Ann: Preliminary Final Report, page-15

Hi Mars, Yes you're quite right. It's neither positive or negative really. But not really an impact on working capital I don't think.

While this year's cash balance is a bit inflated, perhaps $50m (I do think more like $70m), when you look over a 13 year period, clearly, the company is generating cash, it's compounded 15% annually - no debt.


I think the growing balance balance allows it to win bigger projects - and small acquisitions.
The cash is returned to shareholders as well - they've always paid dividend, and that's more than can be said for almost any construction company.

Albeit, hardly anything in 2015/2016- but they were tough years for the industry overrall.

The issue with the construction industry as I see is it's either boom or bust, feast or famine.
The years of the highest EBIT, are also the years with the higest EBIT margin.

To me this makes intuitive sense, because the construction company always has 'fixed costs' e.g. wages to pay.
So it's critical that the company needs to win work to keep some money in the door. When there's not much on, they'll do it, even for a break-even/loses.


Now, 2021/22 could be really good years - thanks to higher commodity prices and infrastructure spending.
It not, well, the company is pretty cheap - so I don't think the downside is much - but there is some of course (e.g. political/govt risk in Africa).

What do you think?