U said it again DOC. "My money is on scenario two. It is clearly...

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Krispytech

4,431 Posts.

19/11/16

20:13

Post #: 20741117
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Originally posted by Dr.Who ↑

willy. Just a thought. At 30 June the company had $83m in cash. I estimate outgoings are in the region of $70m per month so something close to $350m by now. There is no further line credit available. it can only be viable if it is generating cash.

How can they not be earning a profit and still trade? I should modify that to how can they not be earning cashflow and still trade?

The company are on budget in Australia and slightly ahead of budget in the UK as at 30 Sept.

I think the logical conclusion is they are pulling in cash. Now one of two things might be happening.

1. they are converting assets to cash but not replacing them at the same rate of knots - not so good from a profit perspective but good from pulling in cash

2. they are turning over assets roughly at the rate of one case in and once case out plus pulling in cash from receivables.

My money is on scenario two. It is clearly 'finely balanced' because they need to keep the cash flowing in to pay salaries and bills while being mindful of not spending too much investing in cases - yet spend enough to ensure there is an ongoing pipeline of WIP to create moderate growth in future.

The answer is in Australia on budget and UK slight above budget.

I'm totally relaxed but you need to weigh that up for yourself. It is certainly high risk and thing scan change rapidly, then so is investing on the market full stop.

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U said it again DOC.
"My money is on scenario two. It is clearly 'finely balanced' because they need to keep the cash flowing in to pay salaries and bills while being mindful of not spending too much investing in cases - yet spend enough to ensure there is an ongoing pipeline of WIP to create moderate growth in future.

The answer is in Australia on budget and UK slight above budget."

SGH Price at posting: 30.5¢ Sentiment: Buy Disclosure: Held
2 Upvote

0 Great analysis

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