Ann: Market Update, page-11

In some ways I think there this announcement wasn't that surprising. Sure it was disappointing but the half year results were already pointing to a breakeven result.

Apologies for being slightly off topic; I was trying to work out what profit WTP made but the accounting standards for construction companies make the earnings quite hard to grasp. I'm no construction accounting expert but I did this simple exercise on cash to see how the cash uplift from 2013 to 2016 was generated.

	Column 1	Column 2	Column 3	Column 4
0	Based on balance sheet 2012 - 2016
1	Closing net debt - 2012			-    66,157
2	Closing net cash - 2016			233,004
3	Increase in cash from 2012 to 2016		299,161
4
5	Based on cash flow statement (2013 - 2016)
6	Total operating cashflow			428,541
7	Less: total net purchase of PPE			-    69,469
8	Less: total dividend and buybacks			-    14,433
9	Operating c/flow less capex and div + buyback			344,639
10
11	Changes in working capital (WC) excl inventory	2012	2016	Difference
12	Trade receivable	185,843	141,831	44,012
13	Trade payable	- 300,821	- 301,411	590
14	Change in working capital			44,602
15
16
17	Operating cashflow less capex & buybacks		344,639
18	Less: cash increase from change in WC			-    44,602
19	Net cash raised in 4 years incl invstmt property sales		300,037
20	Less: cash generated from sale of investment properties			- 175,322
21	Net cash generated from operations			124,715

Note that the figures above are based on aggregate figures.

Total cash generated was approx $300 million over the last 4 years (which is proven in the net cash difference and the operating cashflow calculations). So it appears that the cash profit from operations was $124 million which is more than the aggregate reported net profits.


Although cash generation is good, this management has overseen massive value destruction from all the impairments over the last few years and has today indicated more impairments to come. I think there is possibly one more impairment from the mining side of the business, which is disappointing as mgmt should have bit the entire bullet last year. But I think after this hit, the balance sheet should be pretty clean.

On one hand, the share price is really cheap as surplus cash (cash + receivables - payables) of 52 cents but on the other hand, there is a looming construction slowdown.

http://chasingvalue.com.au/