue. business and profit margin recovery.

With an accelerated 26% increase in sales to more than 110 billion naira in the first quarter, Nestlé can look forward to the strongest sales growth in recent years this year. Revenue is accelerating from the 22.6% improvement in 2021 to N352 billion.

The profit margin climbed to 16.3% in the first quarter, the company’s best performance in six years. Last year, its profit margin fell from nearly 14% in the previous fiscal year to around 11%.

A robust financial income of 3.8 billion naira in the first quarter came as a windfall compared to an insignificant figure of 123 million naira in the same period in 2021. This caused a big change in the cost-income balance of the business from a net finance cost of N1.3 billion to a net finance income of N1.4 billion over the reporting period.

Despite robust financial revenues, the challenge of rapidly growing financial expenditures remains. The cost of funding increased by 65% ​​to N2.4 billion in the first quarter.

The increase in debts on the balance sheet explains the increase in the company’s financial charges. Nestlé’s borrowing increased from 40 billion naira at the end of 2020 to 77 billion naira at the end of 2021, reaching around 84 billion naira at the end of the first quarter.

Cost savings on expense lines that hampered earnings improvement in 2021 are also supporting the profit margin gain and earnings improvement in the first quarter. The change in position from net financial expense to revenue is the biggest positive move in cost savings. In the previous year, net finance charges jumped 173% to over N12 billion and consumed a significantly increased share of operating profit.

Additionally, administrative expenses provided one of the largest cost savings for Nestlé in the first quarter. Administrative costs fell 21% to N2.6 billion in the first quarter.

Similarly, input costs, which were a major constraining factor last year, moderated in the first quarter. At N67 billion for the first quarter, cost of sales rose 27.6% year-on-year, slightly ahead of the 26% increase in revenue over the same period.

This compares to the prior year when input costs rose before revenue to 31% at year end from 22.6%. Compared to the previous year, cost of sales claimed a reduced proportion of revenue in the first quarter at 60.8% compared to 62.5% at the end of last year.

However, marketing/distribution spending shows no signs of slowing down. The expense line continues to grow ahead of revenue by 28% to over N14 billion in the first quarter against a 26% increase in sales.

Despite the impacts of cost of sales and marketing/distribution expenses increasing more than revenue, gross profit still improved by 24.5% to N43 billion in the first quarter.

A boost came from cost savings from lower administrative expenses, which increased operating profit by 30% to N26.4 billion at the end of the period. This is a strong acceleration from a less than 12% increase in operating profit in 2021.

The influx of net financial income provided the most important growth feature which boosted net income growth to 45% for the first quarter.

]]> LMP Automotive Holdings, Inc. – Sat, 18 Jun 2022 21:14:54 +0000

FORT LAUDERDALE, FL, May 19, 2022 (GLOBE NEWSWIRE) — LMP Automotive Holdings, Inc. (LMPX) (“LMP” or the “Company”), a United States-based e-commerce and automotive retailer, announced today intends to restate previously issued financial statements as of and for each of the first three quarters of 2021 to correct certain accounting items.

On May 16, 2022, management of LMP Automotive Holdings, Inc. and the Audit Committee of the Company’s Board of Directors concluded that the Company’s previously released condensed consolidated financial statements as of and for the three months ended March 31 2021, June 30, 2021, and September 30, 2021 should be restated and should no longer be relied upon primarily due to the following errors: (i) incorrect identification and elimination of intercompany transactions, (ii) incorrect estimates of reserves chargebacks for finance and insurance products, and (iii) certain financial statement misclassifications affecting various financial statement line items of the balance sheet and income statement during the relevant periods.

The aggregate effects are currently estimated as follows:

  • An approximate decrease in total revenue and total cost of sales as follows:
      • $10 million to $15 million for the nine months ended September 30, 2021
      • $4 million to $8 million for the six months ended June 30, 2021
      • $500,000 to $1 million for the three months ended March 31, 2021
  • Gross profit and net profit for the Relevant Periods are not expected to be materially impacted.
  • Certain balance sheet headings for certain of the Relevant Periods, including accounts payable, other non-current liabilities and other current assets, are expected to be materially affected.
  • Total assets and total liabilities for the Relevant Periods should not be materially impacted.

The expected changes do not affect compliance with financial covenants contained in the Company’s outstanding debt instruments or compliance with any other agreement of the Company or its subsidiaries.

As such, the Company will restate its financial statements for the relevant periods in its Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 10-K”). The Company’s management has concluded that, in light of the misstatements described above, material weaknesses exist in the Company’s internal control over financial reporting and that the Company’s disclosure controls and procedures Company information were not effective. The corrective actions planned by the Company regarding these material weaknesses will be described in more detail in the 10-K 2021.

Company management and the Audit Committee have discussed the matters disclosed in this current report on Form 8-K with its independent registered public accounting firm.

The Company will hold a conference call to discuss these financial results when it determines a final filing date.


LMP Automotive Holdings, Inc. (LMPX) is a growing company with a long-term plan to profitably consolidate and partner with automotive dealer groups in the United States. We offer a wide range of products and services covering the entire life cycle of a vehicle, including new and used vehicles, financing and insurance products, as well as repair and automotive maintenance.

