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Yup certainly no point sticking around now, although I was bang on regarding the cash situation. Worth revisiting at the turn of the year short-wise to see if they can actually start generating cash, but it does look like the next 6months are covered for operational expenditure. I'm not convinced by the bull case yet until the company actually starts generating positive cashflow, but I would understand that if you are already invested a hold stance. Any dips to around 8/9p would be a buy. Gl all.
Also the dread words 'strategic review' have been mentioned. To me it looks like there are quite a few problems with no guarantee of resolution, and there are going to be fire sales of inventories /write offs. Have to see what the placing price is and how much they actually manage to raise. I might close if the placing is around 7/8p but I would think there is still further downside from there, but I am not going to wait for it, the stock is too illiquid.
Hello GFD..... I'm interested to know whether you are interested or concerned to know what the current cash position is? With respect to CM.... He is only the only thing propping up the share price at the moment. Without his buys, this would be drifting. Eventually he is going to run out of funds to protect the share price... Don't you think a lot of this stinks? The company needs director loans to survive cash-wise and needs director buys to maintain the share price? This is only going to artificially inflate the market cap for so long before the camel's back is broken.
No, I still think there is further downside. BOD has been very quiet, and no information on the cash position is forthcoming, which I think is more grim than most here. In fact, I should think it is in the territory of 500-750k right now, assuming they have not taken on more debt.
No, net PRESENT value... I am correct to talk about current cash flow. Given you are long, it is not surprising you the think the risk is my side, but given your investment is in a company with (last time we got any actual figures) a -NPV the risk is imv entirely in your court. I have already side, if the company starts building sustainable +ve cashflow there is no reason to maintain a short.
Hello GFD, Simply put, a company that has more cashflow going out than in and little left in the coffers has a NPV of nil. The company's asset backing is weak and is largely based on goodwill and an unclear valuation on attributable equity. Again, I don't take much stock of EKF's adjust EBITDA and accrued revenue - that doesn't create cash, it creates maybes. EKF's issue for me is that it cannot convert revenue to cash, hence the profit warning at the tail end of last year. With respect to previous takeover offers: past performance is not an indicator of future returns. Just because someone offered a figure in the past, it does not mean that they will again or anywhere near that value. Take a look at Petroceltic as an example. Perhaps with a refocusing in the long term it may turn it around, but - sorry to keep banging on about it but it is a core issue - it does not have the liquidity backing to do anything at the moment. If the company comes out this month saying they have oodles of cash and the flow is positive then clearly I have no reason to maintain a short position, but I rather think they do not and need to raise funds, which if the company is as valuable as you believe they will be able to do by a (discounted) placing. Otherwise, it's more debt which rarely ends well for non-cash generative small caps.
Yes no going concern problems. However, the cash issue still remains for me. This is no 0p share, but I do think that at current debt and cash levels this share remains overvalued until it can get a funding away or clarify its cash position and outflows for the YTD and state it requires no further funding (with hard numbers to back it up). I have a low opinion of 'adjusted EBITDA', it permits the BOD to exclude far too much to make company's profitability seem far better than its cashflow says it really is.
Interesting statement from CM in the annual report: "Cash remains tight due to the impact of the cost associated with the restructuring but as the benefits of the cost reductions flow through, the Board expects the Company to be cash flow positive through the balance of the current year." The second part for me is interesting. They "expect" to be cashflow positive through the "balance of the year". The balance of the year is not now, and certainly is not "by April" as promised. Given EKF "expected" to be positive "by April", I am not sure how much stock I can put by their expectations any longer. The £2m figure for gross cash in the report was at 31 Dec. It is now 1 May and EKF really should be less murky about what its current gross cash position is, whether there has been any increase in debt to prop it up and whether it needs further funding in the near future. Beware of any RNSs about contract wins etc with no financial figures on them in the coming weeks, it could be indicative of a ramp ahead of a fundraise.
Also the cash (we assume cashflow) positive by April statements were my RZ, who has since left in what appear to be acrimonious circumstances and wants his money back. Personally, I think that too much has been promised by RZ and hence the (I allege) boardroom tensions that lead to his departure. Not good in my view, we'll find out soon.