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Cash flow is positive, as the company generated $6.4 million free cash flow for Q1. Balance sheet remains healthy. Working capital ratio is 5.3, with $40 million in cash and cash equivalent, translating into 9.3 cents a share. |
LINC ENERGY: Results are poor and moved from bad to worse. Q3 revenue dropped 51% to AUD 17.2 million compared to prior year's same quarter.
Loss from continued operation jumped to a hefty AUD 74 million, 86% more than prior year's similar quarter. YTD nine months loss from continued operations has clocked almost AUD 134 million, although lower than prior year's YTD of AUD 150 million.
That loss translated into 22.5 cts AUD a share. Its NAV per share has dropped from 45 cts AUD a share in March 2014 to 26 cts AUD (28 cts SGD) a share at end March 2015.
Its balance sheet recorded borrowings of AUD 675 million with equity of only AUD 154 million. Working capital is very tight.
All the hype about restructuring, rationalisation, asset divestment trying to calm investors and hold its share price may be fruitless if there is no concrete plan to reverse the loss.
Management must inform shareholders what has been done, what action is being taken, when will shareholders see results, and its impact in monetary terms on the bottom line and balance sheet.
No point promulgating abstract management ideas like set foundations, implementation of scorecards and quarterly targets, strategic planning sessions, financial compliance and cost control, process maps, gap analysis, etc. etc.
Shareholders just want to see a quick turnaround to consistent, profitable growth as well as strengthen the balance sheet. Don't ask for more cash. No rights issue. No share placement. No bond issue. Otherwise, this share will collapse to less than 20 cents... and then... comes share consolidation.
Prior to his retirement, Chan Kit Whye (left) worked more than 30 years as Regional Finance Director, Financial Controller and Manager in a multinational specialty chemical business. He has played an active role in CPA (Australia) Singapore Branch, taking up positions in its Continuing Professional Development and Social Committees. Kit Whye is a Fellow of CPA Australia, CA of Institute of Singapore Chartered Accountants and CA of the Malaysian Institute of Accountants. He holds a BBus(Transport) Degree from RMIT, MAcc Degree from Charles Sturt University and MBA from Durham Business School.
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