Contact Energy - CEN Chart

[alokdhir]

At the rate its going, It wouldn't surprise me if it hit $7.80- $8 before ex div day.

Agree ...maybe just needs one good day to catch up ...at present its underperforming the market

Today its looking promising ...close over 7.50 should take it to 7.80 resistance

[see weed]

Agree ...maybe just needs one good day to catch up ...at present its underperforming the market

Today its looking promising ...close over 7.50 should take it to 7.80 resistance

Go back to my last post, I have edited it with some figures.

[alokdhir]

Go back to my last post, I have edited it with some figures.

Thanks mate ...I have been enlightened ...

It has massive resistance at 7.80 which used to be big support before .

Only over that it will try to reach over 8.10 +

[see weed]

Thanks mate ...I have been enlightened ...

It has massive resistance at 7.80 which used to be big support before .

Only over that it will try to reach over 8.10 +

Good support at 7.50 but close is another story.

[see weed]

alokdhir, are you watching the depth, something is different today. The one day chart is looking a lot stronger, with no sudden dips as yet. Sometimes it drops back a bit on close.

[alokdhir]

alokdhir, are you watching the depth, something is different today. The one day chart is looking a lot stronger, with no sudden dips as yet. Sometimes it drops back a bit on close.

It has crossed a major hump of 7.50 ...now surely 7.80 on cards next week .

Volumes were huge as CEN was the only electricity stock not yet crossed its 60 SMA ....it will catch up with others like GNE , MEL and MCY soon

I think $ 8 will be the minimum to expect before results ie 15th August

But if u see the volumes were high only for CEN and MEL not GNE and MCY ....US fund buying ??

[Snoopy]

I want to update Contact Energy's 'Imputation rate' record, based on the statement that dividend payments will now be based on operating cashflows from the previous four years (NZX Release 15/02/2021).

I thought about what would be the best way to calculate the average imputation rate. Each dividend would have been individually considered by the board, and a decision made on what the appropriate imputation rate should be at each dividend payment time. So I have decided to just average the raw figures, exactly as they were presented to shareholders at the time. An alternative method, that I have chosen not to use, would be to take a weighted average imputation rate attached to each dividend in proportion to the size of that dividend.

Dividend Payment Date	Amount	Dividend Imputed to... {A}	Legal Imputed Maximum (B)	Dividend Imputation Rate (A)/(B)
09-04-2019	16cps	19.55%	28%	69.8%
17-09-2019	23cps	20.23%	28%	72.3%
07-04-2020	16cps	19.55%	28%	69.8%
15-09-2020	23cps	20.23%	28%	72.3%
Average				71.05%
Proposed 31-03-2021	14cps	22.95%	28%	82.0%

If we think of the above average already paid dividends as 'predictive', how does such an averaged prediction line up against what is proposed for the dividend to be paid on 30-03-2021? From the half year announcement:

"The Board has approved an interim cash dividend of 14 cents per share which will be imputed up to 9 cents per share for qualifying shareholders, and paid on 30 March 2021."

100% 'Full imputation' means tax is being paid at 28% on the full 14c proposed payout. In fact only 9cps will be fully imputed, with no imputation credits attached to the remaining 5c portion of the proposed dividend. So the gross dividend being paid is:

9/0.72 + 5 = 17.5c

This means the tax paid before shareholders get their dividend is mapped out to be: 17.5c - 14c = 3.5cps

Under an alternative full imputation scenario, the gross dividend would look like: 14c/0.72 = 19.44c. Under this scenario, the tax paid equates to: 19.44c - 14c = 5.44cps

This comparison gives us an imputation rate paid of: 3.5c/5.44c= 64.3%

For a quicker way of doing the same calculation: The imputation rate of the proposed dividend in proportion to full imputation can be calculated straight from the proportion of dividend declared as imputed: 9/14 = 64.3%. That is a little higher than the historical precedent (82% vs 71.05%). This is not surprising, given the next forecast is no longer the 100% 'Operating Free Cashflow' payout that had previously applied to all four dividends since April 2019.

