Wise-Owl

Email I just wrote to CEO for anyone who cares:

Hi Dom

This Wise-Owl report is useful but, as per my earlier email, fails to represent CM8 at its best.

1. They have adopted FY17 EBITDA of $9.4m rather than adding back the one off re-financing charge to get a more representative figure of $9.5m (i'll leave share based payments alone for the moment).
2. This would make the forecast FY18 EBITDA of $10.7m a pretty weak one in terms of growth.......perhaps you can comment on this today;
3. In any event, if you forecast an EBITDA of $10.7m the forecast NPAT of $2.9m seems low. I understand that D&A this year will be less than last year's $5m? Deduct around $1-1.2m for interest and apply the full tax rate and you get comfortably over $3m.
4. The effect is even more pronounced in FY19 where they have forecast $13.4m EBITDA. There should be little or any interest payable and significantly less D&A deductable in the income statement (all being equal) - I would have thought this would convert to NPAT closer to $6 or $7m rather than $4.1m.
5. The biggest problem though is the failure to comment on the effect of the very high amortisation of intangibles which means the 'cash NPAT' or 'NPATA" is significantly higher. This is the figure that should be presented to market.

Hopefully some of this can be cleared up this afternoon. Thanks for your time.