Ann: 1H FY23 Half Year Results Presentation, page-5

"Fantastic result in what could have been a tough environment, margins slipped slightly but showing they have a good handle on pricing and each acquired contract translates to cash to the bottom line."

Under the circumstances, it is indeed a very good result.

While they had been winning a lot of work I am concerned about "profitless prosperity" in the engineering construction industry due to a shortage of skills and rising input costs, which makes pricing of jobs even more fraught than usual.

But they have done a great job at protecting the operating margin; 80% of operators in the "neck-down", engineering construction game will be experiencing margin pressure (and indeed, some will be losing money).

When I first got wind of the acquisition, I thought "Could this be "Look over there, everyone!" ploy to deflect from a soggy result? Clearly, given the quality of the result, this is not the case.

As for the acquisition itself, knowing a bit about ALS having followed that company for many years, I think its an excellent deal for SRG, which will enhance the earnings quality of the company (Asset care is high margin, low capital-intensity,with relatively stable and annuity-style Revenues and Cash Flows... certainly a far better quality business than SRG's D&C legacy).

Despite the share price performance over the past 12 months, I think an argument could be easily made that, on a risk-adjusted basis, the stock is an even better investment today than it has been in the past.

My one criticism is that coinciding the timing of the acquisition announcement with the release of their result doesn't look all that smart. If they had announced the acquisition in a weeks' time, once the market had digested the result, they could probably have raised the capital at a level above 80c , thereby lowering the cost of the equity. (And it couldn't be because ALS was pressurising them on the timing of the announcement, for example, to tie in with ALS results, because ALS is a September year-end company)

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