who knows about ado except us?, page-8

I have tried to phone the company today to find out their accumulated tax losses but the woman who can answer that question is away today. I have assumed $50m as a guess but whatever it is, I wouldn't expect the company to pay any tax in the first 4 years or so. Will find out tomorrow.

Assuming revenue increase by $10m per year from next year and the cost base to rise by say $750,000 pa as well, using a discount rate of 10% gives a discounted cash flow valuation of 19.9cps. Using a 15% discount rate reduces the valuation to 15.8cps.

Below I have posted the first 5 years of a 10 year spreadsheet.

If revenues increase by $20m per year beyond 2013, the valuation increases to 30.7cps.

Conclusion: share remains good value


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2012 2013 2014 2015 2016

Revenue 3.0 13.0 23.0 33.0 43.0
Costs 3.0 3.8 4.5 5.3 6.0
Profit BT 0.0 9.3 18.5 27.8
tax rate 0.43 43% 43% 43% 43%
tax 0.0 0.0 0.0 0.0 15.9
Profit AT 0.0 9.3 18.5 27.8

Discount rate 10% 10% 10% 10%
Discount factor 1.0000 0.9091 0.8264 0.7513

Cash flow 0.0 8.4 15.3 20.8
Discounted cf (10yrs) 151.9

Number of shares 762

Value per share 0.199
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