SGH (ASX) Long Position

Originally posted by Dr.Who ↑

The extra insight I got from the AGM about NIHL is.

There has been some disruption internally with a few egos getting in the way. Experienced lawyers not wishing to be associated with what they regard as a low class of business in PSD. The PSD legal business did not have adequate experience to deal with such a large portfolio. NIHL is quite a specialist area of personal injury requiring a deep understanding of the protocols. How this transpired into poor performance is:

Virtually all the cases are bulk settlement. Over time work has been carried out to get them close to presenting for settlement, Quindell handed them over in far worse a state than thought. At crucial juncture some staff wen off sick while others left the business at the worst possible time. There are windows of opportunity to present the cases to insurers and those windows were missed due to not a straightforward job of another lawyer picking up and running with them.

In addition, Insurers lack the specialist skills necessary to handle the claims.

Therefore we have a double whammy of missing an opportunity and those that have been presented are dragging their feet due to insurers not having the capability. There are timeframes that both parties must meet to resolve cases so it cannot go on indefinitely.

I didn't pick up on a vibe that it is a hopeless case, on the contrary, there remains a good number of legitimate claims.

I'm surmising that flagging potential for materially less than 18-22,000 means some are less rock solid than others and as time passes they are more likely to fall away.

However, what is left are likely to be rock solid and the fees likely to be more than otherwise would be due to the additional hours working with insurers and insurers struggle to upgrade their skill set.

I'm working on a basis of 10,000 settling at £10,000 = £100m revenue. I previously thought 16,000 at £8,000.

The bulk of costs are already absorbed but there remains an element of cost in re-training some S&G lawyer/Para to handle the run-off. Though costs/fees are likely to increase if cases are litigated.

All my interpretation, I might have misinterpreted some or all of it but that is the impression I was left with post-AGM.

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I'm working on a basis of 10,000 settling at £10,000 = £100m revenue. I previously thought 16,000 at £8,000.
I am going with this and even this when delivered changes every thing for SGH and its shareholders.
It can't B worse than this.IMHO

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