John Linton .......always a time for great amusement as the dregs of the ASX reluctantly reveal their status after COB on February 28th.
I always get an early morning dose of amusement each six months when the complete fiction of aanet/EFTel's latest chapter of pure nonsense is finally sent to the ASX at the very last minute. The latest farrago of total inconsistency can be found here:
http://www.asx.com.au/asx/statistics/announcements.do?by=asxCode&asxCode=eft&timeframe=D&period=W
As always the real 'news' is on page 8 where the immediate debts to the company's suppliers (at over $A8 million) now exceed 300% of monthly revenue and the huge discrepancy between net assets and net liabilities has been 'hidden' by listing the huge debt to Huawei for the DSLAM hardware being also listed as an 'asset' because the company is now being forced by its creditors to try and find a buyer as they want their long overdue money. There could be other interpretations of these plain as day figures but it would be hard to go past the one I have suggested. The heavily 'spun' statements on the second half of page 12 have the directors of the company, for the first time though the company's auditors have been saying it for several years, admitting that it just MAY not all be as 'rosy' as they are trying to say it it on all the other pages ("the consolidated entity continues to require the ongoing support of its suppliers").
You should never take pleasure in other's misfortunes but I have always seriously disliked this particular company and their ASX reporting is, for me, a six monthly occasion for serious mirth (if that is not an oxymoron) How anyone with half a brain can describe a company with falling revenues, greater half yearly losses and a balance sheet that shows levels of debt that simply are not credibly repayable is beyond my simple mind.Yet again the auditor's report (the last page of the PDF) calls in to question whether the company can continue. Doubtless the share price (if you can call 1 cent a price) properly reflects what the shareholders think about the company though as the annual report shows the net asset backing for each share has fallen to minus .63 cents even the current share price is an act of faith. Undoubtedly it will all end in tears before bed time.
So with that comic act the curtain falls on the half yearly reporting season. What can be made of it? Telstra's results dominated it just as Telstra dominates the Australian communications industry. They showed that if you spend enough money you can increase your market share at the expense of both your top and bottom lines but that all you are using is your previously banked monopoly profits to give your competitors a taste of what they should have always been experiencing - true competition which will prevent them continuing to enjoy their fat, dumb and happy lethargy by 'sheltering under Telstra's price umbrella'. With only TPG's reporting to come the overall impression is that more spin than usual was used to explain away the overall trend of lower profits and higher costs of operation.
What does it mean for the balance of this financial year? I wouldn't have a clue. From what can be seen from our very narrow perspective we see little innovation by anyone beyond Telstra's money give aways and ever more Byzantine pricing/bundling/obfuscation presentations of what used to be simple and pretty prosaic services. Personally, I would expect more of the same over the coming months. I look forward to seeing the ABS statistics due in early April to see what differences there are between what has been reported to them versus what has been reported to the ASX.
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