Our proprietary e-commerce technology and strategy is designed to disrupt the industry by leveraging our experienced teams, growing selection of owned inventory and physical logistics network. We seek to provide customers with a seamless experience both online and in person. Our physical logistics network allows us to provide convenient free drop-off points for customers and provide services throughout the property lifecycle. We use digital technologies to reduce our customer acquisition costs, realize operational efficiencies and generate additional revenue. Our unique growth model generates significant cash flow, which funds our innovation and expansion into new geographic markets, as well as the strategic building of dealer networks, creating personal transportation solutions that consumers seek.

Investor Relations:

LMP Automotive Holdings, Inc.
500 East Broward Boulevard, Suite 1900
Fort Lauderdale, Florida 33394
[email protected]

For more information visit:

This press release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended. These statements include, but are not limited to, all statements relating to our expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. These statements may be preceded, followed by or include the words “aims”, “anticipates”, “believes”, “estimates”, “expects”, “plans”, “intends”, “likely”, “prospects”, “plan”, “potential”, “project”, “projection”, “seek”, “may”, “could”, “can”, “should”, “would”, will”, the negatives of those these and other words and terms of similar meaning. Forward-looking statements are based on management’s current expectations and are subject to risks and uncertainties that could adversely affect our business, results of operations, our financial condition and the value of our shares. Factors that could cause actual results to differ materially from those currently anticipated include: our reliance on external sources for funding our operations; our ability to effectively execute our business plan; our ability to maintain and develop r our reputation and to obtain and maintain market acceptance of our services and our platform; our ability to manage the growth of our operations over time; our ability to maintain adequate protection of our intellectual property and to avoid infringement of the intellectual property rights of others; our ability to maintain and develop relationships with existing automotive customers and suppliers; and our ability to compete and succeed in a highly competitive and evolving industry; and other risks described in our filings with the SEC. There can be no assurance that forward-looking statements will materialize. You are cautioned not to place undue reliance on forward-looking statements, which reflect expectations only as of that date. We expressly disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based, except if required by law.

LMP-Automotive-Holdings-Inc-.png ]]> The High Court of Himachal Pradesh removes the addition Mon, 13 Jun 2022 08:45:35 +0000 The High Court of Himachal Pradesh bench Judge Sabina and Judge Satyen Vaidya removed the addition on the grounds that the Valuation Officer (AO) did not consider genuine purchases and sales recorded in the books of account.

The interviewed/evaluated company followed a direct marketing business model and derived revenue from the retail trade of various consumer goods. The assessee had declared gross revenue as Rs.91,90,10,669 and net profit was declared as Rs.1,06,69,510. Thus, the net profit rate was 1.16%. J

The appraiser, after reviewing the file, observed that the appraisee had attempted to provide the monthly closing inventory and had failed to explain it during the appraisal period. The appraisal agent had concluded that the appraise’s claim was incorrect and had concluded that the monthly trading account filed by the appraise was contradictory.

The appraiser had prepared the trading account, the gross profit of the appraisee was deducted from the sales, and therefore the gross profit rate amounted to 51.8%. Hence, an addition of Rs. 14.48 crores was made by the valuation agent.

The appraiser observed that the appraisee failed to explain why the payment made to Sai Purna Caters without deducting the TDS should not be withheld and added back. The assessor had concluded that the assessee had failed to explain and therefore a payment of Rs. 4,16,405 must be added to the assessee’s income.

The assessee appealed to the Commissioner of Income Tax (Appeals), Shimla, against the order made by the assessment officer. The CIT(A) partially allowed the appeal. CIT(A) removed the addition made based on a negative closing stock spike. The addition for the calculation of net profit was made by applying the provisions of sections 145(3) and 144 of the Income Tax Act.

The ministry challenged the order in the bench of the Income Tax Appeals Tribunal Division, Chandigarh. The court dismissed the ministry’s appeal.

The Tribunal found that the appraiser did not consider that the appraisee had made genuine purchases and sales that had been recorded in the appraise’s books of account. The appraiser also failed to take into account the nature of the appraisee’s business, which was based on a tiered marketing system where goods were received throughout the year by different warehouses in separate stations.

The tribunal upheld the Tribunal’s observation. The court observed that lump sum payments were made to the various suppliers throughout the year. All the documents, that is to say the books of account, the sale and purchase vouchers, had been produced in full by the person being assessed. The assessor, however, had prepared a monthly trading account and found negative stock on the books of the assessee’s account. Although the valuation agent found no unregistered purchases. The AO, in its own way, prepared the trading account to improve the gross profit.

“No sale was found outside the books of account. The valuation agent could have made the valuation in accordance with the provisions of the Income Tax Act 1961. The valuation agent had made the order under section 143(3) of the Act in respect of the same business activities of the assessee, which resulted in a net profit of 2.53% and 2.99%,” the court said.

Case Title: PCIT v Smart Value Products And Services Ltd.

