Ann: Notice of FY20 Full Year Results and Key Dates, page-90

Paul may have friends who backed him and hasn't sold any shares would likely be near or past retirement age. So it's possible that he's looking after some of the other major shareholders who are in the top 20. You could do what I did and try and investigate who some of those people are. With everyone leaving digital footprints, it's not overly difficult.

In capital allocation theory, profits are best to be reinvested (rather than paid out as dividends) for companies that are able to generate a significant return on the incremental capital deployed. Typically, a manufacturing business that is investing heavily for growth would see significant capex. In Zoono's case, it basically required ~$0 in capital expenditure to go from ~$1m in a half to $30m+ in a half. This is not any normal business, in fact, the business model denied conventional finance theory in how it achieved its growth.

If you were to ask me what the return on incremental capital is for Zoono was over the 2H of FY20, the answer is basically 'infinite', in the sense that it grows at the same time as capital is generated, rather than reinvested, as is normally the case for almost another other business. Of course, the high gross margins helps a lot in this regard, at 70% GPM, every dollar of cash received from sales could purchase 3 times as much inventory to sell again. If you read the last 2 quarterly results, there's been significant inventory investment already and still the cash balance swells.

So after significant investment in inventory and also buying back the US distributor, Zoono has concurrently managed to increase the amount of cash it holds.

By the way, by my estimates, ROE is currently at ~60% and could be as high as 100% in FY21. This firmly puts Zoono in the top 1% of businesses globally in its ability to generate returns on each dollar of shareholder's money - that is how extraordinary this business is. For peer benchmarking purposes, A2M is 'only' generating 40% returns on its equity and had to raise equity shortly after IPO to fund growth.

One could argue that you could bump up the opex, in the form of marketing, but right now, customers are doing the marketing for Zoono, as well as distributors and channel partners. There are risks with spending heavily on marketing too. There is no guarantee that you would derive an adequate return on marketing - just ask Uber.

If Zoono paid out it's entire cash balance in dividends, I would be willing to bet that by this time next year there's another $10m+ of surplus cash sitting in the bank account ready to be repatriated to shareholders. And sales growth will continue unhindered.

The other option to be considered for the surplus cash is actually a buyback, but with the majority of the register probably with an average age of 50+, a dividend is acceptable. Shareholders could choose for themselves whether they would like to purchase more shares with the dividend or go and improve their quality of life.