We'll now look at the metrics one block at a time.

You can see I've already populated them and the formulas are here on the right.

First, revenue and margins.

This is the overall revenue growth and what it does is it combines the revenue of all the segments and you can see that there's a bit of shrinkage in revenue in 2023, but the desire would remain to look at much more detail for which we have the segments tab.

The margins are interesting because the margins are lower than you would expect from our two operating segments.

Paint and performance both have relatively high margins compared to here, and so this could seem like an error, but what we're seeing is corporate dragging down the overall EBIT margin.

This is also similar for EBITDA and net income.

This would be helpful for benchmarking.

So it's interesting to note that major competitors, American competitors of Axo such as PPG, which has repeatedly tried to buy Axo, has significantly higher EBITDA margin, something like 19%, and this helps us to understand whether Axo is able to create return from its revenues and then we can dig down into the segments to find out why they can or cannot.

The next block is about asset efficiency, and you can see we've just copied in the OWC, so the operating working capital, and then we've made that relative to revenues.

This allows you to see how much OWC there is relative to the revenues that it's helping to create.

And so one way to think about it with Axo is how many tins of paint do they need on their shelves to create the sales that they are creating? And you can see that after some volatility.

Broadly, things are improving because they're able to reduce their proportional OWC and that will be releasing cash.

So what we might be seeing here is the product of their restructuring plan.

For a very capital intensive industry like chemicals, you might see lots more metrics than just PPE over revenue, but here we just have the one.

You can see that Axo is creating around five times as much revenue as it has PPP and E, and you can see that it's improving, so they're able to create more revenue outta less PP and E.

This would warrant further investigation, however, because it could represent things wearing out and not being replaced in time for high quality production down on borrowings, you can see a sudden lurch, which again might seem like an error, but what we're seeing here is a transition from the historical where you can have short-term borrowings and cash to our forecast with the sweep where you cannot have short-term borrowings if you have cash, so the short-term borrowings disappear.

This is then accompanied by a convergence of total debt and net debt.

Historically, they can be quite far apart because you Could have quite high debt.

That's also netted out by quite high cash in the forecast. That can't be the case.

The cash Is already netted out, and so the Debt That you are seeing already has an element of net in it, which is interesting.

What's perhaps more interesting, however, is what we Actually do with Debt and net debt.

There are some classic credit metrics down here.

If we accept that EBITDA is close to cash, it's not perfect, but pretty close.

Then debt over EBITDA is something like a Payback period Where initially in the model it would take about two and a half years of EBITDA to payback the total debt Or 1.6 on a net debt basis, but then in the next year that Rockets up And that's because in the next year, Axo is doing some share buybacks and is entering the lutan market by doing some acquisitions.

Axo has been under quite a little Pressure to do buybacks, Divestments and changes of direction because the competitor that we mentioned earlier, PPG, which is outcompeting it in terms of some of its margins, has also been a Prospective purchaser For a long time.

And so one of the responses to that was to make a major divestment in 2018, which we can't see, and then start to reach into new markets, which we can perhaps see a bit here.

And that's caused what might be a quite concerning level of debt and credit analysts would be watching these lines with interest and with information which is available to us.

Now at time of recording, we know that Axo actually suffered A downgrade in November, 2024. And so What's Happening here is That debt over EBITDA is not just concerning to investors, But also To credit agencies and that would have a big impact on their ability to borrow and their cost of debt.

So Very important to credit analysts. These lines.

Also important is interest cover Because it Represents a margin of safety for your ability To service your debt.

You can see the interest cover is Really good.

However, just like The more Leverage based metrics, it really takes A beating in 2022. And that's because, Uh, what Axo does is it borrows And it borrows quite expensively because It's already quite highly Levered and it's doing that to expand and do the buybacks.

It may seem odd to do any kind of metrics on book basis, Which Is what the final line is doing, but what credit analysts might do with this line is say, well, What's the proportion of debt to the total assets Of the company, which is net debt plus Equity, Broadly speaking.

And what they might do there is they might be undervaluing the equity quite A lot, but if Axo was on a breakup basis, As in it was in trouble and was going to liquidate, then you could assume that the equity Was worth its book value.

And so this then allows you to see the proportion of debt in the overall capital Structure at book or breakup value.