Hi, Im back again to share more views and news on what I have discovered about my company Mission NewEnergy, a renewable energy company that produces or is trying to produce Biodiesel. I say that, as at this point in time I am actually confused as to whether they are producing anything at all at present! My understanding (so far) is that they have entered into joint venture arrangements with other companies that either haven't worked out or are still in the progress stage.
To explain further, I will summarise what I have picked up from the 2014 Annual Report and a couple of articles I have found. My impression is that the company is struggling and is frantically trying to find some way of making serious money.
Of course, the annual report is a big report and a lot of it went straight over my head. But I had a fair understanding of the financial reports as I have been a Financial Accountant for a while now.
2014 was a year of restructure for the company, which has been ongoing since 2012, due to negative market conditions. The company has had to sell refineries and restructure its convertibles notes. What are convertible notes?! I struggled with this as I had no idea so a look on the ATO website states (https://www.ato.gov.au/general/capital-gains-tax/in-detail/shares,-units-and-similar-investments/convertible-notes/) they are some sort of investment made in companies which they have to repay with interest if I understood correctly. Mission NewEnergy owes a significant $25m in convertible notes. The good news is they have managed to move the payment due date to 2018, so they have more time to start generating some profit.
Although total revenue was up to $9.7 million from $8.2 in 2013, the company made a loss of $1.09 million in 2014, compared to a profit of $10 million a year earlier. Looking at the balance sheet, net assets are currently a deficit of $11.4 million. I found this quite odd, however the report states this is due to the impairment of its refineries. I'm not sure whether that is normal practise or not. No dividends were paid which must be to do with the financial position of the company and the need for cash. After all, cash is king! Cash flow wasn't great as there is a very significant deficit in cash used in operating activities of $2.9 million. The bank balance at the end of the year was $451k. That doesn't seem a lot to me, especially with $25 million in convertible notes to repay!
So what is Mission NewEnergy doing to manoeuvre itself out of its current position? What is it's strategy?
The group has decided to sell its 250,000 tpa biodiesel refinery for an expected US$22.5 million (approx. A$25 million) http://www.reuters.com/finance/stocks/MBT.AX/key-developments/article/3060676 and ASX announcement here http://www.asx.com.au/asxpdf/20140901/pdf/42rxhxqr1h71cs.pdf
The group expects the sale to have a positive impact on its balance sheet and shareholder earnings. This will allow it to focus on its joint venture relationships and other opportunities that may arise.
In my view this sale had to happen for the company to remain a going concern. It will be interesting to find out what's been happening since the 2014 annual reports were published. I will endeavour to update the blog soon. I hope I didn't waffle too much!
No comments:
Post a Comment