Just a bit of number crunching that readers may find of...

Just a bit of number crunching that readers may find of interest.

The past two years for BOL have been about a stabilisation and a cost-out strategy, with the 2^nd half showing signs of growth (+6.4% 6/16 half to 6/17 half). More importantly was the growth shown over the 12/16 half, as that period July to Dec is always stronger than Jan to June as you have the shut downs over Jan and into Feb. So the last half was a particularly strong result by comparison.

In their August report, when talking about prospects for FY18 BOL stated that:

• Incremental revenue from contracts won in FY17 would add $14m;
• New contracts won for FY18 and to be completed in FY18 would add $15m; and
• Reduction in revenue from contracts that would not repeat in FY18 would deduct $10m of revenue.

With FY17 revenue at $150m, the above provides us with an early revenue forecast for FY18 being $150m + $14m + $15m - $10m = $169m. If you hold the gross profit margin stable at 27.1% (where it has been for the past 3 half year periods), assume indirect expenses at $11.4m per half and central costs at $3.4m per half (i.e. the same numbers they achieved in the 2nd half of FY17), this suggests trading EBITDA could jump from $10.6m in FY17 to $16.3m in FY18. I suspect that management will, for the moment, be working to keep a lid on expenses after having worked hard to get these down, so I think there is low risk of a cost blow-out (hence the stable cost assumption).

The benefit of this is also potential for further reduction in debt as well - so EV is going up courtesy of the higher EBITDA, debt going down and hence equity value is winning both ways. If the market starts to then also believe this is just the start and there is further near term growth potential / BOL announce further contract wins, the next 12 months should be a good journey for the share price..

Just my basic workings presented for discussion and any further insights that others may have.
As always - DYOR.