Ann: Full Year Results Presentation, page-40

I think C7 will eventually end up buying PRT as Spheria suggests, but the issue is that C7 is the only logical bidder as it has PRT under its thumb by dint of the affiliation agreement. If there's only one logical buyer, then the outcome is unlikely to be a particularly good one.

Some of the Spheria analysis is also just plain wrong:

- They quote D&A as >$12m, whereas it was actually $9.6m in FY18 - it's right there in the P&L! Moreover, that D&A charge will fall dramatically in FY19 because PRT heavily wrote down its intangible carrying balance - $4.1m of FY18's $9.6m D&A charge related to the amortisation of that intangible, and given the asset was written down by ~75%, i'd expect the $4m amortisation charge in FY18 to be roughly $1m in FY19. Therefore, i'd expect FY19 D&A to be closer to $6m.

- Spheria think PRT will do $35-$40m EBITDA in FY19, which is impossible unless PRT management's $12-15m FY19 NPAT guidance is hopelessly under-baked. Taking $15m (top end) NPAT, i'd get EBT of (15/0.7) = $21.4, EBIT of ~$23m (assumes $1.5m net finance costs), and EBITDA of about $29m (using the above $6m D&A charge).

- Spheria somehow think PRT's equity holders get paid back in 2.4 years. That is complete nonsense - it ignores: a) income tax payable, b) the fact PRT has to amortise ~$30m net debt (adjusted for the $15m affiliation fee payable), and c) the fact earnings are rapidly declining. I find this to be the most most offensive error as it's wrong by orders of magnitude - it's not even remotely close to being true.

I'd go so far to say that Spheria's viewpoints here are a great example of why it's best to ignore institutional investors - they're frequently wrong.