Hi HarkenBanksNo Bargin here. The devil is in the detail but you...

Hi HarkenBanks

No Bargin here.

The devil is in the detail but you don’t have to look too hard!

Slide 9 of the presentation deck has three very telling bullet points:

Operating Cash Flow of $21.9m

• Represents 156% of EBITDA, adjusted 141% of EBITDA

• Forecasting 85%+ cash conversion for FY21

• $2.9m payments received in advance of services

Why would cash conversion drop from 156% to 85% in a business forecasting no growth? Well clearly they have held back a monstrous amount of operating expenses at 30 June!

If you look at the Statutory accounts you cannot find the $2.9m on the Balance Sheet (refer notes 8, 10 & 11 of the Stat Accounts) meaning the $2.9m is in the Fy20 revenue and EBITDA figures. Surely this overstates the FY20 result by the full $2.9m!

Clearly RXP is out of cash hence the introduction of an “underwritten” DRP!

If you back out the $2.9m of pre-paid revenue, revenue declined 11% ($123.9m v $139.1m).

It seems like a lifetime ago this company guided $176.4m of annual revenue post the acquisition of The Works in August 2017.

Since that date RXP has fallen backwards on all key metrics.

No cash, declining EBITDA margins and a perpetual cycle of re-building.

Not unlike TNT, plenty of smoke and many mirrors!