My main takeaway from this report is that the business is normalising after the problems associated with Covid. This does not mean that things are getting much better for them. The drop in revenue is explained with the reduction in work associated with special cleaning due to Covid constraints and health requirements together with the ceasing of jobkeeper payments of over $7.3m. However the two good things apparent are the return to a positive equity position and a marginal increase in margins with the comment that rapid increases in costs are being passed on and accepted in contract renewals and existing contracts. Shareholders should be aware that the net tangible asset position on the balance sheet of companies of this nature never amounts to any large figure as the main assets of the company are usually intangible goodwill, cash and low value highly depreciating equipment. Their main value lies in the consistency and low churn of their contracts and staff together with a reasonable margin within their market. They do appear to be making headway towards these factors. More evidence required IMO but they have turned the corner. Value will come when they are in a position to pay a dividend.
MIL Price at posting:
36.0¢ Sentiment: Hold Disclosure: Held
