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54.5¢ slater & gordon limited

FY16 results - My thoughts on OCF, non-recurring expenses and debt, page-59

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Just_a_guy

5,420 Posts.

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02/09/16

18:36

Post #: 18898035
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Originally posted by Nick Miller ↑

You are welcome and thanks for the comment.

The start of FY16 (1 July) was when management reaffirmed the full year guidance after only 1 month of SGS trading. We all know what happened there... The proposed UK regulatory changes were also announced in November, which obviously had a huge (albeit non-cash) impact. I think seasonality did have an impact in one of the underlying practices in SGL Aus or UK in so far as either H1 or H2 being loaded with revenue and the other period having a loss. And from memory this was anticipated based on what had happened in the previous year(s). I don't think it was a material contributor to EBITDAW in any case but please correct me if I am wrong. Perhaps H2 was expected to yield more revenue / customer receipts from NIHL resolution/settlements and we are disappointingly lacking guidance there. In the absence of any correction from management however, the source of truth (not the SP), I remain hopeful and confident on this for now.

The PIP started after H1 results were announced, how could it have happened any earlier? Or did you expect more improvements then were reflected in the results? If so, what were expecting to see?
The company would have been implementing similar reorganisation measures following the SGS acquisition in any case as part of attempting to realise synergies. This would include taking one-off expenses and it was probably reasonable to expect this to roll into FY 17. It is really only our debt situation that makes this problematic, but I presume the banks and management would have been aware of this when they agreed to amend the SFA.

The CA certainly doesn't bode well for the SP but it won't compel me to sell either.

Agreed, time will tell. We need to be patient and wait for the results and try and solicit some guidance from management to anchor us in a particular direction.

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I agree with a lot of your sentiment but they reaffirmed guidance on Nov 30 - 5 months into the year. Also they completely stuffed up the cash flow of h1 when they only had one month remaining. Management are either completely incompetent or a bunch of liars. I gave them a second chance and wanted to believe in h2 but that was a writeoff too just not as bad as h1.

SGH Price at posting: 42.0¢ Sentiment: Hold Disclosure: Held
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