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

[percy]

Take care you may get all you ever wanted.?
Buyers... Quantity..........No.........Price................ ..........Sellers......Quantity..........No....... ..Price.
..................2................1............$1 .80......................................13,488... .........2...........$1.85
...................3................1............$ 1.79....................................15,259.... .........1............$1.88
..................554.............1.............$1 .75
.................2025.............1............$1. 50

[Snoopy]

Take care you may get all you ever wanted.?

Buyers... Quantity..........No.........Price................ ..........Sellers......Quantity..........No....... ..Price.
..................2................1............$1 .80......................................13,488... .........2...........$1.85
...................3................1............$ 1.79....................................15,259.... .........1............$1.88
..................554.............1.............$1 .75
.................2025.............1............$1. 50

I don't usually bother with looking at market depth, but that is some imbalance between the buy and sell side! Thanks Percy. I saw there was a buyers bid at $1.70 on Friday morning , but that bid has obviously been removed.

Mind you, with the 'virus news' over the weekend, there may be a few companies opening up on Monday with a buy/sell imbalance like that. The real question is, how low are those sellers prepared to go? Do they really need to get out? Maybe it is Uncle Ross cashing out some of his holding to buy Christmas presents, and a 'new deck' to open them on?

If not, maybe you and I could mount a bid for control of the company? Offer a buck a share? Then when we get control, we could sack all staff, and force them to apply for new jobs through Accordant and clip the ticket on the way! Profits would skyrocket, and we could cash out big time! Become inhabitants of the 'Zillions Zone' (sounds much healthier than the Twilight Zone)! That plan sounds a bit 'ponzi like'. But I don't think it is possible for one person (or company in this case) to 'ponzi themselves'. So we would probably get away with it - all legal?

SNOOPY

[percy]

I don't usually bother with looking at market depth, but that is some imbalance between the buy and sell side! Thanks Percy. I saw there was a buyers bid at $1.70 on Friday morning , but that bid has obviously been removed.

Mind you, with the 'virus news' over the weekend, there may be a few companies opening up on Monday with a buy/sell imbalance like that. The real question is, how low are those sellers prepared to go? Do they really need to get out? Maybe it is Uncle Ross cashing out some of his holding to buy Christmas presents, and a 'new deck' to open them on?

If not, maybe you and I could mount a bid for control of the company? Offer a buck a share? Then when we get control, we could sack all staff, and force them to apply for new jobs through Accordant and clip the ticket on the way! Profits would skyrocket, and we could cash out big time! Become inhabitants of the 'Zillions Zone' (sounds much healthier than the Twilight Zone)! That plan sounds a bit 'ponzi like'. But I don't think it is possible for one person (or company in this case) to 'ponzi themselves'. So we would probably get away with it - all legal?

SNOOPY

I will leave it to you to ask Simon Hull whether he will sell us his 53.01% at $1.00.
If he does, I will ring Jeff Greenslade at Heartland and see whether he will lend us the funds,keeping in mind we will have to make a full takeover.Jeff may take issue with AGL's negative NTA of -32.64 cps.

PS.Although it is often manipulated,I take a lot of notice when buying or selling of market depth.
I also will not show my hand ie buy/sell what is there.So if there is 22,000 for sale and I want 25,000 I will buy the 22,000 and walk away.Then if another seller shows their hand I buy the other 3,000 I want.Even more fun can be had by buying 21,000 shares and leaving the seller with a 1,000 still to sell. .
This way you are not bidding against your self as no one knows what you are doing.

[Snoopy]

I will leave it to you to ask Simon Hull whether he will sell us his 53.01% at $1.00.
If he does, I will ring Jeff Greenslade at Heartland and see whether he will lend us the funds,keeping in mind we will have to make a full takeover.Jeff may take issue with AGL's negative NTA of -32.64 cps.

Your comment sent me straight to the Accordant annual report. And there I saw a picture of Ross Keenan with such a nice smile, I mean how could you question the financial future of a company where the Chairman photographs so well? (Granted the other four directors do look a bit dodgy in their respective mug shots). I am pretty sure that Jeff Greenslade, would be won over, and as for this NTA stuff, is that a worry? 'N'ot a'T' 'A'll, which is after all what NTA stands for.

PS.Although it is often manipulated,I take a lot of notice when buying or selling of market depth.
I also will not show my hand ie buy/sell what is there.So if there is 22,000 for sale and I want 25,000 I will buy the 22,000 and walk away.Then if another seller shows their hand I buy the other 3,000 I want. Same applies when selling.
This way you are not bidding against your self, as no one knows what you are doing.

The waltzingman would fall off his mountain bike reading that. Or at least he would, if his bike wasn't still in the workshop waiting for parts. I mean, all that fancy share trading software he has, and now you are publicly admitting your part in faking the trading input data Percy?

