stefanis, I'm not sure that the market's reaction was that...

stefanis, I'm not sure that the market's reaction was that unexpected when you consider the financials.

The margin erosion was pretty ugly - down to 3%.

Also, the CFO is somewhat coy whenever asked about the new banking arrangenments. We don't get to see the banking covenants but COF must be sailing close to the wind. Interest cover is 1.4X and that is using EBITDA (pre VEO &SBP). If they used EBIT they wouldn't make cover - so they must be getting an indulgence on this one. Net Debt/EBITDA is running (on an annualised basis) at 3.2X - so that must be close.

Net debt has increased - the capex on the new Adelaide 'World Park' office was new to me. Another extravagance.

We have got the figures on projected expense savings - annualised savings revised upwards to 18m, of which 6.3m is expected to flow through in H2 11. However, we don't know the knock-on efects for revenue.

They did disclose OEBITDA in the Dec trading update but without much colour, only met the bottom of the range and there was a rosy Outlook update.

Having said this, I think Mulcahy and the new CEO have the bones of a good business. I suspect that Mulcahy, who has spent his career analysing financial data for the red flags, is onto the fix and Roger Olds, for all his brilliant work, is not the person best placed to take the remedial action.

I was back in the market buying on Friday and I will probably be going back on any further weakness.

However, I agree with you - it is not without its risks. I suspect the banks won't extend the indulgence forever and then the hand will be out for equity. The risk then is that retail shareholders get shafted because invetsment bankers usually see this as an opportunity to enrich themselves and their clients at the expense of existing shareholders. Mulcahy's last fundraising (with SUN) gave a large slab of the fundraising away to new 'institutional investors' - read large funds with commercial connections to investment banks who clean up on the cheap equity. It was Feb 09 and the shares were given away at a 35% discount to the previous closing price. It's not easy recovering from that sort of dilution even with a good business.