Thank you for sharing that background Tarvold.
Looking back over the threads I saw
@Access2020 ‘s post
[here] citing the December ‘20 report from Louis Bannon at CCZ Equity Research; “Let Sleeping Dogs Lie”.
https://mcusercontent.com/fb916e952...-e590-4312-809e-59ca18fc91c0/20201209_AHX.pdf.
-It’s always useful to look at the glass half empty - thank you for your post Access2020.
One of the points was;
“Apiam is geared at 36% (covenant was recently relaxed from 35% to 45%).
Our estimates suggest that the business can support ~$20m of debt funded acquisitions before breaching its gearing covenant.
ROIC (including goodwill) has been ~5% over the last 3 years.
FCF return on invested capital was 2.7% in FY20.”
In the half yearly presentation
[ref], Apiam says borrowings had increased to almost double what CCZ liked, but it still said there was still “significant headroom for growth opportunities” and that there was is still $19M in the acquisition kitty.*
“Borrowings to fund growth
• Net Borrowings increased to $39.2M due to:
- cash component for Don Crosby acquisition ($3.3M)
- deferred earn-out consideration payment for ACE Laboratories ($2.9M)
- investment in roll-out of new greenfield clinics during period (~$0.8M)
• Operating leverage ratio (net debt basis) as at 31 December 2020 of 2.3x vs covenant of 3.0x – significant headroom for growth opportunities
• Access to additional $19M under NAB acquisition facility”
That’s an interesting diametrically opposed two sides of the story?
..But PETstock must feel secure
I don’t do numbers but think the bank must also feel secure too
So what next for Apiam I wonder?
Cheers
*Acquisition facility;
NAB originally loaned $10M which was increased to $25M on 22/12/17
[announcement]then increased again by $14M in August 2o19
[Market Herald report on this and $16M spend][announcement]
(20min delay)