Dont be alarmed by recent announcment given the confirmed capital expenditure which we have allready been told about heck there could even be more which would indicate cash flow and marnigs are fine if not better. This once off cost or costs will be due to the final stages of gestration out our technology. (Please read below for a more indepth understanding of NPAT,net cashflows and new equipment which we have had.
Net Profit After Tax
Net Profit After Tax (NPAT) is reported on the bottom line of the Income Statement and is supposed to indicate what the company earned after all expenses have been accounted for. If you are a shareholder you can calculate how much of this profit is yours. First, divide NPAT by the total number of shares on issue (to calculate earnings per share), then multiply the EPS by the number of shares you own.
That sounds easy but does it really measure how much the company earned?
The answer is, not really. The reality is NPAT is an accounting construct derived by the company's accountants. Although accounting standards guide their decisions, many are still open to interpretation. How accountants classify income and expense items can change reported NPAT, as can the accounting period to which income and expense items are allocated.
Using the Cash Flow Statement to check NPAT
The Cash Flow Statement can be used as a check on the legitimacy of reported NPAT. It records actual cash flows in and out of the business during the year. This means it is a more objective representation of earnings and is less open to interpretation or misrepresentation.
First, look part way down the Cash Flow Statement for the total given as Net Cash Flows from Operating Activities. This is like a cash-based profit figure. But it does not include the amount spent on new equipment. That cost is found as a separate item further down the page called Purchase of Property, Plant and Equipment. Deduct this from the net cash flows from operating activities to derive a figure referred to as Free Cash Flow.
Compare this to reported NPAT and if they are close you can feel more comfortable. If not, ask why. There can be legitimate reasons for the difference but a significant difference warrants investigation.
The second half of last year was a stage where this company was still weak due to a slow economy which didn't pick up unitl november 2013. Mix this with the commercialisation taking longer and we have the result however looking at the order book which is extreamly stron for this half and the next i believe we should be optimistic and add in that the start ups are a fraction shy of at least breaking even or profitable.
60million market minus 25 million cash =35 million is a company with 3 commerial high margin tech startups and a strong and growing oil and gas business worth 35 million for goodness sake. There are species with nothing in the bank and a 1 show pony idea worth the same unbelievable if this gets sold down i will certainly be there.
Not to mention a NTA of 30cents australian
The market is simply not giving ZGL its right to have its instrinsic value let alone growth and the think the announcement yesterday will get things moving in the right direction despite the title as it has painted our stron future which what the market normally likes as 3500 as pointed out.
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