Ann: Appendix 4D and Half Year Report December 2017, page-2

I always think it is a good sign when I am able to have my financial model for a company fully reconciled - for P&L, Balance Sheet and Cash Flow Statement - for a result announcement before the stock comes out of trading halt for the release of the announcement.

It reflects clean and transparent accounts, and a simple, easy-to-understand business model.

(This result was a little bit curly, though, because they threw a bit of a curved ball at us in the Segmentals. Previously, segment results were stated at the Pre-Tax Profit line; this year, they've presented them at the Net Profit level. An oversight, I suspect.)

At any rate, what some of the (very brief) commentary accompanying this result does is provides some context around the full-year guidance, which is for full-year EBIT of $10.8m (DH2017 EBIT was $5.6m, therefore JH2018  EBIT is expected to be a mere $5.2m - which would be down 5% on pcp and 7% on DH2017... which is quite something given the full-year Revenue guidance of $110m works out to Revenue growth for JH2018 of 3% and 12% versus pcp and DH2017, respectively).

So, Revenue to be up 3% and 12% (pcp and DH2017), but EBIT to be down 5% and 7%, respectively.
Interesting, to say the least.

Ostensibly, this is a reflection of the cost investment that is being made to open new DC and branch in Hamilton, NZ, as well as new branches in Chirstchurch, NZ and Port Headland, WA.

However, despite this investment in future growth, there appears to be so much conservatism in the EBIT guidance that it suggests to me that they are likely to have to upgrade full-year EBIT guidance, anyway, given the positive underlying momentum in the business.  

Very understated managers that employ conservative accounting practices and who deploy shareholder capital in a considered and prudent manner ... everything exactly the way I like it.

This is the closest company I have come across that has the shareholder-value creating traits of ARB or REH (albeit SNL's commercial moat is maybe not as impenetrable).