"What do people think of this result ?" @BenXinvest, Not sure...

"What do people think of this result ?"

@BenXinvest,

Not sure why I follow this company, because I don't think I'd ever become a shareholder in it unless I assessed it to be deeply undervalued (which is a long way lower than where it is valued today), but I do follow it. (Maybe its because its financial statements are so simple and easy to analyse which appeals to my inherent laziness.)

At any rate, without giving you investment advice, I think you will do your investment capital a valuable service by looking at DWS's FY2019 financial result through a lens that strips out the impact of the $30m acquisition that was made at the very start of FY2019.

If you do that you'll find that, on a like-for-like basis, the company in FY2019 generated around $7m less EBITDA than it actually did in FY2018 [*], suggesting that either the core business has contracted significantly or the acquisition did not deliver to expectations (or, probably, a combination of the two).

And $7m, in the context of an EBITDA run rate of some $21m today, is a not-insignificant figure.

To my way of thinking, that is a big concern about the quality of the business model.



[*] Derived as follows:

FY2018 EBITDA = $22.9m

Plus acquired EBITDA = $5.5m (based on the mid-point of valuation acquisition multiple quoted when Projects Assured was acquired for $30m wef 2 July 2018)

=> Theoretical FY2019 EBITDA (assuming core earnings remain unchanged)
= $22.9m + $5.5m
= $28.4m

=> Actual FY2019 EBITDA
= $21.3m

=> Variance = $7.1m