Ann: IQE - Intueri Trading Update, page-2

Interesting result. Somewhat expected after the AGM, although not as low as 27m NPATA. (I based calculations on 28-29m NPATA before today)

(Note: assuming a 0.9 NZDAUD exchange rate)

Nevertheless, taking the midpoint, figures look like:
EBITA: 28m
Interest charge: 3.8m (approx.)
NPBTA: 24.2m
Tax-effected NPATA: 16.94m [15.3m AUD]

Looking at cash flows:
NPBTA: 24.2m (from above)
Amortisation**: 10m (approx. post acquisitions this FY)
NPAT: 14.2m [12.78m AUD]
FCF: (14.2*.7)+10 = 19.9m [17.91m AUD]

** these amortisation charges relate to assets recognised at acquisition that are usually expensed as part of operations (creation of course material, agent relationships, customer contracts, etc.), hence are cash flows that are available for reinvestment. However, they will be taxed once assets are fully amortised (3-10year time frame). This is also why these figures are used as a measure of company performance rather than Accounting NPAT.

Taking a 65% payout ratio (mid-point of IPO documentation):
Tax-effected NPATA: 16.94m
Dividend: 11.01m + tax credits (if in NZ, or partial tax credit in Aus if one owns <10% of the company)

At 100m shares:
Tax-effected EPS: 14.2cps [12.78cps AUD]
FCF per share: 19.9cps [17.91cps AUD]
Dividend: 11cps + 3.3cps franking credits [9.9cps AUD + 1.5cps tax credits {approx}]

Now, using NZX price of $1.78 (and NZD earnings):
P/E: 12.5*
P/FCF: 9*
Net Yield: 6.2%
Gross Yield: 8%

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The abovementioned figures are healthy, so long as the business can grow. Revenues over previous years have grown, but the Quantum business is not performing well at the moment. Key items for me in the next report will be:
- Quantum revenues (they were $27.2m using pro-forma figures, how far have they fallen?)
- Improvement in OCA
- EBITA margins for the business (I imagine they'll fall below 30%)


That said, it's disappointing that it took management so long to announce the downgrade.