1/9
In a previous #HMI thread, I highlighted that the $600k write-down in the FY2021 accounts meant that trade debtors (so effectively trade receivables) almost doubled between YE 2020 and YE 2021.
$924k vs $1.824m
In a previous #HMI thread, I highlighted that the $600k write-down in the FY2021 accounts meant that trade debtors (so effectively trade receivables) almost doubled between YE 2020 and YE 2021.
$924k vs $1.824m
https://twitter.com/BigBiteNow/status/1542520338914766848
2/
Due to the way HMI's business cycle runs this is a theme that compounds as sales expand along with prices.
Meaning that if investors simply concentrate on cash on hand then they are misunderstanding how the business operates.
Due to the way HMI's business cycle runs this is a theme that compounds as sales expand along with prices.
Meaning that if investors simply concentrate on cash on hand then they are misunderstanding how the business operates.
3/
This is can be proven by simply reviewing the Verde Agritech quarterly accounts once more.
For revenues Verde count the full price including freight which indicates that they are responsible for this. Unlike HMI which sells at the gate.
This is can be proven by simply reviewing the Verde Agritech quarterly accounts once more.
For revenues Verde count the full price including freight which indicates that they are responsible for this. Unlike HMI which sells at the gate.
4/
Therefore we have the following,
(Period, sales price, sales, trade receivables at end of the period)
2021
Q1 = $50 @ 17,000 = $2.86m
Q2 = $56 @ 96,000 = $5.41m
Q3 = $69 @ 154,000 = $8.23m
Q4 = $81 @ 134,000 = $15.06m
2022
Q1 = $101 @ 112,000 = $17.62m
Therefore we have the following,
(Period, sales price, sales, trade receivables at end of the period)
2021
Q1 = $50 @ 17,000 = $2.86m
Q2 = $56 @ 96,000 = $5.41m
Q3 = $69 @ 154,000 = $8.23m
Q4 = $81 @ 134,000 = $15.06m
2022
Q1 = $101 @ 112,000 = $17.62m
5/
So taking a couple of examples.
Q2 2021 generated $5.38m in revenues for Verde but there was a net $2.55m (so c. 50%) increase in trade receivables.
Q4 2021 generated $10.85m but trade receivables were up $6.83m or 63% of total revenues booked in the period.
So taking a couple of examples.
Q2 2021 generated $5.38m in revenues for Verde but there was a net $2.55m (so c. 50%) increase in trade receivables.
Q4 2021 generated $10.85m but trade receivables were up $6.83m or 63% of total revenues booked in the period.
6/
Some periods were far less than this and there could be many reasons as to why. Such as seasons, crop, credit lines, fertiliser costs etc.
What makes this comparison even more interesting is the difference between Australian and Canadian accounting.
Some periods were far less than this and there could be many reasons as to why. Such as seasons, crop, credit lines, fertiliser costs etc.
What makes this comparison even more interesting is the difference between Australian and Canadian accounting.
7/
Verde books revenue once the product has been delivered to the customer.
HMI books sales at the point that a deposit is taken. Meaning there is potentially a longer period to wait to get paid because delivery may trigger some payments that aren't attached to harvesting.
Verde books revenue once the product has been delivered to the customer.
HMI books sales at the point that a deposit is taken. Meaning there is potentially a longer period to wait to get paid because delivery may trigger some payments that aren't attached to harvesting.
8/
Despite having actually delivered the product to the customer Verde still has to book a significant portion of its revenues under trade receivables. Indicating and supporting HMI's own reporting that payments often follow credit cycles commonly seen within the industry.
Despite having actually delivered the product to the customer Verde still has to book a significant portion of its revenues under trade receivables. Indicating and supporting HMI's own reporting that payments often follow credit cycles commonly seen within the industry.
9/
As I have demonstrated and argued previously the significant increase in sales and prices takes time to move through to the cash position.
But the cash will show itself significantly in the form of trade receivables which in the case of Verde is up over 500% in just 1 year.
As I have demonstrated and argued previously the significant increase in sales and prices takes time to move through to the cash position.
But the cash will show itself significantly in the form of trade receivables which in the case of Verde is up over 500% in just 1 year.
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