For me there is too much debt and the balance sheet has a lot of intangibles.
Debt to equity is 121%. Debt to market cap is 38%
Balance sheet has $41M in liabilities. Only $15M in current assets. $49M non-current assets. Most of this goodwill, then leases and then loans to partners.
Not sure what the debt covernants are, but in a falling market this is not for me.
The company is expanding well, recording a 23% growth in revenue and 53% NPATA growth for the first half of FY20.
Driven by price and volume increases and acquisitions, all of which appear to be delivering attractive returns.
Still a large market opportunity and company appears to be executing well on its strategy -- one which is clear, disciplined and well practiced.
I believe their revenues are more defensive than you might initially expect, and it's great to have such a strongly aligned CEO (owns over 50% of shares).
It pays a quarterly dividend, which at the current price (77c) is yielding 5.3% fully franked.
Founder and other directors bought shares recently.
Results presentation here
Some initial notes
A roll-up play for SME sized accountancy practices. Generally not interested in services business OR roll-ups, BUT...
Looks like they had a disaapointing first half with the CBD location not performing to expectations. Nevertheless, it has proven to be a very worthwhile investment.
Profit expected to be flat this year, but management confident of ~5% per annum growth over coming 5 years (this legitimiately appears very conservative).
Company guiding for NPATA of $4.3m for FY19. Which means shares are on a PE of ~ 8.6x (amortisation of acquired customer lists are excluded -- which is very reasonable in my view).
Seems cheap given likely growth. Was impressed by management at a recent conference I saw them present at.