The delayed cashflow should be obvious to any investor that has done their homework. Their business is litigation which typically takes years to resolve. They do not get paid till the very end and so there will always be a "long tail" to the cash flow. Somewhat similar to an insurer which specialises in liability except in reverse. The insurer's collect the cash up front but will incur expenses for many years. In analysing both industries it comes down to how good the business is at estimating the outstanding expenses in the case of insure and work in progress for the litigator. I have not seen anything to indicate there is a problem with the work in progress (WIP) and I am sure any auditor will pay very close attention that item and the basis it was arrived at.
On a side issue I note that S+G have indicated that they will concentrating on litigation with a shorter tail in the UK which will improve cashflow but may damage the future revenue somewhat.
SGH Price at posting:
$2.02 Sentiment: Buy Disclosure: Held
