Ann: Appendix 4C - quarterly, page-30

I admire some of the positivity, I really do, but i do not understand it. I am still shaking my head.


A couple of points for consideration- IMHO It is apparent that CCE are running out of money at a rapid rate. Outgoing versus incoming is still dreadfully disproportionate, however understandable whilst costs are going out the door for Northam. Now it can also be argued there are growing pains, which I would agree with but I still think that structurally things are not right.


However as investors, we would never know because as per usual, Carnegie are never transparent in their disclosure.


Projects still seem slow and underdone financially according to friends in the industry. Example - $6.8million for 4.5MWh (installed $1.511 $/MWh) at Kalbarri will be lucky to breakeven and Newcastle is no different -$7million for 5MW (installed $1.40 $/kW). It looks like projects are been priced at or below the real costs. Either this is a deliberate ploy to maintain revenue to stay afloat or CCE still do not understand project costs. Either is not sustainable.


Staff expenses and administration cost are astronomical for a business that turns over what it does. Especially with the constant losses it has been running.


So looking forward - $5.2million cash and cash equivalents with $11million cash outflow this quarter. Some will come back in customer receipts but this is seriously starting to get precarious. No revenue from GIMG for at least a couple of months and I would imagine Northam won’t see revenue for at least 8 months as well. Both of these projects main revenue source won’t be seen for 14 and 18 months respectively because LGC’s are created on an annualised basis.


At the same time, new debt coming into play hurts and overheads (700k pa for premises / occupancy expenses) seems very high for this business. Although If you look at sales revenue (16-17) versus occupancy or rental, it sits around 15% which is high, but not completely inappropriate.


Kemberton and Mungari are just pipe dreams at present. The “right to negotiate a lease” is wonderful but really announcement filler. I would imagine they won’t see the light of day for at least 18 months.


I now worry also about Albany, it seems to me that we shareholders and the market have been sold a very questionable story about this project. The fact that Synergy were never consulted I believe raises the usual question marks about the truth of what CCE’s releases to the market.


It’s now all about timing. We need everything to go right in the coming months. Absolutely everything or I suspect we are very close to tipping. Then it becomes a fire sale and a slippery road to ruin.


I don’t profess to know what the solution is but I do not believe a CR is the answer. CCE seriously need to look at their cost base. I’m sure they would all-ready be considering the sale of some of the above mentioned assets. Reduce staff numbers (which I do not want to see, but perhaps necessary, also maybe why Aidan has not been replaced), trim the board, reduce board members salaries and bunker down.