Biogroup - comment

Our projections were broadly accurate, with revenue €7m higher and EBITDA €4m higher than reported. However, we continue to find it difficult to justify the extensive EBITDA adjustments permitted under the bond documentation. These adjustments allow the Company to state that EBITDA is €81m higher than the reported figure. On our numbers, leverage is 6.7x without these adjustments, compared with the Company’s stated 5.6x. Moreover, even the 6.7x understates leverage as it excludes minority put obligations, which add a further 0.7x. Although these obligations are theoretically subordinated to the bonds, the Company seems obliged to continuously buy out minority biologists. Call is at 1 pm UK time.