Forum Archive Index - September 2001

["Peter" <pmaiden@xtra.co.nz>]

Brian

 

If you have a look at their full year result to June you will note that ADV wrote nearly all this goodwill off - about $60M worth.

 

Ironically even though ADV wrote the goodwill off because 'there is no certainty of the carrying value of goodwill (in the companies involved)" they still had not fully paid for the acquisitions involved. For example ADV issued another 422,000 shares last month to pay for the Campbell Pope acquisition made last year some time.

 

The impact of the writedown was to reduce shareholders equity to $5.8M or about 8.5 cents per share.

 

ADV is therefore (even at 29 cents) trading at nearly  4 times book value - far too high, even in normal times, for a company that hasn't made any money for a while.

 

With all the uncertainity about at present it would not be surprising to see the ADV price drift down to book value over the next few months. It is shares like this (the ones valued on expectations of far better future performance) that take a hammering when times are tough.

 

Cheers

 

Peter