debt equity – Free Bassuk http://freebassuk.com/ Wed, 16 Mar 2022 04:05:00 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://freebassuk.com/wp-content/uploads/2021/07/icon.png debt equity – Free Bassuk http://freebassuk.com/ 32 32 Masayoshi Son wealth: SoftBank founder Masayoshi Son loses $25 billion in brutal tech winter https://freebassuk.com/masayoshi-son-wealth-softbank-founder-masayoshi-son-loses-25-billion-in-brutal-tech-winter/ Wed, 16 Mar 2022 04:05:00 +0000 https://freebassuk.com/masayoshi-son-wealth-softbank-founder-masayoshi-son-loses-25-billion-in-brutal-tech-winter/ Masayoshi Son, the billionaire founder of SoftBank Group Corp., checks the chart. Then again. Again. And again for good measure. Lately, it’s only been moved in one direction: up. This is not a chart of the company’s stock picks. These sink quickly. The same goes for Son’s fortune – at $13.7 billion, it fell from […]]]>
Masayoshi Son, the billionaire founder of SoftBank Group Corp., checks the chart. Then again. Again. And again for good measure.

Lately, it’s only been moved in one direction: up.

This is not a chart of the company’s stock picks. These sink quickly. The same goes for Son’s fortune – at $13.7 billion, it fell from $25 billion last year, according to the Bloomberg Billionaires Index.

The chart is SoftBank’s loan-to-value ratio, which Son says he checks four times a day. It’s key to how he’s staged his comeback over the past two decades after losing $70 billion in the dot-com crash.

Just last year, SoftBank was flying high, borrowing against its hugely lucrative stakes in tech investments such as Alibaba Group Holding Ltd. and investing the money in the promising newcomers of tomorrow. Even when there have been epic failures – Wirecard AG or Greensill Capital – profits elsewhere have buried the problem.

However, lately the problems keep piling up.

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From China’s tech crackdown to Russia’s invasion of Ukraine, from inflation to markets, a litany of problems have beset Son and his conglomerate.

The stock has fallen nearly 60% over the past year and the loan-to-value graph that Son obsesses daily continues to rise, indicating that SoftBank’s net debt is becoming heavy relative to the value of equity of its assets. Some market watchers point to the risk of margin calls.

“There is no good news in sight,” said Tomoaki Kawasaki, principal analyst at Iwai Cosmo Securities Co. financial issues facing the business.”

Son, 64, acknowledges that these are difficult times.

In February, he described SoftBank as being “in the midst of a winter storm” and announced a drop from 1.55 trillion yen ($13 billion) to 19.3 trillion yen in net asset value. the company for the three months until December.

Since then, it has only gotten worse.

The market for new stock sales, critical to SoftBank’s success, has dried up. Didi Global Inc. sank a record 44% on Friday after the ride-sharing company suspended preparations for a Hong Kong listing. In the latest sign that SoftBank is running out of money, its Vision Fund sold $1 billion worth of shares in South Korean e-commerce giant Coupang Inc. at a discount last week.

“SoftBank’s investment macro picture and listing outlook is not good,” said Amir Anvarzadeh, strategist for Japanese equities at Asymmetric Advisors, who recommends betting against the stock. Declines in the value of its investments, such as Alibaba, expose the company to the risk of margin calls, he added.

Son told investors how he checks SoftBank’s loan-to-value ratio, or LTV, several times a day. The measure, calculated by dividing its net debt by the equity value of its holdings, rose to 22% at the end of last year from 8.8% in June 2020.

soft bankBloomberg

The conglomerate aims to keep the ratio below 25%. But an increase in borrowing, as well as declines in Alibaba and SoftBank shares, have pushed it even higher this year.

S&P Global Ratings, which unlike SoftBank includes margin loans in its LTV calculation, estimated the ratio at 29% in a March 7 call, according to Bloomberg Intelligence senior credit analyst Sharon Chen. . If it exceeds 40%, it could trigger a potential downgrade of the current BB+ rating.

The Japanese company depends on financing to maintain its pace of investment and support its share buyback program. It will need $45 billion in cash this year, Jefferies analyst Atul Goyal predicted last month, adding that it will likely sell shares of Alibaba to meet the demands.

SoftBank has long relied on asset-backed financing, which is cheaper than other forms of financing. This includes pledging assets in exchange for cash to invest in early-stage startups and using prepaid futures — where SoftBank receives cash up front for a future sale of its holdings.

In December, he had pledged more than half of his stakes in Alibaba, T-Mobile US Inc., Deutsche Telekom AG and its telecommunications unit SoftBank Corp. Asset-backed financing accounts for $54 billion of the conglomerate’s $128 billion in total debt, according to a BI analysis.

“They need to keep fundraising, and the complexity of how they do it is probably what makes people less comfortable,” BI’s Chen said.

Son’s funding network goes beyond the main business.

Son has some of the largest equity-linked personal loans in the company on the planet after pledging shares worth $5.7 billion to 18 lenders, including Bank Julius Baer & Co., Mizuho Bank Ltd. and Daiwa Securities Group Inc.

A SoftBank representative said the company does not comment on Son’s personal finances.

The conglomerate also provides loans to certain executives as part of its incentive program, with the aim of buying shares in the company, the spokesperson said.

To help fund a stake in T-Mobile, SoftBank loaned $515 million to Marcelo Claure, the former chief operating officer who quit in January over a dispute with Son.

SoftBank may tap into multiple types of funding, but it’s still primarily a technology investment company, and Son has made a string of extremely profitable bets.

Last year, it posted the biggest quarterly profit ever for a Japanese company and its stock hit a record high. Listings of Coupang and delivery platform DoorDash Inc. helped offset losses at WeWork, Greensill Capital and Wirecard – the latter two flopped amid fraud scandals.

But it will be more difficult for Son to reap the gains. Alibaba, SoftBank’s biggest investment, has lost 35% this year, while SoftBank itself is down for a fourth day, heading for its lowest price since April 2020. All but three of the 23 stocks backed by conglomerates listed in 2021 have fallen below their IPO prices and the cost of insuring the company’s debt against default has more than doubled.

Softbank2Bloomberg

Despite the series of bad news, 18 of the 20 analysts whose ratings are monitored by Bloomberg recommend buying the stock. While the challenging environment makes it harder to predict the timing of the buyout plan and investments in the second Vision Fund, “we don’t see a crisis per se,” said Kirk Boodry, an analyst at Redex Research who does not assess not stocks. .

“There is some cushion there, despite the poor performance of the portfolio over the last three quarters,” he said.

SoftBank is not changing strategy. After repaying $10 billion in loans backed by Alibaba shares, it arranged $6 billion in new debt in December. Last month, he asked banks vying for roles in chip designer Arm Ltd’s potential slate. to provide it with $8 billion in funding, people familiar with the matter said.

Moreover, Son remains optimistic about the upcoming end of winter.

“We will see a spring sooner or later, and we continue to sow seeds,” he said in February. “Regularly, the seeds grow.”

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Tekmar Group (LON:TGP) makes moderate use of debt https://freebassuk.com/tekmar-group-lontgp-makes-moderate-use-of-debt/ Wed, 09 Mar 2022 07:47:08 +0000 https://freebassuk.com/tekmar-group-lontgp-makes-moderate-use-of-debt/ Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett said “volatility is far from synonymous with risk.” So it may be obvious that you need to take debt into account when thinking about the risk of a given stock, because too much debt can […]]]>

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett said “volatility is far from synonymous with risk.” So it may be obvious that you need to take debt into account when thinking about the risk of a given stock, because too much debt can sink a business. We can see that Tekmar Group plc (LON:TGP) uses debt in its business. But the real question is whether this debt makes the business risky.

What risk does debt carry?

Debt helps a business until the business struggles to pay it back, either with new capital or with free cash flow. In the worst case, a company can go bankrupt if it cannot pay its creditors. Although not too common, we often see companies in debt permanently diluting their shareholders because lenders force them to raise capital at a ridiculous price. Of course, the advantage of debt is that it often represents cheap capital, especially when it replaces dilution in a business with the ability to reinvest at high rates of return. When we think about a company’s use of debt, we first look at cash and debt together.

Discover our latest analysis for Tekmar Group

What is the net debt of the Tekmar group?

As you can see below, at the end of September 2021, the Tekmar Group had a debt of £6.05m, up from £3.00m a year ago. Click on the image for more details. On the other hand, he has £3.48m in cash, resulting in a net debt of around £2.57m.

AIM: TGP Debt to Equity History March 9, 2022

A look at the liabilities of the Tekmar group

We can see from the most recent balance sheet that the Tekmar group had liabilities of £12.5m due within a year, and liabilities of £3.65m due beyond . As compensation for these obligations, it had cash of £3.48 million as well as receivables valued at £17.4 million maturing within 12 months. Thus, he can boast that he has £4.68 million more in liquid assets than total Passives.

This excess liquidity suggests that the Tekmar group is taking a cautious approach to debt. Given that he has easily sufficient short-term cash, we don’t think he will have any problems with his lenders. There is no doubt that we learn the most about debt from the balance sheet. But ultimately, the company’s future profitability will decide whether the Tekmar Group can strengthen its balance sheet over time. So if you are focused on the future, you can check out this free report showing analyst earnings forecast.

Last year, the Tekmar Group recorded a loss before interest and tax and actually cut its revenue by 20%, to £31million. This is not what we hope to see.

Caveat Emptor

While Tekmar Group’s declining revenue is about as comforting as a wet blanket, arguably its loss of earnings before interest and taxes (EBIT) is even less appealing. Indeed, it lost a very considerable £3.6 million in EBIT. On the plus side, the company has adequate liquid assets, giving it time to grow and expand before its debt becomes a short-term issue. Still, we would be more encouraged to study the business in depth if it already had free cash flow. This one is a little too risky for our liking. There is no doubt that we learn the most about debt from the balance sheet. However, not all investment risks reside on the balance sheet, far from it. Know that Tekmar Group shows 2 warning signs in our investment analysis you should know…

In the end, sometimes it’s easier to focus on companies that don’t even need to take on debt. Readers can access a list of growth stocks with no net debt 100% freeat present.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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Sanlorenzo (BIT:SL) appears to be using debt sparingly https://freebassuk.com/sanlorenzo-bitsl-appears-to-be-using-debt-sparingly/ Sat, 05 Mar 2022 07:34:12 +0000 https://freebassuk.com/sanlorenzo-bitsl-appears-to-be-using-debt-sparingly/ Berkshire Hathaway’s Charlie Munger-backed outside fund manager Li Lu is quick to say, “The biggest risk in investing isn’t price volatility, but whether you’re going to suffer a permanent loss of capital “. It’s natural to consider a company’s balance sheet when looking at its riskiness, as debt is often involved when a company fails. […]]]>

Berkshire Hathaway’s Charlie Munger-backed outside fund manager Li Lu is quick to say, “The biggest risk in investing isn’t price volatility, but whether you’re going to suffer a permanent loss of capital “. It’s natural to consider a company’s balance sheet when looking at its riskiness, as debt is often involved when a company fails. We note that Sanlorenzo Spa (BIT:SL) has debt on its balance sheet. But should shareholders worry about its use of debt?

When is debt dangerous?

Debt and other liabilities become risky for a business when it cannot easily meet those obligations, either with free cash flow or by raising capital at an attractive price. Ultimately, if the company cannot meet its legal debt repayment obligations, shareholders could walk away with nothing. However, a more common (but still painful) scenario is that it has to raise new equity at a low price, thereby permanently diluting shareholders. Of course, debt can be an important tool in businesses, especially capital-intensive businesses. The first thing to do when considering how much debt a business has is to look at its cash and debt together.

See our latest analysis for Sanlorenzo

What is Sanlorenzo’s debt?

You can click on the chart below for historical figures, but it shows Sanlorenzo had €100.9m in debt in September 2021, up from €106.6m a year earlier. However, he has €139.1m in cash which offsets this, leading to a net cash of €38.3m.

BIT:SL Debt to Equity March 5, 2022

How strong is Sanlorenzo’s balance sheet?

According to the last published balance sheet, Sanlorenzo had liabilities of €265.5 million maturing within 12 months and liabilities of €76.3 million maturing beyond 12 months. In return for these obligations, it had cash of €139.1 million as well as receivables worth €125.6 million at less than 12 months. Thus, its liabilities outweigh the sum of its cash and (short-term) receivables by €77.1 million.

Given that Sanlorenzo has a market capitalization of €1.11 billion, it’s hard to believe that these liabilities pose a big threat. But there are enough liabilities that we certainly recommend that shareholders continue to monitor the balance sheet in the future. Despite its notable liabilities, Sanlorenzo has a net cash position, so it’s fair to say that it’s not heavily leveraged!

On top of that, we are pleased to report that Sanlorenzo increased its EBIT by 76%, reducing the specter of future debt repayments. The balance sheet is clearly the area to focus on when analyzing debt. But ultimately, the company’s future profitability will decide whether Sanlorenzo can strengthen its balance sheet over time. So if you are focused on the future, you can check out this free report showing analyst earnings forecast.

Finally, a business needs free cash flow to pay off its debts; book profits are not enough. Sanlorenzo may have net cash on the balance sheet, but it’s always interesting to see how well the company converts its earnings before interest and taxes (EBIT) into free cash flow, as this will influence both its need and its ability to manage debt. Over the past three years, Sanlorenzo has recorded a free cash flow of 47% of its EBIT, which is lower than expected. It’s not great when it comes to paying off debt.

Abstract

While it is always a good idea to look at a company’s total liabilities, it is very reassuring that Sanlorenzo has 38.3 million euros in net cash. And we liked the look of EBIT growth of 76% YoY last year. So is Sanlorenzo’s debt a risk? This does not seem to us to be the case. There is no doubt that we learn the most about debt from the balance sheet. However, not all investment risks reside on the balance sheet, far from it. Example: we have identified 2 warning signs for Sanlorenzo you should be aware.

If, after all that, you’re more interested in a fast-growing company with a strong balance sheet, check out our list of cash-neutral growth stocks right away.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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Treasurer’s Checklist for Navigating the Russian-Ukrainian Conflict https://freebassuk.com/treasurers-checklist-for-navigating-the-russian-ukrainian-conflict/ Sat, 26 Feb 2022 02:54:58 +0000 https://freebassuk.com/treasurers-checklist-for-navigating-the-russian-ukrainian-conflict/ A career in corporate treasury is not for the faint of heart. Following Russia’s invasion of Ukraine this week, stock markets around the world are reeling, currencies fluctuate, commodity prices soar, inflation fears rise and the potential ramifications of supply chain are settling in for what could be a long period of uncertainty. The very […]]]>

A career in corporate treasury is not for the faint of heart. Following Russia’s invasion of Ukraine this week, stock markets around the world are reeling, currencies fluctuate, commodity prices soar, inflation fears rise and the potential ramifications of supply chain are settling in for what could be a long period of uncertainty. The very real human costs – and the resulting trade implications – are at the forefront of global concerns over Russia’s actions.

