Ann: K2F Agrees Scheme of Arrangement with Accel-KKR, page-23

The proposed transaction represents a multiple of around 4x K2Fs $8.8m ARR. That seems to be around market average at the moment.

You could argue K2F has good growth rate and high retention rate which could justify an above average multiple. However, just to provide the counter, arguably K2F has had only one source of growth - RCubed - everything else has provided pretty average to poor growth. And RCubed must be now pretty saturated across most of the larger miners. Hence even that has dropped off new contracts recently. And the reality is K2F is still loss making, and it is not the most easily scalable business given how technical and site specific implementation is.

I would expect the Financial Advisors went far and wide to get potential bidders. We even have one as shareholder - Maptek and they chose not to bid. The best offer we could get after a 6 months thorough process is 19 cents. That sort of process is what investors normally consider should lead to a fair market price.

Everyone wishes it were more, me included, but given where interest rates are and how little interest there is in growth stocks on the ASX right now, I think this is a good deal. This is the highest price we have seen in 2 years and double the current share price. And before this deal it looked like 10 cents was as high as the share price would go.

Finally, for those shareholders now believing value sits above 20 cents, I suppose the question is why were they not buying shares frantically on market. K2Fly has had the lowest volume buying of almost any stock. It’s always easy to believe the market is someone else, but if current shareholders don’t believe it’s a buy at or below 10 cents then the share price is never going to get going to over 20 cents.

I am minded to take the offer and find another stock to (hopefully) ride the market back up in a (hopefully) lower interest rate environment. With 2x the money I originally had on K2F.