IMT HOLDINGS LIMITED 2002-11-05 ASX-SIGNAL-G
HOMEX - Sydney
+++++++++++++++++++++++++
RESPONSE TO ASX QUERY
I refer to your letter dated 1 November 2002 requiring the Company to
respond to eight queries raised in that letter.
The response to each of the queries raised by the ASX in that letter
are provided below. IMT notes that the ASX letter as well as this
response will be released to the market.
1. RESPONSE TO ASX QUESTION 1
The Company's ability to fund its activities in the next two quarters
and beyond cannot be evaluated by reference to the Appendix 4C
numbers alone.
Expenditure in the quarter included a significant quantum of
non-recurring and prior period costs most of which were as detailed
in the Company's Prospectus.
* Research and Development expenditure of $205,000 was incurred in
the quarter. Forward Quarterly commitments for Research and
Development are expected to be less than $20,000.
* Payments for prior period Creditors of $243,000 were made in the
quarter.
The quarter's operating expenditures therefore included $428,000 of
non recurring costs.
Debtors outstanding at the end of the quarter included an amount of
$158,000 with an ageing of greater than 60 days. Focus on listing
activities during this period together with processinq delays from
one major customer resulted in reduced collections during the
quarter. Improved collection procedures have bean established which
the Company believes will significantly reduce the level of aged
debt.
The combined impact of additional expenditures and reduced
collections generated abnormal operating cash flows for the quarter
of $586,000. IMT believes that implementation of current businessobjectives will result in a positive operating cash outcome during
the first quarter of 2003.
Investing expenditures of $84,000 were incurred in the quarter to
fund new capital expenditure on plant and equipment and mine
development costs. The Company intends to fund future capital
expenditure from recently established external finance lines.
2. RESPONSE TO ASX QUESTION 2
The Company does not expect similar negative cash flows to be
incurred in the future. Non-recurring cash outflows of $428,000,
increased debtor collections and actions to increase revenue are
expected to return the Company to positive cash flow in future
quarters.
3. RESPONSE TO ASX QUESTION 3
Sales revenues were below expectations in the quarter with a slower
than anticipated offtake of new generic Coles / Bi Lo cat litter
product and delays in production or new industrial grade bentonite
products. This shortfall should be partially recovered in the next
quarter with the commencement of industrial grade bentonite sales.
Expenses were in line with expectations.
4. RESPONSE TO ASX QUESTION 4
Revenue was recognised to be below expectations in July with steps
taken immediately to redress the situation. This resulted in an
increase in average sales levels in July and August. The
circumstances for the reduction in revenue included:
(a) CAT LITTER
Runout of existing Coles / Bi Lo Generic stocks occurred at a slower
than anticipated rate thus reducing the offtake of new Company
product.
(b) NEW PRODUCTS
Industrial product sales are subject to successful completion of
product trials. The Company anticipated trial completion and initial
orders before the end of the quarter. Delays in the procurement of
equipment and the testing of product have delayed sales to the
current quarter.
5. RESPONSE TO ASX QUESTION 5
During the quarter, new plant including a mill and ancillary
equipment were installed to produce products for the foundry and
drilling markets. This has already had an effect on sales as orders
have been received from new customers for these products. A major
sales push has been made for new customers in the cat litter and
engineering markets, which has generated new orders. There has been
no change to the Company's business objectives or strategies.
6. RESPONSE TO ASX QUESTION 6
The Board of the Company confirms that the Company is in compliance
with the Listing Rules.
7. RESPONSE TO ASX QUESTION 7
There is no change in IMT's strategy as set out in its recent
prospectus and as advised in its subsequent disclosures to the ASX.
IMT has substantial sales revenue from the operation of its mining
resource. At current operating levels, that division of the Company
is cash positive. With additional orders and new customers being
obtained over this last month, the mine is expected to provide a very
satisfactory return.
IMT have informed the ASX of the development of its Phoslock
commercialisation activities. All of those activities continue to be
"on track". IMT remains confident that the tests at Lake Dianchi will
be successful and that commercial application will commence in the
near future, thus resulting in revenues being derived at that time.
Given that IMT will receive royalties with relatively little expense
to be incurred, the overall operating results of IMT should show a
substantial profit.
Achievement of these results will see the Company with a very strong
balance sheet. IMT will be in a position where it could pay dividends
to shareholders in the current or subsequent years, should the
directors so choose.
Apart from lease liabilities in respect of plant utilised at the mine
site, the Company will have no interest bearing debt.
Potential investors have met with IMT and have expressed their
willingness to subscribe for new shares in IMT at not less than the
price in the recent prospectus should the Company decide it requires
further capital. Accordingly, IMT believes it has access to further
funds if there was a need.
8. RESPONSE TO ASX QUESTION 8
Breakdown of Working Capital Payments follows:
CATEGORY OF PAYMENT $(000's)
Creditors - General 266
Creditors - Transport 271
Creditors Packaging 92
Creditors - Contract processing 100
Creditors - Equipment Hire 40
Rent 57
Other 26
TOTAL 852
N Traill
COMPANY SECRETARY
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