As I understand it, VET courses are often two year courses...

As I understand it, VET courses are often two year courses performed in Year 10-11 or Year 11-12. I believe that most VET numbers would be known by the end of each year, though some would be finalised at the start of the school year. Some cancellations will occur in Feb/Mar if a student decides not to proceed. In any case, RCL should have a fair idea of their VET numbers in late Feb. In my last post I assumed their graph of user numbers was reasonably accurate.

I don't have any particular insight, but have been a shareholder of RCL for a couple of years. As I understand it Revenue comes from three main sources. 1. The margin on book sales. 2. A small license fee per Readcloud eReader user. 3. Auspicing Fees via AIET and COSAMP.

Both 1 and 2 are larger for Direct Schools, as Reseller Schools take a cut of these margins and license fees. The Auspicing Fees is where the high margins are for RCL. In my last post I assumed $250 revenue per VET user. This assumption is based on... 1. Page 6 of the RCL Presentation on 27/10/20. 2. The AIET course guide (which includes fees) on AIET home page. 3. COSAMP 'schedule of fee' guide (which is quite complex) on a link on the COSAMP home page.

I'm thinking Rev will be slightly less than $11m, but hopefully EBITDA will be comfortably positive. To work this out, its best to use last year's HY and FY results as a guide, then adjust as you see fit on all the revenue and expense items for FY21. The key is to work out which expenses are relatively fixed and which ones are variable. Of course some expenses such as staff costs will be gradually rising.

I do agree that if RCL get it right, they are building a great network of schools to roll out further services too. I liked the way they bought the best music VET course in Australia in COSAMP, as this should make it easier to roll out these COSAMP courses into other schools. If they can continue to buy quality VET companies, and they can be successfully rolled out across the RCL network, then this will be a big positive for RCL. One unknown, is how hard will it be to sell their services into schools that already have VET or eReaders in place.

I hope the above helps, and as said, I could be wrong in the various parts of my analysis.

And of course, the above is not advice in any way.