Ann: FY24 Results Announcement, page-3

"...amongst all the obvious positives in this report, there are two things that stood out to me
1. A $600K drop in operating cashflow from FY 23 despite revenue rising.
2. In those circumstances the board are considering a dividend in 25.

Can the company afford a dividend? Wouldn't the money best be reinvested internally at the current stage this company is at, considering the lofty horizons the company envisages on page 4 of the report?"

@prcoa1 ,

Without wanting to disparage you, people who have never actually run an operating business (which is probably 99% of us), are unaware of what it takes to fund a business, especially one that is growing strongly, like this:



That picture represents a compound annual growth rate of around 17%pa over that period. Now we can all very easily sit in front of our computers and build spreadsheet models that spit out 17%pa Revenue growth, but very few people appreciate how difficult that is to achieve in the real world.

Not just in terms of the men, machinery and marketing, but also in the other "m" word, namely "money". It takes a lot of money to create that sort of string growth outcome - not just money to pay for wages and materials and to cover overheads, but extra money for Working Capital required over and above mere operating expenses.

In ABV's case, the Working Capital investment over that five-year period has been almost $3.5m, which is a lot of capital for a small little business that wasn't making much money during that period.

Specifically, in the past 12 months alone, the additional working capital investment was a substantial $1.4m (most of it in the form of higher Receivables). Of course, it warrants noting that there was a $670k R&D incentive receipt in FY2024 which means that around $750k of the Working Capital increase was funded organically by ABV, which is still a meaningful amount.

So when you look at the Operating Cash Flows and see that it is weaker than you feel it should be, remember that there are significant calls on capital occurring in order to support the growth seen in the above graph.

I mean, that it has been achieved without any recourse to shareholders for capital is quite noteworthy; in fact, the company went from Net Debt of around $0.5m at the start of that period, to Net Cash of $2.2m today. Worthy of remark.

All of the above will go some way to explaining the prospect of a maiden dividend being declared before lonf.

.