On F15 figures, using fee revenue as the guide (no WIP movement, no bargain gain on purchase, etc), but with debt at its current (much higher) position, the AU operations would (at best) be breakeven after paying the interest bill assuming each as a self contained operation (no crossover).
In F15, the AU fee revenue was $268M. AU segment revenue was $314M but that was after including WIP movement and gain on bargain purchase. Even then, the AU segment result was $74M in EBITDA, and $46M NPAT.
Looking at the F15 result and comparing the Results Presentation with the reported segment results at Note 3 (AR15) - ignoring however SGS:
* UK segment revenue was $276M. UK fee revenue (from the RP) was $260M.
* AU segment revenue was $314M. AU fee revenue (from the RP) was $268M.
So, most of the gain on bargain purchase was loaded into the AU segment results whilst WIP movement was reflected in both the AU and UK segment results.
Stripped of all this and taking it back to a rendering of fees level, then given AU fee revenue (including WIP movement) of $268M, F15 costs came to $240M, with EBITDA at $28M. Adjusting then for interest (in /out) and depreciation), NPBT would have come to $19M and NPAT (after 30%), to $13.3M.
Shifting the F15 net interest load to AU, then the figures would have been $28M - $9M - $4.5M (UK interest) = $14.5M and NPAT, $10.1M. But this is without the full whole of year debt impact applying.
As such, AU likely could bear the debt load, on an interest only basis, but not on a repayment basis. Given this, the present debt load is far too great for AU to take on, address and /or service all on its own, judging by the F15 figures (revisited). UK is therefore needed to perform. Simple, as that. And the required OPEX savings ($100M+ required) and headcount reductions (10-15% required) remain critical to SGH's future recovery prospects.
SGH Price at posting:
59.5¢ Sentiment: Hold Disclosure: Not Held
