All the above information was taken from note 26b-Liquidity Risk in the FY2014 annual report. The equivalent information is not so neatly tabled in the FY2015 annual report. When presentation of results changes from year to year, I immediately become suspicious: What has the company got to hide by changing their result presentation format? The current account information that I seek is still in the FY2015 annual report, but it is scattered. Let's see what happens when I bring it all together again.
Financial Assets |
0-12 months |
Reference |
Cash & Cash Equivalents |
$12.339m |
AR2015 p32 |
Financial Receivables Contractual Maturity |
$74.174m |
AR2015 p53 |
Reverse Annuity Mortgages |
$1.603m |
AR2015 Note 16 |
Total Current Resources |
$88.116m |
(addition) |
Financial Liabilities |
0-12 months |
Reference |
Current Liabilities |
$79.629m+$37.539m |
AR2015 p44 |
Total Current Liabilities |
$117.168m |
(addition) |
What we have here is an on paper 'theoretical' current shortfall of:
$117.168m - $88.116m = $29.052m
Of course there are ways to make up this shortfall.
1/Some of those account receivables could be rolled over into new business, thus making the 'theoretical' shortfall disappear.
2/There is $8.984m of stock on the books at the 'Fleet & Auction' division, that could be sold for cash.
3/ Retaining half (company policy is to pay out half of earnings as dividends) of the profit of $10.050m budgeted for the ensuing year.
4/ If any of the shortfall remained, the difference could be borrowed under the company's banking facilities. However, information on the capacity of spare banking facilities available is not listed in the annual report.
The test I am asking TNR to meet is a follows: Over the twelve months from balance date:-
[(Contracted Cash Inflow) + (Other Cash Available)] > 1.1 x (Contracted Cash Outflow)
=> ($88.116m+$8.984m+0.5x$18.050m) > 1.1 x $119.459m
=> $106.125m > $131.405m (this is false)
The theoretical shortfall of $27.278m represents:
$27.278m/$142.827m = 17.7% of the end of year loan book balance
In summary, not a good result compared to the strong cash positive position of last year. The contractual cash deficit position of TNR is substantial, greater than the (record) full year profit in FY2015 of $18.05m!