I've been through this presentation, and have the following thoughts/opinions:
1. EBITDA performance of $28m achieved in continuing business. To be honest, I don't think there's enough focus on this result, and it gets buried in all the other non-sense in this presentation. This looks like a good result to me, although I will say that the opening statement of "headline revenue growth rate 5%" doesn't fill me with joy, and is a little bit weak for my liking.
2. There is a lot of "spin" in this presentation - agree with others on this point. One of the headings for a section is "clear growth strategy showing results"... but I'm still at a loss to really understand the growth strategy. I certainly couldn't describe it to others regardless of how much I read the releases.
3. NPAT of $8.8m is disappointing, but what's more disappointing is that the Note calls out some drivers for this result, but there is nowhere in the presentation that confirms that this is a blip. I would have liked management to be more affirmative with the numbers they are targeting for FY19 rather than being so wishy-washy around vague strategic plans.
4. No dividend is a huge message here. I think they should have been messaging this as "we are trying to clean up the balance sheet" rather than saying that it's driven by the policy, especially given the policy is based on NPAT and they have been beating the drums on NPAT being impacted heavily by non-cash issues (like write-off).
5. Size of the industry and industry share - yawn! who gives a...
6. "Paragon's strategy on a page" - why are the goals based on FY21 and not FY20? Is that a typo?
7. Why is there no discussion about the 'legacy sale' and the impact on the financial results going forward? I'm still not clear what these '50 employees' means, but I was expecting this to help massively for the FY20 projections.
8. Cost out numbers (6.5m) is fine, but where are the projected numbers on sales growth and profitability for FY20? Am I missing these?
9. Need to dig into the 70.186 million listed in the P/L as "Administration" - haven't had time to properly dig into this number, but it's massive!! I'm assuming it's wages and things, but would be good if it was clearer.
Overall, my personal view here is to ignore the FY19 financials and focus on the value of the company based on continued operations and the projections for FY20, but I'm at a loss because I don't see anything helping me assess whether this is worthy of my time. I have sunk an incredible amount into this because I thought it was wayyy undervalued, but right now, I couldn't even tell you what to make of this.
My best guess would be as follows:
FY20 revenue grows by just over 5% (continued) > 250 million of sales
FY20 EBITDA of 12% (in line with the preso for FY21) > 30 million
Costs of operation to remain consistent with FY19 (natural increase offset by cost out), minus the impacts of one-offs - which leaves us with NPAT of maybe 15 million?
The market cap of this company is less than 160 million. So, after all of this, if my numbers are even remotely reasonable, I would still say that it looks undervalued (NPAT multiple of less than 11?) - but geeeeeezzzz louise do they have some issues they need to address in the management of this company!
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