That's because the company is an awesome cash machine, generating an operating cash inflow from operating activities of £16m in the 12 months to the end of January 2017, a sum in excess of the £13.6m of cash profits reported in the same period and miles ahead of the reported pre-tax profits of £7.1m, even after recording a 20 per cent increase this time around. The £5.9m cash cost of the 5.89p-a-share declared dividend, up 6 per cent year on year, is easily covered by operating cash flow even if EPS of 5.51p, up from 4.71p a year earlier, falls a tad short.
In fact, even after investing £8.8m in the estate, mainly spent on sprucing up 11 stores and opening a further seven to take the total to 124 shops, and splashing out on dividends, the company still managed to increase its closing net funds by £2.2m to £19.5m, a sum worth around 20 per cent of the current market capitalisation. The cash flow statement explains why this is possible, as a non-cash depreciation charge of £5.9m and net amortisation charge of £600,000 depress the pre-tax profit line, so when you add these back you arrive at the cash profit figure of £13.6m. Tight working capital management also aided the cash flow performance to drive up what is already an impressive cash conversion rate.