ccf business model, page-8

I think you're over complicating parts of it Suhm, as well as mixing up profit and loss numbers and balance sheet numbers.

Also, you refer to one "cash flow account" however businesses typically break this into 3 categories: operating cash flow, investing cash flow, financing cash flow.

Although the driving influences are different, in some ways CCF is best compared to a property investment. No one would expect the rent to pay for the property upfront. They would raise equity (part of financing cash inflow as CCF have done), inject this into the purchase (purchase an investing outflow), fund the rest (part of the investing outflow), and the lease payment (part of operating cash flow) would service the debt and whatever else.

Similar to the lease being able to service the property debt, the question with CCF is can the ongoing management fee and other annuity style income service the debt.

In essence, and without going into more detail, provided the company can raise the funds (whether by debt or equity, company says will be part debt) for the land purchases everything is fine provided the ongoing fees provide the cash flow needed for a sustainable business (ie. the "lease" payment needs to pay the debt and property management fees so to speak).

Like I said, comparing this business to a property investment isn't an exact science, but the comparison has a lot of similarities.

MJS

PS. I hold, but a very small number as a spec position only.