These circumstances have once again propelled corporate treasurers into the spotlight as the CFO’s most valuable player. Each geopolitical crisis presents its own unique and unexpected challenges for the treasury team, stretching imagination and adaptability, and often exacerbating pre-existing issues within the organization. Yet today’s treasury professionals have already faced many geopolitical crises in their careers, and many of the lessons learned from past events are relevant to the war in Ukraine.

How can a treasury team ensure they have all the bases covered to mitigate risk in today’s fast-paced environment?

Crisis management checklist

Two things matter most in any crisis: speed and accuracy. Approaching a crisis situation too slowly leads to increased damage; however, sacrificing accuracy for speed can have equally destructive consequences. So, global treasury and finance teams need to strike the right balance between speed and accuracy while taking the following steps.

1. Assess the current cash position of the business. Over the past 48 hours, countless treasurers have received an urgent message from their CFO asking for clarification on the company’s exposure to Ukraine and Russia. Those who haven’t faced this question yet probably will soon. They must immediately:

  • Prepare an up-to-date overall cash position and a means of updating as often as needed.
  • Recalculate short-term global forecasts, at the company level and perhaps also by entity, with a plan for frequent updates.
  • Identify how much money the company currently has in rubles and other currencies that may be destabilized.
  • Evaluate alternatives to holding physical currency in Russia, Ukraine and other relevant countries.
  • Check if any partner banks are currently subject to sanctions.
  • Recalculate counterparty risk for customers, suppliers, financial institutions and other business partners worldwide.
  • Review the credit facilities available around the world.
  • Determine how the dispute might affect the pay of all employees in the affected regions.

For treasurers who don’t have answers immediately available in any of these areas, now is the time to gather this information.

2. Separate risks into short-term, short-term and long-term categories. Leveraging current state analysis, identify issues that require immediate attention. What can wait?

When prioritizing near-term risks, consider the potential for:

  • Shortage of materials. Over the past few decades, many companies have come to rely for key materials on suppliers located in both developed and developing markets around the world. As seen on a small scale with chip shortages during the global pandemic, a disruption in the supply of an entire production component can spell big trouble for businesses, especially manufacturers. Russia is one of the world’s largest suppliers of goods, especially natural resources, while Ukraine is a major supplier of wheat and minerals to the world. The Russian invasion poses a significant supply chain risk to businesses across a myriad of industries and regions.
  • Logistic disruptions. Disruptions to railways, roads and shipping routes in affected regions will cause delays and capacity constraints as businesses seek to reroute their goods and materials.
  • Monetary instability. Increasing exchange rate volatility could increase transactional and operational exposures for the Russian Ruble, Ukrainian Hryvnia and other currencies around the world. When currencies are devalued, hyperinflation may not be far behind.

With these considerations in mind, recalculate your company’s current debt to current assets ratio and assess the organization’s total exposure to the war in Ukraine. If the business requires significant current borrowings, and particularly if you are in an industry likely to be significantly affected by war, you may need to move to longer-term debt to bolster liquidity in the event of a tightening of the loan market.

3. Take action to mitigate the risks you have identified as requiring immediate action. After assessing the current state of the business and prioritizing areas of risk exposure, your treasury team is ready to act. Take steps to:

  • Minimize exposure, using your revised near-term forecasts to ensure your organization will have the necessary liquidity in the affected regions.
  • Reach out to suppliers to discuss new payment terms, leveraging less volatile currencies and financial institutions located in non-sanctioned countries where possible.
  • Work cross-functionally, using financial forecasts to identify at-risk suppliers and arrange for increased inventory or alternate suppliers as needed to ensure business continuity.
  • Communicate frequently with banking partners; alert them if you plan to draw on lines of credit and assess whether lines of credit need to be extended or renewed.
  • Respond to any concerns about your organization’s credit rating to guard against a downgrade, especially if you work in an industry where the war in Ukraine is having, or is perceived to have, a particularly acute impact on your business.
  • Consider any policy or procedural changes needed to support these actions.

4. Dealing with short and long term risks. Once you’ve dealt with the immediate risks, move on to the short- and long-term risks. It is important to prioritize them so that your organization can assess potential operational and business impacts with a cool head. Dealing with short-term and long-term risks generally requires more of a strategic approach than a tactical plan.

Among other issues, consider the following when working to mitigate long-term risk:

  • Prepare for additional penalties. The world reacted quickly to the Russian invasion by imposing sanctions on companies and individuals, freezing assets, etc. One of the most severe sanctions that has not yet been adopted is the withdrawal of Russia from the SWIFT network. While it is impossible to predict what future sanctions might be put in place, companies can prepare for those that are most likely to be implemented.
  • Eliminate sanctioned banks from your pre-authorized bank transfer platforms, including those you use as intermediary banks to other non-sanctioned countries. Failure to do so can result in fines or worse.
  • Examine investments linked to floating rates, to determine if a drop in interest rates would mean that the funds would be better placed in an FDIC-backed account or similar.
  • Review covenants and credit agreements, in case they are tied to stock price or debt-to-equity ratio.
  • Anticipate and plan for an increase in cybersecurity attacks.
  • Modify policies and procedures as necessary to adapt to the changing geopolitical landscape.

5. Establish an ongoing monitoring plan. What areas of the business need to be monitored to detect the impacts of changing circumstances? How often should they be monitored, only when additional information or sanctions change, or on a regular basis? When tackling a developing crisis, regular monitoring of risk mitigation is usually one of the most important activities a business can undertake.

Leverage lessons learned for future resilience

High pressure situations expose deficient processes and exacerbate known pain points. Geopolitical disruptions weigh heavily on treasury teams. Yet, as Winston Churchill once advised, “Never let a good crisis go to waste. As the war in Ukraine reveals areas where inadequate information flow is hampering the agility of your treasury and risk management functions, seize the opportunity to offer solutions that would mitigate these issues.

For example, going through the cash checklist above, you might find that building up a cash position by tinkering with spreadsheets from banking portals is too cumbersome to update as regularly as needed. during a crisis. And limited visibility into cash balances can hinder your organization’s accurate and timely decision-making. If the Ukraine-Russia crisis highlights your need for more dynamic and agile treasury management practices, this experience may support an upgrade to new treasury technologies that can connect through an application programming interface (API) to your company’s bank accounts worldwide.

Likewise, you may be able to leverage short-term concerns that payments may inadvertently be routed through a sanctioned bank to create payment processes that provide end-to-end traceability. Or you may find that confusing forecasting metrics prevent a clear assessment of the supply chain risk inherent in doing business with companies located in sanctioned areas.

Despite many negative ramifications, crises can draw attention to the need to improve key treasury processes. Modernizing the treasury function can now increase the quality, speed and accuracy of treasury operations, improving decisions by reducing the drag of inefficient manual activities.

Russia’s invasion of Ukraine is troublesome for businesses around the world. But treasury professionals need reassurance: the storms you’ve weathered in the past, the tools that help you perform at your best, and the strength of your collective teams mean that your organization’s financial health is in safe hands. .

And as we respond to the Russian invasion and bolster our treasury teams for the instability that war brings, our thoughts remain with the people of Ukraine.


Michael Thomas is the Head of Business Consulting at FinLync. After more than 10 years advising the largest multinational corporations around the world, Mitch now brings his expertise to forward-thinking treasury teams looking to advance core treasury processes in cash management, cash and payments through FinLync’s banking API-powered suite of tools.

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What is a no credit check loan? https://freebassuk.com/what-is-a-no-credit-check-loan/ Fri, 25 Feb 2022 08:00:00 +0000 https://freebassuk.com/what-is-a-no-credit-check-loan/ No credit check loans are loans where the lender does not check the borrower’s credit before approving and lending loans. These types of loans can be tempting if your credit is poor and you don’t qualify for other products. However, no credit check loans can be risky and are generally not well regarded as they […]]]>

No credit check loans are loans where the lender does not check the borrower’s credit before approving and lending loans. These types of loans can be tempting if your credit is poor and you don’t qualify for other products. However, no credit check loans can be risky and are generally not well regarded as they tend to come with extremely high interest rates.

What is a no credit check loan?

A loan without a credit check is a loan that does not require a credit check. You might be tempted to apply if you don’t have the best credit and think you can’t be approved for other types of financing products. Here are some examples of loans without a credit check:

Payday loans

Payday loans are small, short-term loans that you can repay the next time you get paid. In most cases, you will pay them back within two to four weeks. These no credit check loans are designed to provide you with quick cash to hold you over until your next paycheck.

Installment loans without credit check

With no credit check installment loans, you borrow a lump sum of money and repay it over time via fixed monthly installments or installments. They usually come with larger loan amounts than payday loans and can be used to cover just about any expense.

Auto title loans

Auto title loans are secured loans that use your car as collateral. You give the lender title to your car in exchange for borrowing money. The amount you can receive will depend on the value of your car. Most lenders will let you drive your car while you pay off the loan. If you default on a car title loan, the lender can repossess your vehicle.

Secured credit cards

You cannot be approved for a traditional unsecured credit card with bad credit. This is where secured credit cards come in – some issuers don’t do credit checks for them. When you sign up for a secured credit card, you make a cash deposit which is usually equal to your credit limit. The credit card issuer will take your deposit if you do not pay your bill.

Co-signer loans

If you don’t qualify for a loan on your own, ask a trusted friend or family member to be your co-signer and apply for a loan with you. You’re more likely to be approved and earn a great interest rate if you have a co-signer with good or excellent credit. Just be sure to repay the loan so you can improve your credit and not leave your co-signer responsible for the payments.

Why are no credit check loans a bad idea?

Although no credit check loans may seem like a great option, you should avoid them if possible. Their sky-high interest rates lead to high payments, which can land you in a cycle of debt and wreak havoc on your credit. You may find that a loan without a credit check does more harm than good for your long-term financial situation.

Many no credit check loans are considered predatory loans because the exorbitant interest rates can trap people in a cycle where they will never be able to repay the loan. Some lenders also add additional fees that make it even more difficult to get your finances back in order. Many no credit check loans turn out to be scams. Finally, since this type of loan does not build your credit, you lose the possibility of having your payments contribute to increasing your credit score.

Can I get a loan with bad credit?

You don’t have to turn to a no credit check loan if you have bad credit. Fortunately, there are many lenders who accept borrowers with bad credit. They may look at factors other than your credit to determine if they should approve you for a loan, such as your income, work history, and debt-to-equity ratio.

What are the alternatives to loans without credit check?

There are several alternatives to no credit check loans that can give you the funds you need, even if you have bad credit or no credit. Here is a brief overview of them.

Bad credit lenders

A number of lenders specialize in providing money to borrowers with bad credit. If you go with a bad credit lender, you may be able to get a relatively low interest rate for someone with less than stellar credit.

credit unions

Compared to banks, credit unions often have lenient requirements. As long as you are a member, you may be able to get approved for a loan from a credit union, even with bad credit. Credit unions will likely look at your overall financial situation in addition to your credit. In addition, the interest rate they can charge is capped at 18%.

Alternative payday loans

Alternative payday loans (ALPs) are small, short-term loans offered by some federal credit unions. They are generally more affordable than traditional payday loans and come with longer repayment terms. If you apply for PAL, a credit union will ask you for proof of your income to ensure that you can repay your loan.

Secured loans

Secured loans are backed by collateral, which is something valuable that you own. Collateral can be a physical asset such as a house, car or boat. It can also be a cash deposit. Since secured loans are less risky for lenders, you can get approved for a loan with bad credit. The caveat, however, is that the lender can seize your collateral if you fail to repay your loan.

The bottom line

If you have bad credit or no credit and need to borrow money, do not resort to a loan without a credit check. Instead, explore the alternatives available to you and think about the pros and cons of each. By choosing an alternative such as a loan from a lender with bad credit, you can save on interest and significantly reduce the overall cost of borrowing.

Learn more:

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Management’s Discussion and Analysis of Financial Condition and Results of Operations Table of Contents https://freebassuk.com/managements-discussion-and-analysis-of-financial-condition-and-results-of-operations-table-of-contents/ Tue, 22 Feb 2022 22:25:05 +0000 https://freebassuk.com/managements-discussion-and-analysis-of-financial-condition-and-results-of-operations-table-of-contents/ Page Executive Summary 26 Recent Developments 27 Financial Highlights 28 Balance Sheet Overview 30 Supplemental Financial Data 31 Business Segment Operations 36 Consumer Banking 37 Global Wealth & Investment Management 40 Global Banking 42 Global Markets 44 All Other 45 Managing Risk 46 Strategic Risk Management 49 Capital Management 49 Liquidity Risk 54 Credit Risk […]]]>
Page
           Executive Summary                                              26
           Recent Developments                                            27
           Financial Highlights                                           28
           Balance Sheet Overview                                         30
           Supplemental Financial Data                                    31
           Business Segment Operations                                    36
           Consumer Banking                                               37
           Global Wealth & Investment Management                          40
           Global Banking                                                 42
           Global Markets                                                 44
           All Other                                                      45
           Managing Risk                                                  46
           Strategic Risk Management                                      49
           Capital Management                                             49
           Liquidity Risk                                                 54
           Credit Risk Management                                         59
           Consumer Portfolio Credit Risk Management                      60
           Commercial Portfolio Credit Risk Management                    65
           Non-U.S. Portfolio                                             71

         Loan and Lease Contractual Maturities                            72
           Allowance for Credit Losses                                    73
           Market Risk Management                                         75
           Trading Risk Management                                        76
           Interest Rate Risk Management for the Banking Book             79
           Mortgage Banking Risk Management                               80
           Compliance and Operational Risk Management                     80
           Reputational Risk Management                                   81
           Climate Risk Management                                        81
           Complex Accounting Estimates                                   82
           Non-GAAP Reconciliations                                       85


