my latest thoughts on IGL, page-8

Hi MarsC, your scenario above was so good, it deserves additional ‘fleshing out’, on the basis that as a group we can all have a better all round understanding. I am a holder average price around $1.70 but am more leery of managements directional play.
Your comment:
’The value of the Ovato acquisition is now being revised down & associated “restructure” costs seem to be getting revised up(?) (I personally don’t remember the need for retrenchments being articulated, at the time of the acquisitions. Something that is now being provisioned for).’
My comment: Agreed the gloss of a brilliant deal has tarnished somewhat - but looking past FY23’s contribution (which was below expectations) this should be a very, very worthwhile investment. But, this deal was gift wrapped and delivered to management by the market and liquidators who essentially had no other buyer in the wings. (2) the devil is always in the detail. Retentions were always an eventuality when you assume an entire carcass (Ovato) and then realise efficiencies require cutting it up, disposing of some parts and amalgamating others. These costs and necessary retentions are proving higher than expected - but they usually are. Realism might likely be that the real cost of Ovato will be circa $40m - but still an excellent price for a mooted $13m annual earn - likely falling YoY as the sunset on printing continues at whatever pace it does - but it’s not bound for extinction. The upside is that a non governmental monopoly provides capitalism with pricing power.

I agree with your commentary on working capital - it should wind back, but ‘paper’ is the wild card and our falling dollar is a ‘no assist.’
Margins are likely to be tight because (a) we are dealing with well financed tier 1 companies who write the rules on the art of
negotiation and have firepower to back it up (b) you lose pricing power when you are selling bundled products and services because not all of the inclusions are of equal value. I could be wrong here, but the Coles and Woolies weekly print mags are
of lesser value than the digital, but they are accepted as part of the package. A lesser need for a part of a bundled service results in either a request it be dropped completely or a reduced price be negotiated for the total package. And these tier 1 companies are super sensitive to minority persuasion on various issues - whose to say that paper won’t take on a pariah status like plastic.

Will leave it at this stage - getting too long.