announcement on centro.com.au on msc 36 update, page-9

It is very difficult to tell. The latest financials we have are for 31/12/07 and with the exception of the one-page sales results release and the CAF sale, there has been little information available to the market. Centro could have given some guidance along the way but they have chosen not to.

There will be some property write-downs for sure, especially in the US market. Only 50% of the Aus assets were revalued at the end of last year and we would expect the others to have been done last half. This may give a pleasant surprise but it is difficult to tell.

I think income is going to be fine but on the expense side we will see the advisor fees hit last half. We might expect (and hope) that these will be 'one-off' charges. We do know that there has been NO increase in the interest rates on the loans past those agreed at the end of last year. The derivative positions, which accounted for $85m in loss last half are almost impossible to quantify this half - could be up, could be down. We may also see a provision for legal expenses but it is difficult to tell.

On the up side, the timing of the CAWF sales are going to be significant. From the leaked docs, we know that the contracts will be complete by 15/8, which is about 2 weeks before the results announcements. If there is mixed news in the reports, it may be countered by good news from the CAWF sales. We may also see an update on equity injection prior to the announcement.

The key will be outlook for the future. If the company can reassure the market that they can continue as a going concern and outline what this will look like, the SP will react accordingly and the market will stop valuing the company relative to NTA and start looking at future income. Divvy guidance for 2009 would be an added bonus.

As for poor cousin CER, there will be some property write-downs but the fact that it paid a distribution this half is a pointer to what we might expect in the results. We will also see the first full half of CSF/CER merged results, which are probably going to be strong. Outlook again will be closely scrutinised.

Finally, I come back to the fact that it has now been 7 months since the problems started. If Centro was insolvent, it would have collapsed a long while ago and ASIC would be all over it. If it was, as some commentators suggested, just being propped up by the bankers, we would have seen assets fire sold left right and centre to pay back the debts. Instead, what we are seeing is an orderly sell down of two specific funds in line with the plan outlined right from day-1. We have also seen a change in the sentiment towards the company. Journos are off of the case, shorts have dropped and the CNP ASX market has been showing buy-side strength for the past week or so. It is certainly feeling more positive and this has to be a good thing for everyone associated with the company.