investor roadshow, page-66

Sally,

Ok, thanks for clarifying.
I can't help but point out what I see as some errors in the calculation of a 'fair value' based on the PE 8.

MHM has indicated EBITDA between Aus + US plant of $33 million, not a pre-tax profit as indicated by your broker.

I can't agree with using the undiluted share base, given there are 30 million options with an exercise price under $0.30. These options will certainly be exercised and so need to be considered, many will be exercised this year.


So, if you change the calculation to use NPAT (which is what should be used), and use the diluted share base, then the figures turn out as follows.

$33 million EBITDA less (these are estimates)
$1 mil interest
$4 mil depreciation
$1 mil amortisation
gives pre-tax profit of $27 mil
Apply 30% tax rate gives NPAT of $18.9 million.

EPS across diluted share base of 134 million shares equals 14.1 cents EPS.

Apply PE of 8 = $1.13

Before you get up in arms, I'm sure that MHM would trade on a premium valuation should their process prove to be as profitable & desirable as they have indicated. I'm not making any judgement as to the value of MHM, I was just very suprised to see a broker making these types of mistakes in a basic calculation.