Ann: Preliminary Profit Advice - Half Year Ended 31 December 2016, page-15

ASW has always been run very tightly, the CEO pays attention on every single line of expenditure items. An example of this is during the trough of mining slowdown years of FY2012 and FY2013, where investing cash outflows were stopped temporarily:

Total Investing Cash Outflows:
FY2012: -$26,791
FY2013: $0

There are not too many businesses which can stop spending capital expenditure completely for the whole year, like what ASW did in FY2013.

Once conditions stabilised, it started spending again on capital expenditure in FY2014, FY2015 and FY2016.

The reduction in employee numbers from FY2011 to FY2015 was another example of ASW trying to contain its operating costs in response to changing market conditions.

With this understanding in mind, I view ASW's recent increase in employee number to 23 as a positive, because I know that the CEO is unlikely to embark on an unnecessary hiring spree if the condition doesn't warrant it.

When looking at ASW, I'm reminded of the need to keep things as simple as possible. When I look at a stranger on the street, without measuring any of his/her health measures, I can guess how healthy that person is.

If that person is obese, I know for certain that his/her health is probably not that good.

Conversely, if that person is relatively thin, without measuring his/her exact weight, blood pressures, cholesterol levels, etc., I can also make an educated guess that he/she is probably quite healthy. Sure, he/she is probably not the fittest person, but is also unlikely to be that unhealthy.

I look at my ASW investment in a similar fashion. ASW is not the best looking business on ASX by any measures, but it's also far from the worst. I first bought into ASW back in 2010, and over the years I've added more. My ASW investment return so far has been satisfactory.

It's not the highest performing stocks in my portfolio but it's also far from the worst. ASW has been quite a reliable income producer.

The one thing that worries me is, just like ONT, its result so far has been dependent on its founder/CEO. And just like ONT, ASW doesn't have a clear no.2, that can immediately takeover the responsibilities if the situation requires.

One more thing that I would like to point out is, ASW's property portfolio. It currently has 2 properties, the previous Sydney office (that is now rented out as an investment property) and the current Sydney office.

The previous Sydney office was purchased back in December 2010 for $860,000. Its current carrying value is $731,000. Considering that property prices have recently increased significantly, this property current value is probably at least double the value, around $1.4 million. Although this increase in asset value is not reflected in ASW balance sheet, it is very much real and of benefit to us, the shareholders.

There is always scope for ASW to purchase its Perth office from the CEO in the future. This Perth office has recently been renovated nicely, and should be sufficient to accommodate ASW's growth in the foreseeable future.