Quote: Income Tax Appeal No. 37 of 2016

Dated: 28.03.2022

Counsel for the Appellant: Maître Vandana Kuthiala

Counsel for the Respondent: Attorney Vishak Mohan

Click here to read/download the order

The tax treatment of investments has come full circle Sat, 11 Jun 2022 14:27:29 +0000

Tax law is used for several purposes. Chief among them is to generate revenue for government operations. But tax law also encourages or discourages certain behaviors to achieve economic, social or political objectives.

Here is an example. Section 280E of the Act denies any deduction for trafficking in a controlled substance. Well, that’s good, you say.

Cannabis is a Schedule 1 controlled substance. Running a cannabis business means there are no business deductions when filing taxes.

Traders can claim “Cost of Goods Sold (COGS)”. They are taxed on “gross profit,” which by tax law is gross receipts less COGS.

Some people like this rule, some don’t. The rule deals with a value judgment of a business that involves the trafficking of a controlled substance.

You may have heard of this rule – it is frequently mentioned in the “popular press” as many states have now legalized the cannabis trade.

Here’s one you may not have heard of. Similar punitive treatment applies to the income you derive from your investments. Just regular old investments, which are legal.

As is the case with many strange things, there is a story behind it all. When the United States first enacted an income tax, following the ratification of the Sixteenth Amendment, you could deduct business expenses.

Business expenses are those paid to operate a business. By allowing business deductions, the operator is only taxed on net income. Decidedly, even I know it, you say.

Point taken. But the law did not allow deductions for investment income. This meant that people were taxed on the gross investment income.

Stop yawning. Let me give you an example. It’s 1935 and you operate the Proctor and Gamble Co. It’s a business. You can deduct ordinary business expenses on the P&G corporate income tax return.

Your side business operates a boarding house in Cincinnati for P&G employees. Rental income is reported on your personal tax return. What about expenses?

Well, Mr. Smart Aleck, you might want to think about this one before you answer. Ultimately, it depends on whether your pension is a business or an investment.

If it is a business, the expenses are deductible. If it is an investment, no deduction. Your pension from 1935 is akin to a cannabis business from 2022.

Why 1935? Because in 1942, Congress stepped in to remedy this potential tax problem. Proving that it could start a war and change the tax law at the same time, Congress declared that capital expenditures would now be, as they then called it, deductible.

Problem solved! Until 1986. In 1986, Congress declared that from now on, as it was spoken in 1986, capital expenditures could only be claimed as itemized deductions, and only if they exceeded 2% of income taxpayer’s adjusted gross.

In 1990, Congress changed things slightly by adding the “Pease Amendment”, named after Donald Pease, a Democrat from Ohio.

Pease created a conflict for those making “too much money”. Investment spending, even if it passed the two 1986 hurdles, could be reduced for these defined investment big cats.

Well, you say, that’s what you get when Democrats control the House and Senate, and George HW Bush breaks his promise not to impose new taxes.

So you prefer 2017, when Republicans held the presidency, the House and the Senate. As part of the 2017 tax cuts, Congress has said for some time, and that’s how it spoke when this law was drafted, that capital expenditures are not deductible.

Not deductible. For everyone. Rich, poor, big or small. For a certain time. From 2018 to 2026.

What is the logic there?

They needed money to pass the law through reconciliation. Fewer deductions, more government revenue.

So here we are again with investments being treated as trafficking in controlled substances. What can we do about it?

We can say that we run a business. Argue, I say, because the difference between an investment and a business can be confusing.

Drug dealers can deduct COGS. Investors can deduct the cost of the investment. Certain investments may be reported on IRS Schedule E with deductions claimed.

But if you come across a cannabis seller complaining about tax laws, pull up a chair and tell him you know exactly how he feels.

James R. Hamill is the director of tax practice at Reynolds, Hix & Co. in Albuquerque. He can be reached at

An HLM complex increases rents Wed, 08 Jun 2022 00:00:00 +0000

NASHVILLE, Tenn. (WSMV) – The cost of living keeps rising here in Tennessee, and some families don’t know what to do. North Lights Apartments, a new place for low-income tenants, is raising rents in August. Now some tenants are wondering what to do.

“I am thinking of a restricted income. That’s why I’m here, so my rent can’t jump up and down and flip all over the place,” Karen Amos said.

In March, she moved into the North Lights Apartments shortly after the apartment complex opened. “I went through stages to try to get here. To try to pay less rent because where I lived it was expensive and it was older apartments, so I was like, ‘Okay, let me try.’

Amos was thrilled to move into a brand new apartment and save some money. Now she and her neighbors have to adapt.

“Not even in five months, you tell me that my rent will increase. Well, have you checked my money? Because I don’t know where it will come from,” Amos said.

On June 1, she received 60 days’ notice that her rent would increase by more than $100 on August 1. His rent goes from $887 to $1,000. “Some people might say it’s not much, but you don’t know my fight.”

“My niece lives here. She paid 1,200; now it goes up to $1,400,” Amos explained.

Since the apartments are aimed at low-income families, the rent is based on the median gross income area (MIGA). Amo and his neighbors’ lease stipulates that if MIGA increases at any time, the [apartment complex] landlord can raise the rent.

“Even though it may say in my lease that you can ride, think about the people you hurt. Some people are probably freaking out. Not knowing what they will do because they have an income,” Amos said.

