structuring for growth, page-6

MJS,
In order to boost my credibility first I will direct you to my post on 8/2/03 where I imply that a profit of $12.5m would be made for the 02/03 year, several months before a profit of $12.47m was released. I worked this out by applying an assumed margin to the growing FUM.

On 17/6/03 I forecast a profit for 03/04 of $23-26m, 2 months before a forecast of $25m was released.
On the 17/11/03 The Juke posted that Huntleys was forecasting a profit for 04/05 of $75m. In my subsequent reply on 6/12/03 I revised my 03/04 forecast to $30m and made a forecast of $55m for 04/05 as I believe that Huntleys had counted 100% of Martha Cove profits goin to ciy, not 56%.

I will now copy some of my post made on 16/3/04 on ozestock where I detail how I think EPS of 58cps will be made for 04/05:
"I am looking to what they will make in 2004/05. Based on FUM beginning next financial year at 810m and ending at $1170m the average FUM for the year will be $990m For this financial year, their NPAT / Average FUM margin will be 4.8% (29.7m/618m)= 4.8%. Assuming this margin drops to 4.5%, the NPAT from financial services will be approx $44.5m. CP1 will contribute some $60m over the next 3 years to CIY. Some 35-40% will happen next year I think which gives another $21 - $24m. This gives a total profit after tax of $65 - 68m. Assuming all options are exercised there will be 114m shares on issue. This gives fully diluted EPS of 58 cents. This does not allow for future income from the property trust or new commercial property fund......
....Regarding the Courier Mails article, this is a reality check for my forecasts. My forecast for 2004/05 assumes that all continues to go well. CIY have some very experienced property players in their management. Phil Sullivan has been a developer himself for over 30 years. But it only takes one badly managed fund to fall over and the whole industry gets tarnished. The article mentioned that a 1.9m mezzanine loan in the Private Fund was in default as at 30 June 2003 but has since been settled. I have discussed this type of situation with Phil Sullivan at the AGM in October. CIY believe they have have around 100m from potential investors on the sidelines ready to go into the property trust when it is launched. Only problem is, there is no suitably priced property at the moment. If a project is in distress, the Property trust will be able to bid for a distressed property asset that will enable the Private Fund and/or Mortgage Trust to get its money back. Therefore the chance of investors in CIY's funds losing their money is much smaller than with other funds. The example quoted where Biron Capital made a loss is not really comparable as Biron do not hold the first mortgage like CIY does. CIY is much more flexible than Biron.
Nevertheless it is important to not get too carried away with a good story. I will be hopding my shares and options for a while yet as I believe that there is still a good chance of a massive profit increase next year."

Even though Martha Cove has been delayed slightly there will probably be a small contibution from the new Indigo Pacific Capital plus about $1m in commissions that ciy will receive from the Indigo Pacific float so the net effect should be about zero.

cheers
mark