AlphaValue Corporate Services Fundamental Analysis FR
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AlphaValue Corporate Services
This research has been commissioned and paid for by the company and is deemed to constitute an acceptable minor non-monetary benefit as defined in MiFID II

Delta Drone

CR
Bloomberg   ALDR FP
Aerosp. & Defence Equipt.  /  France  Web Site   |   Investors Relation
Acquisitions through dilution
Target
Upside 146%
Price (€) 0.00
Market Cap (€M) 2.31
Debt

At the end of 2019, the company’s net debt amounted to c. €840,000, or a tiny fraction of the balance sheet, with a gearing of just 4%.

Indeed, in light of Delta Drone’s financial situation, the company has favoured equity financing, in particular through the issue of various hybrid convertible securities. At the end of 2019, this hybrid debt (ORNAN/OCEANE), booked as quasi-equity, totalled €1.75m.

In April 2020, Delta Drone signed a new financing line for up to €10m with its historical partner Yorkville Advisors Global, LP, which has been supporting the company’s financing since 2014. To date, €2m has been drawn, in April and June 2020. This is technically an equity line which, if fully exercised, has a massively dilutive impact. In addition and in order to strengthen its shareholder base, Delta Drone issued in May 2020 a €1m convertible bond with Ott Ventures, which was converted in June and thus Ott Ventures became the majority shareholder of the company.

The Weesure acquisition, said to be well below market prices for security/protection assets, is entirely financed through drawing on the equity line leading to a fast-paced dilution of existing shareholders unless they participate in the equity line. We set the price tag at an arbitrary €5m. The dilution would stop when the benefits of the Wessure consolidation show up on the FCF generation line, quite possibly as soon as next year. AlphaValue has allowed for a €10m capital increase in 2021 and another €3m in both 2022 and 2023.

Funding - Liquidity
  12/20A 12/21E 12/22E 12/23E
EBITDA €th -4,269 -4,989 -2,319 -1,534
Funds from operations (FFO) €th -5,772 -5,470 -2,527 -606
Ordinary shareholders' equity €th 12,571 11,253 21,460 22,025
Gross debt €th 1,978 2,480 2,560 2,680
   o/w Less than 1 year - Gross debt €th 968 980 980 980
   o/w 1 to 5 year - Gross debt €th 1,010 1,500 1,580 1,700
   of which Y+2 €th 514
   of which Y+3 €th 288
   of which Y+4 €th 183
   of which Y+5 €th 25.0
 + Gross Cash €th 2,949 1,016 8,027 8,156
 = Net debt / (cash) €th -971 1,464 -5,467 -5,476
Bank borrowings €th 1,454 1,543 1,623 1,663
Financial leases liabilities €th 268 329 329 329
Other financing €th 256 608 608 688
Gearing (at book value) % -0.53 2.19 -9.33 -24.8
Equity/Total asset (%) % 84.2 66.9 87.5 84.0
Adj. Net debt/EBITDA(R) x 0.23 -0.29 2.36 3.57
Adjusted Gross Debt/EBITDA(R) x -0.59 -0.61 -1.46 -2.29
Adj. gross debt/(Adj. gross debt+Equity) % 16.7 21.3 13.6 13.8
Ebit cover x -9.86 -8.08 -7.82 -7.40
FFO/Gross Debt % -228 -180 -74.8 -17.3
FFO/Net debt % 594 -374 46.2 11.1
FCF/Adj. gross debt (%) % -212 -228 -123 -46.7
(Gross cash+ "cash" FCF+undrawn)/ST debt x -2.50 -6.04 3.93 6.65
"Cash" FCF/ST debt x -4.97 -7.08 -4.26 -1.67
Credit Risk
Covenants
Changes to Story : 28/10/2021, Changes to Forecasts : 28/10/2021.