Ann: 2015 AGM Chairman and Managing Directors Address, page-2

If there was ever any uncertainty as to whether or not the banks are definitively running the show here - and that BOL management are merely executors of the mandate of the bankes - then this company release will surely remove any doubts.

The de facto "Liquidation-By-Stealth" of the business continues on schedule (and that's despite the macro business environment continually falling below expectations).

In just the past 36 months Net Debt has fallen by $75m, and at the end of Dec 2015 it will be between $53m and $55m.

This means that Net Debt will have fallen below the Market Cap of the company for the first time in many years.  

Precedent often points to this milestone as being the first psychological hurdle for investors.


The next investor hurdle is for Net Debt-to-EBITDA to fall below 2.0x.  

That point, according to my (now revised-downwards) modelling, will become evident at the FY2016 full-year results, when Gross Debt will be below $50m.  
(Net Debt at that stage should be around $40m, compared to an EBITDA run-rate of $22m to $24m pa.)

But the real big occasion for the stock will be when the company returns to generating positive NPAT.

By my reckoning, the day of NPAT breakeven - assuming the demand for BOL's services neither improves nor deteriorates much further from current levels - will occur sometime in DH2016.  

Of course, assuming my modelling is right about that, the market will anticipate that auspicious event well before it actually becomes manifest with the DH2016 results presentation in less than 18 months' time.  


As is often the case with these sorts of "deep-value, turnaround stories", they can take longer than initially expected. And this one is no different.

But I have little doubt in my mind that the rewards will be there.

Today's update reinforces that view (and especially the insights that are able to be garnered about who is really driving the agenda... namely the bankers who want their dough back.  It is that which makes me particularly content with my investment in BOL).

Accordingly, I duly added in a modest fashion to my existing, out-of-the-money position.