company update, page-24

A view from a non-holder here, and perhaps a key reason as to why the MHM shareprice has languished - a perceived failure by MHM management to deliver.

I don't believe MHM management are conservative or accurate in their forecasts. This can be demonstrated by their repeated failure to accurately forecast the date by which they will achieve full production at Geelong & subsequent downgrades in forecast profitability. These are the two key issues for me, with other issues re-inforcing this view - i.e. AL80 dramas.

This dates back to their initial acquisition of the Aluminium Salt Slag processing facility from Sims.
Upon acquisition, they set a forecast for achieving full production by Q2 2010 and a forecast profit of $8.6 million pre-tax profit (05/01/2010).

I am aware of the reasons for some of the delays - some of which are credible. Teething problems are to be expected, when establishing a new process delays are to be expected. So then, why did MHM management not take that into consideration when setting their forecast? At best they seem to have encountered an unusual streak of bad-luck and at worst have shown themself to be poor managers.

Forecast Geelong profitability has been revised from the original forecast of a $8.6 million pre-tax profit down to an EBITDA profit of $8.0 million inclusive of the AL80 business. Repeated profit downgrades with inadequate explanation are not a good look.

If management have not been conservative in the past with their forecasts then how can you trust that their forecasts regarding the US business are conservative or accurate? As long as they continue to over-promise and under-deliver it will be hard to develop investor trust.