15th September 2016

When the big four give you the heebie-jeebies


BPS Technology (BPS) 92.5c
Few parents attending a school or kinder fundraiser have escaped shelling out $55-$75 for The Entertainment Book, a tome of offers such as one-for-one restaurant deals.  While the coupons can be accessed online these days, parent company Entertainment Company still prints 570,000 physical books across 21 regions.
BPS today wins the keys to Entertainment Publications, having bought it from Kiwi founder-owner Ben Johnson for $22.5m and 2.65 million BPS shares. BPS has been better known for Bartercard, a means for SMEs to swap excess inventory for another member's goods or services.
BPS chief Trevor Dietz dubs the deal as transformative and we won't quibble, given it will boost revenue by 118 per cent (to $109m) and EBITDA by 49 per cent (to $14.2m).
The deal is funded by a $27.5m placement and share purchase plan, at 94c a share, with the former taken up by 15 local fundies.
A quirk of the Entertainment business is that the books are distributed through 18,000 charities and not-for-profits, who pocket 20 per cent on each transaction. "Not-for-profits are the key to differentiating our operation," Dietz says.
Also this week, 30 million founder shares accounting for about one-third of the expanded register came out of escrow, two years after BPS's listing. Dietz says there's no desire or imperative to sell, with the capital raising boosting liquidity. Buy.

Source: The Australian
Published: 15, 2016 Thursday. Page 31