Ann: Appendix 4C- strong ARR growth, cash receipts & cost control, page-99

Thanks Vmk, great post as always. My main criticism of the company of late has been that they promised “hyper growth” which clearly hasn’t eventuated, set against a cost base to run the business that is high and practically impossible to reduce. I stand by my comments that the organic revenue growth rate has not been high enough, but on closer inspection the company actually seems to be having a real crack at cutting costs. CYCL’s annual revenue at the time of acquisition was $14.1m and it was described as being an EBITDA and cash flow positive business. However, I’m assuming by very little meaning that annual costs pretty much equal annual revenue. This means quarterly costs for CYCL would be $3.525m. LVT’s costs for the Dec quarter were $17.159m but this included a month of CYCL operating costs ($1.175m) so $15.984m pre-CYCL. Their forecast (obviously we don’t know if this will be achieved but it’s all we’ve got to go on) for the Mar quarter’s operating costs is $18.610m which if CYCL’s quarterly costs are stripped out is $15.085m. All of which implies that quarterly costs have been cut by around $900K. That’s a pretty reasonable effort for a company in an active growth phase like LVT and is probably another reason behind recent share price strength. Long may it continue!