25 Bank of America


————————————————– ——————————

Management report and analysis of the financial situation and operating results


Bank of America Corporation (the "Corporation") and its management may make
certain statements that constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements can be identified by the fact that they do not relate strictly to
historical or current facts. Forward-looking statements often use words such as
"anticipates," "targets," "expects," "hopes," "estimates," "intends," "plans,"
"goals," "believes," "continue" and other similar expressions or future or
conditional verbs such as "will," "may," "might," "should," "would" and "could."
Forward-looking statements represent the Corporation's current expectations,
plans or forecasts of its future results, revenues, provision for credit losses,
expenses, efficiency ratio, capital measures, strategy and future business and
economic conditions more generally, and other future matters. These statements
are not guarantees of future results or performance and involve certain known
and unknown risks, uncertainties and assumptions that are difficult to predict
and are often beyond the Corporation's control. Actual outcomes and results may
differ materially from those expressed in, or implied by, any of these
forward-looking statements.
You should not place undue reliance on any forward-looking statement and should
consider the following uncertainties and risks, as well as the risks and
uncertainties more fully discussed under Item 1A. Risk Factors of this Annual
Report on Form 10-K: and in any of the Corporation's subsequent Securities and
Exchange Commission Filings: the Corporation's potential judgments, orders,
settlements, penalties, fines and reputational damage resulting from pending or
future litigation and regulatory investigations, proceedings and enforcement
actions, including as a result of our participation in and execution of
government programs related to the Coronavirus Disease 2019 (COVID-19) pandemic,
such as the processing of unemployment benefits for California and certain other
states; the possibility that the Corporation's future liabilities may be in
excess of its recorded liability and estimated range of possible loss for
litigation, and regulatory and government actions; the possibility that the
Corporation could face increased claims from one or more parties involved in
mortgage securitizations; the Corporation's ability to resolve representations
and warranties repurchase and related claims; the risks related to the
discontinuation of the London Interbank Offered Rate and other reference rates,
including increased expenses and litigation and the effectiveness of hedging
strategies; uncertainties about the financial stability and growth rates of
non-U.S. jurisdictions, the risk that those jurisdictions may face difficulties
servicing their sovereign debt, and related stresses on financial markets,
currencies and trade, and the Corporation's exposures to such risks, including
direct, indirect and operational; the impact of U.S. and global interest rates,
inflation, currency exchange rates, economic conditions, trade policies and
tensions, including tariffs, and potential geopolitical instability; the impact
of the interest rate and inflationary environment on the Corporation's business,
financial condition and results of operations; the possibility that future
credit losses may be higher than currently expected due to changes in economic
assumptions, customer behavior, adverse developments with respect to U.S. or
global economic conditions and other uncertainties, including the impact of
supply chain disruptions, inflationary pressures and labor shortages on the
economic recovery and our business; the Corporation's concentration of credit
risk; the Corporation's ability to achieve its expense targets and expectations
regarding revenue, net interest income, provision for credit losses, net
charge-offs, effective tax
rate, loan growth or other projections; adverse changes to the Corporation's
credit ratings from the major credit rating agencies; an inability to access
capital markets or maintain deposits or borrowing costs; estimates of the fair
value and other accounting values, subject to impairment assessments, of certain
of the Corporation's assets and liabilities; the estimated or actual impact of
changes in accounting standards or assumptions in applying those standards;
uncertainty regarding the content, timing and impact of regulatory capital and
liquidity requirements; the impact of adverse changes to total loss-absorbing
capacity requirements, stress capital buffer requirements and/or global
systemically important bank surcharges; the potential impact of actions of the
Board of Governors of the Federal Reserve System on the Corporation's capital
plans; the effect of changes in or interpretations of income tax laws and
regulations; the impact of implementation and compliance with U.S. and
international laws, regulations and regulatory interpretations, including, but
not limited to, recovery and resolution planning requirements, Federal Deposit
Insurance Corporation assessments, the Volcker Rule, fiduciary standards,
derivatives regulations and the Coronavirus Aid, Relief, and Economic Security
Act and any similar or related rules and regulations; a failure or disruption in
or breach of the Corporation's operational or security systems or
infrastructure, or those of third parties, including as a result of cyberattacks
or campaigns; the transition and physical impacts of climate change; our ability
to achieve environmental, social and governance goals and commitments or the
impact of any changes in the Corporation's sustainability strategy or
commitments generally; the impact of any future federal government shutdown and
uncertainty regarding the federal government's debt limit or changes in fiscal,
monetary or regulatory policy; the emergence of widespread health emergencies or
pandemics, including the magnitude and duration of the COVID-19 pandemic and its
impact on the U.S. and/or global, financial market conditions and our business,
results of operations, financial condition and prospects; the impact of natural
disasters, extreme weather events, military conflict, terrorism or other
geopolitical events; and other matters.
Forward-looking statements speak only as of the date they are made, and the
Corporation undertakes no obligation to update any forward-looking statement to
reflect the impact of circumstances or events that arise after the date the
forward-looking statement was made.
Notes to the Consolidated Financial Statements referred to in the Management's
Discussion and Analysis of Financial Condition and Results of Operations (MD&A)
are incorporated by reference into the MD&A. Certain prior-year amounts have
been reclassified to conform to current-year presentation. Throughout the MD&A,
the Corporation uses certain acronyms and abbreviations which are defined in the
Glossary.

Executive Summary

Business Overview
The Corporation is a Delaware corporation, a bank holding company (BHC) and a
financial holding company. When used in this report, "the Corporation," "we,"
"us" and "our" may refer to Bank of America Corporation individually, Bank of
America Corporation and its subsidiaries, or certain of Bank of America
Corporation's subsidiaries or affiliates. Our principal executive offices are
located in Charlotte, North Carolina. Through our various bank and nonbank
subsidiaries throughout the U.S. and in international markets, we provide a
diversified range of

Bank of America 26

————————————————– ——————————


banking and nonbank financial services and products through four business
segments: Consumer Banking, Global Wealth & Investment Management (GWIM), Global
Banking and Global Markets, with the remaining operations recorded in All Other.
We operate our banking activities primarily under the Bank of America, National
Association (Bank of America, N.A. or BANA) charter. At December 31, 2021, the
Corporation had $3.2 trillion in assets and a headcount of approximately 208,000
employees.
As of December 31, 2021, we served clients through operations across the U.S.,
its territories and approximately 35 countries. Our retail banking footprint
covers all major markets in the U.S., and we serve approximately 67 million
consumer and small business clients with approximately 4,200 retail financial
centers, approximately 16,000 ATMs, and leading digital banking platforms
(www.bankofamerica.com) with approximately 41 million active users, including
approximately 33 million active mobile users. We offer industry-leading support
to approximately three million small business households. Our GWIM businesses,
with client balances of $3.8 trillion, provide tailored solutions to meet client
needs through a full set of investment management, brokerage, banking, trust and
retirement products. We are a global leader in corporate and investment banking
and trading across a broad range of asset classes serving corporations,
governments, institutions and individuals around the world.

RECENT DEVELOPMENTS


Capital Management
On February 2, 2022, the Corporation announced that the Board of Directors
declared a quarterly cash common stock dividend of $0.21 per share, payable on
March 25, 2022 to shareholders of record as of March 4, 2022.
For more information on our capital resources and regulatory developments, see
Capital Management on page 49.

COVID-19 Pandemic
The Coronavirus Disease 2019 (COVID-19) pandemic (the pandemic) has impacted the
Corporation and may continue to do so, as uncertainty remains about the duration
of the pandemic and the timing and strength of the global economic recovery. As
the pandemic continues to evolve, we regularly evaluate protocols and processes
in place to execute our business continuity plans. In conjunction with our
efforts to support clients affected by the pandemic, we have cumulatively
originated $35.4 billion in loans under the Paycheck Protection Program (PPP)
with amounts outstanding of $4.7 billion and $22.7 billion at December 31, 2021
and 2020. For more information on PPP loans, see Note 1 - Summary of Significant
Accounting Principles to the Consolidated Financial Statements.
The future direct and indirect impact of the pandemic on our businesses, results
of operations and financial condition remains uncertain. Should current economic
conditions deteriorate or if the pandemic worsens due to various factors,
including through the spread of more easily communicable variants of COVID-19,
such conditions could have an adverse effect on our businesses and results of
operations and could adversely affect our financial condition.
For more information on how the risks related to the pandemic adversely affect
our businesses, results of operations and financial condition, see Part 1. Item
1A. Risk Factors on page 8.

LIBOR and Other Benchmark Rates
Subject to the continued publication of certain non-representative London
Interbank Offered Rate (LIBOR) benchmark settings based on a modified
calculation (i.e., on a "synthetic" basis), British Pound Sterling, Euro, Swiss
Franc and Japanese Yen LIBOR settings and one-week and two-month U.S. dollar
(USD) LIBOR settings ceased or became no longer representative of the underlying
market the rates seek to measure (i.e., non-representative) immediately after
December 31, 2021, and the remaining USD LIBOR settings (i.e., overnight, one
month, three month, six month and 12 month) will cease or become
non-representative immediately after June 30, 2023. Separately, the Federal
Reserve, the Office of the Comptroller of the Currency (OCC) and the Federal
Deposit Insurance Corporation (FDIC) issued supervisory guidance encouraging
banks to cease entering into new contracts that use USD LIBOR as a reference
rate by December 31, 2021 subject to certain regulatory-approved exceptions (USD
LIBOR Guidance).
As a result, a major transition has been and continues to be in progress in the
global financial markets with respect to the replacement of Interbank Offered
Rates (IBORs). This is a complex process impacting a variety of our businesses
and operations. IBORs have historically been used in many of the Corporation's
products and contracts, including derivatives, consumer and commercial loans,
mortgages, floating-rate notes and other adjustable-rate products and financial
instruments. In response, the Corporation established an enterprise-wide IBOR
transition program, with active involvement of senior management and regular
reports to the Management Risk Committee (MRC) and Enterprise Risk Committee
(ERC). The program continues to drive the Corporation's industry and regulatory
engagement, client and financial contract changes, internal and external
communications, technology and operations modifications, including updates to
its operational models, systems and processes, introduction of new products,
migration of existing clients, and program strategy and governance.
As of December 31, 2021, the Corporation has transitioned or otherwise addressed
IBOR-based products and contracts referencing the rates that ceased or became
non-representative after December 31, 2021, including LIBOR-linked commercial
loans, LIBOR-based adjustable-rate consumer mortgages, LIBOR-linked derivatives
and interdealer trading of certain USD LIBOR and other interest rate swaps, and
related hedging
27 Bank of America

--------------------------------------------------------------------------------

arrangements. Additionally, in accordance with the USD LIBOR Guidance, the
Corporation has ceased entering into new contracts that use USD LIBOR as a
reference rate, subject to certain regulatory-approved exceptions.
The Corporation launched capabilities and services to support the issuance and
trading in products indexed to various alternative reference rates (ARRs) and
developed employee training programs as well as other internal and external
sources of information on the various challenges and opportunities that the
replacement of IBORs has presented and continues to present. The Corporation
continues to monitor a variety of market scenarios as part of its transition
efforts, including risks associated with insufficient preparation by individual
market participants or the overall market ecosystem, ability of market
participants to meet regulatory and industry-wide recommended milestones and
access and demand by clients and market participants to liquidity in certain
products, including LIBOR products.
With respect to the transition of LIBOR products referencing USD LIBOR settings
ceasing or becoming non-representative as of June 30, 2023, a significant
majority of the Corporation's notional contractual exposure to such LIBOR
currencies, of which the significant majority is derivatives contracts, have
been remediated (i.e., updated to include fallback provisions to ARRs based on
market driven protocols, regulatory guidance and industry-recommended fallback
provisions and related mechanisms) and the Corporation is continuing to
remediate the remaining USD LIBOR exposure. The remaining exposure, a majority
of which is made up of derivatives and commercial loans and which represents a
small minority of outstanding USD LIBOR notional contractual exposure of the
Corporation, will require active dialogue with clients to modify the contracts.
For any residual exposures after June 2023 that continue to have no fallback
provisions, the Corporation is assessing and planning to leverage relevant
contractual and statutory solutions, including relevant state legislation and
any future federal legislation, to transition such exposure to ARRs.
The Corporation has implemented regulatory, tax and accounting changes and
continues to monitor current and potential impacts of the transition, including
Internal Revenue Service tax regulations and guidance and Financial Accounting
Standards Board guidance. In addition, the Corporation has engaged impacted
clients in connection with the transition by providing ARRs education and the
timing of transition events. The Corporation is also working actively with
global regulators, industry working groups and trade associations. For more
information on the expected replacement of LIBOR and other benchmark rates, see
Item 1A. Risk Factors - Other on page 21.

Changes to Overdraft Services
In January 2022, the Corporation announced changes to its overdraft services for
consumer and small business clients, which include eliminating non-sufficient
funds (NSF) fees beginning in February 2022 and reducing overdraft fees from $35
to $10 beginning in May 2022. Fees from overdraft services were approximately $1
billion in 2021 and recorded in Consumer Banking as service charges in the
Consolidated Statement of Income. Due to the policy changes, in 2022 the
Corporation expects a significant reduction in NSF and overdraft fees.



Financial Highlights
Table 1                      Summary Income Statement and Selected Financial Data

(Dollars in millions, except per share information)                                                                        2021                     2020
Income statement
Net interest income                                                                                                 $        42,934          $        43,360
Noninterest income                                                                                                           46,179                   42,168
Total revenue, net of interest expense                                                                                       89,113                   85,528
Provision for credit losses                                                                                                  (4,594)                  11,320
Noninterest expense                                                                                                          59,731                   55,213
Income before income taxes                                                                                                   33,976                   18,995
Income tax expense                                                                                                            1,998                    1,101
Net income                                                                                                                   31,978                   17,894
Preferred stock dividends                                                                                                     1,421                    1,421
Net income applicable to common shareholders                                                                        $        30,557          $        16,473

Per common share information
Earnings                                                                                                            $          3.60          $          1.88
Diluted earnings                                                                                                               3.57                     1.87
Dividends paid                                                                                                                 0.78                     0.72
Performance ratios
Return on average assets (1)                                                                                                   1.05  %                  0.67  %
Return on average common shareholders' equity (1)                                                                             12.23                     

6.76

Return on average tangible common shareholders' equity (2)                                                                    17.02                     9.48
Efficiency ratio (1)                                                                                                          67.03                    64.55

Balance sheet at year end
Total loans and leases                                                                                              $       979,124          $       927,861
Total assets                                                                                                              3,169,495                2,819,627
Total deposits                                                                                                            2,064,446                1,795,480
Total liabilities                                                                                                         2,899,429                2,546,703
Total common shareholders' equity                                                                                           245,358                  248,414
Total shareholders' equity                                                                                                  270,066                  272,924


(1)For definitions, see Key Metrics on page 169.
(2)Return on average tangible common shareholders' equity is a non-GAAP
financial measure. For more information and a corresponding reconciliation to
the most closely related financial measures defined by accounting principles
generally accepted in the United States of America (GAAP), see Non-GAAP
Reconciliations on page 85.

Net income was $32.0 billion or $3.57 per diluted share in 2021 compared to
$17.9 billion or $1.87 per diluted share in 2020. The increase in net income was
due to improvement in the provision for credit losses and higher revenue,
partially offset by higher noninterest expense.
For discussion and analysis of our consolidated and business segment results of
operations for 2020 compared to 2019, see the Financial Highlights and Business
Segment Operations sections in the MD&A of the Corporation's 2020 Annual Report
on Form 10-K.

