My view only: I believe as good a measure as any is a look through of NPAT to cash generated from operations. My formula for this is Operating cash/(NPAT + D&A). What this shows for me is that in FY22 this was -175.6% and +152.5% for FY23 This is somewhat understandable in the construction industry and you need to assess this over a few years. Bit like the tide goes out and the tide comes in - depending upon project completions etc. Combine these two years and you have negative free cashflow of $12.93m - not too much cause of concern because $9m of this was the acquisition of the modular business and around $6m in plant etc What one could conclude is that the net borrowing over the two years of $5m was used to fund the high dividend pay outs (91%) - and that may not be a good thing. I'd prefer they use the cash rather than pay dividends and keep generating an ROCE of 24% which is admirable. Pressure from the previous owners - as significant shareholders these days - to get the cash?
SHA Price at posting:
$1.91 Sentiment: None Disclosure: Not Held
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