Ann: FY18 Full Year Results - Investor Presentation, page-29

I've had some time to digest and review the results.



Firstly, if we look at revenue growth, this has dropped dramatically over the years from high double-digits (when we were trading above 20 p/e) to the second consecutive year of single-digit growth (whilst trading around 10-15 p/e range).

During this time sales growth has dropped slightly as well but managed to be mostly stable during the last few years.  We're told so far this year group sales growth has been 5.9%, which is promising considering we've been under 5% growth the last few years. I'll give new management the benefit of the doubt to hit 5% sales growth for FY19.

Looking at the margin, this has also dropped from mid 50%'s to high 40%'s over the last few years.  I'd like to see this stabilize or push back into the 50%'s.

Another standout for me was the high increase in CODB for their vets, jumping from 64% to almost 69%; resulting in EBITDA declining this year by 5m.

I'm happy with the opportunities and strategies that management are looking to improve the business. However, until I see some more signs these are successful, I'm wary to invest in a sinking ship (which is how this report paints GXL).

I'm happy with the dividend cut, however now that leaves us with a 2.5% annual dividend.  The upside is management can deliver and that should see us close to $5 likely by HY19 if a nice update is provided.  The downside risk is management under-deliver and that will see us float I suspect around $3.5-$4 pending no takeover offer etc (whilst enjoying the div for holding).  Given current valuation and the fact that new management has not yet proven themselves, I'll be waiting for the price to drop further to initiate a position.  I don't see this going back to $4.50 levels until more evidence is shown to confirm delivering on their strategy.