Announcements are one thing, action is another. Need to keep an eye on cash flow rather than profit, which they don't make. They were cash positive in the Dec half, but did that by blowing out creditors, which increased by $1.7m, would have looked ugly if they have paid them a bit quicker.
They say they made $500k EBITDA in the last half year, so if we double that for full year, you get $1m, they have interest bearing debt of about $10m, so debt/EBITDA ratio is 10, that is a crazy level of debt, almost impossible to get that down, think management have shown over the past 10 years they have no idea.
Their cap raise got them around $500k, won't make a dent in their ratios. Rule of thumb is that ratio should be no higher than about 3.5, they are at 10!!!. Most banks will only feel comfortable lending up to about 3-3.5, which is probably the reason they are paying between 10 and 15%. If you look at their interest cover ratio, it should be no more than about 2, their ratio is negative 1.5, they pay more interest that they earn in EBITDA.
The only reason they haven't gone into VA is management keep putting their hands in the pockets to keep the company alive, you have to think that can't go on forever.
IVT Price at posting:
3.4¢ Sentiment: Sell Disclosure: Not Held
