Monday, May 26, 2014

Is there a dividend in Mongolia Growth Groups future?

Interesting comments by CEO Paul Byrne in a recent company press release:

Over the past two months, newly appointed CEO Paul Byrne has undertaken a review of both recurring and forecasted costs with a goal of better matching those expenses with current revenue run-rates. Based on first quarter, 2014 levels of both recurring and forecasted costs, the Company has identified annual expenses of approximately CDN $500,000 that will be reduced or deferred until the Company shows positive cash flow. The majority of these savings are related to expenditures at the Company’s corporate operations, whereby now the emphasis is on building much more capability in Mongolia, where there are greater operating synergies and resulting cost efficiencies. It is anticipated that the cost saving initiatives announced today, will be undertaken over the second half of this year, with savings becoming visible early in 2015. These savings are in addition to the substantial savings that have been gained through the disposal of Mandal Daatgal, the Company’s former insurance subsidiary.

“The Company has the right business model and operating platform and it is now time that we focus on strengthening cash flow from our high quality asset base,” said Paul Byrne, CEO of MGG. “To achieve this, we need to be more effective with aligning our operating expenditures with our revenues, while still focusing on growth initiatives like our transformation into an asset management, real estate development and funds management business. Going forward, we will be increasing spending on revenue producing initiatives, while re-evaluating all non-revenue producing expenditures. Ultimately, as a business, we need to show stronger cash flow and reward shareholders with a dividend.”

No timeline given on a dividend but definitely going in the right direction. I have been slowly accumulating MGG for a couple of years now and it is my largest position.

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