a few thoughts

Here is one of my posts from yesterday (i.e., before today's announcement), just in case folks try to misrepresent my position:

In reply to Baileyaus I said, QUOTE:
I'm not claiming, and have never claimed, that the cash won't come in. What I'm saying is that it is a highly dodgy contract and that the debtor is at a much higher risk of default than what NBS management and the auditor have led the market to believe. So while the China contract does not look promising at all, the cash (or perhaps some cash) theoretically 'could' come in any day; this is why the sp is at 22c and not 2c.

However, it is my judgement that, given NBS management's flagrant snubbing of continuous disclosure requirements, only a fool would invest or even trade NBS without unambiguous confirmation of substantial cash receipts.END QUOTE

http://hotcopper.com.au/post_single.asp?fid=1&tid=1036767&msgid=5776917

A few further thoughts:

(1) Nothing in today's announcement changes the fact that, assuming the TPID SEC filings are accurate, NBS management have willfully misrepresented the identity of their China counterpary and the risk profile of this counterparty. If true, this is a serious breach of the corporations act.

(2) The default risk surrounding CITP is still evident given the fact the cash that has been received is late and that substantial receivables (some $17mill at today's exchange rate) are still well past due. Consequently, today's announcement does not constitute what I earlier called "unambiguous confirmation of substantial cash receipts."

(3) I've just had a chat to one of the analysts who still bothers to keep an eye on NBS, and we agreed that if all the expected China revenue comes in this FY (and this is a very big 'if'), and assuming minimal contributions from Malaysia or consulting, NBS will post a profit in the region of $20mill. A $20mill profit has NBS currently trading on a forward earnings multiple of around 6.5.

(4) For a 'proper' company that takes continuous disclosure seriously, a pe of 6.5 is cheap. But for a company like NBS where management are widely regarded as having little or no credibility, a pe of 6.5 looks fully priced.

(5) NBS and the old ETC have a sorry history of putting out misleading statements to the market. Indeed, in June 15 this year NBS announced that they had received substantial Nexcode cash, and that they expected more to show up in the full year results. This cash never appeared in the audited accounts. Consequently, I have little confidence that we can read today's announcement at face value.

(6) Today's announcement (and the suspicion that certain fund managers may have been tipped off about today's announcement in advance) will help secure votes for Dykes at the AGM. Will it be enough?