PTB (ASX) Ann: Results Presentation

Originally posted by saintly96: ↑

I'll post more about this later but the company could have done themselves some more favours by explaining their operational cashflow and debt position better.

Operational cashflow included a charge for $11.3m of bolt on inventory that they acquired as part of the Prime acquisition. In reality this was just part of the acquisition rather than an operation cashflow. The acquisition costs also went through the op cashflow (as a one off) and they were otherwise in the process of building up inventory for growth. This is a company that has rightly complained of being capital starved since the GFC - they are only now reaching a point where their talents and growth potential are being backed by the ability to hold sufficient inventory.

Debt: They have included the lease liabilities associated with the US rental properties in their overall debt. Nearly all other companies separate this out to reflect the stupid accounting quirk it is. (this is about $3.5m without looking).

$2m of the debt is provided by the US PPP program and will almost certainly be written off in this half - so that will just disappear.

The 'sale and leaseback' of the US test cells they keep talking about is not a sale and leaseback in the traditional sense - it is more a case of them borrowing some non-recourse debt against that equipment. Maybe there is some option to buy but at the moment that sits as 'debt' on the balance sheet and the test cells stay as PPE. This is clearly debt that could quickly be removed from the balance sheet if necessary.

$11m of the debt is an interest free Vendor loan for the inventory discussed above.

Some of the remaining debt is non-recourse against specific planes/engines that are in turn leased out at higher margin.

The remaining bank debt is a much smaller figure than the $40m headline debt figure and is offset by 1) $15m in cash 2) $10-12m worth of real-estate in Brisbane and Sydney that is on the books for only $6.5m (as they have used the cost-depreciation method); 3) over $60m worth of inventory, planes and engines which hold their value very well. Remembering that this is not like clothes that go out of fashion of other goods that can't be re-furbished - they are items that this company is in fact an expert on taking and adding value to..........

They made a good start at explaining this but they need to go further to show why their debt is no where near as much of an issue as some people might think.

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Thank you for the in-depth analysis and contribution into the Debt, Operational cash flow, and other aspects of the financial statement,
as you mentioned the directors could have expanded on these matters by shedding a better light on the figures.

Many investors are wary of relatively large Debt on the balance sheet, your writtings may have clarified few items for them and us SH.