The fact that DOW has still declared a dividend indicates to me...

The fact that DOW has still declared a dividend indicates to me how badly the balance sheet is being managed.

"Net cash generated by operating activities before interest and tax of $23.9 million represents a cash conversion of
8.5% of earnings before interest, tax, depreciation and amortisation (EBITDA)." So is the Tooth fairy funding Interest, Tax and Depreciation? NO it is DEBT!!!!!

Their balance sheet has a serious debt issue and a massive future amortisation/impairment expense waiting to happen. Fitch had them on BBB negative outlook Dec-22, next step down = no longer investment grade, they will be classified as speculative next review.

That intangible balance of 2.7 billion needs to be drilled down on. When will it be amortised/impaired...? Are they waiting for IT project completion or an auditor to tell them to in July? Software and System Development 31/12/22 is 233.5m. Additions were 23.1m and Amortisation expense 13.4m. Note there was zero impairment related to ERP systems write-offs for the 6 months from 30/6/22 yet in the previous financial year they impaired 24.6m. IMO there could be another 280.9m in software development charges waiting to be expensed. When your NPAT is 68.1m this is pretty bloody material.

Also super scary are 40m in interest charges for HY23, what does this look like in the second half? With Fitch likely rerating and the terminal RBA having gone from 0.85% to 3.35% (so far) in this time and the US Fed benchmark now forecast to high of 4.25% (DOW has US, AUD and JPY long term debt), is DOW looking at 60-70m in interest H2....? Probably. Usually this wouldn't be a problem but the skinny margins, issues with free cash flow, looming impairment charges, looming employee restructuring charges, heavy debt burden.....?

NTA is 22.6 cents per share, drop 5c for the dividend and its 17.6c/share. This is scary, there are SERIOUS going concern issues here that will need to be addressed in the next 6 months imo.

DOW may be good for a trade but I certainly wouldn't be putting them in the bottom draw (yet). This could still just be the start of the train wreck imo. Does the new CEO (ex-COO) have it in him to make big changes to personal and contract profitability, while burdened with higher interest rates, headline grabbing future impairment charges and questions over the entire business model from investors (Allan Gray)...?

Reminds me somewhat of Slater & Gordon (with Spotless being DOW's Quindell), how much of Spotless is parked in intangibles...?

IMO new CEO needs to call in the bankers and raise capital raise while sacking a bunch of mates and increasing contract prices ASAP where possible, have to be prepared to lose contracts. Really hard to execute this in the first week, month or even 6 months.

GLTA, I sold practically all of mine really early yesterday