H! Report due 23 Feb, page-27

When BYL decided not to pay a dividend for H2FY15, it was because there was $9M cash flow short-fall pursuant to two separate matters – a claim against its insurers, and a claim for Main Roads WA to accept a contract variation to accommodate more rock than was implied in a tendered price. The dividend matter was to be revisited in the light of what would transpire in H!FY16 – to quote from the Annual Report, “. . . the Board will consider future dividends after assessing the Group’s first half FY2016 results.”, which would include the outcome of the two matters mentioned.

The insurance claim of $2.5m was settled in H1FY16, and the funds were used to reduce debt, which had breached BYL's bank covenants. A further $4.6m was squeezed from cash flow to pay down $7.1m debt, and a similar $7.1 is planned for H2. With the contract-variation matter unsettled, BYL had no option, other than to suspend the dividend for the H1FY16 period.

BYL has near-zero need for more CAPEX, and it should be cash-flow strong for a while, so a favourable settlement with Main Roads WA could easily have allowed it to resume paying dividends. In recent years BYL has typically paid a 1.25c interim dividend in March, and a 1.75 final dividend in September. With 126.5 million shares, this is $1,581,250 and $2,213,750 respectively. The suspension of the dividend for two halves could be viewed as incident-related, not as a harbinger to the effect that BYL as a company is on the skids.

As an aside, I regard the resignation of the Alan Brierty as a plus. I doubt he has done much for BYL since it floated, so there would seem no need to replace him, and the $80K remuneration can be saved as part of a general expense-reduction drive.