It looks like the iPhone and Smartphone sales are controlling M1’s biggest problem the last few quarters, which is high churn rates. Here is a summary of what I think of their results:
- Revenues improve since 2009, as well as from first quarter
- Net Profit remains largely the same as previous quarter
- On the balance sheet, net cash position is actually worse.
- At Current liabilities, there was a 50% reduction in current liabilities attributable to lower short term debts.
- This reduction was largely offset by a 250 million long term debt borrowing. M1 Limited have kept their debts fixed at 250 million.
- This is where it matters. Due to Trade Debtors increase and a reduction in Trade Creditors, Net Operating Cashflow fell from 58 mil to 20 mil!
- Comparatively, Free Cashflow is worsening from 2009 or previous quarter. It is negative 55 mil.
So judging by the results, although the subscriber base is growing, its not actually improving their situation.
The ability to pay dividends conservatively depends on how much free cashflow they have.
Here is a chart showing the Free Cashflow after paying dividends (please ignore the title of the chart)
What it shows is that after paying out dividends what is left have been negative.
Even after paying out dividends, cashflow left to go into retained earnings have been reducing.
I was expecting better results but this isn’t much to shout about.