Ann: ENA signs non-binding agreement to sell its UK operations, page-14

"Game over for this stock as I've wrote in previous comments"

• CF+, no debt, amazing balance sheet: ~$8m cash in bank, ~$2m investment in PSI
• Top line growing, high-calibre team, high-margin, management buying on market etc. etc. etc.
• Doesn't look like game over to me

"Further proof the board has no idea what its doing"

• They have just sold the lower quality half of their business (ENA UK) at the top of the insurance cycle

"Terrible deal for a terrible price"

• In H1 FY22, ENA UK did EBITDA of A$128K and EBIT of A$106K
• The deal was for A$8.2m (75% cash, 25% shares)
• That's a transaction multiple of 32x EBITDA and 38x EBIT(and a PE of 40x) if one annualises the H1 FY22 figures
• It might look like a mediocre price on a revenue multiple (~2x) or on a p/GWP multiple (~21%) but that obscures the fact that the ENA UK business has razor-thin margins, and very heavy regulatory, systems and HR costs

"Even if the Australian business increases 5 fold, they are still worse off."

• The Australian business is running at an EBITDA of $823K in H1 FY22
• That's 6.4x as much profit as ENA UK; the data suggests it is the faster growing, higher quality business for ENA to focus on
• If we grow ENA Aus 5x, they will be doing annualised EBITDA of $8.23m; at that point, ENA should be worth multiples of the current price
• I don't understand why that scenario would be worse off than a business (ENA UK) that was marginally profitable?

"The only way out now is to sell the last asset, become a cashed shell and look for another deal."

• That's not the plan
• ENA Aus is at the beginning of a significant growth runway in their specialist sectors in Australia
• They now have significant funds to execute on strong profitable growth
• Therein lies the future of ENA