I don't have a position on the stock Manny but think the short...

Originally posted by manny100

Hi Fishinnick and croasian,
I can see the point regarding margins as they do seem exceptionally high and to good to be true. However if they were 'fake' then they are making 'fake' profits and paying 50% of those 'fake' profits to shareholders as dividends. Those dividends would then have to come from borrowing or a share issue/DRP. A quick glance at the first half accounts shows that net borrowing increased by about $17 million. They paid $15.8 cash million in deferred consideration for prior year acquisitions - See note 4. Not sure whether the $3mill cash for STC was paid for in the first half or prior but its small fry anyway. The share issue to raise cash for Lotus was $40 million (note 10) which was pretty much what they paid in cash for it (although they got some back). So the net debt at the end of the first half pretty much stacks up from what I can see. During the first half the Cash Flow Statement shows $22.7 million was paid as cash for dividends.
So as the debt/borrowings pretty much bulls roar seem to stack up and there were no working capital specific share issues it seems that $22.7 million was paid from cash flow from the business. For the year ending 2018 around $35 million was paid in cash dividends and year ending 2017 $28 million was paid. So in 2 and a half years $85 million has been paid out in cash dividends without share issues or enormous debt to support it.
I might be wrong so if I am please point it out for the benefit of all on this thread, especially me because I might be missing something obvious. I do not think the VGI report addresses this. If it does and I missed it please let me know. Revenue and margins leads to EBITDA which leads to profits which leads to dividends. Fake revenue and margins provide fake profits but do not provide actual cash. But cash has to be paid out at 50% of profits for dividends. Usually companies that do this sort of thing rely on a discounted DRP or share issues and heavy debt to make up for the shortage of cash. Alternatively they pay hardly anything out as a dividend. CTD are not doing any of this which supports real margins/Revenues/EBITDA/Cash dividends.
Maybe I am missing something????
Agree that it is not the auditors job to pick up fraud but it is their job to ensure Accounting Standards are adhered to. Now that they have a copy of the VGI report they will have to design their audit plan around the key areas of concern. The 'disclaimer' auditors put at the end of their reports does not cover negligence - nothing does. So the auditors will be really under the pump for this year end report. CTD like any company may have 'something come out of left field' and shatter holders. But it hasn't happened until it happens. If it does longs will bail.
I doubt CTD will take VGI to Court. It appears a 'no win no pay' firm will launch a class action. Evidently they have advertised for disgruntled holders/ex holders. Its a good thing as it will resolve the situation, ie source the blame, either VGI or CTD.
Shorters are what the term describes short term and if you believe Bennelong short tempered as well. The short tempered bit provides a bit of light/entertaining reading as they rip shreds off their target. Longs are what the word infers 'in for the long term' and generally patient but subject to fits of periodic panic attacks. As I said the banter between shorts and longs makes for interesting and at times entertaining reading.
VGI have actually done long term holders a favour. CTD are/were living in the fast lane no doubt. This report will force the BOD and Senior Execs to take a step back and examine the business and maybe make a few adjustments. I would say it has likely derailed another acquisition.
This coming reporting season will reveal all one way or the other.
TTV to Revenue is pretty good except for Asia which is lousy due to flat ticket prices. Yet CTD manage to get a very good margin on that Revenue to produce a decent EBITDA.
Here is the test for CTD. They said Lotus has a TTV of $A1 billion and an EBITDA of $A5 million. The 2018 FY report shows Asia shows TTV at $1483 and an EBITDA of $19.5 million (ex Lotus) - so Lotus could be a drag on results. See how the Asian Figures come up after a 9 month contribution. Slide 22 on the first half presentation has a note which shows a $1.3 mill EBITDA contribution from Lotus which pretty much stacks up. Shows 20% EBITDA growth ex Lotus.
CTD Asia TTV 2018 $1483, EBITDA $19.5MILL, LOTUS 2017 TTV $A1 bill, EBITDA $A5 mill. CTD will need to turn Lotus around.

I don't have a position on the stock Manny but think the short argument would be that the accounts can't be relied upon.

When the company claims to have patents, a special platfo