Forum Archive Index - May 2001

["Peter Maiden" <pmaiden@xtra.co.nz>]

It took RMG until the very last moment in March, and then at an almost indecently late hour on a Friday night, to announce last year's result.

Two amendents later I think everybody has agreed that the RMG loss for the year was $5.4M. Reading between the lines suggests some heated discussions with their auditors took place before the final number was released.

You have to wonder how  an 'abnormal charge of A$1.129 million due to an unreconciled amount in its operating bank account' came about.

 

And when the final figure was eventually reported this statement is stretching the truth a bit  -  'The company has reported a net loss after tax of $5.4m with a positive trading result for the full financial year of $647,000'.

It now appears that the publicists have come on board and there is a regular stream of good news reports - and look whats happened to the share price.

It takes me back to the heady days of Advantage Corp. Comparing the language used in Advantage announcements back then and the recent RMG ones it would not surprise me if they were written by the same person.

The latest RMG announcement  that the quarter produced revenue of A$15.5m with an unaudited EBITDA of A$1.3m certainly is good news - compared to previous performance.

The highlight of the performance is supposedly improved  EBITDA margin - ie 8% - and that RMG is on track to deliver industry competitive margins. RMG have a  long way to go to get to the 45-50% margins that Baycorp consistently achieve.

RMG have a large amount of goodwill ($70M) that still needs to be expensed and this will affect earnings for many years to come. The RMG write-off policy is still not quite clear but even at present levels of EBITDA I would say that RMG is still trading unprofitability after interest, tax, depreciation and amortisation is taken into account.

Another factor around RMG is the 337 million shares in escrow until June 20th. It has been reported that RMG was holding discussions with these shareholders, presumably asking them to hold on longer, and not upset the market with a large sell off.

I would not be surprised that at the upcoming AGM RMG shareholders will be told that  the owners of these shares have decided to hang on to them because 'they are good value'

That would boost the share price a bit more.

Maybe the cynic coming out in me but so much 'good news' after a long stoney silence isn't really good news for small shareholders. One really needs to wonder whether there are ulterior motives in the sudden change in heart by RMG in keeping the market informed.

 

Interestingly most of the recent buying (or selling) activity is on this side of the Tasman. Are New Zealander's being taken for mugs?

 

Cheers

 

Peter

 

Dusc - held some RMG in early days and unashamedly (and pleased) took profits at low 30's