Ann: Appendix 4C - Quarterly Activity Report, page-25

Going back over the 4C from Q420 which was the first positive qtr published since the challenges of 2019. It was a corker. See here below. Highest revenue/receipts seen for a long time with costs held low. I suspect management were keen to show a strong qtr coming into FY21 (which has since seen 3x positive qtrs and looking for another in Q4) but SP has remained static at 3/5 of F All.

At >$3.5m EBITDA Q4 20 was a stonking Qtr indicating 1) Management could again hold something up their sleeve on an important qtr and/or 2) Final qtr may be a strong cashflow qtr naturally. As LMW moved to Qtrs in 2020 it's difficult to see as prior it was half yr reports only.


So the forecast then for Q4 could go 2 ways. For a conservative case we are seeing growing headcount and therefore salaries costs and we could be seeing a run rate of receipts that carries into Q4 but with some growth from S&P and new offices. We know that the govt contract continues for the qtr and also that some significant prepayments (>$1m) were recorded earlier in the year but given the activities (M&A, new offices etc) there may be some additional costs incurred. Comes to ~$1.66m EBITDA estimate.

For an upside case, it's quite possible Q4 could see again higher receipts/revenues, either held back or seasonally occurring. Salaries may have grown but at a more natural rate. We may see the benefit of the prepayments with a run rate non-salaries costs rather than increased due to pre-payments. Comes to a $3.96m EBITDA, a little ahead of Q4 20.

The result is more likely somewhere in the middle. My valuation is based on the conservative estimate and still calls for a 40c SP in 2021/22.

What's clear is that it takes very little to significantly move the EBITDA number. Hence I'm holding additional funds to top up, lets see how this one goes.