Consider they have no debt and $4m cash with zero monthly burn.
As at 30 Jun 08 on the Engin Annual Report there was $6.1M in debt.
As at 30 Jun 08 in the Engin Annual Report there was $6.5M of cash (plus approx $2.5M of debtors, stock & other).
As at 27 Nov 08 the chairman staes they have $4.3M in cash, no mention of debtors, stock or other, presume $2M?.
These are the basic asset & liability facts that I can see. Conclusions are:
Debt is unknown, likely to still be around $6M?
In 5 months there has been a reduction in cash or a loss of $2.2M, carried forward this would be about $5M cash loss for FY09.
Cashflow breakeven is of course completely different to profit, the chairmans address yesterday reffered to aiming for cashflow & EBITA breakeven for FY09. I am finding this hard to comprehend from basic maths.
If the revenue for FY09 mirrors FY08 with say a 30% increase that would be $19M x 1.3 = $26M. At the stated margin of 40%, this gives an FY09 profit of $10.4M. Given last years wage bill alone of $12M without any other Opex (approx $6M not including ANY marketing expenses) they would be in a loss. Ok, so they have made staff reductions of 53%, lets say the wages are cut to to say $8M, plus the Opex (approx $6M) + $6M of OS debt, they still can not make EBTIA anywhere near breakeven. Cashflow positive remains a possibility if debt is not paid but surely not profitability.
If cashflow positive is acheived it will likely be at the expense of the remaining cash & debtors. It is clear that there will likely be a requirement for an additional cap raising sometime in the next 6 months?
Overall, Engin has appears to have changed it's financial course and slowed the massive monthly losses down and this is a good thing however without proper financials it really is not possible to make accurate conclusions about how they are really tracking.
I still say that Seven is a predatory shareholder and expect Seven to engineer a situation where it can take the remain shares for 2-3c by way of a Seven underwritten cap raise/issue in coming months.
Because of the the unclear financial position & more importantly the predatory Seven takeover possibility, I believe an investment in ENG is still too risky at much over 1.5-2c.
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- the bleed has stopped ! breakeven achieved.
the bleed has stopped ! breakeven achieved., page-4
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