The percentage to which a dividend is imputed makes a great difference to the 'gross yield' on any share. The gentailers are a particular risk here, because their dividends are based on free cashflow, which includes earnings (fully imputed) as well as some depreciation allowance that will not need to be reinvested (not imputed). What does this picture look like over the last four years? I choose four years based on the statement that dividend payments will now be based on operating cashflows from the previous four years (NZX Release 15/02/2021).

I thought about what would be the best way to calculate the average imputation rate. Each dividend would have been individually considered by the board, and a decision made on what the appropriate imputation rate should be at each dividend payment time. So I have decided to just average the raw figures, exactly as they were presented to shareholders at the time. An alternative method, that I have chosen not to use, would be to take a weighted average imputation rate attached to each dividend in proportion to the size of that dividend.

For Contact Energy, the financial year runs from 1st July to 30th June.

Dividend Payment Date	Amount	Dividend Imputed to... {A}	Legal Imputed Maximum (B)	Dividend Imputation Rate (A)/(B)
18-09-2018	19cps	28.00%	28%	100.0%
09-04-2019	16cps	19.55%	28%	69.8%
17-09-2019	23cps	20.23%	28%	72.3%
07-04-2020	16cps	19.55%	28%	69.8%
15-09-2020	23cps	20.23%	28%	72.3%
30-03-2021	14cps	20.00%	28%	71.4%
15-09-2021	21cps	21.00%	28%	75.0%
30-03-2022	14cps	22.00%	28%	78.6%
Average				76.15%

Readers may notice that the imputation rate has picked up a bit over the last couple of years. However, this is logical when viewed in the big picture of a largely static profit and cashflow market (new capital raising for the new Tauhara geothermal station excepted) combined with a small reduction in the dividend. The more of the dividend that is paid from actual profits, the higher the dividend imputation rate. If you reduce your dividend in a flat earnings environment, then you are reducing that part of the dividend that does not come from profits. That means overall, the imputation rate of any such dividend paid is likely to go up.

Contact's stated new policy of reducing their dividend to 80-100% of operating free cashflow means the higher imputation rates of FY2022 are more likely to continue into the future.

SNOOPY

[Snoopy]

Time to rework my calculations to consider the new FY2021 dividend policy of paying 80-100% of cashflows. For modelling purposes I will 'split things down the middle' and assume 90% of free cashflows are paid out. Contact have also said they will base their level on dividend payments around the last four years of results So for the purpose of this exercise I will change my timeframe to incorporate this.

	FY2017	FY2018	FY2019	FY2020
Cashflows from Operating Activities (1,2)	$508m + $85m	$457m + $85m	$466m + $85m	$390m+$85m
less Stay in Business CAPEX	($116m)	($78m)	($60m)	($52m)
less Net Interest Costs	($92m)	($84m)	($70m)	($55m)
equals Operating Free Cashflow	$384m	$380m	$421m	$368m
Operating Free Cashflow (OFC) x 90%	$346m	$342m	$379m	$331m
Modelled Dividend per Share (based on 805m shares on issue (3))	43cps	42cps	47cps	41cps
EBITDAF-DA-I-T (Normalised NPAT) (4)	$134m + $45m	$131m + $45m	$175m +$45m	$127m + $45m
Normalised eps (based on 805m shares on issue)	22.2cps	21.9cps	27.3cps	21.4cps

(1) From slide 6 of the presentation: "Projected EBITDAF uplift of ~$85m p.a. at wholesale price of $80/MWh" on commissioning of Tauhara.

(2) The definition of 'Operating Cashflows' has slightly changed between FY2019 and FY2020. If you look in the respective 'Cashflow Statements' for AR2019 and AR2020, you will see that 'Operating Cashflow' for FY2019 is listed as $466m in the former and $401m in the latter. Why the difference? In FY2020 the FY2019 figure has been reduced by a net interest figure of $69m -$4m = $65m. In AR2019 the 'interest paid' is reported in 'Financing cashflows' and the 'interest earned' is reported under 'Investing cashflows'. For consistency I am using the earlier definition of cashflows in the above table, with no interest charges deducted or added. This explains why 'Operating Cashflows' for FY2020 are listed as $390m in my table, but only $341m in the FY2020 Integrated Report.

