Ann: Quarterly Activities Report, page-2

Looks like a solid quarterly, key points I picked up:

- Running about 6% ahead of pro-rata forecast - this could see EBITDA for FY17 hit $1m - looks like MSG is benefiting from the challenging WA economy (probably the only company)
- It appears the growth pcp is sitting at ~15% (quarterly pcp on a cash basis)
- Solid generation of cash this quarter with cash now sitting at $1.3m - I'm expecting this to be north of $2.1m by year end
- Expanding East with an office being set up in SA
- the usual strong tender pipeline and potential M&A
- Potential tax asset via recognition of accumulated tax losses - given the losses in the parent entity are sitting at $11m (FY16), this could be a material amount e.g. back of the envelope valuation of 1/3rd could mean a value of $3m-$4m

Valuation based on the above (excluding possible value of accumulated tax losses):

Equity valuation - $0.022 x 206m share = $4.5m
EV - $4.5m less net cash of ~1.8m ($2.1m less $0.3m loan) = $2.7m
EBITDA of ~$1m results in EV/EBITDA of 2.7x

Looks pretty cheap for a business growing at a decent rate