Elph launched a takeover offer in December 12 for 100% of Engenco at 18c per share. It was only able to obtain 65% of the company and therefore couldn't proceed to a compulsory acquisition. In hindsight they may feel they could have raised their offer price a bit to get it over the line. The reality of the shareholding structure is that Elph has control and disclosure will be the bare minimum requirement. There is always a possibility that Elph could move to mop up the remaining shares at some point.
The result is disappointing, driven by a drop in margins. Employee costs rose by almost $9M over the previous corresponding period accounting for the majority of the impact on profit. "the group continues to invest in its workforce and facilities to maximise additional outsourced maintenance opportunities, and to support the expanded range of products and services" is the explanation for that....
I agree with the vagueness of commentary, the "flywheel" didn't get a run this time (developed a wobble perhaps) and given this subdued result we can probably expect even more conservative guidance in future. I am mindful though that an engineering company is not an annuity, contracts must be won and accordingly revenues will be lumpy, for this reason it can be heart-in-mouth at times. Accordingly an investment case cannot be made in the isolation of a single report which will make the next one indeed more interesting.
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