Ann: Appendix 4E and Annual Report, page-3

On the face of it the profit number is incredible (even when adjusted for derivative sales).

It's all coming from Gross margin expansion.

Pre-covid they operated at gross margins in mid/upper teens.

Now in FY23 the GM is double that at 32% (plus derivative sales).

How is there Gross margin expansion for a homogeneous product?

I think the answer is in the accounting.

It appears they unwound most of the derivative hedges to GP (correct accounting/disclosure?).

Looking at it differently, you can see that OCI for the year (profit + FV hedging) swings to a big net loss of -$18m.

So even though cash has increased by the amount of profit, BV has dropped by $20m (almost OCI for the year).

Interesting no disclosure around this yet mgt make statement that "expects to maintain its profitability and cash flow in FY24" without explaining how given derivatives now unwound and sugar-hit gone.

Still interesting - there's a decent company there once you unpack it & remove mgt story-telling.

(Disc: used to hold from 2019 to mid-2021)