Embattled APM set to confirm horror year for earnings and profit as it pitches takeover offer to investors

Struggling takeover target APM has confirmed a staggering slump in full-year earnings and profit, with both key measures set to just scrape into already-downgraded guidance ranges.

The Michael Anghie-led global human services group on Wednesday revealed preliminary unaudited underlying earnings before interest, tax and amortisation for the year ended June 30 would likely come in at $281 million.

That’s down 23 per cent from $365m a year earlier and will be at the bottom end of the $280m to $290m forecast range it issued as suitors began circling the company earlier this year, sparking a round of low-ball takeover offers.

While revenue is set to leap more than $400m to $2.33 billion — up from the previous year’s $1.89b — net profit will almost halve to $95m. That will be just enough for it to meet the lower end of its expected $95m to $105m range.

APM in April launched a detailed review that aims to save $25m after repeatedly warning investors that it continued to suffer operational pressures because of persistently low levels of unemployment, particularly in Australia and the UK.

The company’s acquisitions over recent years has taken its workforce to about 15,000 people at 1600 sites in 11 countries, including Australia, New Zealand, the UK, Europe, North America, and Asia.

Wednesday’s horror set of figures was contained in APM’s draft scheme booklet that will recommend shareholders back a $1.45-a-share takeover bid from major private equity backers Madison Dearborn Capital Partners, which already controls 30 per cent of the Perth-based company’s stock.

The deal has won the unanimous support of APM’s independent board committee, which was chaired by WA businessman Nev Power and included former WA treasurer Ben Wyatt. But it will crystallise massive losses for true believers who bought into the initial listing.

Chicago-based Madison Dearborn’s offer values APM at $1.33b — almost $2b short of the $3.3b market valuation it achieved on its $3.55-a-share debut on the ASX in November 2021.

If approved by shareholders at a vote expected to be held in September, the takeover will return APM to private hands and end a disastrous three-year misadventure on the local trading board.

That vote is considered a near fait accompli, with APM founder and executive chair Megan Wynne — along with her Perth IVF specialist husband Bruce Bellinge — controlling about 34 per cent of the register and already stating she will sell into the buyout.

Institution investors have a handle on another 20 per cent of the stock.

APM last week signed a “committed letter” with Goldman Sachs for new facilities of up to $950m that will be used to retire an existing syndicated corporate facility and provide “long term and flexible financing on similar terms to the MDP acquisition facility, which also includes additional funding capacity for APM’s future capital and growth expenditure, and working capital requirements up to $1.31b”.

Wednesday’s results update said net debt at June 30 stood at $800m, up from $774m the previous year.

It also warned investors to brace for a likely non-cash impairment of between $250m and $350m that has not been included in its underlying results. But the company said the writedown would not impact the proposed takeover.

APM is expected to release its full-year results in August, along with its scheme booklet for shareholders.

The offer from Madison Dearborn — which snapped up its stake from Quadrant Private Equity in 2020 — was lobbed just weeks after fellow private equity group CVC Asia Pacific walked away from an improved $2-a-share offer following four weeks of due diligence.