Ann: Chairman and CEO Address to Shareholders 2016-SFH.AX, page-18

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natnicnak

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16/01/17

13:39

Post #: 21921623
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Originally posted by madamswer ↑

If agreeable, would be great to do some research into new Toll Prestons facility and discuss cost take out expected. Expected start date is October 2017. Public release by Toll says will handle up to 90 million units and be resourced by 120 staff. There is talk that quite a sizeable redundancy or job reallocation/reduction program is afoot with significant savings expected to be passed onto SFH.

@natnicnak,

I'm just trying to reconcile your "Expected start date is October 2017" with this statement from the notes to the FY2016 accounts:

"The Group has entered into a contract for warehouse management services for the next 5 years, which will give rise to an estimated annual expense of $24 million."

Two things:

1. Presumably, no expenses relating to these warehouse management services are going to be incurred before the services are actually delivered, otherwise FY16's profitability will be badly affected and the market might have a bit of a conniption. But if this service is only due to be delivered from October 2017, why did they include such specific commentary in the FY2016 Annual Report?

2. If $24m pa is what the contract is costing, any idea what the dollar value of the cost savings are?

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Hi
Regarding point 2., that was the point of my own query!

Regarding point 1.; not fully certain as the descriptions in the notation are general in nature-I do note that the 2017 expected expense for operating lease commitments is set out in the table as $83m, which is a $13m reduction on the 2016 expense committed at the end of 2015. I am unsure if this reduction will flow directly into the bottom line at the same quantum.

The $24m might be part of the difference, i.e. Net reduction of $23m over entire period.

Last edited by natnicnak: 16/01/17

SFH Price at posting: 50.0¢ Sentiment: Buy Disclosure: Held
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Ann: Chairman and CEO Address to Shareholders 2016-SFH.AX, page-18

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