Ann: Chairman's Address to Shareholders, page-9

"EBITDA of $25m - $30m..... EBITDA is BS. Tell us what will be the pure profit! 10% of that? $3M Profit?"

Sure, EBITDA is not the most refined measure of financial performance, but what's stopping you constructing the rest of the P&L to the bottom line?

I mean, there are only 3 "unkown" line items between EBITDA and NPAT:

- Depreciation and Amortisation,
- Interest and
- Taxation

For which of those are you unable to make quick and easy estimates, which will acceptably accurate?

I mean, we know there is no debt and we know the company has over $30m in Accumulated Losses, so that's the Interest and Tax lines filled in... zero in both cases

The only item that might need just the teeniest bit of thinking about is the D&A line, but even then, all the information required to make a decent estimate, is available in the financial accounts:

Depreciable Assets (PP&E and Right-of-Use Assets ) amount to a mere $2.1m and Amortisable Assets (Non-Goodwill Intangibles) amount to $16.5m

A reasonable assumption of likely Depreciation and Amortisation schedules of between 3 and 5 years will result in a D&A charge between $4m and $6m.

So in a wink, the bottom half of the P&L can be found to likely to look like the following (using $27.5m EBITDA, the midpoint of the 3-year target and the mid-point of the d&A range discussed above):

$m
EBITDA = 27.5
D&A = -5.0
EBIT = 22.5
Interest = 0.0
PBT = 22.5
Tax = 0.0
NPAT = 22.5


Or, if you prefer to be acutely conservative, and use:

- the lower EBITDA figure,
- a more aggressive D&A schedule and
- provide for full taxation as a matter of principle:

$m
EBITDA = 25.0
D&A = -6.0
EBIT = 19.0
Interest = 0.0
PBT = 19.0
Tax = -5.7
NPAT = 13.3


So, really not hard to see why suggesting $25m to $30m EBITDA might translate into a mere $3m of NPAT, is nonsense.

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