Big changes are required to keep the business sustainable in the future (especially with big shifts in the advertising market) and I don't see them ready to make the big changes. They are already late, removing from ASX 200 is really bad (it is yet to hammer the share price once funds starts selling off). Do they really want to make the changes, or just to keep afloat and drag the share price down until it gets really cheap for WPP to take over?
Keeping the dividends on similar ratio is good, but on what profit will that be?
The only thing actually completed so far is that yet another talk-talk-talk body is created (EXCO).
They have total costs savings estimated at $6.9M, with one-off costs ($6.2M) almost eating up the full year of future savings. This is good for the start, but I would imagine there are far larger saving opportunities for business of this size, and this many separated companies/divisions. One word - consolidation.
What about cleaning up the balance sheets and assets write offs, especially for the ridiculous levels of goodwill (which exists mostly due to overpaying previous acquisitions and will need to be adjusted at some point).
As already commented here, changing the definition of bank covenants is not going to make debt look any smaller or disappear.
Although, hats off for the advertising effort (which, after all, is SGN's core business) and selling the presentation like the great progress had been made.
SGN Price at posting:
56.2¢ Sentiment: Buy Disclosure: Not Held
