Question: On March 6, Charlie strongly recommended Seven Group Holdings (SVW). Having a lot of respect for Charlie’s knowledge and having read the article, I concurred and bought the share at $9.26. Since then and in the space of three weeks, it has dropped like a stone and is currently down over 11%. Can Charlie give me some insight on this recommendation as it now approaches a stop/loss point?
Answer (by Charlie Aitken): The shares have fallen from the recent high for two reasons. One, the stock went ex the 20c fully franked interim dividend on March 24 and also suspended the on market buyback ahead of a deal announcement.
That deal, a merger with Nexus Energy, has now been announced and I expect the buyback to recommence. Speculation of the deal in a period of no buyback and ex-dividend caused most of the share price damage.
I remain a believer in the company.
Question 2: As a recent retiree, mainly due to illness, I retired with around 14 weeks long service leave and 2 -3 weeks of accrued annual leave.
On the ATO website [1] it states: “The following types of payments are not included in the minimum amount that SG contributions are calculated on….accrued annual leave, long service leave and sick leave paid as a lump sum on termination Redundancy payments.”
My former employer has taken that to mean that on retirement I was not entitled to the 9.25% and thus I was deprived almost $3,000. As the 9.25% is included as part of my salary package I was shocked that this clause is in place. In hindsight (and with some friendly advice) I should have stopped work in December 2013 (as I did) but not resigned until all my long service and annual leave had been used up, sometime in April 2014.
Are you aware of this clause? If it is correct that my former employer is entitled to deprive me of that 9.25%, then this seems very unfair.
Answer 2 (by Tony Negline): Yes, the SG isn’t payable on your accrued annual leave, long service leave or sick leave.
It might have been payable if you were employed under an industrial agreement or award.
Unfortunately, sometimes the law and logic are two different things. Your circumstances are a bad way to find this out, I have to say.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
Also in the Switzer Super Report
- Charlie Aitken: Telstra on track for $6.00 target [2]
- Roger Montgomery: IPO opportunity in Japara Healthcare [3]
- Gary Stone: SUN may be set to rise [4]
- Staff Reporter: Buy, Sell, Hold – what the brokers say [5]
- Penny Pryor: Short ‘n’ Sweet – the right Internet exposure [6]
- Tony Negline: When all SMSF members die – individual trustees [7]