Last year, BTC pulled out all the stops to show four quarters of positive operating cash flow and now don't have to release quarterly "4C" reports. That trend has gone into reverse and the annual report is our best chance to infer what happened.

Operating cash flow for FY23 was negative $11.7M implying CF for H2 alone of negative $9.7M. That's a massive deterioration. When you add the capitalised development costs and PPE, cash out was over $17M for H2 alone!

In earlier posts I pointed out the massive amounts of deferred revenue that appeared on the balance sheet. This means that they have been paid (collected the cash) but not provided the service yet. Good for cash flow but it can't keep increasing. I expect that this is selling two and three-year contracts with payment in advance. Now it seems that it is not always the customer paying - sometimes it is the finance company. In note 6, BTC reveal a finance charge of over $5 million for factoring. That's new. If the finance company is charging 10%, that would mean $50M of rolling funding.

I've been worried about their bad debts but that has not panned out. They wrote off a net $900k for the year. Their provision going forward looks low at about half of that but not as significant as other points above.

In short, BTC continue to burn cash and the tricks used to show a positive cash flow have run their course. If capitalised software development is included in FCF, I'd expect BTC to continue to burn over $10M per half year.