Does anyone know if they plan to list on the Assets Test or the Profit Test? Because I see problems with Sterling qualifying for either at the moment.
To list on the Profits Test you need 3 years of audited financials showing an aggregated profit over the 3 years of $1m with $500K in the immediately preceding 12 months. Sterling first hasn’t existed for 3 years (incorporated in Jan 2016) so 3 years’ worth of results simply won’t be available until early 2019 - and I would suggest ASX will want to see 3 full years which means June 2019 accounts audited as part of the listing process.
An interesting thing with the Sterling New Life product is that the nature of the Income might be questioned by an Audit Partner. Is it a loan from the resident (they do call it a lease, similar to a retirement village lease which is treated as a loan, not income)? Which is great in some respects – no income tax, no GST, no Stamp Duty, lots of incoming cash. But not so great in other respects – no accounting income so no accounting profit so no Profits Test.
Also, to list now would mean the Dec 2017 accounts at worst would need to be audited and provided. And at this stage we’re being told it’s only June 2017 that are being Audit Partner reviewed at the minute. So, more work to be done in this area.
To List on the Assets Test we need Net tangible Assets of $5m and market cap of $20m. Last time I looked, Rent Rolls were Intangible Assets and without having seen Sterling’s Balance Sheet, I would suggest the intangible rent roll asset makes up a big chunk of the assets. So I'm wondering if they would be able to get to $5m in NTA. Let alone the $20m in market cap.
Outside of the formal Listing Rules, the ASX also need to make sure that the Company has adequate Corporate Horsepower – Board Structure, Corporate Governance commitments, sound Financial Reporting systems that can cope with the stringent timing for accounts to be prepared and lodged, etc, etc. I don’t see the current structure passing muster in this regard so what is the plan here?
