Ann: Half Year Ended 31 December 2016 - Investor Presentation, page-2

Another Australian-domiciled company with predominantly offshore revenues and earnings, which has done well to weather the strengthening A$, given 7% EBIT growth and 9% NPAT growth.

Although, to be balanced, it warrants noting that Advertising Expenses (which are 4% of Total Operating Costs and 21% of Cost of Doing Business Expenses) fell by 14%, so this flatter the operating performance somewhat.

Now, sure; most of these Advertising expenses would have occurred in no-A$ terms, so the stronger A$ would explain some of the reduction. For context, if Advertising Expense remained unchanged in currency-adjusted terms, then EBIT growth would have been closer to 4%.

So, no fireworks but not too shabby, either, under the circumstances.

The highlight of the result, in my mind, was the working capital management, thanks to the early fruits of the S&OP process undertaken in the half. Working Cap-to-Sales fell to 21.1%, from 23.1% in pcp and 24.9% at the end of June 2016. [We'll see if it can be sustained and is not merely a one-off score.] At any rate, this had the effect of releasing some $10m in working capital ($23m, alone, from Inventory lock-up) in the half.

As a result, Operating Cash Flow was $24m, and all-time record (by far) for a Dec half.
(Due to northern hemisphere seasonality, BRG typically generates all of its Cash Flow in the June half. In most years Operating Cash Flow in the December half is, in fact, negative.)

The net cash balance grew to $33m, from $3m.

Given that the current half is BRG's cash flow half, even if the working cap gains are only partly kept and assuming Working Cap-to-Sales eases back to 22%, that would leave Net Cash at the end of this financial year at somewhere close to $60m.

Which would be an all-time record for BRG, by far.

In that light, I thought that the 7% lift in the dividend was a bit parsimonious.