The auditors may have given them a " clean bill of health ", but...

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02/12/21

10:55

Post #: 58017343
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Originally posted by Marvin_Mindreader: ↑

I think you are mis-judging the capital position. The auditors have just reviewed and given a clean bill of health, so they don't think capital is required within the next 12 months (as they always look forward 12 months). The loan book funding that is available supports a lot of growth. And remember for the March Qtr this year just past, they were operating cashflow positive, so that will extend things as it would be reasonable that this year will be the same.

The call today was really good. If you compare LBY and Z1P results for UK, LBY is absolutely flogging Zip. Zip have almost the same size team as LBY in the UK, and are throwing a lot of money around, yet Zip isn't making a dent at all, and LBY is going further ahead. I think this by itself shows the strategic position that LBY have. Zip are going to waste a lot of money in the UK if they go it alone. LBY is the only way they get into #3 position.

Zip should literally just lob a scrip bid in for LBY at say $1.41 per share (the IPO price), and I'm sure they would get it, and it would be a good buy for them. Instantly they would become the #3 player, and there would be heaps of synergies and cost savings. They could also extend LBY's weekly payment option out to Zip's merchants. Zip's biggest mistake has always been to consolidate brands when they acquire things. They should have different brands for different payment options as they would capture a bigger share of customer wallet that way.

Cheers
Marv

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The auditors may have given them a " clean bill of health ", but they are just painting by numbers. The numbers have been created to enable the " clean bill of health ".
Its not the auditors you need to worry about, its the Bankers.
The " clean bill of health " came courtesy of increase in borrowing facility of $10m from Kiwibank and previous cap raise.
Based off current burn rate they will be starting to draw more funds from their working capital loan facility within about 6 months.
The other facility is for receivables, not wages and bad debts.
IMHO, and based on their past responses, their Bankers will demand there is an out for them, and it will be in a lot less than 12 months.
CR is inevitable.

LBY Price at posting: 24.8¢ Sentiment: None Disclosure: Not Held
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0 Great analysis

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