Cashflow does not equal revenue. I'll write something in more detail once I get the kids to bed but I am pretty sure they include GST in their cashflow not in their revenue. Therefore you would expect the cashflow figure to be higher than revenue before you get to changes in working capital (which could affect it either way). Note last year there was revenue of $18.1m (2nd half was lower than the first 9.2m/8.9m - which is confusing given their claim of 2nd half seasonality, will have to explore that further). Cashflow was $19.5m
Now I look at further the changes in working capital were such (payables down, receivables up) that you would expect cashflow to be less than revenue. The best explanation remains my GST point above.
Again, in the first half of this financial year cashflow was $500k higher than revenue (again, despite a rise in working capital which would usually make it the other way round).
The differential between cashflow and revenue was much larger in the 2nd half of last year than the first.
So in short it's very difficult to work out what the full year cashflow will be but it is likely to be way higher than revenue - probably to the tune of about $1.5 - $2m. So it could be anything from $20-$22m in my view. Remembering that this includes GST that then has to be remitted.
But no reason to suspect the last quarter won't be similar to last year's last quarter operational cashflow (including GST) of $5.1m.
What then of the $18-19m figure? I would hope it would be towards the mid to upper end so we get a rise on last year. Good prospects for it to jump to $20-22m next year with hopefully a better gross margin and lower costs.
A good hold/buy at these prices i reckon.
MSG Price at posting:
1.9¢ Sentiment: Buy Disclosure: Held
(20min delay)