A rental office worker told News4 that tenants could decline the new rental prices and move out before August. However, Amos would like to see Elmington, the company that owns the North Lights Apartment, refrain from raising the rent so that low-income families have an affordable home.

“That’s why there are so many homeless people in Nashville right now,” Amos said. “There is nowhere to live. Nowhere affordable. Nowhere affordable. These were supposed to be affordable.

As more and more people move to Nashville, there is a chance that MIGA will continue to grow. However, Amos and his neighbors tell News4 they hope that doesn’t mean affordable housing will get more expensive.

News4 has reached out to Elmington so they can weigh in on the situation; they have yet to send us a statement explaining why they decided to raise the rent when MIGA went up and whether they plan to raise the rent again this year.

Copyright 2022 WSMV. All rights reserved.

9 Nigerian banks spend N23 billion on travel expenses in 2021 Mon, 06 Jun 2022 08:57:36 +0000

A total of nine Nigerian banks spent N23 billion on business travel in the year 2021, according to data collated from the banks’ financial reports. The amount includes the cost of travel, hotel, passage and any other logistics related to travel inside and outside the country.

The banks are Access Bank, Fidelity Bank, Sterling Bank, United Bank for Africa, Zenith Bank, GTBank, Stanbic IBTC, FirstBank and FCMB.

According to the analysis, the amount spent during the period is 15% higher than the N20 billion spent by banks on travel the previous year (2020). The increase seen in 2021 could be attributed to the ease of containment and the resumption of economic activities locally and internationally compared to 2020, when travel was restricted due to the global pandemic.

Of the total, tier one banks, Access Bank, UBA, Zenith, First Bank and GTBank contributed N21 billion, accounting for 91% of the total business travel amount.

Nairametrics highlights the amount spent by banks in order of amount spent as follows;

Loyalty bank

Fidelity Bank spent N897 million on travel expenses in 2021. The amount reflects a 7% drop from the amount it recorded in the same period the year before at N964 million.

Fidelity Bank saw its gross profit improve in 2021 from N206 billion to N249 billion. Hence, profit for the period reflected this as it also improved from N27 billion in the pandemic year to N38 billion in the recovery year.

Zenith Bank

Zenith Bank comes next on the list, recording N2.6 billion in travel and hotel expenses, which is a 40% increase from the amount during the Covid period.

In its financial statements for the year 2021, the bank reported an after-tax profit of N244.5 billion, the highest on record, and reflects a 6.07% year-on-year increase. This is explained by the observed growth in interest income from N420.81 billion to N427.60 billion in the current period.


The First Bank of Nigeria spent 4.2 billion naira on travel and passage in 2021, a 21% increase from the 3.5 billion naira recorded in 2021.

The bank reported after-tax profit of N117.8 billion in 2021, up 73.9% year-on-year from N67.8 billion in 2020, while its pre-tax profit was 130, 9 billion naira, up 77.9% year-on-year from 73.6 billion naira in 2020. .

During the year, the bank’s non-interest income increased by 106.4% to N342.2 billion from N165.8 billion thanks to higher fees and commissions, treasury activities and other operating income. Similarly, it reported gross profit of N716.8 billion, up 30.3% year-on-year from the N550.3 billion posted in 2020.


UBA is the second largest corporate travel spender. The bank recorded a total of 5 billion naira, which represents 28% of the total amount spent by the highlighted banks. The amount is also up slightly by 5% compared to the amount spent in 2020 for the same purpose.

The bank recorded a robust growth of 20.3% in its pre-tax profit to N153.1 billion in 2021, from N127.3 billion at the end of the 2020 financial year, while its post-tax profits increased. increased by 8.7% to reach 118.7 billion naira in 2021, compared to 109.2 billion naira recorded the previous year.

Access Bank

Access Bank spent the most on travel expenses in 2021 with N8 billion. The amount spent during the period is 36% of the total amount spent by the nine banks and also represents a 16% increase from the 7.1 billion naira spent for the same purpose in the pandemic year.

The bank recorded a profit of N160 billion in 2021, an increase of 51.13% year on year, while its net interest income increased by 14.64% from N262.95 billion to N301.46 billion in the current period.

A quick look at the data shows that the bank retains the top spot as the biggest spender on travel expenses. Last year, it topped the list followed by UBA which recorded N4.94 billion.

This reinforces the bank’s commitment to maintaining international ties while extending its tentacle to reach all over the world. The bank is headquartered in Nigeria along with Ghana, Kenya, other African countries as well as the UK and has recently expanded to Botswana, Mozambique, South Africa and Zambia.

boiling under

  • FCMB – 564 million naira
  • GT Bank – N483 million
  • Sterling Bank – N415 million
  • Stanbic’s IBTC – N255 million

K+S: A European potash game trading at a yield of 20% FCF Sat, 04 Jun 2022 15:35:00 +0000

Orest Lyzhechka/iStock via Getty Images


Fertilizer markets are on fire these days and while most of the attention is on the North American fertilizer games, one would almost forget that there are a few very interesting European companies as well. In a previous post I discussed OCI (OTC:OCINF) but very few people outside of Canada and Europe are aware of K+S (OTCQX:KPLUY) (OTCQX:KPLUF) a German potash and salt producer. And it’s a shame, because this company is doing exceptionally well thanks to the very strong potash market. And since it flies under the radar, it could potentially be an investment opportunity to gain exposure to potash markets.

