Price can protect downside risk, page-6

All of the figures from takeprofits' post are good points. I will be watching debt levels as well. The depreciation charge in 2015 was about $6M higher which explains some of the cash flow reduction, though cash flow was a bit lighter than I would have liked! It appears material/component expenses have increased. This could be as a result of the falling AUD making components dearer or inventory build up or a combination there of. On page 35 of the annual report in the consolidated cash flow, cash paid to suppliers and employees is up by around $13M. The rest of the cash squeeze in 2015 vs 2014 is due to income tax going from around $2M to $17M, due to AGI no longer having a tax loss to offset their income. I guess on the flip side the dividend is now franked.

In summary I still like AGI and I was buying a bit more yesterday. I think it is significantly cheaper than Aristocrat, although with fewer recurring earnings the quality is probably not as high. Director buying is also positive and Len Ainsworth seems to have bought enough for it to be a meaningful vote of confidence.