Hopefully following can address some of your concerns.
Note 33. on page 73 & 74 are details required under the relevant accounting standard, effectively it is intended to allow investors to establish the fair value of an acquisition and future impact.
WWW is effectively the acquisition of additional network and customers being rolled into Spirit, it doesn't seem to be intended as an ongoing seperate business given:
"World Without Wires resources work across the entire Spirit business and network and generate increased revenue opportunities which may not be reflected in the revenue performance of World Without Wires but are instead reflected in the revenues of the main trading entity being Spirit Telecom (Australia) Pty Ltd."
These profit stated for WWW did not include expenses as described in the same paragraph. I wouldn't be concerned about WWW's relative percentage of profit against the consolidated entity. That isn't what this information is intended to reflect or be used for.
Re: depreciation, refer to note 13 page 58 & 59. in respect to increased depreciation. Substantial increase in plant and equipment of aprox. $4m. Of this $1.5m was through acquisitions, the remaining $2.5 are other additions (presumably ongoing expansion).
Increased depreciation doesn't have any effect on EBITDA, you may have meant EBIT, however this isn't down. Not sure what you're looking at, can't help with an explanation there.
I've got it trading closer to 11-12 x EBITDA, not sure what is standard in telecommunications industry. I'm happy to hold, big tick for me is Peter Diamond's ongoing effort to increase his holding.
My only concern was the substantial increase in Administration costs, increase of aprox. $2.6m, I couldn't see a full breakdown of these expenses. Note 7 page 56, shows an increase of aprox. $1.8m in employee benefits. I'd assume this increase is as a result of the acquisition, would like to know if they will retain all staff or if they see potential to reduce staff after acquisition. Are the increased staff expenses required to help fuel further growth? Not concerned enough to contact the company myself.
Would appreciate anyones thoughts on the increase in administration costs if I've missed something. Also happy to hear differing opinions on anything above.
Cheers, JB
ST1 Price at posting:
19.0¢ Sentiment: Hold Disclosure: Held