I have to admit, with Accordant, because it is so lightly traded, I do usually ask for the number of shares on offer before I place my buy order, so that I am 'in synch' with the market with the quantum offered in the market just above my buy price. Hey, did I just admit to being part of the manipulation game as well? I hope if the waltzingman reads this, he doesn't roll out of his kayak!

SNOOPY

[percy]

Your comment sent me straight to the Accordant annual report. And there I saw a picture of Ross Keenan with such a nice smile, I mean how could you question the financial future of a company where the Chairman photographs so well? (Granted the other four directors do look a bit dodgy in their respective mug shots). I am pretty sure that Jeff Greenslade, would be won over, and as for this NTA stuff, is that a worry? 'N'ot a'T' 'A'll, which is after all what NTA stands for.



The waltzingman would fall off his mountain bike reading that. Or at least he would, if his bike wasn't still in the workshop waiting for parts. I mean, all that fancy share trading software he has, and now you are publicly admitting your part in faking the trading input data Percy?

I have to admit, with Accordant, because it is so lightly traded, I do usually ask for the number of shares on offer before I place my buy order, so that I am 'in synch' with the market with the quantum offered in the market just above my buy price. Hey, did I just admit to being part of the manipulation game as well? I hope if the waltzingman reads this, he doesn't roll out of his kayak!

SNOOPY

Well I have learnt something today.
I never knew Waltz had a system.I thought he was a "Sammy the Seal" follower.

[Snoopy]

	eps	dps (imputed)
FY2018	15.8	8.2 + 8.0
FY2019	6.2	8.2 + 8.0
FY2020	9.4	8.2 + 8.0
FY2021	18.1	0.0 + 0.0
FY2022	?	8.2 + 6.5
Total	?	63.3
5 year Average		12.7

Implied Acceptable Share Price = (Gross Dividend) / (Acceptable Yield)

=> (12.7c / 0.72) / 0.08 = $2.20

I see the share price was bid up as high as $1.99 for the half year results announcement, but then closed on its low at $1.92 with a big gap down to the next buyer at $1.75. Nice December divie for Christmas, although it was at a lower level compared to pre-Covid years, dropping from 8c to 6.5c. Maybe the market expected more? I didn't, but am happy to keep holding.

	eps	dps (imputed)
FY2018	15.8	8.2 + 8.0
FY2019	6.2	8.2 + 8.0
FY2020	9.4	8.2 + 8.0
FY2021	18.1	0.0 + 0.0
FY2022	10.4	8.2 + 6.5
FY2023	?	5.6 + ?
Total	59.9	60.7
5 year Average		12.1

Note

1/ By coincidence the two latest dividend payouts add up to exactly the five year average dividend payout!

Implied Acceptable Share Price = (Gross Dividend) / (Acceptable Yield)

=> (12.1c / 0.72) / 0.08 = $2.10

I see the share price was bid up as high as $2.03 at the end of last week, as we come up to the 17th June ex-dividend date for the 5.6c dividend payment due on June 30th. That $2.03 seems a reasonable bid which is still under that 8% gross yield business cycle price. But as time marches on, those higher historical dividends roll off the historical calculation feed, to be replaced by today's lower dividends.

Despite the half year mismatch in my earnings and dividend totals above, it is clear that AGL has in effect paid out 100% of their underlying earnings as dividends over time. So if dividends are to be restored to previous levels, then so must earnings.

New CEO Jason Cherrington is making all the right noises that opportunities are there and profits can rise from the Covid malaise. But making noises and actually doing it are different things. In the meantime I am happy to hold my AGL shares.

SNOOPY

[nztx]

Any word on Covid Leave Support Subsidies they received in the last period - Snoops ?

A fairly material number of bods must be cooped up on compulsary isolate with the large Covid
numbers still flying through .. AGL wont be any exception to seeing their people contracted & otherwise
isolating too as a result ..

[Snoopy]

Any word on Covid Leave Support Subsidies they received in the last period - Snoops ?

A fairly material number of bods must be cooped up on compulsory isolate with the large Covid
numbers still flying through .. AGL wont be any exception to seeing their people contracted & otherwise
isolating too as a result ..

I think a large portion of AGL's workload is eminently suited to 'work from home'. Monitoring social media and connecting via Linkedin are part of the business model. Having said that, I don't think there is any wage subsidy available just because a few of your workers have Covid-19 (edit: could be wrong about that, see extended quote below). It has to be a government mandated lock-down for that kind of support to kick in. Yet with the financial year ending on 31st March, that did cover the nationwide lock-down of mid 2021. Here is what AR2022 said about it (from p32)

"During the financial year, group eligible entities received Government Grants totalling $2.283m (2021 $33,323m). (extend quote) A combination of the two week Covid-19 wage subsidy for businesses affected by the move to Alert Level 4 on 17th August 2022 together with the Covid-19 leave support scheme and Covid-19 short term absence payment schemes"

"The government grants have been offset against employee benefits expense in the statement of comprehensive income."

