I emailed Chris and got a very insightful response and with his...

I emailed Chris and got a very insightful response and with his permission I am posting his response here.

"Thank you for your enquiry.

In relation to page 15 of the presentation (release to the ASX on 22 Nov 2016), the allocations as follows (using a $30/day and 100 cars rented out for the 90 days example as you outlined):
- Receipts from Customers: $270,000 (as you outlined)
- Income received by DMC: $135,000 (being the Admin Fee and Insurance & Roadside)
- Payments to owners (is included in Product Manufacturing and operating costs): $135,000

In addition, DMC also makes some payment from its income which is a part of the cost of service and is included in the quarterly cash-flow statement under Product manufacturing and operating costs. On average over a full year, these payments were historically equivalent to an average of approximately 33% of DMC’s income. (The main cost in this area is insurance, however there are some other costs also included). The net result is a gross profit margin of about 67% (in FY16). So in this scenario, there are also other Product Manufacturing and operating costs (insurance, etc.) of approximately $44,500. To be clear, this is on top of the $135,000 payments above. The net result is that out of the $270,000 received from customers, DMC retains approximately $90,450.

As we announced on 29 March 2017, we have had a reduction in our insurance cost of approximately 35%, which results in an increase in our gross profit by about 10%. So for the June Quarter onwards (averaging it out over the full financial year) we should see the gross profit increase to about 74%, and the payments going out reduce to about 26% of DMC’s income. On this basis, the net result in your original example is that out of the $270,000 received from customers, DMC will retain approximately $99,900 from the Jun Qtr onwards.

The net results are also impacted by GST, but I’ve excluded the net result of those from the above (the short version is that our net retained amount is about 9.1% less than shown above).

It’s important to note that the actual results will vary depending on the rental price of the vehicle as fixed costs have a different impact at varying price points. With regards to the 4C, the component of product manufacturing and operating costs made up by payments to owners will increase as sales increase, so an increase in cash outflows is not always a bad thing as it only occurs as the result of a sale.

I hope this helps.

Best Regards,

Chris Noone"