This is a good result. I was expecting an EBITDA of $5.5m, so...

This is a good result. I was expecting an EBITDA of $5.5m, so initially I thought $6.1m was fantastic. However, after reviewing the accounts, it shows that the new lease standard increased EBITDA by $0.6m (due to a reallocation from lease expense to depreciation). Accordingly, the comparable/underlying result is an EBITDA of $5.5m. Still a solid result, but not as good as it first appears. The balance sheet however remains in great shape despite the acquisition, and it appears that the result was impacted by investment in the labour hire business, so we should hopefully see a return on this investment in the coming periods. Also good to see the CCL acquisition is tracking well, although I always like to see a few periods of a new acquisition to better understand the sustainability of earnings.

An EPS of 4.4-4.5cps looks likely for the full year which should give us a dividend of 3.2cps and a grossed up div yield of close to 10% at the current s/p. With all the market volatility associated with caronavirus, interest rates are likely to be lower for longer, so div yield is going to remain a focus for investors. I would also expect governments to ramp up infrastructure spending if macro conditions deteriorate, which should support demand for ASH's CE business and training.