This back track calls into question honesty and creditability of...

This back track calls into question honesty and creditability of management, the board and auditors who did the DD on acquisitions. People will rightly panic and sell. With the lower statutory profit, it re-rates down to the new cheap level that accounts for higher risk as well, whilst the divie will be lower in absolute terms than previously expected. Given the structure of the optimisation, and given the top line was actually decent (~$17.5m annualised), it appears the staff cost issue was a miss, amongst other items, that reduced the NPAT margin, thus the give back of cash goes towards correcting it (from MCS vendor). With the JBL vendor, the rescinding of the equity to be replaced with options is a $2.5m swing from getting 900k in equity to having to pay $1.6m to get equity again, which suggest the JBL business was a dud and that profit/cashflow from it was nowhere as good as advertised, assuming MSG are honest that they didn't lose a single contract nor saw any contracts move lower in scope. This all draws up concerns as what else might come up in the audited FY16 accounts, where the cash would come from for the divie and drive acquisitions, amongst other things.

This is a tricky situation to be in as the lower CF/NPAT and valuation is a massive headwind for the roll up strategy. However, a decent divie that is covered by free CF may turn the valution around, whilst the commentary on getting big dollar work once they get the HSE ans ISO certification done could get things back on track and drive growth.