Net Interest Income
Net interest income decreased $426 million to $42.9 billion in 2021 compared to
2020. Net interest yield on a fully taxable-equivalent (FTE) basis decreased 24
basis points (bps) to 1.66 percent for 2021. The decrease in net interest income
was primarily driven by lower interest rates and average loan balances,
partially offset by higher average balances of debt securities. For more
information on net interest yield and the FTE basis, see Supplemental Financial
Data on page 31, and for more information on interest rate risk management, see
Interest Rate Risk Management for the Banking Book on page 79.






        Bank of America 28

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Non-interest income

Table 2 Non-interest income

(Dollars in millions)                                    2021          2020
Fees and commissions:
Card income                                           $  6,218      $  5,656
Service charges                                          7,504         7,141
Investment and brokerage services                       16,690        14,574
Investment banking fees                                  8,887         7,180
Total fees and commissions                              39,299        34,551
Market making and similar activities                     8,691         8,355

Other income                                            (1,811)         (738)

Total noninterest income                              $ 46,179      $ 42,168

Non-interest income increased $4.0 billion for $46.2 billion in 2021 compared to 2020. The following highlights the significant changes.


?  Card income increased $562 million primarily driven by increased client
activity and merchant services revenue.
?  Service charges increased $363 million primarily due to higher treasury and
credit service charges and increased client activity.
?  Investment and brokerage services increased $2.1 billion primarily driven by
higher market valuations and assets under management (AUM) flows, partially
offset by declines in AUM pricing.
?  Investment banking fees increased $1.7 billion primarily due to higher
advisory fees as well as higher debt and equity issuance fees.
?  Market making and similar activities increased $336 million primarily driven
by strong sales and trading performance in Equities, partially offset by a
weaker performance in Fixed Income, Currencies and Commodities (FICC), which
benefited from a more favorable market environment in 2020.
?  Other income decreased $1.1 billion primarily due to a $704 million gain on
sales of certain mortgage loans in the prior year, as well as higher partnership
losses on tax credit investments.

Provision for Credit Losses
The provision for credit losses improved $15.9 billion to a benefit of $4.6
billion in 2021 compared to 2020. The benefit was primarily due to improvements
in the macroeconomic outlook and credit quality. For more information on the
provision for credit losses, see Allowance for Credit Losses on page 73.

Non-interest expenses


Table 3           Noninterest Expense

(Dollars in millions)                                          2021          2020
Compensation and benefits                                   $ 36,140      $ 32,725
Occupancy and equipment                                        7,138         7,141
Information processing and communications                      5,769        

5,222

Product delivery and transaction related                       3,881         3,433
Marketing                                                      1,939         1,701
Professional fees                                              1,775         1,694
Other general operating                                        3,089         3,297
Total noninterest expense                                   $ 59,731      $ 55,213


Noninterest expense increased $4.5 billion to $59.7 billion in 2021 compared to
2020. The increase was primarily due to higher compensation and benefits
expense, higher costs associated with processing transactional card claims
related to state unemployment benefits, a contribution to the Bank of America
Foundation and an impairment charge for real estate rationalization.

income tax expense

Table 4 Income tax expense

(Dollars in millions)                           2021           2020
Income before income taxes                   $ 33,976       $ 18,995
Income tax expense                              1,998          1,101
Effective tax rate                                5.9  %         5.8  %


Income tax expense was $2.0 billion for 2021 compared to $1.1 billion in 2020,
resulting in an effective tax rate of 5.9 percent compared to 5.8 percent.
The effective tax rates for 2021 and 2020 were driven by the impact of our
recurring tax preference benefits and positive income tax adjustments from the
impact of U.K. tax law changes discussed below. Our recurring tax preference
benefits primarily consist of tax credits from environmental, social and
governance (ESG) investments in affordable housing and renewable energy,
aligning with our responsible growth strategy to address global sustainability
challenges. Absent these tax credits, the impact of the U.K. tax law changes and
other discrete items, the effective tax rates would have been approximately 25
percent and 26 percent for 2021 and 2020.
In June 2021, the U.K. enacted the 2021 Finance Act, which included an increase
in the U.K. corporation income tax rate to 25 percent from 19 percent. This
change is effective April 1, 2023 and unfavorably affects income tax expense on
future U.K. earnings. In addition, in July 2020, the U.K. enacted a repeal of
the final two percent of scheduled decreases in the U.K. corporation income tax
rate. As a result, in 2021 and 2020, the Corporation recorded write-ups of U.K.
net deferred tax assets of approximately $2.0 billion and $700 million, with
corresponding positive income tax adjustments. These write-ups were reversals of
previously recorded write-downs of net deferred tax assets for prior changes in
the U.K. corporation income tax rate.

29 Bank of America

————————————————– ——————————


Balance Sheet Overview

Table 5                 Selected Balance Sheet Data

                                                                                 December 31
(Dollars in millions)                                                     2021                 2020              $ Change            % Change
Assets
Cash and cash equivalents                                            $   348,221          $   380,463          $ (32,242)                   (8) %
Federal funds sold and securities borrowed or purchased under
agreements to resell                                                     250,720              304,058            (53,338)                  (18)
Trading account assets                                                   247,080              198,854             48,226                    24
Debt securities                                                          982,627              684,850            297,777                    43
Loans and leases                                                         979,124              927,861             51,263                     6
Allowance for loan and lease losses                                      (12,387)             (18,802)             6,415                   (34)
All other assets                                                         374,110              342,343             31,767                     9
Total assets                                                         $ 3,169,495          $ 2,819,627          $ 349,868                    12
Liabilities
Deposits                                                             $ 2,064,446          $ 1,795,480          $ 268,966                    15
Federal funds purchased and securities loaned or sold under
agreements to repurchase                                                 192,329              170,323             22,006                    13
Trading account liabilities                                              100,690               71,320             29,370                    41
Short-term borrowings                                                     23,753               19,321              4,432                    23
Long-term debt                                                           280,117              262,934             17,183                     7
All other liabilities                                                    238,094              227,325             10,769                     5
Total liabilities                                                      2,899,429            2,546,703            352,726                    14
Shareholders' equity                                                     270,066              272,924             (2,858)                   (1)
Total liabilities and shareholders' equity                           $ 3,169,495          $ 2,819,627          $ 349,868                    12


Assets

At December 31, 2021, total assets were approximately $3.2 trillion, up $349.9
billion from December 31, 2020. The increase in assets was primarily due to
higher debt securities that were primarily funded by deposit growth, an increase
in loans and leases and higher trading account assets, partially offset by lower
federal funds sold and securities borrowed or purchased under agreements to
resell and cash and cash equivalents.

Cash and Cash Equivalents
Cash and cash equivalents decreased $32.2 billion primarily driven by higher
investments in debt securities.

Federal Funds Sold and Securities Borrowed or Purchased Under Agreements to
Resell
Federal funds transactions involve lending reserve balances on a short-term
basis. Securities borrowed or purchased under agreements to resell are
collateralized lending transactions utilized to accommodate customer
transactions, earn interest rate spreads and obtain securities for settlement
and for collateral. Federal funds sold and securities borrowed or purchased
under agreements to resell decreased $53.3 billion primarily due to the
investment of excess cash into debt securities.

Trading Account Assets
Trading account assets consist primarily of long positions in equity and
fixed-income securities including U.S. government and agency securities,
corporate securities and non-U.S. sovereign debt. Trading account assets
increased $48.2 billion primarily due to an increase in inventory within Global
Markets.

Debt Securities
Debt securities primarily include U.S. Treasury and agency securities,
mortgage-backed securities (MBS), principally agency MBS, non-U.S. bonds,
corporate bonds and municipal debt. We use the debt securities portfolio
primarily to manage interest rate and liquidity risk and to leverage market
conditions that create economically attractive returns on these investments.
Debt securities increased $297.8 billion primarily driven by the deployment of
deposit inflows. For more information on debt

securities, see Note 4 – Securities to the consolidated financial statements.


Loans and Leases
Loans and leases increased $51.3 billion primarily driven by growth in
commercial loans and higher securities-based lending within consumer loans. For
more information on the loan portfolio, see Credit Risk Management on page 59.

Allowance for Loan and Lease Losses
The allowance for loan and lease losses decreased $6.4 billion primarily due to
improvements in the macroeconomic outlook and credit quality. For more
information, see Allowance for Credit Losses on page 73.

All Other Assets
All other assets increased $31.8 billion primarily driven by higher margin loans
and loans held-for-sale (LHFS).

Passives

AT December 31, 2021total liabilities were approximately $2.9 trillionat the top
$352.7 billion from December 31, 2020mainly due to growth in deposits.

Deposits

Deposits increased $269.0 billion mainly due to an increase in retail and wholesale deposits.


Federal Funds Purchased and Securities Loaned or Sold Under Agreements to
Repurchase
Federal funds transactions involve borrowing reserve balances on a short-term
basis. Securities loaned or sold under agreements to repurchase are
collateralized borrowing transactions utilized to accommodate customer
transactions, earn interest rate spreads and finance assets on the balance
sheet. Federal funds purchased and securities loaned or sold under agreements to
repurchase increased $22.0 billion primarily driven by client activity within
Global Markets.

Trading Account Liabilities
Trading account liabilities consist primarily of short positions in equity and
fixed-income securities including U.S. Treasury and agency securities, corporate
securities and non-U.S. sovereign

Bank of America 30

————————————————– ——————————

debt. Trading account liabilities increased $29.4 billion mainly due to higher levels of short positions in global markets.


Short-term Borrowings
Short-term borrowings provide an additional funding source and primarily consist
of Federal Home Loan Bank (FHLB) short-term borrowings, notes payable and
various other borrowings that generally have maturities of one year or less.
Short-term borrowings increased $4.4 billion primarily due to an increase in
short-term commercial paper issuances to manage liquidity needs. For more
information on short-term borrowings, see Note 10 - Securities Financing
Agreements, Short-term Borrowings and Restricted Cash to the Consolidated
Financial Statements.

Long-term Debt
Long-term debt increased $17.2 billion primarily due to debt issuances,
partially offset by maturities, redemptions and valuation adjustments. For more
information on long-term debt, see Note 11 - Long-term Debt to the Consolidated
Financial Statements.

Shareholders' Equity
Shareholders' equity decreased $2.9 billion primarily due to returns of capital
to shareholders through common stock repurchases and common and preferred stock
dividends, market value decreases on derivatives and debt securities and the
redemption of preferred stock, partially offset by net income.

Cash Flows Overview
The Corporation's operating assets and liabilities support our global markets
and lending activities. We believe that cash flows from operations, available
cash balances and our ability to generate cash through short- and long-term debt
are sufficient to fund our operating liquidity needs. Our investing activities
primarily include the debt securities portfolio and loans and leases. Our
financing activities reflect cash flows primarily related to customer deposits,
securities financing agreements, long-term debt and common and preferred stock.
For more information on liquidity, see Liquidity Risk on page 54.

Additional financial data


Non-GAAP Financial Measures
In this Form 10-K, we present certain non-GAAP financial measures. Non-GAAP
financial measures exclude certain items or otherwise include components that
differ from the most directly comparable measures calculated in accordance with
GAAP. Non-GAAP financial measures are provided as additional useful information
to assess our financial condition, results of operations (including
period-to-period operating performance) or compliance with prospective
regulatory requirements. These non-GAAP financial measures are not intended as a
substitute for GAAP financial measures and may not be defined or calculated the
same way as non-GAAP financial measures used by other companies.
We view net interest income and related ratios and analyses on an FTE basis,
which when presented on a consolidated basis are non-GAAP financial measures. To
derive the FTE basis, net interest income is adjusted to reflect tax-exempt
income on an equivalent before-tax basis with a corresponding increase in income
tax expense. For purposes of this calculation, we use the federal statutory tax
rate of 21 percent and a representative state tax rate. Net interest yield,
which measures the basis points we earn over the cost of funds, utilizes net
interest income on an FTE basis. We believe that presentation of these items on
an FTE basis allows for comparison of amounts from
both taxable and tax-exempt sources and is consistent with industry practices.
We may present certain key performance indicators and ratios excluding certain
items (e.g., debit valuation adjustment (DVA) gains (losses)) which result in
non-GAAP financial measures. We believe that the presentation of measures that
exclude these items is useful because such measures provide additional
information to assess the underlying operational performance and trends of our
businesses and to allow better comparison of period-to-period operating
performance.
We also evaluate our business based on certain ratios that utilize tangible
equity, a non-GAAP financial measure. Tangible equity represents shareholders'
equity or common shareholders' equity reduced by goodwill and intangible assets
(excluding mortgage servicing rights (MSRs)), net of related deferred tax
liabilities ("adjusted" shareholders' equity or common shareholders' equity).
These measures are used to evaluate our use of equity. In addition,
profitability, relationship and investment models use both return on average
tangible common shareholders' equity and return on average tangible
shareholders' equity as key measures to support our overall growth objectives.
These ratios are as follows:

?  Return on average tangible common shareholders' equity measures our net
income applicable to common shareholders as a percentage of adjusted average
common shareholders' equity. The tangible common equity ratio represents
adjusted ending common shareholders' equity divided by total tangible assets.
?  Return on average tangible shareholders' equity measures our net income as a
percentage of adjusted average total shareholders' equity. The tangible equity
ratio represents adjusted ending shareholders' equity divided by total tangible
assets.
?  Tangible book value per common share represents adjusted ending common
shareholders' equity divided by ending common shares outstanding.

We believe ratios utilizing tangible equity provide additional useful
information because they present measures of those assets that can generate
income. Tangible book value per common share provides additional useful
information about the level of tangible assets in relation to outstanding shares
of common stock.
The aforementioned supplemental data and performance measures are presented in
Tables 6 and 7.
For more information on the reconciliation of these non-GAAP financial measures
to the corresponding GAAP financial measures, see Non-GAAP Reconciliations on
page 85.

Key Performance Indicators
We present certain key financial and nonfinancial performance indicators (key
performance indicators) that management uses when assessing our consolidated
and/or segment results. We believe they are useful to investors because they
provide additional information about our underlying operational performance and
trends. These key performance indicators (KPIs) may not be defined or calculated
in the same way as similar KPIs used by other companies. For information on how
these metrics are defined, see Key Metrics on page 169.
Our consolidated key performance indicators, which include various equity and
credit metrics, are presented in Table 1 on page 28, Table 6 on page 32 and
Table 7 on page 33.
For information on key segment performance metrics, see Business Segment
Operations on page 36.