(3) Following the capital raising, I expect the number of shares on issue to jump to 775,709,995 shares. The DRP will further increase the number of shares on issue, I predict at a rate of 2,5% per year (compounding). This will see the total number of shares after four years to increase as folows:

	No.Shares
Year 0	775,708.995
Year 1	795,101,719
Year 2	814,979,263
Year 3	835,353,744
Total/4 = Average	805,285,930

(4) I shall assume with Tauhara commissioned Depreciation will go up by $14m per year (the same jump in depreciation that occurred when Te Mihi was commissioned). There is $180m of new incremental debt funding associated with the building of Tauhara. At a 4.5% borrowing rate, this will increase the annual interest bill by:

$180m x 0.045 = $8m

The projected NPAT increment as a result or Tauhara coming on stream is therefore:

0.72x ($85m -$14m -$8m) = $45m

(This incremental increase in NPAT must ultimately be discounted back because it will not occur for three years time when Tauhara comes on line. I use a 4.5% discount rate, which equates to the long term Gross Yield I am prepared to accept.

1/(1.045)^3 = 0.8763

$45m x 0.8763 = $40m

I have got a bit slack with my overview of results, this post looking at FY2021. The FY2022 result will be released in 10 days. So I plan a rather more prompt review of that.

For those who came in late, a 'scenario analysis' is not an historical record of what happened. Instead it answers the question, what would happen if current dividend policy acted on the historical results of previous years. The purpose of this is to get a measure of how future results might change, if the weather events of the previous four years were superimposed on today's investment policy.

For this analysis I am using the most recent dividend policy (FY2021) of paying 80-100% of cashflows. For modelling purposes I will 'split things down the middle' and assume 90% of free cashflows are paid out. Contact have also said they will base their level on dividend payments around the last four years of results So for the purpose of this exercise, my timeframe is from FY2018 to FY2021 inclusive.

	FY2018	FY2019	FY2020	FY2021
Cashflows from Operating Activities (1,2)	$457m + $85m	$466m + $85m	$390m+$85m	$475m+$85m
less Stay in Business CAPEX	($78m)	($60m)	($52m)	($75m)
less Net Interest Expense	($84m)	($70m)	($55m)	($50m)
equals Operating Free Cashflow	$380m	$421m	$368m	$435m
Operating Free Cashflow (OFC) x 80%	$304m	$337m	$294m	$348m
Modelled Dividend per Share OFC80% (based on 806m shares on issue (3))	38cps	42cps	37cps	43cps
Operating Free Cashflow (OFC) x 90%	$342m	$379m	$331m	$392m
Modelled Dividend per Share OFC90% (based on 806m shares on issue (3))	42cps	47cps	41cps	49cps
EBITDAF-DA-I-T (Normalised NPAT) (4)	$131m + $45m	$175m +$45m	$127m + $45m	$183m + $45m
Normalised forecast 'eps' (based on 806m shares on issue)	21.8cps	27.3cps	21.3cps	28.3cps

(1) From slide 6 of PR2020: "Projected EBITDAF uplift of ~$85m p.a. at wholesale price of $80/MWh" on commissioning of Tauhara.

(2) The definition of 'Operating Cashflows' has slightly changed between FY2019 and FY2020. This has affected the 'Operating Cashflow' figure that I have used, which from FY2020 is different to that in the latter cashflow statements. In AR2019 the 'interest paid' is reported in 'Financing cashflows' and the 'interest earned' is reported under 'Investing cashflows'. By contrast both are reported in 'Operating Cashflows' in AR2020. For consistency I am using the earlier definition of cashflows in the above table, with no interest charges deducted or added.

(2a) FY2020 'Operating Cashflow' for FY2019 is listed as $466m in AR2019 and $401m in AR2020. Why the difference? In FY2020 the FY2019 figure has been reduced by a net interest figure of $69m -$4m = $65m (Figures relating to FY2019). Applying the same adjustment logic to FY2020, where the net interest paid was $49m, this explains why 'Operating Cashflows' for FY2020 are listed as $390m in my table, but only $341m in the FY2020 Integrated Report.