Stock chart

Yahoo finance

K+S has its primary listing in Germany where it trades with SDF as its ticker symbol. Considering that the average daily volume in Germany exceeds 1.5 million shares per day, this is clearly the best quote to trade the company’s shares. There are also options available in Germany.

K+S takes full advantage of favorable winds in the fertilizer sector

While this article focuses on K+S’s fertilizer division, as this will be the primary driver of earnings and free cash flow, it should be remembered that the company’s industrial division generated approximately 30% of revenue in 2021. As I expect the potash division to grow revenue at an exceptional rate this year, the agriculture segment’s contribution to total revenue will likely increase beyond the 70% level achieved last year. last.

Income distribution

K+S Investor Relations

The impact of the high potash price is very clearly visible in the company’s first quarter summary. It produced 11% fewer tons of fertilizer (1.79 million tons compared to 2.01 million tons in the first quarter of 2021), but revenues more than doubled, with average revenue per ton falling from less than 240 EUR/t to just over EUR 520 per ton of fertiliser. (of which potash represents approximately 60% of the total quantity of tonnes sold). And thanks to this massive increase, the consolidated EBITDA margin more than doubled and the company quadrupled its EBITDA to 524 million euros, representing a margin of 43.2% compared to only 17.2% in the first quarter of the year. ‘last year.

Detailed finances

K+S Investor Relations

Total revenue in the first quarter of this year was just over €1.2 billion, resulting in gross profit of €505 million (an increase from just over 294 million euros in the first quarter of last year). Gross profit already includes depreciation and amortization charges of just over 100 million euros per quarter.

income statement

K+S Investor Relations

As the company cleaned up its balance sheet and reduced its gross debt and net debt, interest expense fell very quickly, giving a nice additional boost to pre-tax profit which nearly doubled to $441 million. euros, while net profit reached 441 million euros. just under EUR 311 million for EPS of EUR 1.62 per share. So, on an annualized basis, K+S appears to be on track to generate north of EUR 6 per share in earnings, especially as fertilizer prices continue their upward trajectory.

And it’s not just a paper profit or an accounting profit. The statement of cash flows confirms that K+S could have a banner year. Reported operating cash flow was €253 million, but this includes a strong increase in working capital position (mainly an increase in receivables) of €248 million. On the other hand, the difference of 113 million euros between taxes due and taxes paid must also be deducted and after making these adjustments, the adjusted operating cash flow was 388 million euros.

Cash flow statement

K+S Investor Relations

Total capex in the first quarter was relatively high at €150 million as the total amount spent on intangibles was high, but this includes some non-recurring items such as factoring and the purchase of emission rights. It was intangibles that weighed on capital expenditure in the first quarter, but it also means that capital expenditure for 2022 has been very concentrated. And despite the high capital expenditure, the free cash flow result in the first quarter of the year was around 238 million euros. Spread over the 191.4 million shares outstanding, free cash flow in the first quarter of the year was approximately EUR 1.24 per share.

The 2022 objectives have been raised again

Before diving into near-term expectations, investors should realize that K+S has done a phenomenal job of restoring the health of its balance sheet. In 2020, the company signed an agreement to sell the Americas business unit for a total enterprise value of $3.2 billion, including €2.6 billion in cash. This immediately helped to strengthen the balance sheet which is now healthy thanks to the combination of lower net debt and a much higher EBITDA.

Potash Price Chart

K+S Investor Relations

This now means K+S has more flexibility in how it can invest its incoming cash flow rather than worrying about how it can repay debt, and the company will soon have a luxury problem.

While K+S’ initial guidance provided in the annual report was already quite positive with an expected 70% increase in EBITDA and a 600% increase in adjusted free cash flow, K+S was able to raise this guidance after the exceptionally strong performance in the first quarter of the year.

Updated guidance

K+S Investor Relations

It now expects its EBITDA to be between 2.3 and 2.6 billion euros, while adjusted free cash flow will be around 1 and 1.2 billion euros. If the cost related to the purchase of additional emission rights were deducted from this amount (this is in addition to the expected capital expenditure of 400 million euros), the underlying free cash flow would be 770 to 970 million euros. Given the current strength in the fertilizer markets and the current EUR/USD exchange rate which is much stronger than the 1.16 used in the forecast, I now think it is likely that K+S will reach and even exceed these forecasts. An underlying free cash flow result of €970 million (including €230 million spent on emission rights for the period beyond 2026) translates to free cash flow per share greater than EUR 5 per share. And if we exclude CO2-related expenses, the underlying free cash flow per share will exceed EUR 6.

Of course, the current tailwinds in the fertilizer business won’t last forever, so I won’t argue that K+S should be trading at 12 times its 2022 free cash flow result. But this windfall of profits and cash will allow K+S to immediately convert its net debt into net cash.

At the end of the first quarter, the company had €630 million in cash and financial investments and less than €1.2 billion in financial liabilities for total net debt of just over €500 million. euros. This is based on net financial debt and excludes lease debt and provisions for mining obligations.

