1. Godfrey's, Arccon, and Maxx engineering did not contribute to proftiability in 2011 - they will in 2012. To get a true picture of group profitability we must estimate their contribution to 2012.
- 12 Months Godfrey contribution = extra $520,000 in 2012 - Arccon NPAT $3,000,000 in 2011 - Will ignore abnormal costs of $500,000 restructure cost - Assume no profit contribution from Maxx engineering (only $1.1 mil EBITDA) - Allmines NPAT 2011 of $1.964 mil
So Total = 520,000 + 3,000,000 + 1,964,000 = $5,484,000 NPAT for group in 2011.
I use 330,000,000 shares to account for settlement of acquisitions, so EPS = 1.66 cents in 2011.
2. 2012 is forecast to be far higher than 2011 - Arrcon forecast is $12 mil NPAT - Combining Maxx Engineering with Allmines existing maintenance business will likely lead to higher proftiability across their existing operations due to efficiencies of scale - 'shouldn't' have the same abnormal costs
Forecast 2012 NPAT is $16,500,000 EPS on 330 mil shares = 5 cents
3. 2012 Forecast doesn't include any contribution from NFC collaboration projects - therefore this contribution will fall into 2013/2014. Arccon have indicated 33% revenue share from international NFC projects, and 50% revenue share from Australian based NFC projects - using industry standard net margin of 10% - calculate it out for yourself. This provides an exceptionally strong order book for Arccon beyond 2012.
4. Check out the management of Arccon - Robert Wilde & John McCowan - check out their first business Minproc. They are experienced in taking these businesses global, their track record speaks for itself.
AZG Price at posting:
13.5¢ Sentiment: LT Buy Disclosure: Held