(2b) FY2021 'Operating Cashflow' adjustment. The net interest figure paid over FY2021 was $43m. This explains why 'Operating Cashflows' for FY2021 are listed as $475m in my table, but only $432m in the FY2021 Integrated Report.

(3) Following the capital raising completed on 12-03-2021, and the subsequent dividend paid on 30-03-2021 (with the DRP operating) on all shares issued (including those raised in the March 2021 capital raising), the number of shares on issue to jumped to 776,122,070 shares at the EOFY2021 balance date. I expect the DRP will further increase the number of shares on issue in the future, I predict at a rate of 2.5% per year (compounding). This will see the total number of shares after four years to increase as follows:

	No.Shares
Year 0 (EOFY2021)	776,122.070
Year 1	795,525,122
Year 2	815,413,250
Year 3	835,798,581
Total/4 = Average	805,714,716

(4) I shall assume with Tauhara commissioned Depreciation will go up by $14m per year (the same jump in depreciation that occurred when Te Mihi was commissioned). There is $180m of new incremental debt funding associated with the building of Tauhara. At a 5.0% borrowing rate, this will increase the annual interest bill by:

$180m x 0.05 = $9m

The projected NPAT increment as a result or Tauhara coming on stream is therefore:

0.72x ($85m -$14m -$9m) = $45m

Tauhara Discount Factor for Future Earnings

This incremental increase in NPAT should perhaps be discounted back because it will not occur for three years time, at the point where Tauhara comes on line. For future discounting of profits, I use a 5.0% discount rate, which equates to the long term Gross Yield I am prepared to accept.

1/(1.05)^3 = 0.8638

$45m x 0.8638 = $39m

SNOOPY

[Snoopy]

I have reread past dividend paying intentions and compared that to what actually happened. When Contact had their '100% of Free Operating Cashflow' policy, dividends never quite reached that level. That is because the policy was based on 'averaged hydrological conditions'. If the inflows were above average (which they were in FY2019), then the dividend was not increased. Keeping this in mind, I have created a third possible iteration of future events where dividends are capped at 41cps (This reflects the period after Tauhara has been commissioned remember). Despite the dividend reduction, I expect this iteration will show increased returns to shareholders. This is because the unimputed portion of the dividend will be reduced. The way I have done my analysis, unimputed portions of dividends reduce shareholder returns, because of the extra tax incurred by such payments.

I continue to use my model based on just the last four years of operations.

1/ The 'Scenario 'Dividend Per Share' and 'Scenario Earnings Per Share' columns (from my post 1978) represent a prediction of an ongoing dividend of 90% of free cash flow being paid into the foreseeable future, but now capped at 41cps. The FY2021 forecast, under the same policy of paying out 80-100% of free cashflow, is 35cps. This is somewhat less than my four forecast scenarios where dividends are 41cps. However these scenarios reflect a future where Tauhara is operational which should provide an incremental boost to Contact's profitability. I also note that in the current forecast year, the proposed dividend of 35cps is a figure towards the lower end of the 80-100% cashflow payment range. I therefore do not consider the modelled dividend payout to be unrepresentatively high, once Tauhara is up and running.
2/ The (A) - (B) difference column, if negative, represents the amount of the projected dividend not covered by imputation credits. This is important, because a dividend paid without imputation credits is in accounting terms, equivalent to giving shareholders their own capital back (equal to the amount of the unimputed dividend) complete with a tax bill. This is generally bad for investors. It is necessary to make a negative adjustment to account for any expected tax to be paid on the unimputed dividend component (Column (D).
3/ The capital component of the dividend is the portion of shareholder equity being returned to shareholders. This will need to be removed from the dividend return calculation. Because to pay it is to return to shareholders money on the balance sheet that they already have, so it isn't a shareholder benefit.
4/ The unimputed component tax bill column, represents the income tax charged on share capital that is expected to be paid by the shareholder. A 28% tax rate is assumed. Note that if the (A)-(B) difference were to be positive then there would be no extra tax bill. That's because in such a year, the dividend would be 'fully imputed'.
5/ The final 'Difference Column' represents the 'effective' dividend per share, adjusted for any extra tax obligation from paying tax on unimputed distributions.

