I agree with you - there wasn't the mea culpa you'd expect given such drastic changes to their strategy - both operational and capital management. On operations, previously it was all about "one-off integration issues which are now resolved" and "new contracts mobilising" and "new business development team hired to ensure strong growth" blah blah. And now it's shrinking to greatness as if that was the logical next step.
Then on cap management the absolute mauling of the dividend was thrown out as if it was an obvious thing to have happen - "we're aligning payout ratio to competitors" - why was this not the approach when the dividend policy was set years ago? I'm not saying it wasn't the right move to preserve cash, but I agree it was a disjointed, incoherent mess with effectively no communication to shareholders of the coming changes. The only inkling was given by the SMH with speculation of a capital raising. Yes important to watch the cash flow, but they spent the last 12 months telling investors they will be fine to maintain / pay down debt because they have now resolved all the integration issues.
As I said the other day it was one of the worst results I've seen, and the fact that the share price didn't totally capitulate was only because it had fallen so far already I feel. It's true that the high debt load was always known, but again that was previously sheeted home to the one-off integration costs that were "now resolved" - but now we find there is a further $25-35m coming to exit these underperforming contracts. In hindsight they should have turfed the laundries when they ran the sale process - that division is going backwards consistently and a cash return from that would have dramatically changed the situation. The debt stack puts a huge cap on the equity value here.
SPO Price at posting:
77.5¢ Sentiment: Hold Disclosure: Held