31 Bank of America

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TRONOX HOLDINGS PLC Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-K) https://freebassuk.com/tronox-holdings-plc-managements-discussion-and-analysis-of-financial-condition-and-results-of-operations-form-10-k/ Tue, 22 Feb 2022 13:48:05 +0000 https://freebassuk.com/tronox-holdings-plc-managements-discussion-and-analysis-of-financial-condition-and-results-of-operations-form-10-k/ The following discussion should be read in conjunction with Tronox Holdings plc's consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. This discussion and other sections in this Annual Report on Form 10-K contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, […]]]>
The following discussion should be read in conjunction with Tronox Holdings
plc's consolidated financial statements and the related notes included elsewhere
in this Annual Report on Form 10-K. This discussion and other sections in this
Annual Report on Form 10-K contain forward-looking statements, within the
meaning of the Private Securities Litigation Reform Act of 1995, that involve
risks and uncertainties, and actual results could differ materially from those
discussed in the forward-looking statements as a result of numerous
factors. Forward-looking statements provide current expectations of future
events based on certain assumptions and include any statement that does not
directly relate to any historical or current fact. Forward-looking
statements also can be identified by words such as "future," "anticipates,"
"believes," "estimates," "expects," "intends," "plans," "predicts," "will,"
"would," "could," "can," "may," and similar terms. There are important factors
that could cause our actual results, level of activity, performance or
achievements to differ materially from the results, level of activity,
performance or achievements expressed or implied by the forward-looking
statements. In particular, you should consider the numerous risks and
uncertainties outlined in Item 1A. "Risk Factors."

This Management's Discussion and Analysis of Financial Condition and Results of
Operations contains certain financial measures, in particular the presentation
of earnings before interest, taxes, depreciation and amortization ("EBITDA") and
Adjusted EBITDA, which are not presented in accordance with
accounting principles generally accepted in the United States ("U.S. GAAP"). We
are presenting these non-U.S. GAAP financial measures because we believe they
provide us and readers of this Form 10-K with additional insight into our
operational performance relative to earlier periods and relative to our
competitors. We do not intend for these non-U.S. GAAP financial measures to be a
substitute for any U.S. GAAP financial information. Readers of these statements
should use these non-U.S. GAAP financial measures only in conjunction with the
comparable U.S. GAAP financial measures. A reconciliation of net income (loss)
to EBITDA and Adjusted EBITDA is also provided herein.

Executive Overview


Tronox Holdings plc (referred to herein as "Tronox", "we", "us", or "our")
operates titanium-bearing mineral sand mines and beneficiation operations in
Australia, South Africa and Brazil to produce feedstock materials that can be
processed into TiO2 for pigment, high purity titanium chemicals, including
titanium tetrachloride, and Ultrafine© titanium dioxide used in certain
specialty applications. It is our long-term strategic goal to be vertically
integrated and consume all of our feedstock materials in our own nine TiO2
pigment facilities which we operate in the United States, Australia, Brazil, UK,
France, the Netherlands, China and the Kingdom of Saudi Arabia ("KSA"). We
believe that vertical integration is the best way to achieve our ultimate goal
of delivering low cost, high-quality pigment to our coatings and other TiO2
customers throughout the world. The mining, beneficiation and smelting of
titanium bearing mineral sands creates meaningful quantities of zircon and pig
iron, which we also supply to customers around the world.

We are a public limited company listed on the New York Stock Exchange and are registered under the laws of England and Wales.

Working environment

The following analysis includes trends and factors that could affect future results of operations:


Throughout the current COVID-19 pandemic, our operations have been designated as
essential to support the continued manufacturing of products such as food and
medical packaging, medical equipment, pharmaceuticals, and personal protective
gear.

The fourth quarter of 2021 results were driven by robust demand across our end
markets, with the supply to demand balance remaining tight due to below
seasonally normal levels of TiO2, production challenges caused by supplier force
majeures and delivery times extended by shipping delays. Fourth quarter revenue
increased 13% compared to the prior year, driven by higher TiO2, Zircon and pig
iron prices. On a year over year basis, TiO2 average selling prices increased
17% on a local currency basis and 15% on a US dollar basis and Zircon average
selling prices increased 26%. Both TiO2 and Zircon sales volumes remained
relatively flat in line with prior year levels. Revenue from feedstock and other
products decreased 11% on a year over year basis due to the internal consumption
of all feedstocks in the quarter compared to the prior year, partially offset by
increased pig iron revenue from higher average selling prices. Sequentially,
revenue increased 2% in the fourth quarter of 2021 compared to the third quarter
of 2021, as price increases of TiO2, Zircon and pig iron were partially offset
by volume declines of TiO2 and Zircon. TiO2 average selling prices grew 3%
sequentially on a US dollar basis and 4% on a local currency basis. TiO2 volumes
were
                                       38
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constrained by global logistics challenges and supply chain and certain raw
material availability that resulted in a 4% sequential decline. Revenue from
Zircon sales increased 3% sequentially, as a 9% increase in average selling
prices due to improved pricing, was partially offset by 6% lower sales volumes.
Feedstock and other product revenues increased 26% sequentially mainly due to
both higher pig iron volumes and selling prices.

Gross profit decreased sequentially from the third quarter to the fourth quarter
of 2021 due to lower sales volumes of TiO2 and Zircon, higher production costs
due to transitory inflation and increased freight rates, partially offset by
favorable impacts of average selling prices. Gross profit increased year over
year due to the increase in average selling prices of TiO2, Zircon and pig iron
and the favorable impact of sales volumes and product mix partially offset by
unfavorable impacts of foreign currency as well as higher production costs and
increased freight rates partially offset by favorable overhead absorption and
cost savings.

From December 31, 2021our total available liquidity was $677 millionincluding $228 million in cash and cash equivalents and $449 million available under revolving credit agreements.


During the year ended December 31, 2021, we made several discretionary
prepayments on our debt facilities primarily on the New Term Loan Facility and
Standard Bank Term Loan Facility. During the fourth quarter of 2021, we made an
additional $202 million of voluntary prepayments on our New Term Loan Facility.
As of December 31, 2021, our total debt was $2.6 billion and net debt to
trailing-twelve month Adjusted EBITDA was 2.5x. The Company also has no
financial covenants on its term loan or bonds and only one springing financial
covenant on its Cash Flow revolver facility, which we do not expect to be
triggered based on our current scenario planning.

Consolidated operating results from continuing operations

Year ended December 31, 2021 Compared to the year ended December 31, 2020

                                                                             Reported Amounts
                                                                         Year Ended December 31,
                                                                 2021             2020            Variance
                                                                        (Millions of U.S. Dollars)
Net sales                                                     $ 3,572          $ 2,758          $  814
Cost of goods sold                                              2,677            2,137             540
Gross profit                                                  $   895          $   621          $  274
Gross Margin                                                     25.1  %          22.5  %          2.6   pts

Selling, general and administrative expenses                      318              347             (29)
Restructuring                                                       -                3              (3)
Income from operations                                            577              271             306
Interest expense                                                 (157)            (189)             32
Interest income                                                     7                8              (1)
Loss on extinguishment of debt                                    (65)              (2)            (63)
Other income, net                                                  12               26             (14)
Income from continuing operations before income taxes             374              114             260
Income tax (provision) benefit                                    (71)             881            (952)
Net income from continuing operations                         $   303       

$995 ($692)


Effective tax rate                                                 19  %          (773) %            792 pts

EBITDA(1)                                                     $   821          $   599          $  222
Adjusted EBITDA(1)                                            $   947          $   668          $  279
Adjusted EBITDA as % of Net Sales                                26.5  %          24.2  %          2.3   pts


_____________________

(1)  EBITDA and Adjusted EBITDA are Non-U.S. GAAP financials measures. Please
refer to the "Non-U.S. GAAP Financial Measures" section of this Management's
Discussion and Analysis of Financial Condition and Results of Operations for a
discussion of these measures and a reconciliation of these measures to Net
income (loss) from continuing operations.
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Net sales of $3,572 million for the year ended December 31, 2021 increased by
30% compared to $2,758 million for the same period in 2020. Revenue increased
primarily due to both higher TiO2 and Zircon sales volumes and average selling
prices. Net sales by type of product for the years ended December 31, 2021 and
2020 were as follows:

The table below shows reported revenues by product:

                                                   Year Ended
                                                  December 31,
(Millions of dollars, except percentages)      2021         2020        Variance       Percentage
TiO2                                         $ 2,793      $ 2,176      $     617             28  %
Zircon                                           478          283            195             69  %
Feedstock and other products                     301          299              2              1  %
Total net sales                              $ 3,572      $ 2,758      $     814             30  %


For the year ended December 31, 2021, TiO2 revenue increased $617 million, or
28%, compared to the prior year due to a $369 million increase in sales volumes
and an increase of $217 million in average selling prices. Foreign currency
positively impacted TiO2 revenue by $31 million due primarily to the
strengthening of the Euro. Zircon revenues increased $195 million primarily due
to a 55% increase in sales volumes and a 9% increase in average selling prices.
Feedstock and other products revenue increased $2 million primarily due to an
increase in average selling prices and sales volumes of pig iron partially
offset by a decrease in sales volumes of CP slag and other feedstocks.

Gross profit of $895 million for the year ended December 31, 2021 was 25.1% of net sales compared to 22.5% of net sales for the same period in 2020. The increase in gross margin is mainly due to:

•the favorable impact of approximately 8 points due to the increase in the selling prices of TiO2, Zircon and cast iron;

•the favorable impact of around 1 point on the volume of sales and the product mix;


•the net unfavorable impact of approximately 4 points due to changes in foreign
exchange rates, primarily due to the South African Rand and Australian dollar;
and

•the net unfavorable impact of approximately 2 points due to higher production
costs and increased freight rates offset by favorable overhead absorption and
cost savings.

Selling, general and administrative ("SG&A") expenses decreased $29 million when
comparing the year ended December 31, 2021 to the prior year. The SG&A expenses
decrease was primarily driven by $29 million of lower professional fees and
lower integration costs of $9 million, partially offset by $16 million of
increased employee costs primarily driven by higher incentive compensation. The
remaining net decrease was driven by individually immaterial amounts.

Income from operations for the year ended December 31, 2021 of $577 million,
increased by $306 million or 113% compared to the same period in 2020 which is
primarily attributable to the higher gross margin and lower selling, general and
administrative expenses.

Adjusted EBITDA as a percentage of net sales was 26.5% for the year ended
December 31, 2021, an increase of 2.3 points from 24.2% in the prior year. On a
reported basis, the higher gross profit and lower SG&A expenses as discussed
above were the primary drivers of the year-over-year increase in Adjusted EBITDA
percentage.

Interest expense for the year ended December 31, 2021 decreased $32 million
compared to the same period in 2020. The decrease is primarily due to the
following: 1) lower average debt outstanding balances and lower average interest
rates on the New Term Loan Facility as compared to the Prior Term Loan Facility,
2) lower average debt outstanding balance on the New Standard Bank Term Loan
Facility as compared to the Prior Standard Bank Term Loan Facility, and 3) lower
average interest rates on the Senior Notes due 2029 as compared to the Senior
Notes due 2025 and the Senior Notes due 2026. These decreases in interest
expense are partially offset by the four months of additional interest expense
in the current year associated with the 6.5% Senior Secured Notes due 2025,
which were issued on May 1, 2020.

Interest income for the year ended December 31, 2021 decreased by $1 million
compared to the prior year primarily due to lower cash balances from the use of
cash to paydown the New Term Loan Facility, the Standard Bank Term Loan Facility
and the Tikon Loan.

Loss on extinguishment of debt of $65 million for the year ended December 31,
2021 is primarily comprised of the following: 1) call premiums paid of $21
million and $19 million in relation to the refinancing of our $615 million
Senior Notes due 2026 and our $450 million Senior Notes due 2025, respectively,
2) the write-off of certain existing debt issuance costs and original issue
discount as well as certain new lender and other third party fees associated
with the refinancing of our new revolver
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and term loan and issuance of our new senior notes due 2029 and 3) approximately
$9 million write-off of existing debt issuance costs and original issue discount
as a result of the $398 million voluntary prepayments made on the New Term Loan
Facility.

Other income, net for the year ended December 31, 2021 primarily consisted of
$16 million net realized and unrealized foreign currency gains, $8 million
associated with the monthly technical service fee relating to the Jazan slagger
we receive from AMIC, and $5 million of pension income primarily due to the
expected return on plan assets offset by pension related interest costs and
amortization of actuarial gain/losses partially offset by $18 million related to
the breakage fee associated with the termination of the TTI acquisition. The
foreign currency gains were primarily related to the South African Rand and the
Australian dollar due to the remeasurement of our U.S. dollar denominated
working capital and other long-term obligations partially offset by the impact
of our foreign currency derivatives.

We maintain full valuation allowances related to the total net deferred tax
assets in Australia, Switzerland and the United Kingdom. The provisions for
income taxes associated with these jurisdictions include no tax benefits with
respect to losses incurred and tax expense only to the extent of current tax
payments. Additionally, we have valuation allowances against other specific tax
assets.

The effective tax rate was 19% and (773)% for the years ended December 31, 2021
and 2020, respectively. The large negative effective tax rate for the year ended
December 31, 2020 is caused by the release of valuation allowances for deferred
tax assets in the U.S. and Brazil, partially offset by the recording of
valuation allowances in Saudi Arabia and the U.K. The net impact was $905
million benefit to the income tax provision. Refer to Note 8 of notes to
consolidated financial statements for further information. Additionally, the
effective tax rates for the years ended December 31, 2021 and 2020 are
influenced by a variety of factors, primarily income and losses in jurisdictions
with valuation allowances, disallowable expenditures, prior year accruals, and
our jurisdictional mix of income at tax rates different than the U.K. statutory
rate.

Year ended December 31, 2020 Compared to the year ended December 31, 2019


A discussion of our results of operations for the year ended December 31, 2020
versus December 31, 2019 is included in Part II, Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Results of Operation", included in our Annual Report on Form 10-K for the year
ended December 31, 2020.

Other comprehensive income (loss)


There was an other comprehensive loss of $104 million for the year ended
December 31, 2021 compared to other comprehensive loss of $20 million for the
year ended December 31, 2020. This increase in comprehensive loss was primarily
driven by unfavorable movements of foreign currency translation adjustments of
$113 million for the year ended December 31, 2021 as compared to unfavorable
foreign currency translation adjustments of $4 million in the prior year. In
addition, we recognized net losses on derivative instruments of $11 million in
the year ended December 31, 2021 as compared to none in the prior year. These
losses were partially offset by $20 million of pension and postretirement gains
for the year ended December 31, 2021 as compared to $16 million of pension and
postretirement losses for the prior year.

A discussion of our comprehensive (loss) income for the year ended December 31,
2020 versus December 31, 2019 is included in Part II, Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations - Other
Comprehensive (Loss) Income", included in our Annual Report on Form 10-K for the
year ended December 31, 2020.