Scenario Basis Financial Year	eps (A)	Scenario dps (B)	Difference (A)-(B)	Divie Capital Component (C)	Unimputed Tax Bill (D)	Difference (B)-(C)-(D)
2017	22.2c	41.0c	-18.8c	18.8c	5.3c	16.9c
2018	21.9c	41.0c	-19.1c	19.1c	5.3c	16.6c
2019	27.3c	41.0c	-13.7c	13.7c	3.8c	23.5c
2020	21.4c	41.0c	-19.6c	19.6c	5.5c	15.9c
Total	89.8c (E)	164.0c (F)				72.9c
Business Cycle Imputation Rate (E)/(F)		54.76%

.

The expected average dividend per year, net of tax is therefore: 72.9 / 4 = 18.2cps (net)

Using a tax rate of 28c this is equivalent to a gross income of: 18.2cps /(1-0.28) = 25.3c

Now we come to a critical point in this analysis - the choosing of an indicative interest rate that allows us to value Contact on the basis of being an ongoing income stream. I have previously used a figure of 5.5%. But that was in a climate of investment interest rates of some 3.5%. Interest rates have fallen by at least 200 basis points since then. OTOH the Tiwai Point aluminium smelter is likely on a three year wind down closing path. The power market is consequently in a state of flux as whether an energy intensive replacement industry like hydrogen fuel production, will arrive. If not, there is work to be done, by Transpower, to ensure Contact will be able to extricate the consequential surplus energy from their Clutha River power stations at Clyde and Roxburgh. The 'transmission north' constraints need to be relieved. There is also uncertainty as to how Tauhara will feed into the mix of competitors' new wind farms that are due to come on line within a similar construction timeframe.

To balance these competing factors, I have assessed that a gross return of 4.5% is an acceptable return from a shareholder perspective, investing in Contact Energy's assets.

Dividends can only be imputed to the extent that tax credits are being and have been generated. The bulk of the Contact tax credits on the books came about in FY2016, because of $204m of impairments net of tax relating to the closure of the Otahuhu Power Station, an assessment that the Taheke Geothermal field is unlikely to be developed in the foreseeable future (from a June 2016 perspective) and a 'write down' in the value of inventory gas. I have calculated above that $63m of those tax credits have been used up (post 1806) , which means that $97m - $63m = $34m are yet to materialise. That means there are probably two years worth of 'Superimputed dividends' for Contact Energy shareholders to come. What value of superimputation is appropriate? I am going with the average that I calculated in the early part (post 1799) of this valuation exercise of 71.64% as a figure that is now appropriate for Contact Energy. Nevertheless my forecast period is from 2023 onwards. By that time I have to assume all of those remaining $34m of tax credits that are funding 'superimputed dividends' to be used up. That means I expect future tax credits to come out of this historical shadow and revert to reflecting operational performance.

If we assume that a business cycle investment 'gross return' of 4.5% is required, then this equates to a CEN share price of:

25.3c /0.045 = $5.62

So $5.62 is therefore 'fair value'. However, this is fair value in the future, three years hence when Tauhara is up and operating. We need to discount this back using an appropriate 'time value of money' factor. This I calculated in post 1978 to be 0.8763.

0.8763 x $5.62 = $4.92

Readers should note that $4.92 represents 'business cycle neutral' fair value. We could argue that we are currently, keeping in mind the increasing ten year bond rate, descending from the top of a low interest rate inspired valuation cycle. My rule of thumb would suggest a 'top of cycle' value some 20% higher than my calculated fair value. However, given we may have passed the interest rate low, I am reducing my interest rate cycle premium from 20% down to 15%

$4.92 x 1.15 = $5.66

Contact Energy is trading at $6.77 as I write this post. This technique would suggest that Contact Energy is now still 17% overvalued (above fair valuation), but not out of line with the broad overvaluation of the NZX as a whole.

But does a 'capitalised dividend valuation' give the full picture? This is a 'no growth valuation', so maybe not!

