TK Journal 2021-07-23

HI Cam,

Mea Cul­pa,

I stuffed up on Mil­le­ni­um Ser­vices Group (MIL) on a recent show. They have an “empha­sis of mat­ter in rela­tion to going con­cern” in the their audit report. IE, they have a qual­i­fied Audit. Thanks for pick­ing that up and I should have ear­li­er, too. This means they should not be on the Top Scorer’s list.

I didn’t read the audit report when I was prepar­ing the Stock Pull Apart on MIL on our recent show. I did a deep dive into their Bal­ance Sheet and Cash­flow State­ment as well as a quar­ter­ly state­ment.

Regard­less of that, I did not pick it up a few months ago when it was added to the Top Scorer’s list and I should have. Apolo­gies to every­one for that, but again, it high­lis­ghts that doing your own research is an imper­a­tive.

Now that the con­fes­sion is out the way, the share price han’t done to bad­ly since it went onto the Top Scorer’s list.

It looks like the empah­sis of mat­ter wa raised due to Cur­rent Lia­bil­i­ties exceed­ing Cur­rent Assets, how­ev­er, it also looks like circe $20m of long term debt was trans­ferred to Cur­rent Lia­bil­i­ties due to an account­ing rule that long term debt is clas­si­fied as short term debt in the year that it falls due. As we know from the Stock Pull Apart, a large amount of debt has been paid down this year.

MIL is in our Dum­my Port­fo­lio and I will be watch­ing its sen­ti­ment and wait­ing for results before tak­ing any action on this one. It is up 3.5% since we bought it at the start of July. Let’s see if I can make a silk purse out of a sow’s ear, or whether I need to invoke Rule 1.

I wouldn’t begrudge any­one from Sell­ing this share giv­en the dis­cov­ery of the Qual­i­fied Audit.

Maybe James Oliv­er could shed some light for us on the Audit Report for this one.

Regards,

Tony