Issues with Shine's business and accounting, page-20

Understand that the 200+% figure reached was based on market cap - erroneous statements such as these need to be brought out into the open and questioned. Although SGH is certainly in a less than favourable position from a gearing position. Agree with accaeric's comment around expected SGH gearing ratio following assumed write-downs to WIP/goodwill - certainly will be less than ideal sitting at around ~65% (this is the expected position if there is a ~20% write-down to WIP/goodwill, to provide context - not overly aggressive by any means).

Interested to see how you have come to the $30m potential earning figure stated, and what the expected turnaround time for this is. FY15 OCF less finance costs sees a figure of $11.6m. I would suggest that to reach a position of $30m cash via an organic process (i.e. not via equity raising) would take a reasonable length of time. Let's compare OCF with gross debt for a second (rather than against equity), applying the FY15 position for either company. Ignoring current cash/cash equivalents, SHJ has $10.4m OCF against gross debt of $21.6m. As we know, this has since increased due to recent acquisitions. I'll conservatively assume current gross debt of $30m for SHJ. At $10.4m OCF (my expectation is that this will decrease in FY16/FY17 due to recent hints in SHJ market ann) there is a ratio of 1:2.88 OCF to gross debt. The same ratio for SGH sits at 1:17.67. Adding in dividend payments and the like will obviously stretch this ratio further for both companies. Quite clear though that SHJ is the less risky proposition of the two based on this.

For SHJ to "shine", as an investor (which I am not at this time), I would like to see a tightening of the balance sheet prior to further acquisitions. As we have seen with the SGH saga, acquisitions fuelled by debt will inevitably put the company in a position of risk. To add, revenue has grown (due to acquisitions, as stated in FY15 report), as EBITDA has also tended to, but OCF fairly static. If revenue grows alongside EBITDA and OCF, this is certainly a positive sign for mine that SHJ are turning their acquisitions into profitable operations.