ASX Announcement

Just as I was shutting down for the weekend, this came through.

Consideration is 4.5 x Gateways's FY23 EBITDA of $5.6m

So, 40% = $10.0 m

Paid as:

a) $4,894,433 cash

b) $5,974,729 in LBL shares based on a VWAP of $0.85444 per share.

$LBL has the right to acquire up to 51% in total.

Further shares to 100% at Gateway's shareholder's discretion.

Consideration for additional shares up to 4.5 x EBITDA up to a max. of 3 years average EBITDA. Method of cash and / or scrip to be decided at the time.

I'll not repeat any of the results and commentary today on $LBL, as I think everything is well-captured.

While also irritated at the clarity of the deal communication, we are learning time and again, that our small cap management team's and Boards simply need to develop their investor communication capabilities. While it is something to bear in mind from a governance and risk perspective, if I trust in the integrity of management, I'll cut them some slack.

I was also not unduly disappointed with the operating performance. Gross profit and %GM continue to progress.

The expense increase lacks explanation: $5.04 to $6.60m! But perhaps they felt it goes without saying given the things they are doing as part of the strategy. It is one to watch, and if expenses continue to expand in an outsized fashion, then that will be a flag for me. A more sophisticated management team would have provided more detail here.

The continued slow progress on the technology division is disappointing. However, this is a relatively new area for them, and I'd rather they continue to innovate subject to exercising capital discipline. The commentary indicates that they are managing this and adapting as they go. It will take time to get the business model and the execution around it right. It remains core to the thesis.

I am glad they are expanding the business to WA and I'm not too fussed about the $60m target, or how they get there.

So, while today had more bad news than good, that's the time to buy if the thesis is intact. For me the thesis is intact, so I increased my small RL holding by 25% at $0.75, and will put a corresponding SM order in now.

Disc: Held in RL (2%) and SM

@Wini very interested in your view on $LBL.

It was on my shortlist of "companies I would like to increase if it hits certain criteria". It did. So I added on SM and RL. Unfortunately, I didn't see if there was an investor call today and, in any event, I was spread too thinly and missed it if there was.

Keen to hear what any other StrawPeople observed.

$LBL posted their results today.

After a rollercoaster week of results, I'll post their entire results summary because it is so well written and shows a really well-managed founder-led company. (My thanks for @Wini for putting me on to them).

My Takeaway: Great results on every dimension: both segments, financials, cash, dividend, outlook.

Held: RL (1.2%) SM (2.9%)

Ahead of our meeting with Wayne Hooper CEO of $LBL later this month, I recently came across Owen Rask’s (aka @Owen ) interview and site visit. It’s a really good discussion of the history of the company, the family-owner-manager mindset, economic drivers, customers, and the technology licensing strategy.

Thoroughly recommend to those interested.

edited to add the link: https://youtu.be/geRLAorTM5E

Disc: Held in RL and SM. (Small position)