The release of full year (preliminary) results is due by the end...

The release of full year (preliminary) results is due by the end of the month, some 9 days away.

What we know is that the company has had tough trading conditions as exhibited in the first half results.

The second half should not be markedly better (if at all).

The company is NOT generating sufficient funds from operations (again first half results). This will adversely impact its strategies.

Subsidiaries are for sale (refer article in Australian newspaper). The realities for the sale process are that the due diligence process will be protracted and thorough and take some time. Additionally, potential purchasers know that the company is stressed and will therefore likely offer (if at all) low ball prices for the subsidiaries.

It is not feasible for the company to take on more debt (if at all). Therefore any capital must come in by way of an equity issue. Such an issue will be dilutive and have an adverse impact on the share price (could be substantial).

When results are announced key items to look at are:
-Cash position (differential from 1st half results);
- Working capital - composition, changes, receivables/payables - amounts and changes, and write-offs if any;
- Provisions (changes from first half);
-Liabilities - amounts, term (current vs long term);
- and so on.

Be careful as the recent increase in the share price may be a false dawn, with future pain to come.