Finally took some action to restore its depreciating assets. Borrowed 6m & made a 5.9m capex purchase, also made a 6m acquisition of some Queensland egg company. Cash on hand as of dec 2017 is only 1.m, down from 8m from the June 2017 period. So that cash on hand & proceeds of debt financing has been spent on restoring assets & an acquisition.
Its net cash from operating actives is only 100k as of December 2017, down from 2.3m from December 2016.
The combination of having to restore assets & the acquisition, in conjunction with falling cash receipts, means this company might need to take on more debt to raise cash, given it hardly has any, and looks like it is facing problems generating cash. The capex purchase wast maintenance capex, not growth, so dont expect any additional cash flow generation from that, meaning cash from the acquisition will need be generated, as if not, its going to need to borrow again. That, or it improves its current margins.
FRM has even said its EBITDA is going to be between 5-6m, when it the last two years its been 15m. How much free cash flow they can they extract from earnings almost 3 times as less as previous reported earnings?
Even owning this company as book value is risky.
Its annual report is due soon. Will be interesting to see how it fairs.
FRM Price at posting:
89.0¢ Sentiment: Sell Disclosure: Not Held
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