Yes, the context here is this is 1 small contract. With a small contract you can normally service the contract out of existing resources that are already on the books. For example existing staff can fit it into their existing workload. The additional costs from adding the 1 small contract can be very low and this is reflective of the 87.8% gross profit margin on average across all of their contracts. So a high percentage of the revenue of a small contract can, potentially, flow straight through to the bottom line.
ALC's profit is highly geared to getting contract wins with such a high gross profit margin. So its important they focus on growth.
ALC Price at posting:
5.3¢ Sentiment: Buy Disclosure: Held
