Mel, your comment: "If SGH Oz was left with $50M debt then the...

Mel, your comment: "If SGH Oz was left with $50M debt then the Oz float would have to achieve £350M", will not work.

In F15 terms, the suggestion made would price AU at >16x NPAT (based on Note 3, AR15, Segment Reporting), or 10x F15 reported AU segment EBITDA.

H16 has all but cruelled such a possibility because AU EBITDAW is now down to $16.4M on revenue of $139.3M. At H15, AU revenue (Presentation slides 5 & 6, 29/2) was $113.5M and H15 EBITDAW was $14.2M. So, in H15, the EBITDAW margin was 12.5%. Now, it is 11.8% (so, falling). Looking more closely at this (slide 11), AU/GL is loss making in AU at the EBITDAW level, whilst AU/PIL is still generating +ve EBITDAW returns.

One however could argue about the little notes of one-off payments /costs factored into EBITDAW, but they are repeating in one form or another. At F16, the comments will be about the one-off costs associated with the banking syndicate review and /or the refinancing, etc. So, they are much more mainstream than what is otherwise being pretended about.

As for interest, this too has increased sharply. Going off the operating cash flow, interest costs (paid out = $11.419M)) averaged 3% (annualised). Reported at the P&L level however (= $15.476M), the interest rate is now annualising at 4.1%. Either way, the interest cost burden (whether as a recurring rate, or added on fees, or facility baseline fees, or drawdown charges, etc) are up significantly on the 2.17% (variable) - 2.26% (fixed) range that was reported at AR15, Note 32, p129.

The existing facilities have also been reduced from $895M at Jun15 (AR15) to $850M at Dec15 (Note 3, H16 report). Headroom at H16 was $67.3M. Cash on hand (+$51.9M) however brought this back up to $119.2M.

So, whereas there was raging an argument back in January where headroom was being counted by some as the >$100M + cash on hand, the reality was that headroom was already well below $100M with cash on hand having to be retained in order to keep it at or above $100M.

Factoring this all through, any carve off of AU would need to raise substantially more than the the figures you have mooted, so the required selling multiples would need to be far greater than 10x EBITDA or 16x NPAT in order for it to work. And in this, rapidly emerging risk averse /contrarian market environment, such an outcome would be a very tough ask, indeed. About the only type of thing that might work would be something similar to what's recently occurred with Arrium. But this is also unlikely.

There is therefore no escaping it. The rather significant OPEX and headcount reductions, necessary in the UK, at SGS and in AU are crucial to turning things around in the future, absent which, the localised margins (whether in AU, the UK, etc) will continue diminishing.