Ann: Full Year Statutory Accounts, page-7

Hi @jg123456

Thanks for your comments. I like posts of a non-cheer-squad variety, especially in businesses that I have a stake in (and while we wait for our regular friendly prompt from @travelightor).

You are spot on with regards to your comments about "like-for-like" revenues. And you are absolutely right, two key things need to be done, firstly the current year revenues need to have acquired revenues stripped out, and the prior year revenues need to be beefed up by annualising last years acquired revenues. Without making both of these adjustments, things will look much better than they should.

I had actually been monitoring this sort of "like-for-like" trend. It's just an estimate, as reported prior year acquire revenues do not always have all required information (eg granularity of revenue pertaining to each specific acquisition). However, as is usually the case, precision is not required in order to gain an understanding of the trend.

But there was an error in my method. You see I like to think in terms of Over The Counter (OTC) revenues, as I believe these tell a more representative story than do statutory revenues (for this business). As such, all the numbers, including margins and charts, on my spreadsheet, are very OTC revenue centric. The problem of course is that the acquired revenues (in the business combinations notes) are all statutory (presumably).

I was inadvertently adjusting annual OTC revenues, for the acquired statutory revenues. The statutory revenues are of course substantially smaller in magnitude than the OTC numbers. This meant that my estimated impact of the acquired revenues was less than it should have been. Very much less. And so whilst my estimates revealed a trend of negative like-for-like growth - it did not seem alarming to me. In short,I was at this stage willing to live with this "leakage" on the basis that I felt there were other cyclical headwinds at play (in practice acquisition hurdles, and in operating  margins of existing practices).

Having corrected my numbers, and seen the impact, I am now far less comfortable. So all in all, there are just too many questions for a business selling at current multiples. So I am out.