Ann: Change in substantial holding, page-8

Ka$ - There are a lot of strings to the bow for TME. That is one of the reasons I bought in. You mention Real Estate - which is very important to them - but they also have motor vehicles, employment as well as the whole buying and selling thing (a bit like ebay). For me TME must deliver the following:

Full year sales - Must be north of $200m. I don’t see this as a problem as the half year was $96.9m and as you mentioned the NZ market has been very strong in an economic sense. My number for the full year is $204m

Net Profit - For me this is the number that will get the most attention. The half year number of $38.4m was only just above the prior year of $38.0m. The margin of 39.6% was well down on previous full year margins (44.5%, 47.8% and 53.1% for 2014,13 & 12 respectively). So what I want to see is a return to mid 40’s margin. If they can do that for the second half then that should get the SP going north.

So in summary my second half numbers are sales of $107.1m with a NP of $47.7m. This would give a full year revenue number of $204m and full year NP of $87.3m. That equates to 22c a share. With a PE of 15 that makes a Share Price of $3.30. I am of the view that any stock with double digit sales growth and 40% margins should have a PE ratio north of 20. So add another dollar to the share price if things were normal in the world. The other thing to note is TME is just a cash generating machine. As we are heading into trouble waters (Greece and now China and who knows who or what is next) then cash is what it is all about. Cash flow from operations last year was $107.8m or 27.2c a share. Fantastic stuff and not recognised by the market IMO.

Anyway just my thoughts and please note the above is just the ramblings of a gray haired accountant – not investment advice.

Cheers

SLC4ME