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Why this small cap share is the best performer on the All Ordinaries today

James Mickleboro
share price higher

The best performer on the All Ordinaries index on Friday has been the Experience Co Ltd (ASX: EXP) share price.

The adventure tourism company’s shares were up as much as 13.5% to 25 cents at one stage. They have since pulled back a touch, but are still up 9% at the time of writing.

This puts them ahead of Galilee Energy Ltd (ASX: GLL) and Speedcast International Ltd (ASX: SDA) which are also pushing notably higher.

Why is the Experience Co share price charging higher?

Investors have been buying Experience Co’s shares after it released an update on its strategic review.

According to the release, the company has entered into a contract for the sale of the Great Barrier Reef Helicopters business to the Morris Group. Management expects the Great Barrier Reef Helicopters transaction to be completed in early January 2020.

It has also completed the sale of its canyoning business and assets. When completed, both these divestments will deliver net proceeds of approximately $17.5 million, which will be applied to its corporate debt facility.

The company has chosen not to disclose the sale prices of the assets individually, but looks likely to be booking sizeable losses on their disposals.

After all, Experience Co paid $20 million in 2017 for the Great Barrier Reef Helicopters business.

More divestments to come.

The release advises that it has appointed Nash Advisory to run a divestment process for the remaining businesses identified as non-core in its strategic review.

This includes Raging Thunder Adventures and RnR White Water Rafting, Cairns Hot Air Balloon Co, Byron Bay Ballooning Co, and Hunter Valley Ballooning Co.

Experience Co paid $15.45 million for the Raging Thunder Adventures business in 2016. But given how poorly it has been performing, it will be lucky to get anything close to that when it sells it.

However, management believes that shedding these non-core assets is for the best and will improve its return on invested capital.

John O’Sullivan, Chief Executive Officer, said: “We are delighted to today announce an update on the key pillar of the business simplification process being the divestment of non-core businesses. It is particularly pleasing to hand the Cairns headquartered GBRH and Canyoning businesses to the Morris Group and Cairns Canyoning respectively which have established a tourism and hospitality presence in the region.”

“The Group continues to execute the outcomes of the strategic review announced on 20 November 2019. The completion of the divestment of GBRH and other non-core assets provides the business with flexibility to pursue growth opportunities better aligned to our core business, expertise and with a focus on return on invested capital,” he added.

The post Why this small cap share is the best performer on the All Ordinaries today appeared first on Motley Fool Australia.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of EXPERNCECO FPO. The Motley Fool Australia has recommended EXPERNCECO FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019