Evolution of the debt ratio

K+S Investor Relations

The debt ratio (based on EBITDA LTM) has fallen to just 0.4x, but given that the EBITDA forecast for this year has been raised to around 2.5 billion euros, the debt ratio indebtedness based on expected EBITDA is less than 0.2. And if free cash flow projections hold true, net debt will likely convert to net cash by the end of this year.

Investment thesis

If we assume that net debt is effectively converted into a small net cash position by the end of this year, K+S’s current market capitalization of less than 6 billion euros essentially means that the company is trading at just over twice EBITDA. While the fertilizer market is a highly cyclical industry, the current tailwinds will position K+S into a future down cycle as a stronger company. If the current high price environment lasts until 2024 (which competitor OCI was aiming for), K+S could easily have over €1 billion of net cash on the balance sheet, which will be a big help. in the event of a slowdown.

Additionally, the company is spending money to improve its existing operations to ensure they can withstand falling fertilizer prices.

Although it is difficult to predict future supply volumes for fertilizers and potash products given the issues with Russia and Belarus, K+S is in an enviable position and with an EV/EBITDA ratio of just a little more than 2, it trades slightly cheaper than CF Industries (CF), Nutrien (NTR) and Mosaic (MOS) which trade at consensus estimates of 3, 3.8 and 3 EV/EBITDA respectively.

APCHA Board Says Yes to Income Exemption Rule Changes | New Thu, 02 Jun 2022 09:00:00 +0000

The Aspen-Pitkin County Housing Authority Board of Directors voted Wednesday to formally pass a set of regulatory changes that would give tenants more flexibility to receive wage increases and requalify for their rental units.

The changes went into effect immediately after the unanimous vote. The maximum gross income will be adjusted to 50% of the respective income category, which will be reviewed annually based on the median income of the existing area, according to a memorandum from APCHA staff. The vote follows a May 18 vote to pass the amendments at first reading and two previous discussions about the effects of inflation on APCHA tenants.

“We plan to look at this every year, which is not something that’s been done historically, but we felt it was important this year to look at where those numbers came in and what we’re seeing in the game. ‘inventory,’ said Bethany Spitz, assistant. Director of Housing Compliance for APCHA.

The board first discussed the changes at a May 4 meeting after an APCHA resident said in a public comment that he and his wife had been told they could not not requalify for their home because they had received raises and were earning more than their allowable income category. With inflation rising and employers across the valley granting wage increases, the board felt the amendment was necessary.

Board member Rachel Richards, who is also a member of Aspen City Council, asked how APCHA could ensure that privately managed tenancies would be compliant. Spitz said the changes would be implemented across APCHA’s entire inventory, minus ownership units. A discussion on adjusting income categories for property units is scheduled for a future Board meeting.

APCHA does not plan to officially notify residents of the changes, but more information will be posted on its social media pages and website. APCHA expects to continue to hear from residents about the changes, although no one offered public comment to council at Wednesday’s meeting when the opportunity arose.

In addition to the bylaw changes, the board also agreed to hold only one meeting per month for the months of June, July and August after staff requested the change to ease some of their workload. Executive director Matthew Gillen said the housing authority was so understaffed that some staff had to take on extra responsibilities, leaving them less time to create files for board meetings or to have meetings. lasting discussions.

“I think [this] would give the board a better product and give us a bit more time, especially this summer, to get you a good package once a month instead of really scrambling twice a month,” Gillen said.

He added that APCHA is in the process of hiring a new employee to manage qualifications, but that person likely won’t start until July and will need the summer to familiarize themselves with the program.

Board members ultimately supported accepting the request, but said they would like to consider holding an open house or some sort of less formal board meeting during the summer so that the public can stay informed.

“I want to respect staff time, but I also want to respect the fact that there are things we are talking about that people have already been waiting for years for APCHA to come,” said board member Alycin Bektesh. administration.

Staff agreed to discuss internally how to hold a public rally in lieu of a formal board meeting and come back with more information. The next board meeting is scheduled for July 20.

Net Operating Losses—Policies, Effectiveness, and Alternatives Tue, 31 May 2022 08:46:01 +0000

A net operating loss (NOL) occurs when a taxpayer’s allowable deductions exceed their gross income for a given year. Most taxpayers can take advantage of NOL deductions, including individual taxpayers, exempt organizations, trusts, and most C corporations, to offset taxable income from other tax years. NOLs allow companies large and small to have an average effective tax rate over time that reflects their taxable income over the long term, survive the start-up years and survive economic downturns.

To illustrate these principles, suppose you read an article about a large corporation – let’s call it Fortune 50 – that pays “no taxes!” or has an effective tax rate that is “lower than a janitor!” Sensational titles are undoubtedly effective. But once you remove the smoke and mirrors from those headlines, it can only be buried in the article that the note that Fortune 50 paid significant taxes in a previous year and/or will pay important taxes in the years to come.

This article will take a step back from these sensational titles and examine how NOL deductions make these titles possible, and explore whether the NOL policy is effective or if there are better alternatives.

