Ann: CEO AGM Presentation-REF.AX, page-7

Hi Andy

Agree with your calculations however I had assumed that the capex was already outlayed which brings me to EBITDA for the quarter of ~$325k. I assumed the contribution from the contact lens businesses was $25k which brings us to $300m EBITDA for the REF business for the quarter.

Given the following contributions:

H1 FY16: $1.4m
H2 FY16: $1m

I would think $300k for the first quarter seems about right, hopefully taking us to ~500k for the first half. I would be surprised if the REF business contributed more than $800k in EBITDA for FY16 and thus $550k after tax.

We also then have a contribution of ~$200k NPAT from the contacts business.

So effectively the cash position in mind as at 30 Sept 2016 is:
Cash on Hand: $4.5m
Add proceeds from OTH (Net of Tax) ~$2.2m
Cash Position $6.7m

Expected cash position as at 30 June 2017:
Cash Position above: $6.7m
NPAT REF: $500k
NPAT Contacts Business: $200k
Total Cash on Hand: ~$7.4m

Market Cap ~$10m
EV ~2.6m

Assumption that FY18 EBITDA is somewhere around $300k after realisation of synergies.

So based on my calculations the market currently values the business on a 8-9x EBITDA multiple which appears high.

The investment case then becomes one reliant on management investing the cash on hand into the business (via additional acquisitions) at a rate that in excess of ones required rate of return as to narrow the valuation gap. ie. the present value of $1 on the balance sheet is actually worth more than $1 should management be able to invest this into an acquisition at a cheap price similar to what they have done historical.

The other point to note and perhaps one that cannot be taken lightly is if we refer back up to the calculation above it assumes that the core business will cease to be EBITDA positive by the end of the year. At which point one would assume the business would be discontinued leaving the remaining contact lens business to operate on its own. However based on my understanding is the core business pays the remuneration of the KMP's which for FY16 was ~$1m. So when carrying forward the contact lens business one needs to consider that in the above calculation the $300k EBITDA is more like an EBITDA loss of $700k.

Would be good to get other peoples thoughts, and interested to know if any of the above can be proven wrong. I initially started writing this post believing an investment case existed however upon completing it I now believe somewhat the opposite.