Ann: PSD Acquisition and Entitlement Offer - Presentation, page-63

Oh - BTW - operating cashflow has been growing along with profits. I can see that profits are ahead by about $10-15m. Growth uses up working capital in most industries, and I would be surprised if SGH is any exception.

Also I cannot see a better way of providing a realistic estimate of earnings than making an "actuarial" type of assessment as to the odds of success of a portfolio of similar cases. Without this type of assessment, you would be misleading the market, or the market would be analysing the business based on underlying measures anyway, and ignoring the statutory figures. Finally you would have a business full of natural whistle blowers in Slater and Gordon. There may be some exceptions, but I would expect most staff will take pride in doing the right thing and helping their clients. If you are a good lawyer and anything smells bad, or you are stuck with a fubar bunch of cases - you would leave and work somewhere else. And you would short your previous employer - lol.

In this case also - SGH has paid up for Quindell, but they have cherrypicked what they are willing to pay a good multiple on, and will pay based on how things pan out for the rest that has been acquired. With the lower multiple, you just take everything as it is. Finally the synergies from significantly lower overheads per unit of business will usually be shared between the acquirer and the acquiree - makes sense. They say this is going to be EPS accretive by about 30%. So why wouldn't you pay up. Some of it is factored in already, but then again if they can keep succeeding with acquisitions, why wouldn't you factor in more investments and acquisitions?