Hi Alpha,I've now finished with my divestment work for the...

Hi Alpha,

I've now finished with my divestment work for the evening, Tiara(i) and all. The emails have been sent and further discussions should continue, tomorrow.

Now, I can concentrate on some other matters at hand, one of which was HTA, and on which I took a breather earlier, to comment.

KCG, I will leave to Stocko to comment.

Pete, if you are out there, I received an email, and have since responded back to M. My delay in doing so, as pointed out to M, had much to do with being tied up on the other matter (see, above).

My real subject for comment tonight, however, is TMS.

In passing, I saw the rather disappointing monthly cashflow figures for January. I say disappointing because of the following:

RECEIPTS:

January receipts were $3.391m.

Since July, TMS' monthly receipts were:
July = $14.8m.
August = $14.9m.
September = $10.0m.
October = $10.5m.
November = $11.7m.
December = $7.5m.
January = $3.4m.

This suggests to me the following:
1)
January is easonally lower, by a factor of 1/3 or more.
2)
Adjusted for this, the 2H02 monthly figures suggest that Global TV + OmniLab is running at a sub-$60m annualised level (and quite possibility, near term flat comapred to FY02 revenue outcomes).
3)
Val Morgan made a full contribution in all months other than in December (ie: the effective transfer of VM to the exhibitors occurred mid- or early-month).
4)
VM's revenue run-rate was running higher than anticipated by year end (ie: closer to $30m in the traditionally weak exhibitor (hence advertising) period.
5)
Adjusted for this, annualised VM revenue in Australia(+) for FY03 appears to have been tracking $70m on an annualised basis, up about $5m year on year (adjusted for residual international operations).
6)
Bear in mind that the VM figures quoted are for Australia only given the September exit from the USA, etc. That is, the July and August figures include full USA contribution, and a 1/2 contribution in September. The VM Australia(+) figures include full contributions through to November, and a 1/2 contribution in December.


NEGATIVE CASHFLOW:

In January, TMS' cashflow was negative $2.102m (YTD of -$3.115m).

This suggests that TMS may again be in breach of its banking covenants to the ANZ.

More interetsing, however, was thefact that by end January, none of TEN, PBL or ANZ had injected (as yet) any of their contractually proposed equity injections (ie: the $13.4m+).


NO CASH LEFT:

By end January, TMS' bank balance had been reduced from $600k (positive), to a negative overdraft balance of -$1.6m.

This meant that TMS had no cash left in the bank and was relying upon its existing banking facilities in order to get by.

In actual fact, TMS' gross overdraft position was much worse, at -$2.67m (previously -$525k). Offsetting this was term deposits /guarantees of $1.113m.

At end January, TMS had banking facilities in place of $59.5m, of which $57m had been utilised.

Another $2m negative cashflow result for February (since passed) would mean that TMS' banking facilities would be fully drawn down and committed.


OVERALL:

This reuslt has been less than satisfactory, as TMS' available cash balance of ~$5.5m at end November has been reduced to -$1.6m by end January.

It is, therefore, clear that the susbtantial cash outflow during December was in satisfaction of acrued theatre rental liabilities, etc.

In other words, TMS' cash cupboard has been stripped bare and yet we are all waiting for the Company to explain what it has done, and when it is going to call the General Meeting to approve of the placements, and of the Rights Issue.

On current timings, even if this were to occur tomorrow (now, today), a General Meeting could not convene until end March, early April, with the Placement not being finalised until late April, and the Rights until mid-May.

TMS for the time being is, therefore, going to struggle, rather than recover. It is clearly being kept in a dulled sense of awareness.

The question though is why, particularly as the potential for recovery in TMS is hosted in its Global TV business.