Ann: Retention of Laundries business-SPO.AX, page-86

Thank you madamswer for your detailed responses to my post. I am still trying to get to the bottom of it all. I cannot yet find the breakdown of investing cash flow between sustaining capital expenditure and growth capital expenditure. Do you have any information about this?

By the way, I agree with you that the FY15 operating cash flow was unusually high, in my opinion because no actual tax was paid in that year. I adjusted for that by assuming an amount of $49.5M to be paid in tax during FY17, and took that off the cash flow, which is why my cash flow estimate for FY17 was a lot lower at $175M. I am certainly considering your response seriously.

If you are right (I am not yet sure you are) and they do need extra equity, then in my opinion it is still a bargain for those shareholders able and willing to contribute equity and stay with the company for another 1-2 years (even though the share price could suffer more in the short term). I have seen many similar examples of companies that take a couple of years to turn around and have regretted selling out when the market lost faith. SPO is still a strong company with ROE of over 16% (using NPAT of $128.5M or 10% below FY15 reported NPAT), good reliable cash flow, and benefitting from the trend for outsourcing of services and PPP's. Once they get past the FY16 integration issues and any need for additional capital (which I still need to research a bit more), NPAT should head back to $150M + and I see no reason at all why the share price will not get back to its past high.