the train is leaving the station, page-10

boffa, given past history, I think you are being generous assuming 40-50% earnings off the revenue from any acquisitions.

EBITDA margins:
JH12: 21.0%
DH12: 21.5%
JH13: 18.7%

$500k revenue at 20% EBITDA is $100k
Acquisition EV of $1.5m / $100k implies an EV/EBITDA multiple of 15x. I am sure they will avoid such a transaction.

I agree that they should be able to generate an EBITDA margin of 50% to justify such transactions. The question is when will they be able to generate such margins? As a check: EBITDA of $250k implies an EV/EBITDA multiple of 6x, which seems reasonable.

I think mgmt recognise there is a need to improve profitability and it would appear they are now focusing on growing revenue. This would be great if the cost base was fixed, but they have highlighted the hiring of additional staff. Mgmt have also highlighted the delayed benefits from these additional staff, hence my concern that DH13 may disappoint.

That is why I am having trouble reconciling the recent Director purchases. They could have been patient and probably picked up the shares around 20c over the next 6 months. Given the lack of liquidity, they would have had an influence on this run up. Is RNC, with its disclosure obligations, the best of their investment alternatives to chase?

Insiders own c.60% of the outstanding shares (post 40c placement). If I were mgmt, and could see that the business was making good progress, I would privatise the company. It is essentially a private company anyway and the listing is doing them no favours.

We'll see.