Ann: WestStar Awarded a Further $5M in Contract Extensions, page-289

So, the report comes out Monday morning. Just thoughts on what my pass mark is:

1HFY19 loss: $1.4 million ($0.77m if you add back once-off $0.63m payment as part of SIMPEC acquisition).

So, a total year loss of $1.4m or less would mean a profitable 2nd half. My pass mark is a break even or profitable 2nd half which would suggest they are making significant progress.

What would send SP through the roof?

Let’s say $20m revenue at 20% margins so gross profit of $4m.

Expenses for 1st half was $3.4m. Take away the once off acquisition payment and doubtful debts and you get $2.6m. Factor in 10% increase of mainly fixed overheads and you get a potential EBIT of circa $1.1m for the half. That would mean a full year loss for FY19 of $0.3m.

That’s annualised EBIT of $2.2m.

Apply PE 20 for a high-growth company and you get $44m market cap or SP or around 7c.

In summary, if the full year result is anything close to break even or in profit, then boom 10c is possible.