I responded to this last night. Not sure what happened, but...

I responded to this last night. Not sure what happened, but didn't stick.

I'm not 100% sure on what you are trying to say in some parts of that Flex. I found your 2nd paragraph especially confusing. No offense intended, I am thinking you may have been tired or distracted when you wrote it...or I am tired and distracted in reading it, which is definitely true.

I didn't get across my original point in regards to goodwill very well. My point was that goodwill is a fake asset. It's made up for accounting and tax purposes. The reason that it is being written down in some parts of the business and not others is that those are the parts of the business which have goodwill. It is not an indication of performance, so much as an indication of which parts of the business are carrying goodwill.

I believe the new board are writing down goodwill to give themselves the lowest capital starting position. They can blame the writedowns on the previous CEO. This is a common tactic that you will see when a new board or CEO takes over they will immediately look to bring forward all bad news, so that they can blame it on the last guy. Reducing the goodwill means that any future increases in assets will be a higher percentage. It also makes ROE and other return metrics look better. So there's good reason to do this.

In terms of the Bugatti example. If you buy a Bugatti for $4m and it is worth $4m there is no goodwill. If you buy a Bugatti for $4m but it's market value is actually $3m, then you bought a Bugatti and $1m worth of goodwill. In that second case, you can write down the value of goodwill to nothing and take a $1m loss at some point. However you cannot write down the value of the Bugatti unless it actually falls in value.

And that is what CI1 has done here. They are not writing down real assets. They are just writing down goodwill. The real assets from those subsidiaries are not being touched. It is the fake goodwill assets that don't mean anything anyway that are being written off. These planned write downs will eliminate almost all of the goodwill in the business. If the Hong Kong businesses were carrying goodwill I am sure they would try to write them off as well, but clearly they cannot be carrying much.

I don't have a strong view on the suspension. If I try to guess what is going on, I will just be wrong. There are a million different things that could be happening there. I don't think CI1 will delist. I think the company is the strongest now that it has gotten rid of Jimmy. Cashflow will improve dramatically, as will the company's relationship with its shareholders. It should be easier to attract new investors now that there is not a madman threatening to sue his own shareholders.