Cash and capital resources

In 2021, our liquidity decreased by $364 million for $677 million.

The table below shows our liquidity, including amounts available under our credit facilities, as of the following dates:

                                                December 31,       December 31,
                                                    2021               2020
Cash and cash equivalents                      $         228      $         619
Available under the Wells Fargo Revolver                   -                

285

Available under the new Cash Flow Revolver               329                

Available under the Standard Credit Facility              63                

68

Available under the Emirates Revolver                     38                

50

Available under the SABB Facility                         19                 19
Total                                          $         677      $       1,041



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Historically, we have funded our operations and met our commitments through cash
generated by operations, issuance of unsecured notes, bank financings and
borrowings under lines of credit. In the next twelve months, we expect that our
operations will provide sufficient cash for our operating expenses, capital
expenditures, interest payments and debt repayments, however, if necessary, we
have the ability to borrow under our debt and revolving credit agreements (see
Note 15 of notes to consolidated financial statements). This is predicated on
our achieving our forecast which could be negatively impacted by items outside
of our control, in particular, macroeconomic conditions including the economic
impacts caused by continued impact of the COVID-19 pandemic. Consistent with our
actions in 2020 in response to the COVID-19 pandemic, if negative events occur
in the future, we may need to reduce our capital spend, cut back on operating
costs, and other items within our control to maintain appropriate liquidity.

Working capital (calculated as current assets less current liabilities) was
$1.2 billion at December 31, 2021, compared to $1.7 billion at December 31,
2020. The decrease year over year is primarily due to the decrease in cash as we
made several voluntary prepayments on our debt obligations as is discussed below
and in Note 15 of notes to consolidated financial statements and reductions in
inventories as the supply / demand balance remains tight due to continued strong
demand.

As of and for the year ended December 31, 2021, the non-guarantor subsidiaries
of our 6.5% Senior Secured Notes and our Senior Notes due 2029 represented
approximately 20% of our total consolidated liabilities, approximately 25% of
our total consolidated assets, approximately 44% of our total consolidated net
sales and approximately 49% of our Consolidated EBITDA (as such term is defined
in 6.5% Senior Secured Notes Indenture and the 2029 Indenture). In addition, as
of December 31, 2021, our non-guarantor subsidiaries had $777 million of total
consolidated liabilities (including trade payables but excluding intercompany
liabilities), all of which would have been structurally senior to the 6.5%
Senior Secured Notes and the 2029 Notes. See Note 15 of notes to consolidated
financial statements for additional information.

AT December 31, 2021we had outstanding letters of credit and bank guarantees $53 million. See note 15 of the notes to the consolidated financial statements.


Principal factors that could affect our ability to obtain cash from external
sources include (i) debt covenants that limit our total borrowing capacity; (ii)
increasing interest rates applicable to our floating rate debt; (iii) increasing
demands from third parties for financial assurance or credit enhancement; (iv)
credit rating downgrades, which could limit our access to additional debt; (v) a
decrease in the market price of our common stock and debt obligations; and (vi)
volatility in public debt and equity markets.

As of December 31, 2021, our credit rating with Moody's was B1 stable outlook
unchanged from December 31, 2020. Starting in the first quarter of 2021 and
through December 31, 2021, our credit rating with Standard & Poor's changed
positively to B stable and further changed positively to Ba3 during the first
quarter of 2022. See Note 15 of notes to consolidated financial statements.

Cash and cash equivalents


We consider all investments with original maturities of three months or less to
be cash equivalents. As of December 31, 2021, our cash and cash equivalents were
invested in money market funds and we also receive earnings credits for some
balances left in our bank operating accounts. We maintain cash and cash
equivalents in bank deposit and money market accounts that may exceed federally
insured limits. The financial institutions where our cash and cash equivalents
are held are highly rated and geographically dispersed, and we have a policy to
limit the amount of credit exposure with any one institution. We have not
experienced any losses in such accounts and believe we are not exposed to
significant credit risk.

The use of our cash includes payment of our operating expenses, capital
expenditures, servicing our interest and debt repayment obligations, making
pension contributions and making quarterly dividend payments. On November 9,
2021, we updated our capital allocation policy and announced that our Board of
Directors had authorized the repurchase of up to $300 million of the Company's
ordinary shares through February 2024. Under the updated policy, the Board
intends to increase the annual dividend to $0.50 per share beginning with the
first quarterly dividend in 2022. We also expect to continue to invest in our
businesses through cost reduction, as well as growth and vertical
integration-related capital expenditures including projects such as newTRON and
various mine development projects as well as continued reductions in our debt.

Cash repatriation


At December 31, 2021, we held $228 million in cash and cash equivalents in these
respective jurisdictions: $5 million in the United States, $54 million in South
Africa, $59 million in Australia, $30 million in Brazil, $40 million in Saudi
Arabia, $19 million in China, and $21 million in Europe. Our credit facilities
limit transfers of funds from subsidiaries in the United States to certain
foreign subsidiaries. In addition, at December 31, 2021, we held $4 million of
restricted cash of which $3 million is in Australia related to performance bonds
and $1 million is in Saudi Arabia related to vendor supply agreement guarantees.
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Tronox Holdings plc has foreign subsidiaries with undistributed earnings at
December 31, 2021. We have made no provision for deferred taxes related to these
undistributed earnings because they are considered indefinitely reinvested in
the foreign jurisdictions.

Debt Obligations

In March 2021, the Company closed the refinancing of its existing first lien
term loan credit agreement with a new seven-year first lien term loan credit
facility (the "New Term Loan Facility") and existing revolving syndicated
facility agreement with a new five-year cash flow revolving facility (the "New
Revolving Facility"). Pursuant to the New Term Loan Facility, the Company's
wholly owned subsidiary, Tronox Finance LLC borrowed $1,300 million of first
lien term loans. Pursuant to the New Revolving Facility, the lenders thereunder
have agreed to provide revolving commitments of $350 million. The Company also
paid down approximately $313 million, with cash on hand, of debt in conjunction
with the refinancing transaction. Refer to Note 15 of notes to consolidated
financial statements for further details.

On March 15, 2021, Tronox Incorporated, a wholly-owned indirect subsidiary of
the Company, issued its 4.625% senior notes due 2029 for an aggregate principal
amount of $1,075 million. The net proceeds was used to fund the redemption in
full on March 31, 2021 of the Company's outstanding $615 million aggregate
principal amount of 6.50% senior notes due 2026 and the redemption in full on
April 1, 2021 of Company's outstanding $450 million aggregate principal amount
of 5.75% senior notes due 2025. Refer to Note 15 of notes to consolidated
financial statements for further details.

On October 1, 2021, Tronox Minerals Sands Proprietary Limited, a wholly-owned
indirect subsidiary of the Company, entered into an amendment and restatement of
a new credit facility with Standard Bank. The new credit facility provides the
Company with (a) a new five-year term loan facility in an aggregate principal
amount of R1.5 billion (approximately $98 million) (the "New Standard Bank Term
Loan Facility") and (b) a new three-year revolving credit facility (the "New
Standard Bank Revolving Credit Facility") providing initial revolving
commitments of R1.0 billion (approximately $63 million at December 31, 2021
exchange rate). As a result of the amended facility, the Company repaid the
remaining outstanding principal balance of R390 million (approximately $26
million) of the Standard Bank Term Loan Facility on September 30, 2021 and we
drewdown the R1.5 billion (approximately $98 million) on the new term loan
facility in November 2021.

During the year ended December 31, 2021, the Company made several voluntary
prepayments totaling $398 million on the New Term Loan Facility. As a result of
these voluntary prepayments, the Company recorded $9 million in "Loss on
extinguishment of debt" within the Consolidated Statement of Operations for the
year ended December 31, 2021.

During the year ended December 31, 2021, the Company made several voluntary
prepayments totaling R1,040 million (approximately $69 million) on the Prior
Standard Bank Term Loan Facility. Additionally, on September 30, 2021, in
conjunction with the Company's refinancing of the Prior Standard Bank Term Loan
Facility, the Company repaid the remaining outstanding principal balance of R390
million (approximately $26 million). During the year ended December 31, 2021,
the Company repaid the remaining outstanding principal balance of CNY 111
million (approximately $17 million) on the Tikon loan. No prepayment penalties
were required as a result of these principal prepayments.

On a consolidated basis, no additional debt has been incurred as a result of the above debt refinancing transactions.

AT December 31, 2021 and 2020, our long-term debt, net of unamortized discount and debt issuance costs, was $2.6 billion and $3.3 billionrespectively.


At December 31, 2021 and 2020, our net debt (the excess of our debt over cash
and cash equivalents) was $2.3 billion and $2.7 billion, respectively. See Note
15 of notes to consolidated financial statements.

Cash flow

Completed exercises December 31, 2021 and 2020

The following table presents the cash flows for the periods indicated:

                                                                         Year Ended December 31,
                                                                         2021                  2020
                                                                        (Millions of U.S. dollars)
Net cash provided by operating activities                          $          740          $     355
Net cash used in investing activities                                        (269)              (229)
Net cash (used in) provided by financing activities                          (877)               214
Effect of exchange rate changes on cash                                       (10)                (3)
Net (decrease) increase in cash and cash equivalents               $        

(416) $337

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Cash Flows provided by Operating Activities - Cash provided by our operating
activities is driven by net income adjusted for non-cash items and changes in
working capital items. The following table summarizes our net cash provided by
operating activities for 2021 and 2020:
                                                                         Year Ended December 31,
                                                                         2021                 2020
                                                                       (Millions of U.S. dollars)
Net income                                                         $       

303 $995
Net adjustments to reconcile net income (loss) to net cash provided by operating activities

                                             455               (488)
Income related cash generation                                               758                507
Net change in assets and liabilities                                         (18)              (152)
Net cash provided by our operating activities                      $        

740 $355




Net cash provided by operating activities was $740 million in 2021 as compared
to $355 million in 2020. The increase of $385 million period over period is
primarily due to a $251 million improvement in net income net of non-cash
adjustments and a decrease of $134 million use of cash for net assets and
liabilities. The lower use of cash for working capital was primarily driven by
decreases in inventories and prepaid and other current assets of $74 million and
$82 million, respectively, and an increase in account payable and accrued
liabilities of $36 million partially offset by an increase in accounts
receivable of $59 million and an increased use of cash in long-term other assets
and liabilities of $10 million.

Cash Flows used in Investing Activities - Net cash used in investing activities
for the year ended December 31, 2021 was $269 million as compared to
$229 million for the year ended December 31, 2020. The $40 million increase in
use of cash year over year is primarily driven by higher capital expenditures of
$272 million. The prior year also included $36 million for a loan to AMIC
related to a titanium slag smelter facility (see Note 24 of notes to
consolidated financial statements) of which there was no comparable amount in
the current year.

Cash Flows (used in) provided by Financing Activities - Net cash used in
financing activities during the year ended December 31, 2021 was $877 million as
compared to cash provided by financing activities of $214 million for the year
ended December 31, 2020. The current year is primarily comprised of repayments
of long-term debt of $3 billion partially offset by proceeds from long-term debt
of $2 billion due to the various debt refinancing transactions that occurred
during the current year (refer to Note 15 of notes to consolidated financial
statements) as well as the Company's continued focus on making discretionary
debt repayments in order to achieve its previously stated gross debt target. As
a result of the debt refinancing transactions, there was a $77 million use of
cash for debt issuance costs and call premiums paid in 2021 as compared to $10
million in 2020. Additionally, dividends paid were $65 million during the year
ended December 31, 2021 as compared to $40 million in the same period of 2020.

Completed exercises December 31, 2020 and 2019


A discussion of our cash flows for the year ended December 31, 2020 versus 2019
is included in Part II, Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Cash Flows", included in our
Annual Report on Form 10-K for the year ended December 31, 2020.

Contractual obligations

The following table presents information relating to our contractual obligations as of December 31, 2021:

Payments of contractual obligations due by period(3)

                                                                 Less than            1-3             3-5             More than
                                                Total             1 year             years           years             5 years
                                                                         (Millions of U.S. dollars)
Long-term debt and lease financing (including
interest)(1)                                  $ 3,370          $      151          $  303          $   757          $    2,159
Purchase obligations(2)                           655                 231             209              157                  58
Operating leases                                  226                  34              42               29                 121
Pension and other post-retirement benefit
obligations(4)                                    312                  37              65               64                 146
Asset retirement obligations(5)                   446                  17              26               25                 378
Total                                         $ 5,009          $      470          $  645          $ 1,032          $    2,862


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__________________

(1)We have calculated interest on the new term loan facility at LIBOR plus a margin of 2.25%. See Note 15 of the Notes to our Consolidated Financial Statements.


(2)Includes obligations to purchase requirements of process chemicals, supplies,
utilities and services. We have various purchase commitments for materials,
supplies, and services entered into in the ordinary course of business. Included
in the purchase commitments table above are contracts, which require minimum
volume purchases that extend beyond one year or are renewable annually and have
been renewed for 2022. Certain contracts allow for changes in minimum required
purchase volumes in the event of a temporary or permanent shutdown of a
facility. We believe that all of our purchase obligations will be utilized in
our normal operations.

(3)The table excludes contingent obligations, as well as any possible payments
for uncertain tax positions given the inability to estimate the possible amounts
and timing of any such payments.

(4)Pension and other post-retirement benefit ("OPEB") obligations of $312
million include estimates of pension plan contributions and expected future
benefit payments for unfunded pension and OPEB plans. Pension plan contributions
are forecasted for 2022 only. Expected future unfunded pension and OPEB benefit
payments are forecasted only through 2031. Contribution and unfunded benefit
payment estimates are based upon current valuation assumptions. Estimates of
pension contributions after 2022 and unfunded benefit payments after 2031 are
not included in the table because the timing of their resolution cannot be
estimated. Refer to Note 23 in notes to consolidated financial statements for
further discussion on our pension and OPEB plans.

(5) Asset retirement obligations are presented at undiscounted and uninflated values.

No-we GAAP Financial Measures


EBITDA and Adjusted EBITDA, which are used by management to measure performance,
are not presented in accordance with U.S. GAAP. We define EBITDA as net income
(loss) excluding the impact of income taxes, interest expense, interest income
and depreciation, depletion and amortization. We define Adjusted EBITDA as
EBITDA excluding the impact of nonrecurring items such as restructuring charges,
gain or loss on debt extinguishments, impairment charges, gains or losses on
sale of assets, acquisition-related transaction costs and pension settlements
and curtailment gains or losses. Adjusted EBITDA also excludes non-cash items
such as share-based compensation costs and pension and postretirement costs.
Additionally, we exclude from Adjusted EBITDA, realized and unrealized foreign
currency remeasurement gains and losses.

