Friday, 15 August 2014

Update: Asseco Central Europe

The net cash position is actually 3.8m better than expected for 1Q2014.

The remaining financial liabilities relate mainly to the purchase of the shares of Asseco Solutions AG (principal EUR 6,000 thousands + interests EUR 48 thousands, interest rate 6M EURIBOR + 1.3% p.a., maturity in December 2014).

The selling price of 51 shares of Slovanet a. s. has amounted to 11m. Asseco Central Europe shall receive payment in cash in three instalments within three months from the date of the transaction.
At 30.06.2014 there were 10m receivables, which are lower now and have been added to cash in the following table:

1Q20141Q2014 ex Slovanet1H2014
Cash and cash equivalents36.045.828.9
receivables sale Slovanet

Total liquidity36.045.838.9
financial liabilities16.416.46.5
Total interest bearing liabilites30.217.77.0
Net interest bearing liabilites-5.8-28.1-31.9

As you can see the performance from continued operations deteriorated in H1 2014, but Q2 is already improved y-y. The restatement for 2013 excludes 0.8m Ebit and 0.3 net profit from the sold company Slovanet.
With mcap of 80.5m (08/15/2014) and EV of 80.5-31.9=48.6m and H1 2014 EBIT from continued operations of 6.2m:

EV/2x H1 2014 Ebit = 3.9

I think this looks very promising. Keep in mind two major logistics projects were sold in 3Q 2013 and did not contribute in 2014. Because of this logistics and outsourcing services dropped significantly in 1H 2014 by EUR 2.5 million (5% and 11.5% proportion on total revenues in 1H 2014 and 1H 2013).

Additionally Asseco Solution's integration may bring some benefits in the future:
"Aim of the transaction is to utilize the synergic effects of combining the forces in ERP business. Cross-border collaboration – particularly in implementing new trends – can shorten development cycles and allow innovative concepts to be turned into reality more quickly. Moreover, it creates a solid foundation for preparing and making strategic acquisitions in the future."