So Net Assets improved from $122m to $166m half on half. Slightly more than the raised amount. Ok.
But maybe more importantly, Net Tangible Assets rose from $24m to $70m.
H1: $24m tangible assets against a large loan book, and large corporate debt looks bad for covenants. NTA vs borrowings: 1.94% leeway
H2: $70m tangible assets against a 7% smaller loan book and 10% smaller Borrowings looks more decent. NTA vs borrowings: 6.28% leeway
So we seem to have reduced risk a fair amount in terms of covenants and tangible assets. Why would a lender care about intangibles like SocietyOne Brand Value? They'd care about receivables and cash.
The raising did do most of the heavy lifting, but underlying performance seemed to contribute a little.
Overall, seems fairly good. But, is the ECL Overlay Provision a one-off and is it realistic?
ECL provision drove NPBT down from $18m to $12m for the FY. So the provision would have to be underestimated by 3x to drive profit down to 0.
There's a lot of information to take in, but I'm feeling like it's a reasonable result, maybe good.
But why retain an increased cash balance? Why not reduce the expensive corporate debt further? (Emailing management that question)
And an interesting point, the corporate debt was reduced only recently, so it should contribute increased savings in the coming HY. ~$28m * ~15% * HY = $1.875m saving for HY, if we didn't save any yet this prior HY.
Net Assets are $170m vs $62m market cap (including intangibles like Society One brand / synergies).
Or $70m Net Tangible Assets vs $62m market cap.
Lots of risk priced into the market cap.
Cash being $92m.
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So Net Assets improved from $122m to $166m half on half....
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