Excellent analysis Flying Gurnard. I'm totally with you and your figures. The NPATA of $10.5 million is similar to my estimate. There are a few other points I would make that to me make this report far better, and the company a lot stronger than the market has acknowledged. First they paid $9 million out of cash for Elton Consulting (the balance of the $16 million purchase price being in shares and some future payments: no extra borrowing was incurred). Second they paid $4.6 million off the debt, so that they have $5.5 million in cash, and $6 million debt. That's quite a nice balance. Third they have a low market cap around $70 million. I say low because for next year it will be only slightly more than 6 months revenue, and it is also only a little over half the net assets of $128,000 million. While goodwill is a large item, it is realistic given the ongoing revenue into the future, guaranteed by government contracts.
The company has measured the growth very strategically, maximising use of funds, increasing revenue significantly above the guidance of $90 million, with it currently tracking at $125 million annualised revenue. Despite the $13.5 million spent on debt repayment and Elton Consulting, they have run the accounts almost to zero, while maintaining the 0.5c fully franked dividend. My opinion is they are on a very sensible, well managed growth path. A share price of 30c and above into the future is certainly realistic.
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