Remember they have currently factored receivables for 8.5% ?

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Icarus

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05/09/19

10:44

Post #: 40320356
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Originally posted by Warnie: ↑

Ok I'll ask you this way instead and we can see if the market has it right or wrong.
H1 income say $6m
Alleged revenue first 2 months H2 = $3.1m or $9.3m per half year

$6 + $9 = $15m
Total COGS per year are 60% of revenue = $9m p.a
Operational costs + Other = $10m p.a as per H1 results extrapolated

$19m - $15m = loss $4m
Furthermore, you have increased borrowings by 50% to $4.8m (debt)
Also you have $12m worth of legacy debt to tidy up which adds continuous dilution to all holders
A $15m debt facility (if it ever eventuates) will also come at a cost to EN1, debt is not free, and will the debt rate cost be less than the uplift in guesstimated revenue by using it and offering upfront payments?
you also have many millions of director and major holder script coming out of escrow end of this year.

let's say the legacy debt is settled for 50% in the $ or $6m in EN1 script at 2c over whatever time period= 300m shares
lets say the debt facility of $15m costs 8%p.a = $1.2m
Lets say the debt facility increases revenue by 30%, sound fair?

So revenue = $24m
COGS = $14.4m (say $14m)
Operation + Other = Lets say its still $10m, in other words I've not increased operating costs even with 30% more revenue
We need to allow for $1.2m (new debt facility payment) lets just say $1m

$24m - 25m = - $1m

So what am I actually getting at?

What i'm saying is that due to the 40% margin after COGS + operational costs, its very very difficult to make a profit.

lets say revenue for next year = $30m
COGS at 60% = $18m
Operational + Other = $10m (assuming it stays the same which it wont, it will increase)
Profit = $2m (and that's not allowing for the extra cost for the debt facility) or dilutive affect of $12m or $6m worth of shares

even at $2m NPAT id value it at best 10 x NPAT = $20m market cap

So what have I discovered?

That the COGS to revenue margin of 40% is not high enough to ever make a decent NPAT unless you're doing say $100m revenue
The only shining light is due to $28m in accrued losses they won't pay tax on any profit for a long time

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Remember they have currently factored receivables for 8.5% ?

EN1 Price at posting: 2.4¢ Sentiment: None Disclosure: Held
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0 Great analysis

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