A few people have been commenting on the debt position. Based on...

A few people have been commenting on the debt position. Based on the 30 June balance sheet, SGH has:
Cash $97m
Debt $720m
= Net debt $623m

I don't know what the leverage covenant is for SGH but generally speaking you wouldn't want to be geared at more than 2.5x EBITDA (note: I've worked in investment banking for years and have a fair idea of lending practices)

SGH would therefore need $250m EBITDA to support the current net debt position assuming 2.5x. Based on FY16 guidance this appears fine, but it's not what is happening this year that is the issue.

The fly in the ointment is the impact of the regulatory changes on FY17+ earnings. UBS estimate 30% revenue and 43% EBITDA impact. That's a catastrophic impact to gearing if debt remains at the current level.

And even though, as SGH says, the impacts may not happen until 2017; the business is just not generating cash flow to reduce debt at the rate needed.

Not to mention the other impacts to the BS that are sure to come - the most obvious being a massive impairment of goodwill from the Quindell acquisition (there is just no way auditors will support the current intangibles position if the regulatory changes are happening).