DebdebOn the surface the result is again disappointing but i am...

Debdeb

On the surface the result is again disappointing but i am happy with the transformation process Lombard is guiding.

In a traditional accounting business if you want to be a partner it is quite customary to relinquish all existing clients and focus on bringing new clientele into the firm. Once you achieve a certain revenue level of new business then you are welcomed as a partner.

I sense that as WHK's growth prior to the GFC was primarily via aquisition (buying firms on a lower EV/EBITDA than WHG traded) the correct renumeration structure to compete to achieve organic growth hasn't existed. KPI's and subsequent renumeration were based more around "bedding in" acquisitions than growing organically through competition for new business. Lombard has identified this as a key area for change hense the focus on Principle renumeration structure.

The functional support review and movement to a Group Shared Service model can be seen in the same light. Its not only about reducing cost but also about positioning the business for organic growth.

So while the current result is disappointing with Cash earnings falling, for the first time since i have owned the business we have a vision or strategy to enact change.

Whether this will be successful or not only time will tell, but as a recent holder i am happy to give John Lombard at least 12-18 months to implement his vision for change.

What i like about WHG is the cash flow. OCF was lower this half than the pcp but i expect strong cashflow in the next period. The December half is always slower in cashflow due to the build in WIP associated with year end accounts.

For this reason i believe the downside from here is very limited. They can keep paying a 7c per share dividend indefinitely.

WHG is also suffering from cyclicality in the FUA due to depressed sharemarkets and also in Bus. Serv that does better in a broadly stronger economy where more advice work is performed.

Its certainly not highon my lists of stocks to buy but i will continue to hold patiently.