Agreed Noiceone. Even if you accept management's figures, if the consideration is mainly cash and the script that is being offered is being drip fed over four years then you want to hope it was EPS accretive! That's just maths...

What is interesting to me is that based on what they've disclosed you can get a read on management's expectation of Dusk's earnings for FY22 (pre-Eroma). By disclosing Eroma's forecast FY22 EBIT ($7-8.5M), taking the mid-point, making an assumption about Interest and Tax, I come up with earnings of approximately $5M. What I'm not clear on is whether they're diluting Dusk's FY22 EPS with the shares to be issued between now and H1 FY24. Given they mention 'escrow' I'm going to be conservative and say they are diluting them, which gives me pre-Eroma earnings of $17-17.5M. If they're not doing that pre-Eroma earnings are expected to be closer to $25M. Either way it's a lot higher than what I'd been assuming given the impacts of lockdowns in NSW and Vic.

[Not held]

I was reflecting on a straw I saw a couple of days ago where someone tried to argue you could take the EPS accretion disclosure and back calculate to get management's FY22 earnings projection ex-Eroma. I was thinking about that and I couldn't help but think - what a Gobshite! To protect the innocent I'm not going to name them here but as a clue Google actually calls them out by name:

Let's assume for a minute that knowing that would actually have value (on that I'm going to give them a pass. You could argue as a long term investor 'who cares' and 'it's just a forecast' but I'd counter that although I'm not against retail it's seldom as a long term investor and so relatively short term data points are of value). But we don't know if that is their current forecast, or a forecast when the budget was produced (pre-lockdowns) or some other random time. In addition to the numerous assumptions I made - I mean he made - he's also assuming they're pro-rating the EPS comparison as if they own Erona for the full year, which is a massive assumption. If they're not you'd have to make a whole lot more assumptions about seasonality and acquisition timing and probably other stuff besides. Putting all that together the range of outcomes for Dusk ex-Eroma are somewhere between chicken soup and an original Banksy. A pointless exercise...