Ann: Profit Guidance, page-48

I have strong links to the consumer leasing industry, take that as you will. To me this sentence is highly insightful. Part of Radio Rental's problems with ASIC relate to not adjusting adequately to the amended requirements of the NCCP Act through 2013-2015. In my opinion it was complacency borne of arrogance.

Further I would suggest that your comment foretells of further disappointing news ahead. It might be controversial for me to suggest this but I believe that TGA have misled the market, perhaps unintentionally, on the potential impact on the recommended changes from the Panel Review into the NCCP Act with respect to consumer leases.

Of particular concern for TGA shareholders should be the proposed protected earnings cap of 10% of customer income on all their leases collectively. With a large number of customers reliant on government benefit income, if the average benefit is say $800-1000 pf across all payment types, that implies a maximum of $80-100 pf in lease commitments. It is not uncommon for customers to deal with more than one rental company. How will RR's book be impacted when this cap comes in, if it does at the proposed level?

These things will be likely starting to bite just when the first 4 year contracts are rolling off and with a reduced rate of return customers. It's fundamentally implicit, to me at least, that there is a portfolio shock ahead.