Hi Serge,
I thought I would clarify my interpretation of the numbers released. Others may differ but here is how I see it and the assumptions implicit in my analysis:
Assumptions:
Used income before tax since the company has $13.351 million in loss carryforwards from the old Xencet.
Assumed no interest on term loans and debenture since Receivable from sale of subsidiary of $2.387M was received in first week of January (Funds were tied up in escrow at lawyers office and were not received until January) and said funds would be sufficient to pay off substantially all of debt o/s.
Ignored amortization since this is non cash item which pertains primarily to G/W which was inherited from GTR balance sheet prior to business combination. Ordinarily, I would not add this item back but it represents sunk costs on a going forward basis.
Net customer credits and Gain on sale of subsidiary are unusual items as per management discussion.
Consequently income from quarter used was $2,026M.
Divided by 25,004,119 common shares is $.08/sh. x 4 =>$.32
Using a P/E of 10 I get $3.20 per share. If you use the fully diluted basis you also need to account for the additional $8.4M that the company would gain in equity and the additional return that would be generated thereon.
Re: the lower margin, my understanding is that a great deal of management's time was spent finalizing the Xencet acquisition and refining the MIS that the company has developed. Frankly, I was expecting much lower margins given the distractions that management had to deal with in the last quarter.
Management is on the acquisition trail and I believe a P/E ratio of 10 would be unfairly conservative - but have not yet decided what the proper P/E should be. Any thoughts would be appreciated.
I attended the S/H's meeting last fall and was really impressed with the game plan that mgmt. is putting together. As I've said before the days of Legacy, Tecmar, Xencet are long gone and we now have to value this company on a going forward basis.
There is always risk in a company such as GTR but I feel a whole lot better about the shares I have today vs. what I had a year ago.
Regards,
Skipper |
