Actually, BCC is still burning cash - to the tune of about ~$0.3m per quarter or $1.3m pa. In the 9 months YTD for FY21, BCC had positive operating cashflow of $0.3m, but $(1.1m) in investing cashflows (primarily product development costs that have been capitalised) so their net cash position has actually decreased by $0.8m YTD if you ignore external funding (debt/equity).
[Source: March 2021 Appendix 4C p 2]
BCC capitalised $2m and $2.6m in FY19 and FY20 respectively for product R&D - see below. In FY21, we are on track for ~$2.4m if we assume similar investment of ~$0.6m in Q4. If operating cashflows are static, that means another $0.1m of operating cashflow net of the ($0.6m) in capitalised product development = ($0.5m) for the quarter).
Capitalising IT development is fair game under the Accounting Standards, and as far as I can tell BCC's capitalisation treatment is ok. The part I take issue with is BCC's disclosure. They keep banging on about being operating cashflow positive which is misleading as this is a business that needs continual R&D spend to maintain a competitive advantage. So it's disingenuous for the board/management to keep trumpeting that they are cashflow positive when in actual fact the capitalised R&D hits the bottom line after you account for amortisation.
[Source: 2020 Annual Report, Cashflow Statement, p 31]
BCC needs a new Chairman, a new broker and potentially a new MD. I'm not sold on MC. He seems ok on an operational front but neither him nor the board of directors seem to understand how listed markets work. I'm here for the Zoleo subscription revenues....if those dont flow through as I expect than my thesis is cooked and im taking a hair cut on my investment.
Note: figures are rounded. Usual caveats apply - not investment advice, DYOR etc.
(20min delay)