forecast pe at 6, page-20

I agree that looking at the cashflow is a much better indication of the company performance than the headline profit figure.

last year cashflow was $494K. this included about $67K paid in interest on a loan that is now paid off, so this should not be paid this year and they should actually earn a small amount of interset.


They are targeting a full year net profit of about $1.5M compared to almost $1M in the previous year. Just how much of that $0.5M increase in profit comes to increase cashflow we will have to wait and see.

$67K of the increase in profit would be from no longer paying the interest. The other $433K must come from increase revenue (plus cost savings if there are any)

If we use $567K as a base cashflow and assume 50% of increase of $433K ends up in casfhlow then we have a cashflow of about $780K for FY 2014. This would again make the cashflow about half the reported profit figure.

If the company can achieve this in 2014 and then continue to grow cashflow at a reasonable annual rate in future years then I think that a price of low 40c mark looks about reasonable and 30c is pretty good value.

Also rememeber that they are not paying any tax.