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TMS 0.0¢

someone was asking about this

  1. golam

    477 posts.
    Network Ten, PBL, Consolidated Press Holdings and ANZ together owning 63% of all the shares.The debt is high but as part of the capital raising in May last year Network Ten and PBL guaranteed $11m of the debt.
    For those who don't know about TMS, think Global Television who produce Hi-5, Australian Idol, Neighbours, Rove and sports coverage including NRL, AFL, Aust domestic and International cricket, V8 Supercars, Australian Formula One Grand Prix, Gold Coast Indy, Rugby World Cup, etc, etc. Customers include Network Ten, The Nine Network, Foxtel and Fox sports, Grundy Television, Southern Star Endemol, Roving Enterprises, Granada Productions, Hi-5 Productions, Walt Disney Television, TVSN and the Queensland Turf Club.
    The big shareholders didn't recapitalize the company in May and then guarantee $11m of debt to watch it go broke.

    Concerning the high debt, the bank facilities were negotiated for 3 years under a new agreement dated 2 May 2003. These facilities are required to be reduced by surplus working capital and non-core asset sales. Debt was $42.7m in June 2003 and in the chairmans address it was projected that by the end of December 2003 the debt would be $36.5m. It is also worth noting that ANZ subscribed to 100m shares at 2.5c in the placement in May. TMS clearly has the support of it's banker ANZ.

    I liked the announcement concerning the CEO who has a great track record including at Global Television. Also his potential remuneration is 50% performance related which is the way it should be. From the announcement it sounds like TMS is in good shape operationally, the only issue is the debt but that is being repaid very quickly and could all be gone in less than 3 years.

    The chairman projected that "by the end of December 2003 the debt balance will be approximately $36.5m". The actual debt came in at $36.5m with $4.5m cash in the bank. Net operating cash flows were $4.4m for the 6 months to 31 December so the share price looks too cheap at 5c which equates to a market cap of less than $50m.

    Net operating cash flows were $4.4m for the 6 months to 31 December. While cash flow and profit are not the same it still provides a good indication. On an annualised basis TMS would seem to be selling at less than 5 times cash flow so look like OK buying.

    If last year is any guide then January may result in a negative cashflow. What may be more important though could be the interim report due at the end of February which could well be positive in it's nature. The TMS share price got moving immediately following the chairman's address at the AGM in November.

    At 3.7c the company has a market cap of around $35m and operating cashflows of $4.4m for 6 months so it can't be expensive at this price.
    From a TA point of view, it is looking good. I dont see how I can go wrong at these prices.

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