Somewhat surprised the SP has held up this am. To start, they have opted for the bare minimum in reporting and all done in the 11th hour so to speak. Breaking the professional presentation is not good form IMO.
To the actual results, an EPS of 0.15 c spot on with what was expected. On the subject of funding, confirmed virtually maxed out on their facilities, barring their right to one final draw a of BP 1 m. We must assume that this is earmarked as a portion of the Marketing Punch earn- out payable between Aug and Nov this year (assuming they reach their EBITDA target). Interesting that they provide more detail on the borrowings eg Current loan to be paid down by 2021, implying monthly payments.
As the non current loan exposure is up over the 6 months, I suspect they are maxed out on facility.
Whilst we have an update on the income statement, guessing an exit rate is IMO impossible. Assuming MBE met their disclosure obligations and nothing was untoward on the 21 October, then to get a real perspective, you need the split revenue and expenses pre and post the announced problem. Their indication of only $22m revenue in H2 17 provides a pointer. Same applies to the expenses. Advertising & Marketing down from $ 9 m (H2 2016) to $ 5.8 m (H1 2017), but in fairness the runout number will be less.
All things considered, the business remains on a knife-edge. $7 odd million in cash less ear outs after using last BP 1 m probably leave them with $ 5 odd million. Some may say that's fine, but employee expenses running at $ 1.2 m per month. Service Provider & Commissions running at $ 350 k per month and operational expenses running at $ 230 k per month. Probable that these too will be reduced but what of the pipeline effect. These are the big expense items, but of course there is more.
The DCB international negative cash flow number of - $ 3.5 m stands out as the core challenge. When they reported the problem back in Nov, it was cited as an Aussie problem. Mmmmmm !!!
IMO remains MBE remains fragile and cannot be regarded as risk free. My money will remain invested elsewhere.
Rokewa
MBE Price at posting:
6.3¢ Sentiment: None Disclosure: Not Held
