Hi Timber,Apols if my note was a little cryptic.First item, the...

Hi Timber,

Apols if my note was a little cryptic.

First item, the ASX 4C report. This is quarterly and is a cash report, not an accounting one. For example, the Company Tax is paid in Feb-July of the year after the close of reporting. Say JGL earns a tax profit in the year end June 09. Hooray!!!!

From an accounting view point, the net profit in the June 09 report (in August) is after tax, that is, the tax is deducted.

Then, if the Company is still reporting 4C's, there will be a cash outflow in Q3 10, not Q2 09.

Many people confuse the 4C with profit - but profit is accounting not cash.

My concern is the reported events.

I don't understand why a Network Charge is reported as "relating to prior periods". Network charges are calculated and paid monthly to the DUoS companies. How can a prior period outflow - amounting to nearly 25% of a qtr's charges arise???

Secondly, a prudent hedging policy would smooth cash flows and price risk. Volatile inputs - like energy and green charges (REC's, NGAC's, GEC's and VEEC's) should be progressively acquired and priced. The 4C may lead to a surmise that even if the price is smoothed the cash is not, and that is a potential issue.

There is inadequate info here to decide if they are one off, indeed the commentary could lead to the opposite conclusion.

Besides, IMO, why is a new entrant electricity retailer with a $60m cash revenue cash negative? One of the most recent listed examples Australian Electricity Limited (ASX:AEN) was cash positive by this point, at $52m revenue.

Is JGL's hedging different? Their collections cycle?


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