Forum Archive Index - August 2000

[Robert Cox <robert_cox@icanz.co.nz>]

Brian,
Advantage's true EPS are 5.9 (basic) and 5.79 (diluted).  
This gives a P/E ration of approx 47 (based on price of $2.82).
EPS actually fell from previous year (8.78 basic, 8.11 diluted)
These EPS figures are from the NZSE announcement of 11 August on the
appendix 1 form in compliance with the Listing Rules.

Your EPS figures are from the much criticised announcement of 9 August and
are based on Advantage's "normalised" profits.   The difference between the
two I understand to be primarily amortisation of goodwill.  

Amortisation of goodwill is not a one off item, as it is written off over a
number of years. 
Regards
Robert
(hold no ADV)

> -----Original Message-----
> From: Brian Gale [SMTP:brigale@i4free.co.nz]
> Sent: Wednesday, August 16, 2000 10:33 AM
> To:   sharechat@sharechat.co.nz
> Subject:      Re: [sharechat] Advantage , the cold hard facts
> 
> Rather sweeping Nick.  On Your points
> 
> 1. Yes they made a complete hash in their presentation.  They had an 3x
> increase in turnover, but this had to be off-set by the cost of getting
> this turnover i.e. the Goodwill they had paid out. They chose to try to
> cover this up which was quite stupid.  If it had been presented in a
> straightforward way, along the lines of  saying "We have been able to
> increase our revenue 3x but you will understand that there have been
> substantial initial costs in achieving this, the full benefits will occur
> in the future." I'm sure that would have been acceptable and
> understandable. Hopefully they will have learnt a lesson from all of this.
> As to their future I refer back to Frank Fernandez report which includes a
> number of 'goodies'
> 
> 2. This is rather ironic as there were recent arguments saying companies
> should retain their earnings and not pay dividends !!
> 
> 3. From the reported EPS  of 11.1 cents, at the current price 2.82....P/E
> is 25.4...not too bad.
>     EPS did go up 40%
> 
> 4. The Goodwill pay-out is a once off.  Future bottom line figures must be
> better. If in fact that high expense had not been there the overall result
> would have been extraordinary. This appears to have been what they were
> trying to put over, but as I have said it was stupid because they couldn't
> (and didn't) get  away with it.
> 
> BG  (Have a few ADV)
> 
> PS  That other coy much in the news RMG with have a similar problem with
> Goodwill - wonder how they will handle it.
> 
> 
> 
> At 07:19 16-08-00 +1200, you wrote:
> 
> 
>           1. Untrustworthy --   No longer possible to trust this company
> imho.
>           2. No dividend --      None likely in near future
>           3. High p/e    --        Who knows how high?
>           4. Growing revenues but not profits
>          
>                Surely there are better places to invest money than this
> outfit?
>        Trade it maybe, invest in it?- not bloody likely!!
>        
>         nick
> 

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