v2 Report
SLG Sealegs Corporation Limited

Commentary: Sealegs Corporation Limited manufactures and develops the sealegs amphibious vehicles. Sealegs was founded in 2000, the first boat was built in 2001, and first delivery to a customer was made in 2004; recently it revealed orders for over 50 boats, and in response has had to increase its production capacity and looks set to increase this from 50 boats per year to a potential 200 boats a year.

One of the key recent events for SLG is the planned $15million rights issue for the purposes of international expansion “He explained that the funds raised from the rights issue would be used for increasing working capital to assist with rapidly growing sales, strategic international expansion and market development, as well as creating new boat models and more production efficient designs.” (recent forecast announcement to the exchange). SLG has also confirmed that its new 7.1m amphibious boat is heading into full production following successful sea trials.

Thus the picture painted is one of a rapidly growing start-up in need of additional capital to sustain this growth. The key question remains however – where’s the profit? When dealing with start-up companies the potential rewards can be great, but one always has to keep at the forefront of their mind the issue of when the profits will start showing, growth is good, but growth that translates into a strong bottom line is better.

In the 07 year SLG made a loss of 1.m – similar to the previous year, however this was on the back of improved revenues. It’s obvious given the balance sheet that these losses are unsustainable though and the company will be very much reliant on the capital raising to continue building the business. On a cash flow basis the company will still be around, however again the question is echoed – where’s the profits?

Looking forward, the rights issue if successful will create a strong capital cushion for the company, and bolster its efforts in expansion both in production capacity and marketing. A prudent person would probably wait for profits – which may come next year… or later if at all, but then this company is currently best suited to investors with a more aggressive growth attitude, when profits come they may come large, and those that can foresee this will be rewarded. But in the mean time there’s no profits, only promises; but gains can be made in strategically timing your investments, a stock price increase doesn’t have to come from profits – sometimes only the promise of profits, thus while it remains high risk there is also the potential for high reward (excuse the cliché).

By Callum Thomas

10-September-2007

Website: http://www.sealegs.com/

Recent announcements: click here

IPOs and Investment Opportunities

Financials 
 

Statement of Financial Performance
	2007	2006	2005	2004
Revenue
Sales	5,006,255	2,732,231	1,528,011	19,000
Interest received	56,044	87,459	21,014	26,434
Other	285,681	53,597	1,025,579	215,933
Total Revenue	5,347,980	2,873,287	2,574,604	261,367
Expenses
Cost of sales	-	-	-	-
Other expenses	6,332,956	4,041,115	2,384,280	1,706,480
EBITDA	(984,976)	(1,167,828)	190,324	(1,445,113)
Depreciation	43,174	30,714	25,534	7,288
Amortisation	20,133	12,519	1,222,586	1,213,847
EBIT	(1,048,283)	(1,211,061)	(1,057,796)	(2,666,248)
Interest expense	-	-	-	-
Taxation	-	-	5,558	29,045
NPAT	(1,048,283)	(1,211,061)	(1,063,354)	(2,695,293)
Statement of Financial Position
	2007	2006	2005	2004
Assets
Current Assets
Bank and cash	1,093,571	1,269,104	258,614	495,050
Receivables	75,073	330,986	167,962	4,594
Inventory	1,025,281	211,276	316,544	119,065
Other	306,898	66,065	81,532	95,486
Total Current Assets	2,500,823	1,877,431	824,652	714,195
Non Current Assets
Property Plant & Equipment	370,201	156,627	105,437	79,235
Investments	-	-	-	-
Goodwill & Intangibles	594,663	643,944	635,104	1,770,314
Other	40,826	-	-	-
Total Non Current Assets	1,005,690	800,571	740,541	1,849,549
Total Assets	3,506,513	2,678,002	1,565,193	2,563,744
Liabilities
Current Liabilities
Payables	1,180,727	341,260	247,390	96,108
Short term borrowings	-	-	-	-
Other	754,967	310,061	203,649	437,128
Total Current Liabilities	1,935,694	651,321	451,039	533,236
Non Current Liabilities
Long-term Borrowings	-	-	-	-
Other	-	-	-	-
Total Non Current Liabilities	-	-	-	-
Total Liabilities	1,935,694	651,321	451,039	533,236
Net Assets	1,570,819	2,026,681	1,114,154	2,030,508
Statement of Cashflows
	2007	2006	2005	2004
Cash flows from operating activities
Operating revenues	5,363,061	2,725,729	1,405,168	609,998
Operating expenses	5,791,042	3,679,919	2,675,070	1,721,383
	(427,981)	(954,190)	(1,269,902)	(1,111,385)
Cash flows from investing activities
Inflows	37,915	-	1,025,580	5,684
Outflows	377,888	158,909	139,114	72,489
	(339,973)	(158,909)	886,466	(66,805)
Cash flows from financing activities
Inflows	592,421	2,123,589	147,000	499,491
Outflows	-	-	-	-
	592,421	2,123,589	147,000	499,491
Net Increase (decrease)	(175,533)	1,010,490	(236,436)	(678,699)
Opening cash	1,194,104	183,614	420,050	1,098,749
Closing cash	1,018,571	1,194,104	183,614	420,050
	Analysis
Per share figures
Dividend/shares	-	-	-	-
NPAT/shares (EPS)	(0.02)	(0.02)	(0.03)	(0.06)
EBITDA/shares	(0.02)	(0.02)	0.00	(0.03)
Net Assets/shares	0.03	0.04	0.03	0.05
Profitability
ROA	-29.90%	-45.22%	-67.94%	-105.13%
Equity multiplier	2.2	1.3	1.4	1.3
ROE	-66.73%	-59.76%	-95.44%	-132.74%
ROavgE	-58.28%	-77.12%	-67.63%	-
Net profit margin	-19.60%	-42.15%	-41.30%	-1031.23%
Liquidity
Net working capital	565,129	1,226,110	373,613	180,959
Current ratio	1.29	2.88	1.83	1.34
Quick ratio	0.76	2.56	1.13	1.12
Working capital ratio	0.16	0.46	0.24	0.07
Capital structure
Debt to equity	1.23	0.32	0.40	0.26
Interest coverage
Shares	60,392,696	56,631,295	42,474,041	42024845
Dividends paid	-	-	-	-
Dividend payout ratio	0%	0%	0%	0%
Growth rates
Revenue	86.13%	11.60%	885.05%
EBITDA	-15.66%	-713.60%	-113.17%
NPAT	-13.44%	13.89%	-60.55%
Total assets	30.94%	71.10%	-38.95%
Net assets	-22.49%	81.90%	-45.13%
g = (ROE*(1-DPR))	-66.73%	-59.76%	-95.44%	-132.74%
Other
Share price (31-August-07)	$            0.64	Avg 4 yr growth rate (NPAT)		-20.03%
Market cap	$  38,651,325	Cmpdg 4 yr growth rate (NPAT)		-21.03%
Enterprise value (EV)	$  40,587,019	Avg 4 yr growth rate (NA)		4.76%
EV/EBITDA	-41.21	Cmpdg 4 yr growth rate (NA)		-6.22%
P/E Ratio	-36.87
P/NA ratio	24.61
Dividend yield	0.00%
Earnings yield (E/P)	-3%

Company balance date: 31 March

Trading over the last year

 

Supplementary Information

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