It is the construction industry that seems to be facing problems everywhere you look! Simon Bennett 'blamed the weather' for the patchy uptake of construction workers during the year.
I guess with climate change bedding in, Bennett will be within his rights to 'blame the weather' every year from now on, But the fact is, there is still an awful lot of construction activity going on. At some point the industry will have to get their cost structure right. The underlying business case for the 'AWF' sub unit remains in my view.
I see looking at note G1 in AR2017, the net cash paid for AbsoluteIT, $9.903m excludes the $3.420m estimated earn out payment. Of course that $3.420m was an estimate based on the expected earn out performance at the last balance date. But in the March 1st trading update we were toldQuote:
Maybe the next crunch point is when we know how much less than $5.9m F18 earnings turn out to be.
One thing that boost profits a bit is when they make a favourable adjustment to what they have provided to cover the earn out payment re ITAbsolute if targets aren’t met
"The performance of AWF Madison’s other business, Absolute IT, continues to meet expectations."
This is despite the performance AWF and Madison business units being softer. This sounds like code for no change to the expected earn out payment for AbsoluteIT. If AbsoluteIT has a late financial year falter, that would mean all three divisions going soft. Not a good trade off for a saving in the earn out payment I would have thought! Could it be the earn out payment that is influencing the projected lower full year financial result forecast? I would have thought that any earn out payment would be capitalized expenditure in relation to the AbsoluteIT acquisition and would show up on the books as extra goodwill or something? IOW not an operating expense that would affect the upcoming profit figure. Happy to be corrected by a real accountant on this one.
SNOOPY