Green Compliance has sold its pest division to Rentokil Initial enabling it to concentrate on the water and fire suppression business.
The initial payment is £3.25m with £150,000 payable in three months when completion accounts are agreed and £600,000 deferred for 12 months and dependent on achievement of certain operational targets.
The plan is to partly pay off loan notes and return some of the cash to shareholders. A payment of 0.25p a share appears possible while maintaining a strong balance sheet and it could be higher.
A placing raised £3.5m at 1p a share in September 2013 and at the beginning of the year £1.8m was raised from a placing and open offer at 2p a share at the beginning of the year.
At the end of September 2013, there were bank and other loans of £932,000 and deferred consideration of £512,000.
At 1.2p a share, Green Compliance is valued at £5.71. The NAV is £6.6m, although that is prior to the sale of the pest division, which appears to be for more than asset value.
In the six months to September 2013, revenues fell from £9.77m to £6.64m, but excluding the pest division, revenues declined from £6.01m to £4.35m.
There was a £4.25m gain on the restructuring of HSBC debt. That is the reason for the swing from a loss of £2.05m to a profit of £2.44m. There are tax losses of £2.5m but there may be a tax liability for the gain on the debt restructuring.
The remaining businesses have started to recover and annualised costs have been cut by £1m.
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