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#ASX Announcements
Last edited 3 months ago

In the middle of a deep dive on VVA's full year financials and I came across this, which I think might be a typo/drafting error. @UlladullaDave thoughts?

First below is from HY results, Second is from FY results.

I think the property lease repayments in the FY results (Note 19) have accidentally excluded the interest component.

The $28.37 mil figure is equal to the principal payments detailed 1 page earlier, also it makes no sense that lease principal payments haven't at least doubled from HY to FY given expansions that have happened this FY. I think this figure is meant to be $43.5mil, as per their Investor Pres adjustments which I'll post on later.

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#ASX Announcements
Added 6 months ago

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Another Acquisition and a capital raise. I get why it makes sense to go into new geographic markets via an aquisition, but the price they're paying is nearly above their cost of capital. They're raising at 3.5X EBITDA and acquiring at around 4x EBITDA (or 3x EBITDA post synergies). There's some waffle about how some of the consideration includes a capex reimbursement but it makes little difference to the attractiveness of the acquisition IMO.

If the acquisition means it becomes easier to role out Greenfield sites and the ROI is higher than it otherwise would have been, or that the geographical reach means member growth, then I can see the logic.

The problem VVA needs to solve is:

1) Convince the market it's worth a better valuation

2) Proving it can grow using FCF without diluting shareholders.

They've failed at both so far and I think the reason they've failed at 1 might be because they've failed at number 2.

#ASX Announcements
stale
Added 8 months ago

I haven't posted any commentary on the HY results as I couldn't really pin down my thoughts exactly. Despite making no acquisitions, it was still hard to determine what the actual underlying FCF was.

In regards to the below, it seems ok, but here's the emerging problem I'm starting to see:

VVA have paid approx. 1.2x Rev and 3.5x EBITDA for this acquisition (EBITDA margin expectation is much higher than usual 20%) .

VVA currently trades at approx. 0.8x Rev and 3.7x EBITDA.

There's no public to private arbitrage at the moment.

Assuming a 35% EBITDA to FCF conversion ratio (as per company presentations), a 3.5x EBITDA multiple implies a FCF yield of 10%.

VVA currently pays just under 8% on its debt facilities.

If everything goes to plan, VVA generates an additional $100,000 in FCF on its $5 in additional debt. There may be some additional synergies down the line, but I wouldn't bank on it.



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