Contact with their '80%-100% of Free Operating Cashflow' looks, in practice, to be paying dividends towards the bottom of their indicated range. I believe this is because the policy was based on 'averaged hydro-logical conditions'. If the inflows were above average (which they were in FY2019), then the dividend was not increased. My modelled future dividend scenario is that dividends will be capped at 37cps (This reflects the period after Tauhara has been commissioned remember). Over FY2022 dividends paid during that period amounted to 35cps.

I continue to use my model based on just the last four years of operations.

1/ The 'Scenario 'Dividend Per Share' and 'Scenario Earnings Per Share' columns (from my post 2198) represent a prediction of an ongoing dividend of 80% of free cash flow being paid into the foreseeable future, but now capped at 37cps.

The FY2021 actual dividend payment, under the same policy of paying out 80-100% of free cashflow, was 35cps. This is somewhat less than my four forecast scenarios where dividends are 37cps. But these scenarios reflect a future where Tauhara is operational which should provide an incremental boost to Contact's profitability. I do not consider the modelled dividend payout to be unrepresentatively high, once Tauhara is up and running.


2/ The (A) - (B) difference column, if negative, represents the amount of the projected dividend not covered by imputation credits. This is important, because a dividend paid without imputation credits is -in accounting terms-, equivalent to giving shareholders their own capital back (equal to the amount of the unimputed dividend) complete with a tax bill. This is generally bad for investors. It is necessary to make a negative adjustment to account for any expected tax to be paid on the unimputed dividend component (Column (D).
3/ The capital component of the dividend (Column C) is the portion of shareholder equity being returned to shareholders. This will need to be removed from the dividend return calculation. Because to pay it is to return to shareholders money on the balance sheet that they already have, so it isn't a shareholder benefit.
4/ The unimputed component tax bill (Column D), represents the income tax charged on share capital that is expected to be paid by the shareholder. A 28% tax bill from the value calculated in Column C is assumed. Note that if the (A)-(B) difference were to be positive then there would be no extra tax bill. That's because in such a year, the dividend would be 'fully imputed'.
5/ The final 'Difference Column' represents the 'effective' net dividend per share, adjusted for any extra tax obligation from paying tax on unimputed distributions.

Scenario Basis Financial Year	eps (A)	Scenario dps (B)	Difference (A)-(B)	Divie Capital Component (C)	Unimputed Tax Bill (D)	Difference (B)-(C)-(D)
2018	21.8c	37.0c	-15.2c	15.2c	4.3c	17.5c
2019	27.3c	37.0c	-9.7c	9.7c	2.7c	24.6c
2020	21.3c	37.0c	-15.7c	15.7c	4.4c	16.9c
2021	28.3c	37.0c	-8.7c	8.7c	2.4c	25.9c
Total	98.7c (E)	148.0c (F)				84.9c
Business Cycle Imputation Rate (E)/(F)		66.69%

.

The expected average dividend per year, net of tax is therefore: 84.9 / 4 = 21.2cps (net)

Using a tax rate of 28c this is equivalent to a gross income of: 21.2cps /(1-0.28) = 29.4cps

Now we come to a critical point in this analysis - the choosing of an 'indicative interest rate' that allows us to value Contact on the basis of being an ongoing income stream.

SNOOPY

[Snoopy]

In this post my 'modelled' imputation credits paid payments are actually the real payments that must have been handed over to IRD, to allow a dividend to be paid with that specified level of imputation credits attached. The actual tax declared I have taken from the representative 'Statements of Comprehensive Income'. I am reporting in half year periods. The tax declared in the second half (calendar year period from 1st January to 30th June) has been worked out by taking the tax paid for the full year and subtracting that paid in the first half.

My Post 2197 covers the period after the Contact Energy imputation credit balance was exhausted, by the paying of a 'special dividend' (from 23-06-2015). The following table has evolved from information presented in that post. It should be no surprise to see the first dividend to be paid after the imputation credit clean out, the first line in the table, has no imputation credits attached as a result. Not only was no income tax paid by Contact Energy over that period. The company received a $51m income tax credit.

