Re Tender Offer29 Apr 2016 17:47
The full accounts are now available on the company's website. Interestingly, they are in 'plain' format - none of the usual PR style dressing up with pictures of people and products etc. I would suggest this clearly indicates the probability that the company will not remain independent.
What, therefore, can we say about the value of what remains and does it justify £2 per share or perhaps more?
The directors have said, correctly, that for 2015 the EBITDA was £3.4m but this was after the costs of running a public company with a full board of non-execs etc. and after paying the CEO and FD the quite outrageous total of £798k. The total of directors remuneration was £981k all for a company with a turnover of £27m p.a.!
In my judgement, as an independent non-public company, the EBITDA for 2015 would have been of the order of £4m and based on what the directors are now saying about reduced R&D and CAPEX, this little baby should now start to spew a lot of cash.
Valuing such a company is usually done by applying a multiple to EBITDA and adding any surplus cash or deducting debt. The key is therefore what multiple to use?
I believe 10 is a reasonable multiplier giving a value of £40m plus say, £4m of spare cash which all equates to £2.06 per share after the tender offer. This valuation at the EBITDA level is only 1.5 times revenue which is hardly over the top.
YES FOLKS, WE ARE GOING TO GET TAKEN OUT AT A MINIMUM OF £2 PER SHARE.