"So, the main question is why the cash has decreased by 4.7 m$ in 6 months. As usual, we will have to wait the final H1 25 results to have a clear answer. However, there are 2 elements which can explain such a cash decrease : - possible reverse of the working capital which decreased by 8.9 m$ during FY 24, - final dividend impact (of 1.8 m$)."
Yes, we will have to wait for the full set of accounts to know for sure what drove the movements in capital. But I think we can say with high degree of certainty that the cash reduction is due to a degree of normalisation of Working Capital, which had been run down aggressively at the 30 June 2024 balance date.
As can be seen in the graphic below, as a function of Sales, Working Capital reduced sharply over the course of FY2024, ending the year at just 35, compared to a more typical level of 10% (which, incidentally, is the level that, unsurprisingly, needs to be input into my financial model for MYG, in order to get to 31 Dec 2024 Net Cash of around that reported $11.4m number).
The interesting thing to me from today's update is the pre-emptive declaration of special dividend, even before all the new work that has been won, has commenced undertaken, despite the lower cash balance.
This tells me that the CFO and the Board must be quite content and satisfied that any future calls on working capital will be more than adequately funded, even after providing for the $5m special dividend.
.
MYG Price at posting:
95.5¢ Sentiment: None Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)