Garry is a transparent CEO and that is good, but the old boxing expression of 'if you lead with your chin you are going to get hit' is true - too many hits and you are done!
Garry was beaten to a pulp in FY23 - the results were way off track to that projected.
Those results and the absolutely insane purchase of the Direct Division of info services was a 'throw the white towel' event for me - but, out of the blue came the Morrisons sale & I'm sure this literally saved his bacon. For me at least. I listened to the plans for FY24 and again they sound logical, commecial, doable and moreover, he believes it implicitly.
My decision: Hang in & assess on what happens in 1HFY24 - the early murnerings by Garry were reassuring.
EXAMPLE: Direct Division was turning around - I recall him saying June July and August were good months, its turning around. BUT, by 1HFY24 we find it has actually done worse than the previous year and a desperate focus on cost cutting to contain the blood spill. On Garry's novel ROME (Return on Management Equity) scale he has reduced this divisions value from $5m to $3m. Come on Garry, it's real value is 'peanuts to zero'. And we are now involved in litigation to try and get back part of the acquisition money. On this area I am calling - MALARKEY The best this division can do is supply leads to other divisions.Downgrade it as a division and make it part of marketing but with an emphasis of running it at breakeven. And it has the ability to encourage strong interactivity between prospect and financial advisor; Lords knows this is required, most of the advisors I have met couldnt sell a whore to a troop train!
My take on the 1HFY24 results are that they were so-so. They have fallen short of expectations. He admits that - EBITDA of $3.6m v the budget oif $4m.
This means he has an awful lot of work to do in 2H to get close to his $10m EBITDA in FY24. But that has gone now too - replaced by between $8.1m and $10m. Actually when you add up his thoughts on possible divisional results in 2H and add them to the 1H actuals and deduct the $2m in head office expenses, he's targetting a $9m EBITDA. But that's assuming the bounce of the ball goes Garry's way from here on in, and history proves that it doesn't.
Its difficult to see continuing business NPAT for FY24 exceeding $5.5m (4.2c eps) which then brings into play another goal/aspiration which maybe wobbly, that of '4c div increasing at 25%'. I think betting on a 4c div for FY24 might be more prudent.
Of course, there are some good points The all important licencing division which drives $100m of the $130 revenue in any event, looks to be doing well. The Professional Services Division is moribund and the tiddlers - equity is also a plodder and you know my thoughts on Direct.
All up, SEQ is driving on one good tyre, two travelling on the rim and the fourth is a square tyre. One more round Garry.
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