“Lean” and “lush” years

Tax law is designed so that a corporation’s tax rate reflects its gross taxable income over a number of years. Going back to the hypothetical Fortune 50 article, consider this example—Fortune 50 has a taxable income/loss as follows: first year: $5 billion; Second year: $6 billion; Third year: $1 billion. In its three years in business, Fortune 50 has broken even, but the headline for year three might be “Fortune 50 pays no taxes!” This may sound shocking, but if Fortune 50 makes no profit over a three-year period, then it’s no surprise that Fortune 50 owes no taxes.

Indeed, as the Supreme Court succinctly put it in Lisbon shops against Koehler“Those [NOL rules]…were enacted to mitigate the unduly harsh consequences of taxing income strictly on an annual basis. They were designed to allow a taxpayer to offset their lean years with their lush years, and hit something like an average taxable income calculated over a period longer than a year.

NOL deductions can also be useful for start-ups, especially the deferral of deductions to future years, which is currently indefinite. Startup companies that focus on creating a new product or technology may initially go through many years of investment and operation before the company’s revenue exceeds its annual expenses. Without the NOL carryover deductions, these businesses would not be able to take advantage of the deductions accumulated over the first few years before achieving stability and profitability. As the US economy is increasingly driven by companies that started as startups in the last 15-20 years – Airbnb, Tesla, Uber, etc. -, it is obvious that there are significant economic advantages in being able to defer the first losses.

NOLs also encourage businesses to maintain and/or revamp their operations during an economic downturn. When businesses face difficult times, either due to an unexpected economic cycle or due to national economic conditions such as the 2008 financial crisis or Covid-19, they can take comfort in the fact that NOLs occurring during these periods can be deferred to more profitable periods. coming. NOLs can provide some assurance that can help prevent companies from making drastic decisions to downsize operations or downsize their workforce.

Legislative tool

Congress uses NOLs as a political tool, so the law regarding NOLs changes. For example, to help spur the economic stimulus needed in response to the dot-com crash and ensuing recession, Congress passed legislation in 2002 authorizing a five-year temporary deferral period – an extension of the window two-year carry-back then in effect. This extended deferral was available for NOLs occurring in the 2001 and 2002 tax years. Later, in response to the Great Recession beginning in 2008, Congress again created a temporary extension to the NOL deferral rule. This allowed taxpayers to choose to carry forward certain losses that occurred in 2008 and 2009 for three, four or five years.

Then, in 2018, the Tax Cuts and Jobs Act of 2017 (TCJA) made NOLs subject to a 20% haircut. This means that they can only be used to offset up to 80% of taxable income and cannot be carried forward to offset taxable income from previous years, but can be carried forward indefinitely – hereafter, the general NOL rule. Prior to 2018, NOLs could be deferred for up to two years and deferred for up to 20 years without a discount. Abandoning rollback reduces the effectiveness of NOLs in terms of their usefulness and ability to help businesses survive a downturn. Under the general NOL rule promulgated by the TCJA, struggling businesses will also no longer be able to use NOLs to obtain prompt refunds.

Presumably recognizing these NOL benefits, on March 27, 2020, as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Congress retroactively amended and expanded the general NOL rule for certain years. Under the CARES Act, NOLs occurring in the years 2018 through 2020 can be carried over for five years, and the 20% NOL haircut is temporarily suspended for NOLs carried over to years beginning before 2021.

As the above illustrates, Congress has shown that it is willing and able to deviate from the general NOL rule. Yet important questions remain; for example, whether improving the NOL tool for specific purposes is as effective as having a general stable rule and whether other tax reliefs may be more effective for specific events.

By comparison, the Employee Retention Credit (ERC), also introduced by the CARES Act, is a form of stimulus providing more direct relief to struggling businesses during the pandemic. The ERC provides relief to businesses that have retained employees during the pandemic, typically by waiving them from paying 50% of certain employer taxes. By directly tying tax relief to a company’s desire to maintain operations and keep members of its workforce employed, the ERC was arguably more effective in helping companies that would otherwise have had to facing pressure to reduce their workforce as a result of the pandemic. .


NOLs can be seen as a broad instrument of financial assistance to businesses in times of economic downturn. But without a requirement to tie NOL relief to a specific business-impacting event that Congress is seeking to help, increasing the ability of all struggling taxpayers to use NOLs is nothing more than a reduction in the overall effective tax rate for companies that could be entirely unaffected by the specific event causing the downturn.

Some of these businesses should fail under the general NOL rule. We suggest more targeted stimuli, such as targeted NOL relief, and credits, such as ERCs. We also advocate for the return of the NOL deferral so that, without having to hope Congress will act, businesses know there is a safety net available. Ultimately, the goal should be to encourage reasonable entrepreneurial risk-taking.

This article does not necessarily reflect the views of the Bureau of National Affairs, Inc., publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Patrick M. “Rick” Cox is a partner in Nixon Peabody’s M&A and Corporate Transactions team and a member of its Tax team. Rick focuses on various tax aspects facing domestic and international businesses and brings significant experience in the areas of capital markets, reorganizations, real estate and private equity matters.

