Ann: Preliminary Final Report, page-2

Managed to get a chance to review the full-year report. Not too many surprises in there as mentioned previously - given the capital raising and forecasts were given only a couple of months ago.

Key takeaways for me are:
1. Overall the future guidance was slightly positive with growth expected across all segments. Whether EVZ can deliver on this depends on how hamstrung they are by the lack of working capital as walking a very tight line!

2. Extrapolating the full year results, 2H was poor. EBITDA of 108k vs 773k in first half, EBIT loss of -284k vs 371k in first half, and revenue decreased from 28m in 1H to 23.8m in 2H. If it wasn't for the debt forgiveness recognised as income of 7.3million, NPBT would have been a loss of 1.5m as opposed to profit of 5.8m.

3. Huge decease in operating cashflows largely due to payment to suppliers. Wonder whether they had overdue accounts which have now been settled, and going forward would expect to see cash flows level out (with only 1.5m cash on hand they need this to be the case!)

4. Employee expenditure is and always has been too high for me given the performance of the company. Employee costs of 31.6m and superannuation contribution of 2.2m when revenue was only 51.9m is not sustainable. If they are seriously looking to return to profit, there is an obvious place to start cutting costs.

5. AGM to be held in 2 days where they will be looking for approval to convert loan of $600k to equity at a fair market rate of 1.39cents. This will result in further dilution with issue of 43,165,467 shares taking total shares on issue to 721,975,605.

6. Would have expected to see a reduction in finance costs in 2H but definitely not the case (went from -382k in 1H to -1.2m for the full year).

So main headline to me is still early to tell if there has been a turnaround - next 6 months is critical to see progress, return to profitability, and positive operating cash flows. Full benefit of debt forgiveness should be seen in 1H 2018.

Difficult to set a target for the next year as could go either way. However in order to justify a price of 3 cps (which would equate to a market cap post dilution of 21.7m), a PE of 15 would need earnings of around 1.5m.

Is this feasible - absolutely if they can grow revenue, manage costs, and maintain margins. Will they do it - check back in 6 months!