Ann: Change in substantial holding, page-11

Hi Go South

Yes, I took the rev numbers from the acquisition announcements. To summarise

	Column 1	Column 2	Column 3
0		2016 revs	Acqn Completed
1	Evolution	10.8m	17 March 2017
2	Action	6.8m	9 March 2017
3	Sunshine	8.5m	? (Guess 20 April)
4	TOTAL	26.1m

So even without organic growth those three should $26.1m to revs in FY18. MTO has a June year, and these businesses were acquired part way thru the year, but they should still contribute approx one quarter's revenue to FY17 (approx $6.5m).

You are quite right that MTO stated that all three acquisitions are to be "funded from cash reserves". I found that comment far too cryptic - since while MTO has cash at bank of $6.87m as at Dec 2016, it also had short term borrowings of $18.9m at that date and which were classed as current liabilites (had to be paid within 12 months). So what are "cash reserves"? To me, MTO has no cash reserves! The interim accounts was a little differently worded - probably much more accurately - the acquisitions were said to be "funded from existing banking facilities". Ie, using debt too.

Each of the acquisitions was said to earnings accretive (and obviously linked to MTO's strategy). But that still doesn't say give much of an indication as to what they paid. Presumably, the lack of candour about this is due to confidentiality clauses in the S&P agreements with the vendors - rather than mgmt not wanting to fess up that they paid an excessive price! But it does make a big difference to how we should value MTO, IMHO. In particular, if the acquisitions are made at low multiples, then it's pretty easy to see that they should be strongly value-accretive, and more similar acquisitions would be good, but what if MTO paid a multiple very close to its own for each of them.? We'll obviously know a lot more when the annual report comes out in 4-5 months time.

I'm not sure how big any opportunities of scale or scope would be in the bike dealing business - but presumably the listed value is greater than the unlisted value? That I'm guessing is part of the rationale for the roll-up strategy.

Maybe there are some clues in the prospectus.? Has anyone seen any broker notes re: any of this?