Brian Kenney is a partner in the Corporate practice of Nixon Peabody and a member of its Tax team. He advises corporate clients on tax issues relating to mergers, acquisitions, fund formation, private equity investments and other business transactions, and has extensive experience in advising clients on inbound and outbound tax issues on real estate investments. .

Myra A.Benjamin, also a partner at Nixon Peabody, is a litigator and a member of the firm’s Complex Litigation practice. She represents clients in federal and state courts in numerous commercial disputes, including tax disputes, lender liability, contract disputes, bankruptcy and creditor-debtor, fraud, commercial torts and foreclosures.

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How to do anything but land a millionaire retirement Sun, 22 May 2022 16:00:00 +0000

Owith the S&P500 on the brink of a bear market and some high-growth companies down more than 90%, reaching millionaire status by the time you retire can seem like a crazy goal. In fact, most bear markets plant the seeds for the next big rally. Unless you believe this crash will mark the end of capitalism and entrepreneurship, chances are this one will too.

Now – when the market is down sharply from its highs – is the perfect time to put in place your plan to achieve millionaire status when you retire. After all, every dollar you invest today buys far more stocks than it did near the market highs. More action translates directly to a broader base that participates in any rally that follows. It can actually end accelerating your way to millionaire status.

Yet building such a big nest egg is a journey that takes time. Although there are no guarantees left in the market, there is a simple and proven four-step approach that can give you an excellent chance of anything but landing a millionaire retirement.

Image source: Getty Images.

Step 1: Get your own financial house in order

A big challenge with bear markets is that they often bring job losses with them. Your bills won’t disappear just because your job is working, and if all your money is tied up in stocks, you might be forced to sell near market lows just to make ends meet. It won’t help you on your way to millionaire status and could instead set you back.

One of the main tools in your arsenal is an emergency fund. With three to six months of living expenses paid in cash, you can better handle a short-term interruption to your income. With interest rates well below inflation, you don’t want also lots of savings, but somewhere in that three to six month range at least gives you a buffer to help you make adjustments.

In addition, controlling your debts is an important element in being able to invest successfully. You don’t have to be completely in debt to invest, but your debts should be reasonable. Reasonable debts are those with low interest rates where you can state a clear value for your future due to that debt. Additionally, your total payment levels should be low enough that you can easily cover them and still have some wiggle room in your budget each month.

If you’re not there yet, the debt avalanche approach is the most effective way to pay off your debts. To use it, line up your debts from the highest interest rate to the lowest interest rate. On all but your highest interest rate debt, pay the minimum. On this highest interest rate debt, pay as much as you can above the minimum until it is paid off. Once it is paid, take the money you had paid and add it to the amount you put on your New debt at the highest interest rate.

Continue until your total indebtedness reaches this reasonable level.

Step 2: Take advantage of all the free money you can

If you get a match for contributing to your 401(k) at work, investing enough money in this plan to maximize your match is hands down the first investment you should make. Adding your boss’s money to yours earns you even more on your behalf.

Once your match is maxed out, it usually makes sense to keep contributing to your 401(k) as long as it doesn’t charge high fees and offers strong index funds with low expense ratios. If you’re under 50, you can generally contribute up to $20,500 to your account in 2022. If you’re 50 or older, that amount increases to $27,000.

In addition to matches, 401(k) plans also give you tax benefits. In any eligible 401(k), your money is tax-deferred while it’s in the plan. In Roth 401(k) plans, you can withdraw money in retirement tax-free. In traditional 401(k) plans, you get an immediate tax deduction for the money you contribute, but the money is taxed when you withdraw it.

Between your boss’s money and tax-benefit money, 401(k)-style plans offer great ways to build wealth. If you’ve maxed out your 401(k), participation is too expensive, or you don’t have one available, you can also contribute to an IRA. IRAs are also available in traditional and Roth varieties, but the contribution limits are lower. In 2022, you can contribute up to $6,000 if you are under age 50 or $7,000 if you are age 50 or older.

Step 3: Invest in broad stock indices

Unless you want to get heavily involved in your investments, by far the easiest approach to building wealth over time is to place each contribution in a large, low-cost stock market index fund. This simple approach tends to beat the vast majority of professional fund managers on Wall Street over time, and it’s available for nobody eligible to invest in the US stock market.

Step 4: Keep on going

The following chart shows how many years it will take to reach $1 million from scratch, based on how much you can save each month and the rate of return you earn along the way.

Monthly investment

10% annual return

8% annual returns

6% annual returns

4% annual return































Data source: author.

That $2,833 number is what a person age 50 or older who maxes out both a 401(k) and an IRA can set aside tax deferred. The $2,208 one is valid for people under 50. If you’re not able to invest that much, even as little as $300 a month – around $10 a day – can give you a reasonable path to millionaire status when you retire. . If you can’t immediately reach your target savings rate, start with what you can and increase your savings as much as you can.

start today

As the table shows, the more time you have before retirement, the less you need to save each month to build up a comfortable nest egg when you get there. The earlier you start, the more valuable time you have to execute your plan. So start today and give yourself the best possible chance of anything but landing a millionaire retirement for yourself.

The $18,984 Social Security premium that most retirees completely overlook
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Chuck Saletta has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.