I'm deeply suspicious of Macquarie in particular. They have a well-established track record of splitting off business operations, selling stocks on the market, then gouging back a disproportionate amount of money in service and management fees. YBR isn't one of those, but Macquarie is providing the core products and has a substantial holding. Macquarie need to be watched closely or they'll find all kinds of ways to siphon money out of the business before earnings, depriving ordinary shareholders of their share of the business.
My concerns about Bouris are based on the extremely lucrative CEO contract granted to him a while back. The terms of the contract were published in an announcement document. I had a quick look through the announcements and couldn't find it. It will be attached as an appendix to one of the presentations or 4C statements. It's worth a look. It has lots of performance incentives contingent on both business returns and share price (which is encouraging). But the base package in shares and cash was pretty rich for a start-up!
On the plus side, Bouris and the management team have shown that they are immensely capable of building a well-managed, tightly-controlled large business over a wide geographical area. The risks involved in regulatory breaches are large in this business and can easily wipe out profitability. The management have been rigorous in devising, monitoring and enforcing skills development, regulatory compliance, and license qualification across all branches. This team isn't going to make the typical mistakes made by small-business-grown-large.
Have a look at last year's investor presentation of 18-Mar-2013, and the quarterly reports. They will give you an excellent feel for the company's position and direction. The objectives for the last 12 months have been attained.
YBR Price at posting:
61.0¢ Sentiment: Buy Disclosure: Held
