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Green Compliance

  • BY: Andrew Hore |
  • POSTED: 22/12/2013 |

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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