Ann: FY2023 AGM Presentation, page-6

No doubt all looking very pleasing. Keep in mind @madamswer, that at last June there was $25m in "unearned" revenues. That said, working capital is high (ex advance ["unearned"] payments). Whilst it is true that current high revenues can be expected to correspond with a higher WC position, and that when the cycle reverts (& yes, I'm still anticipating it to, at some point) this can be expected to free saubstantial cash. So yes, looking "through the cycle" (or trying to), we can justify a very large "surplus" cash position in current valuations (I suspect something like $50m is very un-aggressive).

To moderate all of this, whilst it is true that we don't know how big the next cycle is going to be, we have to remember that in this game, pronounced up-legs are folloowed by pronounced down-legs. If you do the math, you will find that whilst up-legs do forward load earnings, the positive impact on valuation whilst it can be substantial, is very substantially moderated by the subsequent down-leg.

On the flip side again, it is quite possible (probable?) that LYL is growing its business. Something that is masked by the cyclical nature of this game. On this note, I like the fact that revenues outside of Africa (location of projects) seem to be at all time highs. On this basis, if we are brave, we may want to treat LYL as a "compounder" (I stress, if we are brave). If so, we can treat all cash as being part of LYL's operating capital (assume no surplus cash in our valution). After all, the business generates a very attractive ROE, despite all that cash and its very "lazy" balance sheet (including a high ratio of operating assets to liabilities, ex cash).

I will keep attempting to form a view of value on the basis of "mid cycle" (adjusted for nominal GDP) earnings power, with a factor for the front-loading of earnings due to the upcoming cycle. If the price gets very aggressive relative to cash-adjusted yields (based on this earnings power), I will then have a keen eye on the value of this earnings power through the lens of a "moat compounder". If the price looks aggressive relative to the latter, I will assume that the dizzy heights of the next cycle has got us all giddy, & that perhaps we've forgotten the cycle.