15-16 pending annual results, page-15

Ok so the EBIT profit number isn’t that good :/ And it’s clear the CEO feels the first half of 2016 hasn’t performed as they’d hoped. But the numbers are still quite decent and it’s clear they have the built in capacity (dormant NZ software engineers) to ramp it up as the big project materialise

Sales up by 67%
They are cashflow positive
EBITA increased by 10%

The industry itself is chugging along at 25-30% growth so they are out still performing even with an average 2^nd half of the year. As GB said if they grow by that industry rate in 16/17 then $60mil of revenue would come in and I think a larger % of that growth would go straight to the bottom line - unless they buy another business So in 16/17 they could well achieve an EBIT of $4-5mil, even more.

In a long term growth industry I think that profit could warrant a multiple of 15, so a market cap around $60-$75mil is around the mark…. thus they are trading at around fair value for right now.

There is $4mil of depreciation in their current EBIT and it will be good to see the final 15/16 accounts to see how the value of the assets they still have to expense. They are estimating to expense around $600k more depreciation for 15/16 than in 14/15.

If they don’t acquire more major assets in 16/17 that depreciation value should also come down, improving their EBIT.