Thank you for sharing that background Tarvold. Looking back over...

Thank you for sharing that background Tarvold.

Looking back over the threads I saw @Access2020 ‘s post [here] citing the December ‘20 report from Louis Bannon at CCZ Equity Research; “Let Sleeping Dogs Lie”. https://mcusercontent.com/fb916e952...-e590-4312-809e-59ca18fc91c0/20201209_AHX.pdf.
-It’s always useful to look at the glass half empty - thank you for your post Access2020.

One of the points was;

“Apiam is geared at 36% (covenant was recently relaxed from 35% to 45%).
Our estimates suggest that the business can support ~$20m of debt funded acquisitions before breaching its gearing covenant.​

ROIC (including goodwill) has been ~5% over the last 3 years.​

FCF return on invested capital was 2.7% in FY20.”​

In the half yearly presentation [ref], Apiam says borrowings had increased to almost double what CCZ liked, but it still said there was still “significant headroom for growth opportunities” and that there was is still $19M in the acquisition kitty.*

“Borrowings to fund growth
• Net Borrowings increased to $39.2M due to:​

- cash component for Don Crosby acquisition ($3.3M)
- deferred earn-out consideration payment for ACE Laboratories ($2.9M)
- investment in roll-out of new greenfield clinics during period (~$0.8M)​

• Operating leverage ratio (net debt basis) as at 31 December 2020 of 2.3x vs covenant of 3.0x – significant headroom for growth opportunities
• Access to additional $19M under NAB acquisition facility”​

That’s an interesting diametrically opposed two sides of the story?
..But PETstock must feel secure
I don’t do numbers but think the bank must also feel secure too

So what next for Apiam I wonder?

Cheers


*Acquisition facility;
NAB originally loaned $10M which was increased to $25M on 22/12/17 [announcement]
then increased again by $14M in August 2o19 [Market Herald report on this and $16M spend] [announcement]