Lowell FY18

All,

Lowell GFKL have reported Year End numbers. 

The numbers have closely matched our model. The most interesting news:

- the new ERC matrix and some regional splits the company has provided for the first time. 

- Colin Storrar (long time CFO) will be taking over as CEO from James Cornell, who will remain in an advisory role. The move seems a planned hand-over. 

However, we are struggling in particular with Slide 28 of the presentation and the company’s own views of its cash flows. The slide does not take into account the £45m the company has had to spend on the Year-Zero collections (blue on the left). These have to be incremental to the year-end rationale underlying the Replacement Rate and thus would drop FCF negative - which is of course where it has been all along.

We are thus disappointed about (new) management playing the very same trickery as the old.

We will be sending out a new model / analysis shortly.

Wolfgang