The second line of the table shows a dividend being paid with $19m of imputation credits attached, against an actual tax liability over the period of only $11m. I don't understand how attaching such a large imputation credit to the dividend payment is possible, unless:

a/ Contact have stumped up with a $8m 'tax paid in advance' payment to the IRD to make up the difference (but the cashflow statement from FY2016 shows $1m of tax received and no tax paid- let alone 'extra tax' paid in advance). OR
b/ All of that "declared in the prior period $51m tax credit" has found its way into Contact's imputation account.

The second explanation looks more likely, because the sum of imputation credit tax paid from 23-06-2016 onwards exceeds the declared income tax liability for the same period - by $42m. And $51m of potential extra income tax credits more than makes up for this difference. However, if my second explanation is correct, then why was the dividend declared on 23-06-2016 not fully imputed (that $51m tax refund should have ensured there were plenty of imputation tax credits available in the tax credit bucket)? An unsolved mystery?

If indeed the tax refund from HY2016 has been treated as a 'tax credit' for imputation purposes (I still have my doubts about that because imputation credits are normally only issued for actual tax paid) then the income tax differences over the 14 half year periods come down to:

$432m - ($389m + $51m) = ($8m)

It is at least conceivable that Contact may have overpaid their tax by $8m at balance date, because a forecast decrease in profit in FY2022 may result in the provisional tax already paid being greater than the final forecast tax bill.

Dividend Payment Date	Net Amount	Dividend Imputation Rate	Gross Dividend Divisor	Imputed Dividend Tax Paid {A}	Half Year Period Income Tax Declared {B}	Tax paid less Tax Declared {A}-{B}
25-09-2015	$110m	0%	1.0	$0m	($51m)	$51m
23-06-2016	$79m	70.9%	0.8015	$19m (2)	$11m	$8m
23-09-2016	$107m	54.9%	0.8463	$19m	$38m	($19m)
17-03-2017	$79m	78.7%	0.7796	$22m	$21m	$1m
19-09-2017	$107m	100.0%	0.72	$42m	$24m	$18m
06-04-2018	$93m	100.0%	0.72	$36m	$17m	$19m
18-09-2018	$136m	100.0%	0.72	$53m	$43m	$10m
09-04-2019	$115m	69.8%	0.8046	$28m	$26m	$2m
17-09-2019	$165m	72.3%	0.7976	$42m	$26m	$16m
07-04-2020	$115m	69.8%	0.8046	$28m	$20m	$8m
15-09-2020	$165m	72.3%	0.7976	$42m	$32m	$10m
30-03-2021	$109m	71.4%	0.8001	$27m	$42m	($15m)
16-09-2021	$163m	75.0%	0.7900	$43m	$53m	($10m)
30-03-2022	$109m	78.6%	0.7799	$31m	$36m	($5m)
Average		72.41%
Total 23-06-2016 Onwards				$432m	$389m	$43m

Notes


1/ The 'gross dividend divisor' column is calculated according to the method explained in my post 1796.
.
2/ A sample calculation to derive the amount of tax that has to have been paid to satisfy the imputation credit attached to the dividend paid on 23-06-2016 is shown below.

Imputation tax payment = ($79m / 0.8105) - $79m = $18.5m (=$19m to two significant figures)

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This post is based on actual declared dividend payouts, and the tax paid implications from those payouts and company declared tax (not the derived tax from my 0.28x (EBITDAF - DA -I) calculation, such as in my post in post 1804). However, actual earnings are subject to various one off earnings blips (both up and down) from non core transactions that are not reflective of core business activity into the future.

A new phenomenon in the table above is that -looking at the last three dividends-, Contact have paid less tax as declared through the imputation credits attached to each of the three dividends, compared to the actual underlying income tax paid by Contact over the same period. It looks like Contact could have declared those three dividends with a higher percentage imputation rate than they did. Why they did not declare the largest extent of imputation credits they were entitled to declare on those three dividends I find very puzzling! But it does mean that Contact get to 'roll over' $32m of imputation credits into future years (if my reasoning behind constructing the above table is correct).

SNOOPY