Hi asf,To estimate the FY result there need to be some additions...

Hi asf,

To estimate the FY result there need to be some additions and subtractions made and a bit of guesswork.

To start with we need to assume that Q3 and Q4 together are similar to 1H 2013 in terms of revenue - i.e. no further project delays/ cancellations but likewise no uplift either.

I assume that the "underlying NPAT" of $6-7m doesn't include the $6m of additional costs incurred in Q2 associated with underperforming contracts nor the $5m for redundancy costs. Thus the reported NPAT for 1H 2013 is likely a loss.

However, assuming that there will be no further underperforming contracts in 2H and that the $13m in labour savings, as stated, do eventuate then I would imagine that the FY 2013 "underlying profit" could be $25m; i.e.:

Underlying NPAT 1H = $6-7m
Underlying NPAT 2H = $6-7m (assuming similar result)
Labour savings 2H = $13m

Underlying FY NPAT = $25-27m

For reported FY NPAT:

Deduct 1H redundancy costs = ($5m)
Deduct $6m in 1H one-off costs = ($6m)

Reported FY NPAT = $14-16m

This is very basic and doesn't take into account heaps of other variables, some of which are currently unknown.

A more important measure IMO will be the cash flow for FY13. AAX has a very strong balance sheet relative to other mining services companies and this will determine how cut down the dividend will be vs. the pcp of 20.1c and secondly what long term advantageous acquisitions management can make at the bottom of the cycle.

$1.50 for a MC of $186m is probably fair enough given the poor FY13 guidance. Provided FY14 is better then it may be a good opportunity to patiently purchase shares over the coming six months.

Cheers
John