Emerson Stewart Group Limited (ASX: ESW) advises the market of its Q3 Appendix 4C Quarterly Report in the attached terms.
As foreshadowed in its 26 February 2009 announcement to the market, operating conditions for the 3rd quarter 2008/2009 proved to be challenging, resulting in net cash outflows of $0.42 million for the quarter, and a 9 month cumulative net cash outflow to 31 March 2009 of $0.8 million.
In addition to relative revenue decline on account of client project commencement delays and deferrals of client projects in progress, especially in the resources sector, other major contributors to this position include the continuing non receipt of around $1.2 million in undisputed receivables from Windimurra Vanadium Limited (Voluntary Administrator and Receivers Appointed), as well as some $0.4 million in continuing investment in the Company's future with respect to its people and systems development.
In anticipation of there being little, if any, improvement in market conditions to 30 June 2009, prospects for earnings and cash flow for the Company for the 4th quarter of 2008/2009 remain modest. However the Company has actively taken steps, and implemented strategies, to manage expenditure, and to adjust its operations to respond to the change in market conditions
ESW anticipates being in a position by mid/late May 2009 to give the market guidance as to its projected full year profit performance to 30 June 2009, subject to the final recoverability of the Windimurra receivable, which, as previously reported, on a worst case outcome, could have up to a $0.7 million impact on full year NPAT.
Other than for the foregoing, the underlying cash position of ESW remains robust and sound, with around $10 million cash at bank and on deposit as at 31 March 2009.
Accordingly the Company is well poised to take advantage of business acquisition opportunities that may present themselves, as outlined in the Company's IPO Prospectus issued in 2008. In this context, the Company continues to actively review an increasing number of business opportunities in need of balance sheet stability, strong management and a vision for the future. However the Company remains selective in its approach to ensure that any acquisition should be shareholder value accretive.