AGL - Accordant Group. was previously AWF Madison, Allied...

[Snoopy]

Barring the transition between HY2021 and 2HY2021, a period where no migrant workers were allowed into the country, the largest period to period fall off in 'employment and sales costs' was between HY2023 and 2HY2023. Over those times, these costs fell from $117.843m to $104.350m, a half year drop of $13.493m. Could similar cost savings be made between HY2024 and 2HY2024? If Accordant management are predicting a rebound, would AGL even want to do that?

To answer my above question, I don't believe such slashing of costs could occur again for the second time in six months. But I will take a guess and say that costs can be slashed by half that amount. In our favour is that, thankfully, the Queen did not die again. And hopefully payments into the ACC agreement mess will be lower. Plus of course - despite being disgruntled about the performance of AbsoluteIT - our executive team at Accordant remains ever optimistic about a rebound. And they won't be able to rebound if they cut their workforce much further. So I am predicting incremental operational cost savings of half that achieved in the prior period ($13.493m/2). On the interest payment front I am predicting 'no relief'. So let's plug those changes into our spreadsheet model and see what happens. I have added up the two 2024 half years to produce a full year 2024 forecast.

For comparative purposes, I have included the comparative full year figures from FY2023.

Operating Cashflow Analysis	FY2024 (1)	2HY2024 (1)	HY2024	FY2023
Cashflow from Customers {A}	$208.395m	$94.803m (2)	$113.592m	$230.322m
Payments to Suppliers and Employees {B}	$210.036m	$101.895m	$108.141m	$222.193m
'Principal & Interest' Lease Liability Payments (Rent) {C}	$3.012m	$1.506m	$1.506m	$3.403m
Sum of Operational Payments {B}+{C} or {D}	$213.048m	$103.401m	$109.647m	$225.596m
Operational Payments as a %ge of Customer Cashflow	102.2%	109.1%	96.5%	97.9%
Operational Cash EBITDA (IFRS16 adj.) {A}-{D} or {E}	($4.743m)	($8.598m)	$3.855m	$8.129m
Bank Interest Paid {F}	$2.480m	$1.240m	$1.240m	$1.683m
Tax Paid (Refunded) {G}	($1.073m)	($2.407m)	$1.334m	$2.433m
Operational Cash EBDA {E}-{F}-{G} or {H}	($4.910m)	($6.191m)	$1.281m	$4.033m
Dividends Paid	$2.156m	$1.085m	$1.071m	$4.309m
Dividend payment per share	6.0cps	3.0cps	3.0cps	12.1cps
Depreciation & Amortisation {I}	$4.782m			$4.628m
Operational Net Profit After Tax {H}-{I}	($9.692m)			($0.595m)
c.f. Declared Net Profit After Tax	$?m	$?m	$1.164m	$1.977m

Notes

1/ These columns represent estimates.
2/ 2HY2024 revenue estimate calculated as follows:
(0.91x$227.371m) - $112.105m = $94.803m. I am using the assumption that 'cashflow revenue' will equal 'booked revenue' for this period.

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The last row shows the actual net profit declared over the reported periods. This shows that deriving profits from operational cashflows, and deriving profits according to accounting rules, which also include non-operational transactions, are not the same thing. So perhaps of more interest than the absolute value of derived cashflow profits is the forecast change from FY2023 to FY2024: ($9.692m) - ($0.595m) = ($9.907m). Transfer that across to the declared profits and you are looking at a NPAT loss of:

FY2023 Normalised net profit = $1.977m + 0.72($1.406m+$0.379m+$0.109m) - $0.044m = $3,297m
Where$1.406m represents a one off ACC scheme adjustment, $0.379m represents an earn out payment for the Hobson Leavy Acquisition, $0.109m a one off impairment, and $0.044m money from a Property Plant and Equipment sale.

$3.297m + ($9.907m) = ($6.610m). Ouch!

And on top of this we have the $13.223m of Madison goodwill and $7.836m in AbsoluteIT goodwill that will/may need trimming. Double ouch! No wonder the Accordant share price has taken a hammering in recent times. But the bankers are still happy - apparently.

SNOOPY