Ann: Appendix 4C - quarterly, page-2

This release is, in my opinion, one of the most instructive for both current and prospective shareholders, yet it the one that is the least read, and one that generates no comment.

When, earlier in the year, there was some brief discussion about how a weakening A$ would impact the  of MSB's financial position in A$ functional currency terms, given the US dollar denominated cash outflows, it was easy to expect the trend to be unfavourable, but the extent to which is has happened in recent quarters is quite noteworthy indeed:

CASH OUTFLOWS (A$m):

DQ, 2010:  -4.0
MQ, 2011: -5.7
JQ, 2011:  -7.4
SQ, 2011:  -18.8
DQ, 2011:  -18.3
MQ, 2012:  -14.2
JQ, 2012:  -23.6
SQ, 2012:  -18.9
DQ, 2012:  -17.0
MQ, 2013: - 18.4
JQ, 2013:  -15.7
SQ, 2013:  -26.2
DQ, 2013:  -44.3
MQ, 2014: -19.5
JQ, 2014:  -35.6
SQ, 2014:  -34.0
DQ, 2014:  -30.0
MQ, 2015:  -31.5
JQ, 2015:  -43.5
SQ, 2015:  -41.2 (reported in US$, adjusted for average quarter exchange rate)

(My simple spreadsheet that models these metrics had assumed A$31.0m of cash outflow for the quarter, so it shows how wrong even conservative little old me got it).


Based on the latest Appendix 4C, the current rate of capital consumption, compared with the available cash @ 30 September 2015, means that the Cash Flow Coverage is actually only sufficient for 2.7 quarters  (i.e., some 8 months from 30 September 2016 or 7  months from now, i.e., sufficient to last until May 2016.)


CASH FLOW COVERAGE (i.e. CASH BALANCE divided by CASH BURN)
[Number of Quarters of Cash Availability]:

DQ, 2010:  23.2
MQ, 2011: 47.7
JQ, 2011:  37.6
SQ, 2011:  12.1
DQ, 2011:  13.3
MQ, 2012:  16.7
JQ, 2012:  9.4
SQ, 2012:  10.1
DQ, 2012:  11.9
MQ, 2013:  17.7
JQ, 2013:  20.5
SQ, 2013:  12.9
DQ, 2013:  9.3
MQ, 2014: 13.0
JQ, 2014:  6.0
SQ, 2014:  5.4
DQ, 2014:  5.1
MQ, 2015:  4.0
JQ, 2015:  4.0
SQ, 2015:  2.7

Again, my earlier forecasts of 3.8 quarters worth of cash availability (refer Post 16229676) - which coincided with feedback just a few days earlier from the AGM along the lines of cash being sufficient to last "15 months from 30 June 2015" -  proved to be hopefully too generous.

Based on the latest Appendix 4C, the company was on track to deplete cash reserves by May 2016, and not September 2016, per feedback from the AGM.

Which means that the stock going into a trading halt in relation to a capital raising is eminently logical given the likely potential reception from the market on the share price if trading in the stock had not been suspended.