Forum Archive Index - August 2001

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

Curious about the RMG figure of $200,000 EBITDA in their half year announcement I thought I would seek out their cash flow statement.

 

Companies like showing a positive EBITDA when the overall picture is a disaster - it conveys that at least the company is cash flow positive.

 

However in the case of RMG this is not the case.

 

From their half year announcement RMG collected $30.1M from their customers but spent $32.5M paying suppliers and staff and paid $0.8M in interest.

 

At an operating level RMG had a negative cash flow of $3.2M.

 

No wonder RMG have had to take the action that they have. Couldn't have carried on much longer at this rate could they?

 

But one thing that must be a concern for RMG is that even though they have made a provision in the P&L for all the redundancies it appears as if they have yet to pay them out. The provisions in the balance sheet have increased by $6.9M - which suggests they still need to find the cash for this.

 

Those who converted their options to shares might like to know what happened to the cash.

 

RMG got $6.9 from the proceeds of share issues and options.

 

Of this $3.2M went in running the business as described above. They purchased $1.1M of fixed assets (was this the building in Melbourne), got $0.4M from selling some investments and repaid some loans $1.5M.

 

This leaves $1.5M and they have borrowed another $3.2M which neans they have increased their cash poistion by $4.7M over the last six months.

 

Total cash on hand as per their balance sheet is $6.0M   - which stated has to be ear marked for the restructure etc.

 

Not a very solid position and one that will obviously stretch the abilities and talents of Mr Boult.

 

Peter

 

 

No