AnnAik Ltd - How much longer can its shrinking cash balance last?

Saturday, 20 February 2016 - AnnAik has been hit hard by the falling oil price.

Its cash reserves have been shrinking and does not appear to be sufficient to repay debts due in the next 12 months. It will have to roll them over, even as interest rates rise.

It has a new manufacturing business and wastewater treatment associates, but they are not yet pulling their weight.

Investor Central. Asian insights for global investors. We ask the tough questions of Asian companies to which global investors need answers.

Question

1. How much longer can its shrinking bank balance last?

AnnAik had S$15.7 mln in cash in FY12, but it burned cash in FY13 and FY14, which has led to its cash holdings at the beginning of FY15 at just S$7 mln.

Then it burnt some more in the first half of FY15, and a further S$625,000 on operations.

Question

2. How will it pay back its loans?

Besides a declining bank balance, AnnAik had debt of S$24.3 mln as of H1FY15 that it needs to pay back within one year.

It borrowed S$8.3 mln from banks in H1FY15 but paid back only S$2.8 mln.

It also paid S$6 mln in cash to its suppliers.

This means it is borrowing money from the bank to pay its suppliers.

With interest rates rising, how will it work its way out of trouble?

(Read the full story to get all seven (7) questions)

We have invited the company (kkng@annaik.com) to an on-camera interview, and/or to reply to our questions in writing.

At the time of publication we have not received a reply (which is why you are seeing this message).

We will update this report if we do.

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