Ann: Major New Contracts and Retail Sector Expansion, page-17

I was looking at the possible earnings accretion from an acquisition and the numbers look pretty impressives e.g. Doubling the revenues to $40m via a debt funded acquisition:

Estimated cost - $8m for a $20m revenue business generating $2m NPAT so 4x Pe multiple (keep in mind MCS and Integra Pe multiple was ~3.5x)

Given the business currently runs net cash of $2m, the acquisition would leave the business in a $6m net debt position. This level is easily manageable with net debt / ebitda sitting around 1x with interest costs of $300k.

Combined business NPAT - $3.8m

EPS accretion of 90%

Pe multiple on the combined business of 6 - 8x gives an equity value of $23 - $30m which equates to ~$0.11 to $0.14. With mgt targeting East coast expansion, there is plenty of potential upside from a deal.