Tiger, Australia’s corporate laws give directors an almost...

Tiger, Australia’s corporate laws give directors an almost unrestrained discretion to determine whether to pay dividends, when to pay them and what amount to pay. Directors are not required to justify or explain why a particular level of dividends has been chosen. Any forecast is only that and to compare EHL to SSM is like comparing chalk with cheese.

Please note that they are a heavy earthmoving equipment distributor. The company has 631.2m on issue with a market cap of $176.6m. In comparison, SSM has 179m shares on issue with a market cap of $51.6m.

EHL lifted net profit 27.9% to a record $39.03m with revenues improving to 7.5% to $309.8m from $288.21m. Basic earnings per share from continuing operations were 6.2c,up from 4.8c. Their dividend was expected and was in line with their given forecasts and their net tangible asset backing per share was 79c, up from 73c.

In contrast, together with the one off impact of losses incurred by McCourt Dando, Service Stream now expects to report EBITDA of $38m for FY09. More importantly, the Company will report negative operating cashflow of approx. $15 million for the half year tomorrow. Also, SSM do have banking covenants, geared at 3 times EBITDA to to their net debt.

In my view, you may find that just perhaps, the market has awoken to the fact that SSM is sound (fiscally healthy) in regards to their debt covenants, as is my view, however, no matter what the dividend outcome may be tomorrow, it is important to read ASX public announcements as legal documents. Even though SSM have highlighted their anticipatory behaviour, this does not legally preclude them from cancelling the dividend in full when reported tomorrow and any comparison to EHL, is not worth your time.

A few too many rampers on this one, but I personally wish for everyone that she comes up with the goods.

Best of luck.