ATM - A2 Milk Corporation Limited

[Snoopy]

Why? They are operating profitably and have cash in hand.

While strictly correct, the ATM operating profit was a mere $10k last year. Less money than the payment they made to their lowest paid part time cleaner. So within the margin of error ATM make no money, by design of course as all potential profits are being funnnelled into further market expansion. Nevertheless ATM effectively have no earnings and therefore no borrowing capacity.

As for having cash in hand, actually you don't know that.

What we do know is that plans to raise more cash are well underway. If there was sufficient cash about they wouldn't be doing that. We also know that cashflow from operating activities shrunk down from $3.647m in FY2013 to a mere $435k in FY2014. We know that the actual cash balance the company has shrunk from $20m in FY2013 to $16m in FY2014 (EOFY 30th June). We also know that due to taking legal action in Australia, cash costs going forwards will be higher than budgeted for. So I would guess the cash balance is now somewhat less than $10m based on those trends. Pretty pathetic for a company that the market values at more than $400m.

All they would need to do is slow down their expansion plans.

I suppose pulling out of the loss making UK market might help.

The plan to increase capital as far as I can see is simply in order to fund a faster growth rate in the US, which has to be their best market.

Probably true. But this doesn't change the fact that ATM are severely short of capital and they will not want to wind back their expansion plans before their intellectual property patents start to expire.

SNOOPY

[airedale]

I take your point Snoopy, that cashflow shrank from 2013 to 2014 but much of that was due to the then high NZ dollar. Was it a foreign exchange loss rather than an operating loss. ok a loss is still a loss...but ?

[NT001]

Snoopy, I think it's obvious that a2MC needs more capital if it is to step up its US expansion. That is very different from saying that unless it raises capital urgently it will have to call in the receiver who would then liquidate the company, starting off by selling off its IP.

You have also speculated that ATM is in crisis and on the verge of receivership because one of its major shareholders might not want to participate in a cap raise. There is no shareholder so large that it can stymy a cap raise by saying it wouldn't take part. It's up to individual shareholders whether they participate or watch their stake being diluted.

We know that ATM has been operating profitably in Australia and have no reason to believe that is not still the case. And do we know for a fact that it is still losing money in UK as you say? Even if it is, I would expect to hear soon that those losses are less than in the initial setup stage. China too should be looking better.

ATM has a gung-ho new US chief who wants to speed things up and has the background and experience to make things happen. I don't see a crisis.

[see weed]

Small amounts of about 5,000 shares keep on going through on the buy side every 2 or 3 minutes. Same thing happened a few months ago but it was the other way round, they were selling every 3 minutes, on one particular day.

[airedale]

Director, David Mair has just disclosed selling 250,000 shares. He is a fund manager for another entity as well as a director of ATM.

[NT001]

Looks weird. As at 3.45pm, there had been 314 trades at an average value of just under $3,500 - some far lower than that. Only on the NZX, not the ASX.

[Bjauck]

Looks weird. As at 3.45pm, there had been 314 trades at an average value of just under $3,500 - some far lower than that. Only on the NZX, not the ASX.

David Mair's disposal was by way of one transaction on the 24th June - if that is what you are referring to. He sold approx. 12% of his holding.
Maybe he thought a concrete bid was unlikely to eventuate....

[NT001]

David Mair's disposal was by way of one transaction on the 24th June - if that is what you are referring to. He sold approx. 12% of his holding. Maybe he thought a concrete bid was unlikely to eventuate....

No, there's no suggestion of a connection between the odd trading today and David Mair's transaction report. Mair, a former director who resigned just before the dual listing, still has 5 million ATM shares in his own name. He has not sold any of these.

In his latest notice he was reporting (as a former ATM director) that a trust company of which he is a director (Forte) has sold $250,000 shares. Not sure whether he was obliged to report this.

[winner69]

David Mair's disposal was by way of one transaction on the 24th June - if that is what you are referring to. He sold approx. 12% of his holding.
Maybe he thought a concrete bid was unlikely to eventuate....

Public Trust Forte Nominees sold these shares, not David Mair

Mair is a shareholder of that company, the reason for this disclosure.

He has said a few times he has nothing to do with the funds investment decisions. When they buy and sell things in ATM, SKL etc they bring him a piece of paper to sign to keep the regulators.

Unless some nudge nudge wink wink stuff going on you can't read anything into this announcement in so far as what Mair may know or not.

[Snoopy]

I take your point Snoopy, that cashflow shrank from 2013 to 2014 but much of that was due to the then high NZ dollar. Was it a foreign exchange loss rather than an operating loss. ok a loss is still a loss...but ?

If you look at note 28.1 of AR2014 Airedale (reconciliation of cashflows with operating profit) , it shows a foreign exchange gain of $1.448m,which is an increase on the gain of $0.545m in FY2013. The biggest single difference year on year seems to be a large increase in inventories $4.838m for the year. Last year saew an increase in inventories too, but that was only $65,000. Not sure why. Building up stocks for new markets?

SNOOPY