Ann: AFL FY21 Investor Presentation, page-4

Personally I am not too worried about the statutory profit. They acquired multiple businesses and have been investing growth CAPEX, all of which is expensed this financial year. Worthwhile to dig a bit more though. Here is my first headline grabbers:

•Revenuegrew from $6.9m to $11.3m, but because acquisitions occurred mainly in 2H21 theproforma grew to $16.4m. No mention oforganic growth (lateral hires) improving revenue though?
•UnderlyingEBITDA grew from $1.7m to $2.7m, but because acquisitions occurred mainly in2H21 the proforma grew to $4.7m.
•Need to consider EBITDA per share because of dilution for acquisitions. This grew from 2.8c EBITDA/per share in FY20 to3.7c in FY21, but proforma is 6.5c. This I reckon is quite good still.
•Otherexpensesincreasedsubstantiallyand reckon this is consistent with scaling up operations – not one off costs.
•Adminexpenses increased substantially and think some of this may be due to one off –marketing costs +$450k (from $370 to $816) and computer/software expenses+$350k (194 to 550k). Hard to know how much of this is ongoing vs growth CAPEX, but allcosts are counted in this FY and are expecting to move from roll-out tobuild-out (Scaling)
•Cashflowfrom operations was down ($1.64mto $1.15) and this is a bit of a red flag – again hard to know what is in the‘payments to suppliers and employees’ that may be fronting FY22revenue/investments. Withthe $5.5m cap raise, they are cashed up now with $4.6m for more acquisitionswhich is good.

My estimate is that the market is currently pricing in around 10% growth in FCF yoy. From the pro forma results on a diluted basis, they seem to be doing substantially better than that. Any pull back in CAPEX will flow to bottom lines - if they halved their marketing / software costs they would have been very profitable this year, but that's not the long game. Overall, generally happy, will accumulate if price is right.