Management believes that EBITDA and Adjusted EBITDA is useful to investors, as
it is commonly used in the industry as a means of evaluating operating
performance. We do not intend for these non-U.S. GAAP financial measures to be a
substitute for any U.S. GAAP financial information. Readers of these statements
should use these non-U.S. GAAP financial measures only in conjunction with the
comparable U.S. GAAP financial measures. Since other companies may calculate
EBITDA and Adjusted EBITDA differently than we do, EBITDA and Adjusted EBITDA,
as presented herein, may not be comparable to similarly titled measures reported
by other companies. Management believes these non-U.S. GAAP financial measures:

• reflect our ongoing operations in a manner that permits meaningful period-to-period comparison and analysis of trends in our operations, as they exclude revenues and expenses that do not reflect current operating results. Classes ;

•provide useful information to understand and evaluate our results of operations and compare financial results from period to period; and

•provide a normalized view of our operating performance by excluding non-monetary or infrequent items.


Adjusted EBITDA is one of the primary measures management uses for planning and
budgeting processes, and to monitor and evaluate financial and operating
results. In addition, Adjusted EBITDA is a factor in evaluating management's
performance when determining incentive compensation.
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The following table reconciles net income (loss) to EBITDA and Adjusted EBITDA
for the periods presented:
                                                                       Year Ended December 31,
                                                               2021              2020              2019
Net income (loss), (U.S. GAAP)                             $     303        

$995 ($97)
Income from discontinued operations, net of tax (see Note 6), (we GAAP)

                                                    -                 -                 5

Net income (loss) from continuing operations, (we GAAP) 303

       995              (102)
Interest expense                                                 157               189               201
Interest income                                                   (7)               (8)              (18)
Income tax provision                                              71              (881)               14
Depreciation, depletion and amortization expense                 297               304               280
EBITDA (non-U.S. GAAP)                                           821               599               375
Inventory step-up(a)                                               -                 -                98
Contract loss(b)                                                   -                 -                19
Share-based compensation(c)                                       31                30                32
Transaction costs(d)                                              18                14                32
Restructuring(e)                                                   -                 3                22
Integration costs(f)                                               -                10                16
Loss on extinguishment of debt(g)                                 65                 2                 3
Foreign currency remeasurement(h)                                (16)               (4)               (6)
Pension settlement and curtailment gains(i)                        -                (2)               (1)
Costs associated with Exxaro deal(j)                               6                 -                 4
Costs associated with former CEO retirement(k)                     1                 -                 -
Gain on asset sale(l)                                             (2)                -                 -
Office closure costs(m)                                            3                 -                 -
Insurance proceeds(n)                                              -               (11)                -
Other items(o)                                                    20                27                21
Adjusted EBITDA (non-U.S. GAAP)                            $     947          $    668          $    615


________________

(a) The amount for 2019 represents a pre-tax charge related to the recognition of an increase in the value of inventories following the recognition of purchases.

(b) The 2019 amount represents a pre-tax charge for estimated losses we expect to incur under the supply agreement with Venator. See Note 3 of the notes to the consolidated financial statements.

(c) Represents non-cash stock-based compensation. See note 22 of the notes to the consolidated financial statements.


(d)2021 amount represents the breakage fee and other costs associated with the
termination of the TTI transaction which were primarily recorded in "Other
income (expense)" in the Consolidated Statements of Operations. 2020 amount
represents transaction costs associated with the TTI acquisition which were
recorded in "Selling, general and administrative expenses" in the Consolidated
Statement of Operations. 2019 amounts represent transaction costs associated
with the Cristal Transaction which were recorded in "Selling, general and
administrative expenses" in the Consolidated Statements of Operations.

(e)2020 and 2019 amounts represent amounts for employee-related costs, including
severance, which was recorded in "Restructuring" in the Consolidated Statements
of Operations. See Note 4 of notes to consolidated financial statements.

(f)2020 and 2019 amounts represent integration costs associated with the Cristal
transaction after the acquisition which were recorded in "Selling, general and
administrative expenses" in the Consolidated Statements of Operations.

(g)2021 amount represents the loss in connection with the following: 1)
termination of its Wells Fargo Revolver, 2) amendment and restatement of its
term loan facility including the new revolving credit facility, 3) termination
of its Senior Notes due 2026 and its Senior Notes due 2025, 4) issuance of its
Senior Notes due 2029 and 5) several voluntary prepayments made on the New Term
Loan Facility. See Note 15 of notes to consolidated financial statements. 2020
amount represents the loss in connection with a voluntary prepayment on the
Prior Term Loan Facility. 2019 amount represents the loss in connection with the
modification of the Wells Fargo Revolver and termination of the ABSA Revolver
and a voluntary prepayment made on the Prior Term Loan Facility.

(h)Represents realized and unrealized gains and losses associated with foreign
currency remeasurement related to third-party and intercompany receivables and
liabilities denominated in a currency other than the functional currency of the
entity holding them, which are included in "Other income (expense), net" in the
Consolidated Statements of Operations.

(i) The 2020 amount represents a curtailment gain due to the plan benefit freeze partially offset by pension settlements. The 2019 amount represents the settlement gain related to the we Pension Plan (acquired as part of the Cristal transaction).

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(j)2021 amount represents costs associated with the Exxaro flip-in transaction
which are included in "Selling, general and administrative expenses" in the
Consolidated Statements of Operations. 2019 amount represents the payment to
Exxaro for capital gains tax on the disposal of its ordinary shares in Tronox
Holdings plc included in "Other income (expense), net" in the Consolidated
Statements of Operations.

(k)2021 amount represents costs, excluding share-based compensation, associated
with the retirement agreement of the former CEO which were recorded in "Selling,
general and administrative expenses" in the Consolidated Statements of
Operations. The $2 million of share based compensation expense associated with
the former CEO is included in the total share-based compensation amounts of $31
million in the table above.

(l) The amount for 2021 represents the gain on European Union carbon credits sold in
March 2021 which have been recorded in “Cost of Goods Sold” in the Consolidated Statement of Income.


(m)Represents impairments of our right-of-use assets associated with the early
termination of our leases and other costs related to the closure of our
Baltimore and New York City offices which are included in "Selling, general and
administrative expenses" in the Consolidated Statements of Operations.

(n) The 2020 amount represents the reimbursement of claims related to the failure of the Ginkgo concentrator that we inherited as part of the Cristal transaction.

(o) Includes non-cash retirement and post-retirement expenses, accretion expense, severance and other items included in “Selling general and administrative expenses” and “Cost of goods sold” in the statements consolidated results.

Significant Accounting Policies and Estimates


The preparation of financial statements in conformity with U.S. GAAP requires
management to make certain estimates and assumptions regarding matters that are
inherently uncertain and that ultimately affect the reported amounts of assets,
liabilities, revenues and expenses, and the disclosure of contingent assets and
liabilities. The estimates and assumptions are based on management's experience
and understanding of current facts and circumstances. These estimates may differ
from actual results. Certain of our accounting policies are considered critical,
as they are both important to reflect our financial position and results of
operations and require significant or complex judgment on the part of
management. The following is a summary of certain accounting policies considered
critical by management.

Asset retirement obligations


To the extent a legal obligation exists, an asset retirement obligation ("ARO")
is recorded at its estimated fair value and accretion expense is recognized over
time as the discounted liability is accreted to its expected settlement value.
Because AROs represent financial obligations to be settled in the future,
uncertainties exist in estimating the timing and amount of the associated costs
to be incurred. Fair value is measured using expected future cash outflows,
adjusted for expected inflation and discounted at our credit-adjusted risk-free
interest rate. No market-risk premium has been included in our calculation of
ARO balances since we can make no reliable estimate. Management believes these
estimates and assumptions are reasonable; however, they are inherently
uncertain. Refer to Notes 19 to the consolidated financial statements for a
summary of the estimates and assumptions utilized. At December 31, 2021, AROs
were $149 million of which the long-term portion of $139 million is recorded in
"Asset retirement obligations" and the short-term portion of $10 million is
recorded in "Accrued liabilities" in the Consolidated Balance Sheet.

Environmental issues


Liabilities for environmental matters are recognized when remedial efforts are
probable and the costs can be reasonably estimated. Such liabilities are based
on our best estimate of the undiscounted future costs required to complete the
remedial work. The recorded liabilities are adjusted periodically as remediation
efforts progress or as additional technical, regulatory or legal information
becomes available. Given the uncertainties regarding the status of laws,
regulations, enforcement policies, the impact of other potentially responsible
parties, technology and information related to individual sites, we do not
believe it is possible to develop an estimate of the range or reasonably
possible environmental loss in excess of our recorded liabilities. At
December 31, 2021, environmental liabilities (both short term and long term)
were $72 million, primarily related to the Cristal transaction.

For further discussion, see Environmental Matters included elsewhere in this
section entitled, "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and Notes 2 and 20 to the consolidated financial
statements.

Income taxes


We have operations in several countries around the world and are subject to
income and similar taxes in these countries. The estimation of the amounts of
income tax involves the interpretation of complex tax laws and regulations and
how foreign taxes affect domestic taxes, as well as the analysis of the
realizability of deferred tax assets, tax audit findings and uncertain tax
positions. Although we believe our tax accruals are adequate, differences may
occur in the future, depending on the resolution of pending and new tax matters.

Deferred tax assets and liabilities are determined based on temporary
differences between the financial reporting and tax bases of assets and
liabilities using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. A valuation allowance is provided against a deferred tax asset when it
is more
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likely than not that all or some portion of the deferred tax asset will not be
realized. We periodically assess the likelihood that we will be able to recover
our deferred tax assets and reflect any changes in our estimates in the
valuation allowance with a corresponding adjustment to earnings or other
comprehensive income (loss) as appropriate. ASC 740, Income Taxes, requires that
all available positive and negative evidence be weighted to determine whether a
valuation allowance should be recorded.

The amount of income taxes we pay are subject to ongoing audits by federal,
state and foreign tax authorities, which may result in proposed assessments. Our
estimate of the potential outcome for any uncertain tax issue is highly
judgmental. We assess our income tax positions, and record tax benefits for all
years subject to examination based upon our evaluation of the facts,
circumstances and information available at the reporting date. For those tax
positions for which it is more likely than not that a tax benefit will be
sustained, we record the amount that has a greater than 50% likelihood of being
realized upon settlement with a taxing authority that has full knowledge of all
relevant information. Interest and penalties are accrued as part of tax expense,
where applicable. If we do not believe that it is more likely than not that a
tax benefit will be sustained, no tax benefit is recognized.

See Notes 2 and 8 to the consolidated financial statements for additional information.

Contingencies


From time to time, we may be subject to lawsuits, investigations and disputes
(some of which involve substantial amounts claimed) arising out of the conduct
of our business, including matters relating to commercial transactions, prior
acquisitions and divestitures including our acquisition of Cristal, employee
benefit plans, intellectual property, and environmental, health and safety
matters. We recognize a liability for any contingency that is probable of
occurrence and reasonably estimable. We continually assess the likelihood of
adverse judgments or outcomes in these matters, as well as potential ranges of
possible losses (taking into consideration any insurance recoveries), based on a
careful analysis of each matter with the assistance of outside legal counsel
and, if applicable, other experts. Such contingencies are significant and the
accounting requires considerable management judgments in analyzing each matter
to assess the likely outcome and the need for establishing appropriate
liabilities and providing adequate disclosures.

Refer to notes 2 and 20 of the consolidated financial statements for more information.


Long-Lived Assets

Key estimates related to long-lived assets (property, plant and equipment,
mineral leaseholds, and intangible assets) include useful lives, recoverability
of carrying values, and the existence of any asset retirement obligations. As a
result of future decisions, such estimates could be significantly modified. The
estimated useful lives of property, plant and equipment range from three to
forty years, and depreciation is recognized on a straight-line basis. Useful
lives are estimated based upon our historical experience, engineering estimates,
and industry information. These estimates include an assumption regarding
periodic maintenance. Mineral leaseholds are depreciated over their useful lives
as determined under the units of production method. Intangible assets with
finite useful lives are amortized on the straight-line basis over their
estimated useful lives. The amortization methods and remaining useful lives are
reviewed quarterly.

We evaluate the recoverability of the carrying value of long-lived assets that
are held and used whenever events or changes in circumstances indicate that the
carrying value may not be recoverable. Under such circumstances, we assess
whether the projected undiscounted cash flows of our long-lived assets are
sufficient to recover the carrying amount of the asset group being assessed. If
the undiscounted projected cash flows are not sufficient, we calculate the
impairment amount by discounting the projected cash flows using our
weighted-average cost of capital. For assets that satisfy the criteria to be
classified as held for sale, an impairment loss, if any, is recognized to the
extent the carrying amount exceeds fair value, less cost to sell. The amount of
the impairment of long-lived assets is written off against earnings in the
period in which the impairment is determined.

Retirement and post-retirement benefits


We provide pension benefits for qualifying employees in the United States and
internationally, with the largest in the United Kingdom. Because pension
benefits represent financial obligations that will ultimately be settled in the
future with employees who meet eligibility requirements, uncertainties exist in
estimating the timing and amount of future payments, and significant estimates
are required to calculate pension expense and liabilities relating to these
plans. The company utilizes the services of independent actuaries, whose models
are used to help facilitate these calculations. Several key assumptions are used
in actuarial models to calculate pension expense and liability amounts recorded
in the financial statements; the most significant variables in the models are
the expected rate of return on plan assets, the discount rate, and the expected
rate of compensation increase. Management believes the assumptions used in the
actuarial calculations are reasonable, reflect the company's experience and
expectations for the future and are within accepted practices in each of the
respective geographic locations in which it operates. However, actual results in
any given year often differ from actuarial assumptions due to economic events
and different rates of
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retirement, mortality, and turnover. Refer to Notes 2 and 23 to the consolidated
financial statements for a summary of the plan assumptions and additional
information on our pension arrangements.

Expected Return on Plan Assets - In forming the assumption of the long-term rate
of return on plan assets, we consider the expected earnings on funds already
invested, earnings on contributions expected to be made in the current year, and
earnings on reinvested returns. The long-term rate of return estimation
methodology for the plans is based on a capital asset pricing model using
historical data and a forecasted earnings model. An expected return on plan
assets analysis is performed which incorporates the current portfolio
allocation, historical asset-class returns, and an assessment of expected future
performance using asset-class risk factors. A 100 basis point change in these
expected long-term rates of return, with all other variables held constant,
would change our pension expense by approximately $4 million.


Discount Rate - The discount rates selected for estimation of the actuarial
present value of the benefit obligations are determined based on the prevailing
market rate for high-quality, fixed-income debt instruments with maturities
corresponding to the expected timing of benefit payments as of the annual
measurement date for each of the various plans. These rates change from year to
year based on market conditions that affect corporate bond yields. A 100 basis
points change in discount rates, with all other variables held constant, would
decrease/increase our pension expense by approximately $1 million. A 100 basis
points reduction in discount rates would increase the PBO by approximately $72
million whereas a 100 basis point increase in discount rates would have a
favorable impact to the PBO of approximately $61 million.

