Ann: Appendix 4E - Directors' Report and Financial Statements, page-15

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SethKlarman

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26/08/22

13:05

Post #: 63343287
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Originally posted by weekend_cook: ↑

This has landmines all over it:
Current Assets are less than Current Liabilities. So, either more debt or a Cap raise. The notes suggest that "This financial position needs to be considered noting the following key
factors:
§ Current liabilities includes deferred and contingent consideration payable of $14.3M. The estimated cash
component of this consideration totals $11.7M. Thebalance is to be settled in equity. The Consolidated
Entity has available cash and debt facilities to settle these cash liabilities.
§ Current liabilities includes unearned revenue of $6M. This liability unwinds to revenue rather than being a
cash settled liability.
§ The Consolidated Entity can access required capitalwithin its banking facilities to meet it projected forward
cash flow commitments.
§ The Consolidated Entity remains confident that it has the ability torequest additional support from existing
shareholders if financial assistance isrequired.

" The Consolidated Entity will continue to require access to external capital in addition to its own operational cash flow generation abilities."

"Net cash outflows from investing activities were $1.4M (2021: $52.9M). During the financial year the Company drew down net debt from its banking facility of $3M as part of its capital management." So it looks as though the sale of the infrastructure was a desperate bid to pay down debt. Note that the sale of the assets were less than the book value. Further the EBITDA multiple that the sale of the infrastructure received was less than that of the company to market cap... so it was sold at a significant discount.
So, the infrastructure has been sold for a combined $18M. However Bank Debt has increased by $3M. Cash also increased by $3M… You only get to sell an asset once. So now what? Well, there’s this “Subsequent to the assessment date of 30 June 2022, the amount of contingent consideration payable where the FY22 EBITDA performance target has been exceeded has been estimated to be $3.25M.” So, where back to increase in debt and same cash level… and they have sold their only infrastructure asset.

Revenue increased by 32%. Salaries and wages increased by 52%. Admin and corporate expenses increased by 50%
This company lacks strategy. How it comes back from this I have no idea… but neither do they.

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Good summary

market is clearly saying it needs to raise capital by share price change

ST1 Price at posting: 6.1¢ Sentiment: None Disclosure: Not Held
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0 Great analysis

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Ann: Appendix 4E - Directors' Report and Financial Statements, page-15

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Ann: Appendix 4E - Directors' Report and Financial Statements, page-15

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