Half Year Report

I would say the half-year report is going to make very interesting reading indeed.

The quarterly 4C's unfortunately don't show the true level of trade creditors & that's precisely what we do need to see to judge how much progress the business is actually making.

We had A$108,240 of trade debtors (see page 46 of annual report). To that figure we need to add A$394,861 from the September quarter (A$988,861 less A$594,000 ) and A$755,000 from the December quarter (A$1,8750,000 less A$1,120,000).

Which means we should be receiving additional cash of A$1,258,101 in the coming months.

This is due to the extend payment terms that go with some of the new contracts, no longer are we mainly on net 30 & net 60 day payment terms. We're now on net 30, net 60, net 90, net 120 & possibly on net 180, so we have no idea which contracts or amounts fall into each category. So we have no idea how much of that overall figure will show up in the March quarterly, June quarterly or even September quarterly.

Make no mistake A$1.25M is a lot of money, is more than the A$1.120M we received in the last quarter just to put it in context.

I suspect we are going to see the trade debtors amounts increase in size over the coming quarter's as the business grows.

On the other side of the equation comes trade creditors (see page 48 of annual report). That figure at the 30th June 2018 stood at A$632,453 (in other words there was a lot more cash to be paid out than was still due to be received [over A$524,000] at that moment in time).

As I said earlier the 4C's don't allow us to see the changes in outstanding trade creditors, so we have no idea how much is still to be paid until the half-yearly report is published.

So I'm going to put some range bands down ahead of the announcement and how I'll view them.

If the trade creditor figure is under A$1M then that is excellent news indeed.
if its between A$1M - 1.25M then I'd view that as still good news.
if its between A$1.25M - A$1.5M its ok with a slightly positive trend to it.
if its between A$1.5M - A$1.75M it would be ok to slightly negative (depending how close to the higher figure it was)
if its between A$1.75M - A$2M then that would be on the disappointing side of things
& if its over A$2M then alarm bells will be sounding

LOTM