Rates of Compensation Increase - We determine these rates based on review of the
underlying long-term salary increase trend characteristic of the local labor
markets and historical experience, as well as comparison to peer companies. A
100 basis points change in the expected rate of compensation increase, with all
other variables held constant, would change our pension expense by approximately
$1 million and would impact the PBO by approximately $6 million.

Recent accounting pronouncements

See Note 2 of the Notes to the Consolidated Financial Statements for recently issued accounting pronouncements.


Environmental Matters

We are subject to a broad array of international, federal, state, and local laws
and regulations relating to safety, pollution, protection of the environment,
and the generation, storage, handling, transportation, treatment, disposal, and
remediation of hazardous substances and waste materials. In the ordinary course
of business, we are subject to frequent environmental inspections and
monitoring, and occasional investigations by governmental enforcement
authorities. Under these laws, we are or may be required to obtain or maintain
permits or licenses in connection with our operations. In addition, under these
laws, we are or may be required to remove or mitigate the effects on the
environment of the disposal or release of chemical, petroleum, low-level
radioactive and other substances at our facilities. We may incur future costs
for capital improvements and general compliance under environmental, health, and
safety laws, including costs to acquire, maintain, and repair pollution control
equipment. Environmental laws and regulations are becoming increasingly
stringent, and compliance costs are significant and will continue to be
significant in the foreseeable future. There can be no assurance that such laws
and regulations or any environmental law or regulation enacted in the future is
not likely to have a material effect on our business. We believe we are in
compliance with applicable environmental rules and regulations in all material
respects.

See Section 3. Legal Proceedings for more information.

© Edgar Online, source Previews

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Does Petrus Resources (TSE:PRQ) have a healthy balance sheet? https://freebassuk.com/does-petrus-resources-tseprq-have-a-healthy-balance-sheet/ Sun, 20 Feb 2022 14:42:15 +0000 https://freebassuk.com/does-petrus-resources-tseprq-have-a-healthy-balance-sheet/ Howard Marks said it well when he said that, rather than worrying about stock price volatility, “the possibility of permanent loss is the risk I worry about…and that every practical investor that I know is worried”. So it seems smart money knows that debt – which is usually involved in bankruptcies – is a very […]]]>

Howard Marks said it well when he said that, rather than worrying about stock price volatility, “the possibility of permanent loss is the risk I worry about…and that every practical investor that I know is worried”. So it seems smart money knows that debt – which is usually involved in bankruptcies – is a very important factor when you’re assessing a company’s risk. We can see that Petrus Resources Ltd. (TSE:PRQ) uses debt in its business. But the real question is whether this debt makes the business risky.

What risk does debt carry?

Generally speaking, debt only becomes a real problem when a company cannot easily repay it, either by raising capital or with its own cash flow. An integral part of capitalism is the process of “creative destruction” where bankrupt companies are mercilessly liquidated by their bankers. Although not too common, we often see companies in debt permanently diluting their shareholders because lenders force them to raise capital at a ridiculous price. Of course, the advantage of debt is that it often represents cheap capital, especially when it replaces dilution in a business with the ability to reinvest at high rates of return. When we think about a company’s use of debt, we first look at cash and debt together.

Discover our latest analysis for Petrus Resources

What is Petrus Resources net debt?

As you can see below, Petrus Resources had C$59.5 million in debt as of September 2021, up from C$115.8 million the previous year. On the other hand, it has C$1.51 million in cash, resulting in a net debt of approximately C$58.0 million.

TSX:PRQ Debt to Equity Historical February 20, 2022

A look at the liabilities of Petrus Resources

Zooming in on the latest balance sheet data, we can see that Petrus Resources had liabilities of C$79.5 million due within 12 months and liabilities of C$40.2 million due beyond. On the other hand, it had liquid assets of 1.51 million Canadian dollars and 9.16 million Canadian dollars of receivables due within one year. Thus, its liabilities outweigh the sum of its cash and (current) receivables of C$109.0 million.

This deficit is considerable compared to its market capitalization of 149.2 million Canadian dollars, so it suggests that shareholders monitor the use of debt by Petrus Resources. If its lenders asked it to shore up its balance sheet, shareholders would likely face significant dilution.

In order to assess a company’s debt relative to its earnings, we calculate its net debt divided by its earnings before interest, taxes, depreciation and amortization (EBITDA) and its earnings before interest and taxes (EBIT) divided by its expenses. interest (its interest coverage). In this way, we consider both the absolute amount of debt, as well as the interest rates paid on it.

Even though Petrus Resources’ debt is only 2.2, its interest coverage is really very low at 0.27. The main reason for this is that it has such high depreciation and amortization. These fees may be non-monetary, so they could be excluded when it comes to repaying the debt. But accounting fees are there for a reason: some assets seem to lose value. Either way, it’s safe to say that the company has significant debt. Notably, Petrus Resources recorded a loss in EBIT last year, but improved it to a positive EBIT of C$2.6 million over the last twelve months. There is no doubt that we learn the most about debt from the balance sheet. But you can’t look at debt in total isolation; since Petrus Resources will need revenue to repay this debt. So, if you want to know more about its earnings, it might be worth checking out this graph of its long-term trend.

Finally, while the taxman may love accounting profits, lenders only accept cash. It is therefore important to check how much of its earnings before interest and taxes (EBIT) converts into actual free cash flow. Fortunately for all shareholders, Petrus Resources has actually produced more free cash flow than EBIT over the past year. This kind of high cash conversion gets us as excited as the crowd when the beat drops at a Daft Punk concert.

Our point of view

Neither the ability of Petrus Resources to cover its interest charges with its EBIT nor its level of total liabilities gave us confidence in its ability to take on more debt. But the good news is that it seems to be able to easily convert EBIT to free cash flow. We think Petrus Resources’ debt makes it a bit risky, after looking at the aforementioned data points together. Not all risk is bad, as it can increase stock price returns if it pays off, but this leverage risk is worth keeping in mind. When analyzing debt levels, the balance sheet is the obvious starting point. But at the end of the day, every business can contain risks that exist outside of the balance sheet. Be aware that Petrus Resources displays 2 warning signs in our investment analysis and 1 of them does not suit us too much…

Of course, if you’re the type of investor who prefers to buy stocks without the burden of debt, then feel free to check out our exclusive list of cash-efficient growth stocks today.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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Parsvnath Developers (NSE:PARSVNATH) seems to use a lot of debt https://freebassuk.com/parsvnath-developers-nseparsvnath-seems-to-use-a-lot-of-debt/ Sat, 19 Feb 2022 02:53:23 +0000 https://freebassuk.com/parsvnath-developers-nseparsvnath-seems-to-use-a-lot-of-debt/ Legendary fund manager Li Lu (whom Charlie Munger once backed) once said, “The greatest risk in investing is not price volatility, but whether you will suffer a permanent loss of capital. It’s natural to consider a company’s balance sheet when looking at its riskiness, as debt is often involved when a company fails. We note […]]]>

Legendary fund manager Li Lu (whom Charlie Munger once backed) once said, “The greatest risk in investing is not price volatility, but whether you will suffer a permanent loss of capital. It’s natural to consider a company’s balance sheet when looking at its riskiness, as debt is often involved when a company fails. We note that Parsvnath Developers Limited (NSE:PARSVNATH) has debt on its balance sheet. But does this debt worry shareholders?

What risk does debt carry?

Debt helps a business until the business struggles to pay it back, either with new capital or with free cash flow. Ultimately, if the company cannot meet its legal debt repayment obligations, shareholders could walk away with nothing. Although not too common, we often see companies in debt permanently diluting their shareholders because lenders force them to raise capital at a ridiculous price. Of course, debt can be an important tool in businesses, especially capital-intensive businesses. The first thing to do when considering how much debt a business has is to look at its cash flow and debt together.

Check out our latest analysis for Parsvnath Developers

What is Parsvnath Developers net debt?

You can click on the graph below for historical figures, but it shows that as of September 2021, Parsvnath developers had ₹36.4 billion in debt, an increase from ₹30.1 billion, on a year. On the other hand, he has ₹1.05 billion in cash, resulting in a net debt of around ₹35.4 billion.

NSEI: PARSVNATH Debt to Equity History February 19, 2022

A Look at the Responsibilities of Parsvnath Developers

According to the latest published balance sheet, Parsvnath Developers had liabilities of ₹52.0 billion due within 12 months and liabilities of ₹26.0 billion due beyond 12 months. As compensation for these obligations, it had cash of ₹1.05 billion as well as receivables valued at ₹2.91 billion due within 12 months. Thus, its liabilities total ₹74.1 billion more than the combination of its cash and short-term receivables.

This deficit casts a shadow over the ₹7.18 billion society, like a colossus towering above mere mortals. So we definitely think shareholders need to watch this one closely. Ultimately, Parsvnath Developers would likely need a major recapitalization if its creditors were to demand repayment.

We measure a company’s leverage against its earning power by looking at its net debt divided by its earnings before interest, taxes, depreciation and amortization (EBITDA) and calculating how easily its earnings before interest and taxes (EBIT ) covers its interest charge (interest coverage). Thus, we consider debt to earnings with and without amortization and depreciation expense.

Low interest coverage of 0.11x and an extremely high net debt to EBITDA ratio of 54.6 shook our confidence in Parsvnath Developers like a punch in the gut. This means that we would consider him to be heavily indebted. Worse still, Parsvnath Developers has seen its EBIT soar to 26% over the past 12 months. If profits continue like this in the long term, there is an unimaginable chance of repaying this debt. There is no doubt that we learn the most about debt from the balance sheet. But you can’t look at debt in total isolation; since Parsvnath Developers will need revenue to repay this debt. So, when considering debt, it is definitely worth looking at the earnings trend. Click here for an interactive preview.

Finally, while the taxman may love accounting profits, lenders only accept cash. We must therefore clearly examine whether this EBIT generates a corresponding free cash flow. Over the past two years, Parsvnath Developers has actually produced more free cash flow than EBIT. This kind of strong cash generation warms our hearts like a puppy in a bumblebee suit.

Our point of view

To be frank, Parsvnath Developers’ EBIT growth rate and track record of keeping total liabilities under control makes us rather uncomfortable with its level of leverage. But on the bright side, its conversion from EBIT to free cash flow is a good sign and makes us more optimistic. Considering all the above factors, it seems that Parsvnath Developers has too much debt. That kind of risk is acceptable to some, but it certainly doesn’t float our boat. The balance sheet is clearly the area to focus on when analyzing debt. But at the end of the day, every business can contain risks that exist outside of the balance sheet. For example Parsvnath Developers has 3 warning signs (and 1 which is significant) that we think you should know about.

Of course, if you’re the type of investor who prefers to buy stocks without the burden of debt, then feel free to check out our exclusive list of cash-efficient growth stocks today.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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Ilex Medical (TLV:ILX) could easily take on more debt https://freebassuk.com/ilex-medical-tlvilx-could-easily-take-on-more-debt/ Mon, 14 Feb 2022 04:25:01 +0000 https://freebassuk.com/ilex-medical-tlvilx-could-easily-take-on-more-debt/ Berkshire Hathaway’s Charlie Munger-backed outside fund manager Li Lu is quick to say, “The biggest risk in investing isn’t price volatility, but whether you’re going to suffer a permanent loss of capital “. It’s natural to consider a company’s balance sheet when looking at its riskiness, as debt is often involved when a company fails. […]]]>

Berkshire Hathaway’s Charlie Munger-backed outside fund manager Li Lu is quick to say, “The biggest risk in investing isn’t price volatility, but whether you’re going to suffer a permanent loss of capital “. It’s natural to consider a company’s balance sheet when looking at its riskiness, as debt is often involved when a company fails. We can see that Ilex Medical Ltd (TLV:ILX) uses debt in its business. But does this debt worry shareholders?

Why is debt risky?

Generally speaking, debt only becomes a real problem when a company cannot easily repay it, either by raising capital or with its own cash flow. In the worst case, a company can go bankrupt if it cannot pay its creditors. However, a more common (but still painful) scenario is that it has to raise new equity at a low price, thereby permanently diluting shareholders. By replacing dilution, however, debt can be a great tool for companies that need capital to invest in growth at high rates of return. When we think about a company’s use of debt, we first look at cash and debt together.

Discover our latest analysis for Ilex Medical

What is Ilex Medical’s net debt?

You can click on the graph below for historical figures, but it shows that Ilex Medical had a debt of ₪6.09 million in September 2021, compared to ₪26.8 million a year before. However, he has ₪192.8 million in cash to offset this, resulting in a net cash of ₪186.7 million.

TASE: ILX Debt to Equity February 14, 2022

A look at Ilex Medical’s responsibilities

We can see from the most recent balance sheet that Ilex Medical had liabilities of £267.7m due within a year, and liabilities of £59.7m due beyond . In return, he had ₪192.8 million in cash and ₪300.0 million in debt due within 12 months. He can therefore boast of having 165.4 million more liquid assets than total Passives.

This surplus suggests that Ilex Medical has a conservative balance sheet, and could probably deleverage without much difficulty. Simply put, the fact that Ilex Medical has more cash than debt is arguably a good indication that it can safely manage its debt.

On top of that, we are pleased to report that Ilex Medical increased its EBIT by 65%, reducing the specter of future debt repayments. There is no doubt that we learn the most about debt from the balance sheet. But it is Ilex Medical’s results that will influence the balance sheet in the future. So, when considering debt, it is definitely worth looking at the earnings trend. Click here for an interactive preview.

Finally, a company can only repay its debts with cash, not book profits. Ilex Medical may have net cash on the balance sheet, but it is always interesting to see how well the company converts its earnings before interest and taxes (EBIT) into free cash flow, as this will influence both its need and its capacity. . to manage debt. Over the past three years, Ilex Medical has produced strong free cash flow equivalent to 69% of its EBIT, which is what we expected. This cold hard cash allows him to reduce his debt whenever he wants.

Summary

While we sympathize with investors who find debt a concern, you should bear in mind that Ilex Medical has a net cash position of ₪186.7 million, as well as more liquid assets than liabilities. And it has impressed us with its 65% EBIT growth over the past year. Is Ilex Medical’s debt then a risk? This does not seem to us to be the case. The balance sheet is clearly the area to focus on when analyzing debt. But at the end of the day, every business can contain risks that exist outside of the balance sheet. For example – Ilex Medical has 1 warning sign we think you should know.

Of course, if you’re the type of investor who prefers to buy stocks without the burden of debt, then feel free to check out our exclusive list of cash-efficient growth stocks today.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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