Ready to pop, page-255

"In what timeframe? I don't think they would restate the dividend until the debt reduces to $20m level (if performed well, possibly in two years).
We need to be realistic."

Indeed.

And on the matter of being realistic, one thing that warrants caution, I think, is what the 31 December 2018 balance sheet will look like when it is published next week, specifically in relation to the Net Debt figure which I suspect will be little improved on 30 June 2018.

The reason for this is that Free Cash Flow over the past 6 months is likely to have been muted with OCF unlikely to be again boosted by the working capital reduction that occurred in previous periods. (For context, recent closing Working Capital-to-Sales: JH16 = 14.3%, DH16 = 13.3%, JH17 = 9.1%, DH17 = 4.9%, JH18 = 4.7% for a total $16.7m working capital liberation over that period).

So it looks to me like the working capital lemon has been squeezed hard and it would not come as a surprise to see an increased investment now being made in working capital of a couple of million dollars. (Of course, this might not necessarily be a bad thing if it is accompanied by a turnaround in Sales).

But besides this potential headwind to Operating Cash Flow, it is likely that there will have been cash expenditure related to restructurings and redundancies, and possibly onerous lease payments, of maybe $1m or $2m.

And then there was a $3m deferred consideration payment that would have been made in the half.

Which means that, out of the maybe $10m or $11m of EBITDA ISD will generated in the half, after interest and tax payments of around $1.0m each, and providing for the above-mentioned cash outgoings, Free Cash Flow could quite easily come in negative for the half-year.

So, there might be some sticker shock impact of this on the share price on the day of the result, due to selling from some elements of the market who aren't fully on top of the developments within the company.

But in the context of all that, declaration of a dividend is almost certainly out of the question (and I think that if a dividend was declared, it would anyway only be a mere modest token gesture on the part of the board, because any sizeable dividend would be seen by the market to be somewhat reckless and elevating the financial risks in the company.)

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