This can be looked at from two angles - revenue and expenses. Here are a couple of the main items from each, which hopefully gives some flavour to the numbers.
Revenue -
(1) The second half tends to do in the vicinity of $500K less sales than the first half. This is a trend going back many years. The first quarter of the calendar year is the quietest time for hospitals and results in less product orders.
(2) Most products are manufactured in China and invoiced in US dollars. The lower Australian - US dollar exchange rate over the past year has adversely impacted the gross margin.
Expenses -
(1) The staff costs have increased by ~200K per half when compared with H1 FY2015. The company has expanded the sales and marketing team and hired an inventory controller (the inventory controller should help with lowering the inventory levels).
(2) Travel and accommodation is up by $65K - $75K in H2 FY2016 when compared with FY2015. More than likely due to stepping up the sales and marketing efforts in conjunction with the expanded sales team. Hopefully the benefits will be seen in FY2017.
MLA Price at posting:
4.9¢ Sentiment: Buy Disclosure: Held
