Loading up the truck, page-3007

"I respect he's having go at making a serious contribution".............

............gee thanks Alex - you've made my day; wish I could say the same about you.

I've come across your 'style' before - many times. You're trying now to come across as the voice of reason - causing people to think: "you know - I don't think that Alex geezer is so bad after all; he seems to be quite balanced and I think he's trying to help us here". Trust me, he isn't.

If you're under any illusions, check the share price and ask yourself if it fairly reflects the situation SGH is likely to be in. Don't underestimate the importance of the clean audit report E&Y have just signed on the UK subsidiary accounts. This is the latest indication (and a very solid one) we have of the company's present cash flow profile. If SGH was still burning cash, would E&Y have failed to mention going concern - even as an emphasis of matter? The UK sub couldn't exist if the loans were called in. I know this would still give the group 12 months to find alternative sources of finance, but the reality is the thing would come crashing down because the degree of alarm would be so great. If I know this, then so too will E&Y have known it when they signed their audit report. They will not have done this in the dark.

The reality is that SGH's worst problems will be over when profits and cash flow turn positive by a significant factor. My feeling (this is all it can be because nothing has been said) is that this is likely alreadt to have happened, although to what extent no-one yet knows. The numbers weren't that disastrous in H1 - what caught the attention of the media and the talk shops was the magnitude of the reported loss, the overwhelming part of which was caused by non-cash write-offs and provisions. Houghton will have wanted a 'clearing of the decks' so that he could start with a clean sheet. It's what happens. Nothing will have been left in any cupboards - it will have been a full clean-out.

Don't trust people like Alex, when it is people like him who have driven the price down to its present level, which is next to nothing - and his sentiment is lower still. Is the present price the right one? It's impossible to say any price is 'right', but it is possible to establish what is a fair one, within parameters at least. But this requires a position of stability to work from and we don't yet have one - nor do we have any reliable means of projecting future numbers against which to run the usual investment measurements such as P/E, dividend yield (presently missing) and whatever other measures might be appropriate.

All the present price tells us is at what price demand broadly matches supply. With the level of confidence so low, it isn't likely to change much one way or the other without news that is significant. In the meantime, it is Alex's job to make sure there are plenty of reasons for you not to buy, although there has to be an outside chance - only an outside one, mind - SGH won't go bust after all.

Don't be fooled - he isn't on your side. He's on his.