Ann: Investor Presentation - 1H15 results, page-14

Bang on with my thoughts Peter.

I had organic revenue growth at about 12% and organic earnings growth lagging with a tad over 1%.
So we need to figure out what the deal is!
After drilling through the expense accounts I can't see any major red flags, except cost of sales.
Moving on from there I find that the contribution from managed services is becoming a bigger part of EBIT.
It is now making ~20% of EBIT.

As I have stated previously in these threads, I expect the growth into managed services (via Annitel and others) to be a boom for revenue growth...but at the expense of margins.
Fixed Wireless = 16% (seasonally adjusted as bulk expenses fall in H2)
Comm Broadband = 59%
Managed Services = 21%

You might rebut by saying that Fixed Wireless margins are lower at 16%. However, these margins were previously higher and have been trending lower as the Comm Broadband segment assumes more earning power from the assets in place. The company states "The Community Broadband division makes use of high speed backhaul infrastructure delivered using the Fixed Wireless division". Therefore, when I see fixed wireless earnings falling, while comm broadband earnings are rising - I just see this as the natural progression of the company that Jason has intended all along ---> invest in the infrastructure and leverage its use for new applications as they become relevant and in demand.

So my perception is that the increase in growth of the managed services segment is causing the gross margin to fall. If BGL can drive out some costs over FY16, in combination with generating some strong organic growth through cross selling...then it really could generate value for shareholders as it offsets this drag. I believe this is where we could see the step change in EPS that you (Peter) refer to, however the time is ticking and the market will really want to see this by this time next year.

Still a few "ifs" there at the moment which is probably why the short term price got slammed. Medium to longer term is looking solid though, IMHO of course.