Saturday, May 14, 2011

loosely swinging and largely missing

Kitchenslut reeled off some recent thoughts on CEC at this blog recently from memory while quietly imbibing a Pinot Grigio. Surprisingly, he didn't make a goose of himself. However, the Editor-at-Loose down the road at the Journal of Ignorance, has indeed made a goose of himself with a post labelled as 'analysis' in the hardcopy Weekend Compost.

Loose Goose stakes everything on the history and fate of CEC being a signalled by the largely irrelevant December 2004 half yearly result and says:

"When the next half-yearly financial report was released in March 2005, CEC’s profit had nose-dived to just $658,915, seven per cent of the $9.2 million it had forecast. It was the first public sign of trouble, a tipping point it never recovered from."

Well the half yearly result was actually released in February 2005, not March, and there is a bit of a problem with this 'analysis'. Ya see, the $9.2 million forecast was a full year, not the half. The full year result for CEC was $7.1 million. Below forecast but, close to 80% of forecast, not 7%. There was a reason for that which was explained and reasonable in that half-yearly report which has been ignored.

The half-yearly result stated "substantial profits are locked in stock and land that cannot be brought to account until the first half of 2005 so our half yearly result will not give a true indication of our year to date financial position". This was further explained that there were 123 contracts for land sales conditional following sub-division on the issue of title which had not been issued as at December 31. CEC missed the full year forecast but there was no huge significant hole as in the narrative from the Editor-at-Loose.

The Goose then goes on to hyperbowl the market reaction: "About $8.8 million was wiped off the company’s market value in the space of just a day’s trading." The result was released on Monday February 28. CEC took a hit the next day falling from $1.60 to $1.38 before recovering to close the week at $1.49. As in chart previously posted, CEC shares consolidated and subsequently went on to surge higher and the company rapidly grow debt funded assets all the way to the brink. There was no "tipping point it never recovered from" for another two years!

I think I need another bottle of shiraz to cope with anything further!

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