Fellow Holders
Further to my earlier post - one thing I find in the report that we should keep a close eye on is credit control across the group. "
Currently there are no individual credit limits set, however going forward this will be considered by the Audit and Risk Committee and the Board to improve controls over credit risk." (p. 64 2015 Annual Report)
Counterparties without external credit rating *
2015 $’000 2014 $’000
Trade receivables
A customers (aged 0 – 30 days) 2,357 1,581
B customers (aged 31 – 60 days) 509 485
C customers (aged 61 – 120 days) 652 311
D customers (aged 120+ days) 293 76
Total trade receivables 3,811 2,453
As can be seen above - the report notes that receivables older than 120 days has grown from 76k in 2014 to 293k 9n 2015. Receivables between 61 and 120 days have doubled. Across the board the accounts receivable have grown by around 1.4m since 2014. To some extent this is understandable when building a client base and it is, I believe, a signal of a growing business. Also, some of the receivables still outstanding will be ongoing contract payments. However, all contracted clients are normally subject to a credit check. Try getting a mobile phone on a plan without the telco provider checking your credit history! Cash management is crucial. I am confident that they are on top of it but something for us to keep an eye.
Fact of the matter is, that receivables are shareholder funds and the report is produced so that we have access to this information and can ask the appropriate questions of our management and board should we so desire.
A good report this one - believe me I am looking for the issues - something that will tell me why a share of a profitable company is only valued at 13c? I have to admit - it is tough to finding a gap. Some spec companies (burning cash as opposed to making it) are twice the price of PEH - figure that out? And unlike a typical spec company - PEH is not overburdened with having a huge number of shares on issue.
Will continue my read
