Ann: Trading Update, page-3

20.5.24 I did some back of envelope calculations. PGH say net debt at 30 April was $507m, and underlying ebitda for 10 months $200m (both excluding leasing liability and charges). Ignoring seasonal fluctuations, annualised U/L ebitda for FY24 would be $220m, so gearing 507/220 = 2.3x. But PGH say “now expect Gearing of approx 2.8x at 30 June 2024” also excluding lease accounting. That suggests they expect net debt to be about $110m higher by 30 June, or that ebitda for the next 2 months is tiny and there is a rise in net debt of about $60m, or somewhere between the two. As you say it’s v hard to comment or guess without the cash flow statement and balance sheet. However, the 30 June forecast of “gearing” is specifically given as 2.8x. It’s unhelpful that they emphasise figures excluding the very large lease liabilities (and the depreciation on the leased assets which would move “up “the P&L account ie add to stated ebitda), as the gearing multiples have historically increased by about 1.0x.when leases are included. .

At 31/12/23 “Gearing at 2.7x, was down largely due to settlement of the Crate sale. Net debt at 31 Dec 2023 of $428.5m was down $157m v 30 June 2023 due to proceeds from the Crate sale. Net debt including lease liabilities at 31 December 2023 of $943.9m reduced by $174m”. So lease liabilities were then $515m. The lease deprecation charge for FY23 was $59.5m. I guess it would be lower for FY24 given the sale of Crates- say $45m for continuing consolidated business.

My rough guestimates are full year 24 ebitda $220m (or $265m adding back U/L lease depreciation) and net debt $615m (about $1B including leases) to give gearing at 30 June of 2.8x (or 3.8x including leases).

~$290m market cap gives enterprise value/ UL ebitda of 905/220= 4.1x or 1290/265 = 4.9x including leasing. As you say PGH looks cheap, but I’m happy for someone to disagree with my estimates. DYOR