I just phoned Ben Reichel and got straight through and he answered my question (this is a surprise as so many companies make it difficult to access them). He assured me that the 15m USD repaid was from free cash flow. I wanted to double check this as the bit around the 20m working capital was slightly opaque to me. Ben assured me that the working capital was entirely for the purpose of having funds on the floor to cover redemptions.
The 4m over 2 years does seem like a lot, the only thing I will add is in 2015 they had no substantiated cash flows from the Star and this could have crimped their ability to borrow on favourable terms.
So what does this mean in terms of their NET debt? 16% net debt to equity gives:
0.16 = x/462m (equity attributed to owners of 462m pg 7 half year report)
x = 74m
This is an assumed figure if equity value does not change.
Some other calculations................... (all from half year report)
Total liabilities = 209m
Non debt liabilities (total) = 36m
Total cash = 83m
net debt at end of Dec = 209 - 36 - 83 = 90m
So if 15m USD paid that should be 20m AUD
net debt current = 90 - 20 = 70m
Using the two methods we have a discrepancy of 4m this could be explained by a small fall in the cash on hand and slight differences in rounding on the 16% of 462m.
So my conclusion is that free cash flow for the half could be something like 16m. On an annual basis that is 32m FCF.
So FCF yield = 32/350 = 9% (not bad)
EV/FCF = (350+74)/32 = 13 (not bad)
My conclusion is that my investment thesis in DNA is progressing roughly as expected and I will continue to hold.
PS. Please let me know if you dispute any of my calculations or numbers (I post so other people will check my working and debate my assumptions).
