Hi @govr - some comments on this from my perspective. I welcome...

Hi @govr - some comments on this from my perspective. I welcome other thoughts on this.

Historically, the gearing ratio (and I am not sure the exact factors you are using in your gearing ratio, but I will assume debt/equity) has decreased over the past 3 FYs, and is expected to further decrease as a ratio with the overall increase in equity expected as a result of the proposed acquisitions. I prefer a cash-to-debt ratio over a gearing ratio with respect to debt, as it more closely represents the ability of the company to pay its debt obligations; and in this respect I have no immediate concerns. With proposed acquisitions in mind, there should be sufficient cash coverage for payments on debt, provided that the debt position is not significantly extended from this point; although, PGC do have a facility in place which can be used to fund further growth or for working capital if absolutely required. Given that FCF has more or less matched NPAT over the past 2 FYs, it could be reasonably projected (and given no further significant cash investment in property, plant, and equipment) that this will extend for FY2018, where the target is AUD20.9m NPAT with proposed acquisitions accounted for.

The dividend payout is currently quite high as you point out, toward the latter end of the range of the 40-50% policy. However, this appears to be a strategic move to attract investors. Although, some investors may prefer profits to be ploughed back into the business to fund proposed acquisitions, rather than through capital raisings which ultimately act to dilute the overall holding. I have mixed feelings on this.

Finally, the NPAT margin for the PGC group of companies is increasing YOY, with the FY2017 margin coming in at 8.68%. Again, if the proposed acquisitions come to fruition and bear the fruit that PGC has forecast, then this is once again expected to increase as a ratio to just over 9%. This in comparison to the NPAT margin of 4.33% in FY2013. For mine, any business with a roll-up strategy that can aggressively pursue revenue growth without sacrificing NPAT margin shows its health and ability to reap synergies (sorry, I couldn't help but add this corporate jargon in!).

What would be the basis for writing off goodwill/intangibles? Do you see the discount factor applied as unreasonable?