Ann: Investor Conference Call Details, page-52

I'm glad they referenced this slide, as it goes to my grief with pointless inorganic acquisitions.

From the below actual return on equity is 30% (cost of equity). I'm pretty sure that is based on book value of equity. On market value of equity, that ratio is even higher



Inorganic growth (I.e. acquisitions) has a ROACE of 15%... this means that this will have the effect of reducing our return on equity, and diminishing our return.

From what maximises shareholders returns, they should:

1. Conduct a share buyback (I.e. with cost of equity so high, you write it off). This would increase the share price, and thereby reduce the cost of equity.
2. Only when the cost of equity is less than the inorganic growth opportunity ROACE of 15%, should they pursue this.

Why the inorganic growth ROACE has a lower investment hurdle than organic growth and our actual cost of equity is actually baffling (but attributable to management).

They are essentially borrowing money at 30% (cost of equity) and investing it in things that generate a 15% return.

@Slim103 you like management. Do you mind sharing how you think this is a good idea for us?