"Its interesting that the language in February was of a "highly...

"Its interesting that the language in February was of a "highly competitive market". This has now been referred to as "current trading conditions" without reference to whether conditions have improved or are still highly competitive. Hopefully the latter as that would bode well should the industry tides rise."


@hcosah ,

I have long ago learnt that some of the best run companies that deliver the best returns for shareholders are characterised by management teams who do not excessively talk up the prospects of their businesses.

Instead, they seem to often complain and moan and lament about how tough business is and how competitive things are and how hard it is to make a buck.

And yet their companies go onto report ever-increasing profits at high rates of return.

And, if you think about it, it makes perfect sense. As an owner of a business, the last thing you want your managers to be doing is shouting out from the rooftops how simply rosy and peachy things are, thereby simply signalling to both your company's customers and suppliers that they have licence to present to you with more demanding trade terms in the future.

No, what you want is for your customers and suppliers, who value their relationships with you, to feel that they need to continue to be nicely accommodating to you to make sure you don't go anywhere.


Apropos SNL's upcoming result announcement, one of the things I am keen to see in it is the Operating Cash Flow and the impact it will have on the balance sheet.

Because during the establishment of the new DC, for contingency reasons, SNL was running duplicated supply lines, which saw inventory levels ratchet up from $25.8m @ June 2015, to in excess of $30m @ December 2016. Some of that $4m investment in elevated stock levels is sure to unwind and the bulk of that will have occurred over the past 6 months, I suspect.

So, I am expecting OCF to come in above $3.0m for JH2017 (up from $2.4m in pcp), which - combined with lower levels of capex - will see the company in a Net Cash position at 30 June 2017.

That pristine balance sheet condition, combined with limited calls on capital going forward, as well as a franking credit balance in excess of 7 cps, could easily see another special dividend declared with the full-year result. (SNL have been known to regularly pay specials in the past).

I think a final dividend of at least 6cps is certainly on the cards (20% up on pcp, which even appears conservative in the context of the 35% EPS growth implied by the latest update), with a 50% chance of another 4cps special dividend, like 2007, 2009, and 2010 (although those special dividends were declared at the interim result stage, for some reason).