APM Human Services International Limited - Scheme Update and Preliminary Financial Results
APM (APM) Share Update July 2024 Wednesday 24th
APM Announces Scheme Update and Preliminary Financial Results
APM Human Services International Limited (ASX: APM) has provided an update on its proposed Scheme of Arrangement with Ancora BidCo Pty Ltd and shared preliminary unaudited financial results for the fiscal year ending June 30, 2024.
Instant Summary:
- APM submits draft Scheme Booklet to ASX and ASIC.
- Shareholders to vote on the Scheme in September 2024.
- IBC recommends shareholders vote in favor of the Scheme.
- Preliminary unaudited revenue of $2,332 million for FY2024.
- Estimated impairment range of $250 million to $350 million.
Scheme Update
APM Human Services International Limited (ASX: APM) has submitted its draft Scheme Booklet for review by the ASX and ASIC. This booklet pertains to the proposed Scheme of Arrangement with Ancora BidCo Pty Ltd, an entity controlled by Madison Dearborn Partners, LLC (MDP). The Scheme involves the acquisition of all issued share capital of APM, excluding shares held by MDP affiliates, for $1.45 per share.
APM shareholders will have the opportunity to vote on the Scheme at a meeting expected to be held in September 2024. The APM Independent Board Committee (IBC) has unanimously recommended that shareholders vote in favor of the Scheme, provided no superior proposal emerges and an Independent Expert continues to deem the Scheme in the best interests of shareholders.
Preliminary Unaudited Financial Results
The Scheme Booklet also includes preliminary unaudited financial results for the fiscal year ending June 30, 2024. APM reported estimated revenue of $2,332 million, underlying EBITDA of $281 million, and underlying NPATA of $95 million. These figures are compared to the previous year's results of $1,896 million in revenue, $365 million in EBITDA, and $178 million in NPATA.
Net debt as of June 30, 2024, is approximately $800 million, up from $774 million the previous year. The carrying value of intangibles, including goodwill and customer contracts, is under review as part of the year-end audit process. Based on the offer price under the Scheme, there is an indicator of impairment, with a preliminary unaudited impairment range of $250 million to $350 million.
Any impairment expense resulting from this process is non-cash and excluded from the underlying results and APM's covenant calculations. It will not impact the proposed recommended Scheme.
The announcement of the Scheme of Arrangement and the preliminary financial results is likely to have a mixed impact on APM's stock. The Scheme, if approved, offers shareholders a clear exit strategy at a set price, which could stabilize the stock in the short term. However, the preliminary financial results, particularly the significant impairment range, may raise concerns among investors about the company's underlying financial health.
Investor Reaction:
Analysts have noted that the Scheme provides a structured exit for shareholders, which could be appealing given the current market conditions. However, the preliminary financial results, especially the impairment range, have led to some cautious reactions from investors. Some investors are waiting for more detailed information in the final Scheme Booklet expected in August 2024.
Conclusion:
Investors should closely monitor the upcoming Scheme meeting in September 2024 and review the final Scheme Booklet for detailed information. The outcome of the shareholder vote and the final audited financial results will be crucial in determining the future direction of APM's stock. Staying informed and assessing the potential long-term impacts on their portfolios will be key for investors.