HTOut of interest i have looked back at the EBIT margins over...

HT

Out of interest i have looked back at the EBIT margins over the last 6 FY's. They are as follows;

2007 12%
2008 14.7%
2009 13.9%
2010 16% (incidentally the only year with negative revenue growth)
2011 14.9%
2012 13.8%

So while this result is slightly lower its within the broad range that LYL has achieved historically. My suspicion is that the Construction Management stage of the project life is lower margin than the Engineering design work in the feasibilty stage - which would explain why 2010 FY had high margins but Revenue was low ( low project execution due to delays caused by the GFC)

I tend to feel after consideration that the lack of guidance for 2013 could be as much a positive as a negative. In the 2009 report Caratti gave negative guidance for 2010, so if the outlook was negative i have no doubt he would just release it.

Also as the key projects that have contributed to this result largely run through 2013 ( Tropicana, Marandoo Mine 2, Aykem, Namuldi etc) i feel we are likely to see a result at this level at least.

The lack of guidance is likely more a function of waiting to see how much of the Feasibility work that is flowing through the Canadian office moves in Procurement and Construction.

Preserving cash to expand working capital could also be seen in light of building the balance sheet strength to deliver this organic growth (hense the lower dividend growth).

The other point that i found interesting in the report was that Project Services Africa now is reported under a separate business segment for the first time. I see the Canadian office as a way to get closer to TSX listed companies operating in Africa.

I see LYL as an excellent growth stock, i don't rule out the odd year of negative growth but feel medium term they will continue to grow due to their competitive advantage established through delivering projects on time and budget.

Its not a CSL or WOW for rock solid earnings reliability but over time they will win more than their share of work and expand geograpically to service core clients..

Who do you see as the top three clients - RIO, Anglo Ashati, Newmont Mining?