Op cashflow down PCP because of +$7m ($11m total) tax paid against income tax expense of $7m, essentially tax overpaid by $4m. If you flick back to FY13 full year report you see cash flow from operating activities of $40m ($16m H1 $24M H2) essentially H2 represents 60% of cashflow give or take timing of acquisitions. Notes of the report also clearly state seasonality factors. In addition to that
1. Large acquisition in October last year wont have been fully impact in H2 CF.
2. Big acqusition in January of H1 14 will impact significantly
3. Most impartanyly big acquisition around March April will impact more heavily and H2 and in FY15.
Increase in trade receiables also impacting on Cash flow however its hard to determine how much of the trade and other payables relates to business activities and how much relates to contractual rights to acquire centres so difficult to really determine on that front.
On EPS
they essentially issued 30m shares (approx 15% increase in shares on issue) over the past 2 months. Impact of recent sterling acquisition negligable in H1 so you have essentially front loaded the share issue with no improvement on earnings. Reverse that and essentially you have approximately 35% increase in EPS. So you are looking at EPS of 6 Cps.
Based on prior year review H1 was 4.14CPS and H2 7.14 CPS. Essentially 37% - 63%. weighted.
So roughly looking at 17CPS + sterling acquisition which essentially factored nil impact into H1.
Add in sterling EBIT of $39.8m *0.7 Adjust for tax = 27.86 divided by approximately 323m shares on issue = 8.62cps divided by 2 assuming impact will be roughly 50% of the year as some centres acquired already and some acquired towards september and also assuming earnings achieved 50/50 in each half despite knowing its weighted to 2nd half.
So essentially looking at 17 + 4.31CPS = 21.31CPS for EPS.
This calc does not factor in any of the smaller acquisitions that have been taking place recently and the one announced today with results which could provide some 1-3CPS upside which whilst not conservative gives potential EPS of 24CPS but i think this may be in line with management as increase dividend to 5CPS.
I have not considered potential upside in occupancy which per the investor presentation G8 seem to be able to lift.
FYI i almost screwed up my calc by forgetting to divide by 2, but the sterling education acquisition alone increased EPS of 8.31CPS which will impact full year next year.
Further more
Cash at Bank of 153,942
+ Receivables 16,237
- Trade payables (assuming sterling and other contracts to acquire centres) 74,917.
Leaves 95,262 cash.
Acquistions at 4x Ebit = 23,815
Less tax = 16,670.
= 5.15CPS to EPS from further acquisitions.
Thus 24CPS in FY14 + (additional 4.31cps of sterling) + 5.15CPS = 33.46 CPS FY15.
Not knowing what exactly makes up that trade and other payables because their could be additional centres under contract that arent part of the sterling group that i haven't factored in the earnings impact.
FYI thats NPAT of $108m in FY15.
Calculations are very rough and just wrote them out to satisfy my own curiosity and a number of assumptions have been made. As always this is not intended as financial advice please DYOR.
GEM Price at posting:
$4.91 Sentiment: Hold Disclosure: Held
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