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In one of his presentations Dom explained the margins were...

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pembo111

2,193 Posts.

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03/12/15

14:26

Post #: 16539103
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Originally posted by One Up ↑

Revenue of AU$4m for November is actually above the run rate of FY15 ($43.1m revenue or $3.6m per month), so it doesn't appear that November is a weaker than average month as some are claiming. EBITDA margin was 37% in FY15 but this has shrunk to 27% in November. The margin contraction is due to higher costs, not any issues with revenue. Shareholders should rightfully be asking 'why'?

If margin decline is due to "one off" costs related to the acquisition, which may be the case, then it is up to CM8 to explain this.

One thing that has stopped me from buying CM8, despite it looking cheap, is that Track's EBITDA margins seem exceptionally high; it's very rare to find a business with an EBITDA margin above 30% and Track is earning a 55% EBITDA margin! Overheads are only $2.7m, is this a sustainable cost base or will CM8 need to build out a proper corporate structure? We will find out...

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In one of his presentations Dom explained the margins were because Tracks system was mostly automated or something along those lines, which is one of the reasons he chose it over its competitors. Over time I'm sure things will become clearer.

CM8 Price at posting: 28.5¢ Sentiment: Buy Disclosure: Held
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