the bill wild score card, page-24

Making Mustard,

Hope your pipe work sub-contractor mate get through this alright. It would seem very strange if sub-contractors are not next in line for payouts after paying out employees entitlement before paying the banks. Are we looking at a situation where the asset sales are not bringing in enough to pay employee entitlements and thus leaving sub-contractors no hope? I hope there's something in the asset sales that can be distributed to sub-contractors like your mate.

Obviously many of us holders have got ginormous humble pies to eat and digest for a very long time.

Yes, you did raise warning flags. If I remember correctly you started posting on HST forum around the time Bill Wild came back from the middle east. Quite late in the game when most of the value of our holdings have already evaporated. Some of us here bought long before the 1st recap i.e. more than 18 months ago. Back then posters were talking about the huge order book, the potential rebuilding work after the Queensland flood blah blah blah. Having been on HC for almost 4 years and having read numerous posts (postive & negative) I'll say this: that unless you know the poster in person or have corresponded privately before it's almost impossible to know who are the genuine bearers of bad news with good intention and who are not. Nor can we be sure who are the genuine bearers of good news. Nonetheless, a late thank you might still be appropriate I think, so THANK YOU for raising the warning flags.

My biggest problem is that I've successfully employed the average down strategy for many previous trades, some of which were highly profitable. Looking at the book value that was still around $5.10 post consolidation, as well as all the turn around intention/talk I thought average down was still the right course of action. But this one swept everything from me clean.

Not that I can see there's a chance to trade my way out. But if I ever trade again, for my own lessons I am making the following notes:

1. Follow and analyse the company's cash flow carefully.
2. Never trust the book value.
3. Watch out for intangibles.
4. Good will can be bad.
5. Watch out for large accounts receivables.
6. Do not assume 'cornerstone' investors are in to make money by turning the company around. That might or might not be their agenda. Even if it's their agenda, they could be wrong.
7. If the company's market update highlights a huge order book as opposed to other metrics e.g. upgrade guidance on EBIT and/or NPAT, get out.
8. If the CFO sells, get out.
9. If investor relations are unresponsive to hard questions they're probably hiding some dead rats, get out. One year ago Amy Croft replied to my email saying that Anne Griegg (the company secretary) was on business trip and will respond to my questions on her return. Anne never responded to me.
10. Learn to spot potential 'accounting irregularities' (not sure how yet)?
11. Think twice, pause, then think twice again about what/where is the value before buying.