Ann: Half Yearly Report highlights, page-9

I too wondered why they used the factoring facility when they had such a large cash balance at the start of the year. Maybe it was lumpiness in cashflow, small growth businesses can have weird cash cycles - they had their reasons i'm sure, its not obvious to me what they would have been, one para of commentary would have been good, provided the answer and removed any speculation.

In any event its important to understand how a factoring facility can distort operating cashflow, it turns operating cashflows into financing cashflows

Any repayments of the debtor factoring facility made directly from a customer/debtor to the financier DO NOT go through the cashflow statement. They are treated as non cash movement.

From the financials

(2,750,012) Net cash from operations
2,391,381 Advances received under debtor factoring facility

In the subsequent note - The customer payments made directly to the debtor factoring agent total $2,158,203.

You need to net off these numbers to determine true net cash from operations - whichever you chose is for your own analysis. But either make a material difference to operation cashflow deficiency (circa $600K from $2.7m)

In addition looks like they had factored that provisioned debtor as there is also a $577,122 'repayment of debtor factoring advances' - this is an amount the company has paid the financier directly rather than a receipt from customers.

From the financials 'In the event a customer invoice remains unpaid for 90 days the group is required to repay to the debtor factoring agent all advances received from the debtor factoring agent for that invoice plus all fees associated with that invoice.'

I picked some up today.