what price ssm on fri 27th?, page-8

Good evening macrae12. You certainly produced a well structured and considered post in reply. Credit to you for putting such a persuasive argument forward. Macca were you by any chance captain of your school debate team? Yep gave a tiger much to chew on.

M12 you made some valid points that I can't easily counter, but tigers are nothing if not tenacious, so I'll give it a try.

Macca said, "Tiger, Australia’s corporate laws give directors an almost unrestrained discretion to determine whether to pay dividends, when to pay them and what amount to pay. Directors are not required to justify or explain why a particular level of dividends has been chosen. Any forecast is only that and to compare EHL to SSM is like comparing chalk with cheese."

T22 A: Can't argue Aus corporate law regarding divs. However do you really believe the board of SSM would make such a statement last week and then come back to the market a week later and say sorry we had no idea what we were talking about - no dividend. In the business world perception is reality. Should the board do a total back flip the markets perception of the competence of the SSM Directors would be poor and impact greatly on the company's value. As for EHL to SSM chalk and cheese. I agree the companys are very different, but perhaps you missed the point. I was not comparing companies I was comparing share price performance and the impact of dividends on the share price.

Macca said, "Please note that they are a heavy earthmoving equipment distributor. The company has 631.2m on issue with a market cap of $176.6m. In comparison, SSM has 179m shares on issue with a market cap of $51.6m."

T22 A: Already agreed the two cos are different. As for market caps, approx 2 months ago SSM cap was about $150mil when sp was trading in the 70's. A point illustrated by the chart I posted previously.

Macca said, "EHL lifted net profit 27.9% to a record $39.03m with revenues improving to 7.5% to $309.8m from $288.21m. Basic earnings per share from continuing operations were 6.2c,up from 4.8c. Their dividend was expected and was in line with their given forecasts and their net tangible asset backing per share was 79c, up from 73c."

T22 A: Did SSM not forecast a 38mil profit for current financial year as against 18mil profit previous financial year. That looks like a 100% + increase in profit. That is also a record profit for SSM. SSM dividend is as quoted from previous statement, 'anticipated' to be 3.5c, and when its confirmed tomorrow we will all say it was 'expected'. I'll award you the points with regard to 'net tangible asset backing per share.' I'd have to do some more home work to argue that point.

Macca said, "In contrast, together with the one off impact of losses incurred by McCourt Dando, Service Stream now expects to report EBITDA of $38m for FY09. More importantly, the Company will report negative operating cashflow of approx. $15 million for the half year tomorrow. Also, SSM do have banking covenants, geared at 3 times EBITDA to to their net debt."

T22 A: SSM expects a favourable outcome regarding the McCourt Dando matter and cashflow will be positive in second half FY09. You are right about debt geared at 3 times EBITDA, but what about the rest of the SSM statement regarding debt. I quote, "Service Stream remains conservatively geared at 3.0 times EBITDA to Net Debt. The Company continues to operate within its banking covenants and has sufficient headroom within its debt facilities to fund growth in the business. Its main senior debt is not due for renewal until October 2010." While no debt would be better, my take on this is SSM debt is by no means diabolical.

Macca says, "In my view, you may find that just perhaps, the market has awoken to the fact that SSM is sound (fiscally healthy) in regards to their debt covenants, as is my view, however, no matter what the dividend outcome may be tomorrow, it is important to read ASX public announcements as legal documents. Even though SSM have highlighted their anticipatory behaviour, this does not legally preclude them from cancelling the dividend in full when reported tomorrow and any comparison to EHL, is not worth your time.

T22 A: I think the first half of the above paragragh is positive for my argument, so I agree (me thinks). Again can't argue corporate law and I understand that legally SSM board could say sorry no dividend. Also I reiterate my aim was to compare share prices and market reaction to dividends, not the individual companies.

Macca said, "A few too many rampers on this one, but I personally wish for everyone that she comes up with the goods."

T22 A: I must admit in the past week I've been one of the main SSM cheer leaders and yesterday one of my posts got, upon reflection, rightfully moderated. Yes there are a number of rampers on SSM. If your wishes of good luck to all SSM backers is genuine then I sincerely thank you.

Finally Macrae12 you have restored my faith in your high standing on HC. I really did appreciate your post, I really really really mean that because, although I don't agree with your entire argument, you truly made some valid points that gave me great food for thought. And it doesn't hurt to be made to stop and think about my business and investment decisions.

Sincere regards.