----- Original Message -----
Sent: Sunday, June 24, 2001 6:58 PM
Subject: Re: Re: [sharechat]
....BCH.........CLH.........RMG../ Mike G.
Mike,
Please refer to my post of June 23, 2001.
Readers, please refer to the disclaimer at the end of the
page.
1. Boards of Directors, Management and
staff.
The business of debt collecting , credit
reporting and allied matters is a very sensitive one and the staff need to
have a very high standard of ethics and a good education.
Therefore, both BCH and
CLH spent a lot of time training staff.
You can be sure that the standard of selection
of management staff is very high!
What else can you expect:
Excellent staff will
always seek out
excellent Companies!
The company culture is promoted from the day,
staff are taken on.
CLH has been operating for
nine years and thus have a highly qualified
core of staff and excellent software.
They did expand over the last 18 or so months and
thus incur a certain amount of staff costs. However, they would have hand
picked the new Branches as they had plenty of time to evaluate
them.
As explained, RMG in the
main consists of " Instant Staff " from the
22 businesses which were " merged " in record
time!
2. Accounts.
If BCH wants cash - a rare event
- then it will " shake the money tree " ( make a placement of shares
).
CLH has just
been admitted to the 200 share index and this should be
positive for the share price.
They can also place shares in record
time: CLH is perceived to be a true
Aussie company!
RMG's Current
assets to current liabilities ratio was an
astounding 1 : 2 ( 18.8 mill to 35.4 mill., source:
Annual report ).
A difficult situation to be in and in my opinion
very unattractive to lend money on. A placement based on the current low share
price, will require a lot of shares at a possible heavy
discount.
3. The EBITDA concept used by
RMG. ( Please note that the currency used is $ A: It is an Australian
company ).
Item 3 of my last post referred to a sum of "
$14 mill. before the normal 33% tax
rate. The new tax rate will be 30%. If the shareholder
wants to earn 1 cent / share profit after this full tax rate,
then on 31/12/01, the
EBITDA
will need to be: $ 15.7
mill. #
Deduct:
Interest: 0.8
Depreciation:
1.5
EBTA:
13.4 mill.
Deduct: TAX ( 30%
):
4.0
Abnor./
Intang.
3.6
NPAT ($)
5.8 mill or 1
cent per share ( RMG will have 582 mill. shares
).
# : RMG declared an
EBITDA of only $1.3 mill. for the Jan/ March
quarter.
Let us assume that for the year up to Dec
31, 2001, the EBITDA will be $ 6
mill. On that basis, the
loss will be $ 1 mill.!
This is based on a full tax rate
and deduction of $ 3.6 mill. Abn./ Intang. over 20
years.
As mentioned in my previous post, the full tax
rate will not be paid and RMG may decline to write off the $
3.6 mill. abnormals.
If the combined tax rate and abnormals is entered
as $ 1 mill., then the NPAT will only be $ 2.7
mill. or 0.46 cents per share!
4. Will RMG be taken
over?
A foreign company will be interested in a
fast growing Australian company with no
complications : CLH will fit that
category!
It is virtually certain that
neither BCH nor
CLH will be interested in a takeover of RMG.
Instead, both companies may want to
establish joint ventures overseas at less cost!
Mike, while I like to hold RMG shares, I shall
have to wait for much better news from this company!
Gerry
( Holds BCH and CLH ).
Disclaimer: Readers are not asked to buy, hold or
sell any securities, eg. BCH, CLH or RMG. To do so, will be entirely at their
own risk.
See IRG research reports
