The latest 4c suggested they burned cash around $1.3m However in the additional notes they referred to receiving $1.1m after the month cutoff and the debtors grew grew by $827k and stock by $56k in the period December 09 to 31 March 10. Trade and other operating liabilities dropped in the same period by $367k. This means that under normal conditions their cash flow should roughly equal their accounting profit or loss. This is totally consistent with a business that is a trading company or an annuity type company as it does not have deep cycles of work in progress or project based income. I may be wrong but I think management also cleared this up around AGM time in that they indicated that the ramp up would not need further cash.
Given that we expect a small profit in this quarter and I would expect that this profitable process should endure into the next period than they should start generating cash in each quarter. In addition to that they collected 1.1m of debtors so should have around $3m as a base level of cash ($2.4m and at least 600k of the increase in debtors) so they could repay Lord out of that. Given the debtors book of say $1m they would/ should be able to secure a banking facility of say $500k to fund working capital movements.
So if we are to trust management ( I have absolutely no reason at this time not to) than assuming we are moving into profitability we should be self funding and able to repay Lord as well.
By the way I note my sentiment as none because I don't think I can draw sufficient conclusions because there has been a lack of management reported news.
AHL Price at posting:
0.8¢ Sentiment: None Disclosure: Held