'Employee benefits expense' includes salaries. So AGL have netted off that employment subsidy payment against wage costs, which makes the situation more opaque than ideal in my view. If you regard the wage subsidy as literally that, then the declared profit for the year halves. However, although on line is OK for parts of the Accordant group, 'face meet and greet' is still an essential part of the business model. So I think you can say that business was genuinely restricted under the lock-down. The subsidy did save jobs, and has allowed a post Covid-19 lock-down Accordant to bounce back.

Looking back at the half year report (period ending 30th September 2021) I see government subsidies totalled $1.729m. So post lock-down grants must have totalled:

$2.283m - $1.729m = $0.554m

SNOOPY

[Snoopy]

All in all a useful series of comments to incorporate into the mix.

The results for Jackson Stone, Absolute IT and Madison are 'lumped together' in a white collar bucket, when reporting the dollars. To get a wider picture of where these business units are going, we have to look up the comments in the annual and half year report texts.

HYR2022 p4 "All of our white collar businesses were not only seeing good client demand, but they were also able to capitalise on it. They were able to adapt to this demand with an emphasis on permanent recruitment and retained exclusive work."

Jackson Stone

HYR2022 p5 "JacksonStone & Partners have posted a record contribution at EBITDA level"
AR2022 p5 "A welcome over-performance by the business resulted in a higher final earn out payment."

From AR2022, p86, the payment for Jackson Stone was adjusted over time as follows

	Deal Struck @01-06-2019	Deal @ 31-03-2021	Deal @ 31-03-2022
Initial Payment	$1.500m	$1.500m	$1.500m
Final Payment	$1.958m	$0.549m	$1.393m
Total Payment	$3.458m	$2.049m	$2.893m

Improved income since EOFY2021 resulted in a higher than expected second tranche payment. Nevertheless that was less than the original forecast second tranche earnings payout. So we can assume that the actual income earned over FY2022 was still lower than the original estimate from 01-06-2019.

Absolute IT

HYR2022 p5 "Absolute IT challenges included skills shortages driven by offshore talent being unable to enter the country."
AR2022 p8 "Absolute IT did not achieve the goals we set for the business." "Attracting and retaining key talent within the business has also been front of mind as a key enabler."

Madison

AR2022 p8 "Madison had a strong year off the back of increased demand and a number of large projects, either related to or as a result of New Zealand's Covid-19 response. They grew the number of consultants in the business by 25%"

SNOOPY

[Snoopy]

The combined revenue for Madison and AbsoluteIT over FY2020 (Y.E. 31-03-2020) was $138.6m. If both divisions took an equal 'hit' in terms of the percentage drop in business from FY2019 (Madison & Absolute IT revenue of $151.9m (total) , with an estimate of $69.0m (Madison) and $83.9m (AbsoluteIT) ), that would imply Madison turnover of $62.0m and AbsoluteIT turnover of $76.6m over FY2020. On a full year basis, the just acquired JacksonStone turned over $33.3m through the FY2020 period. These three turnover figures I regard as the 'base figures' from which to project earnings for FY2022. I regard FY2021 as a 'Covid affected outlier'.

Looking out to FY2022, JacksonStone is reported to be on target for the sellers of the business to meet their earn out hurdles (my post 912). I am taking that to be a forecast of a full recovery to a $33.3m turnover. Comments on AbsoluteIT being '10% down' over FY2021 ties in with a fall in turnover from $83.9m to $76.6m. I am forecasting a half way return to the baseline for FY2022, which corresponds to a turnover of $80.3m. A less profitable (due to a reduction in the proportion of permanent placements) slower recovering Madison I am modelling by holding turnover firm from FY2021.

My total forecast NPAT for FY2022, attributable to the white collar division only, is therefore:

Forecast Table

Business Unit	Madison	AbsoluteIT	JacksonStone	Total
Forecast FY2022 Turnover	$62.0m	$80.3m	$33.3m	$175.6m
Modelled Net Profit Margin	0.034	0.034	0.072
Business Unit Net Profit	$2.1m	$2.7m	$2.4m	$7.2m

This equates to a total forecast net profit after tax for the Accordant white collar business group collective of $7.2m.

Care must be taken when interpreting business unit profits as reported by Accordant. The declared numbers in the segment performance in AR2022 (page 33) do not include central administration costs, finance costs and income tax. We need to allocate these costs to get a true reflection of the performance of the business units.

When apportioning the annual interest bill between the AWF division and the 'White Collar' division, I like to apportion interest expenses in line with the respective liabilities of each division. This information can be found in AR2022 on p34. I have used the average liabilities over the year for my calculations. Interest being apportioned over the year amounts to $1.095m

Division	AWF	Combined White Collar	Total
Average Liabilities	$8.712m	$22.744m	$31.456m
Percentage of Average Liabilities	27.7%	72.3%	100.0%
Apportioned Interest Charge	$0.303m	$0.792m	$1.095m

When apportioning central administration costs, I prefer to do that by revenue. Divisional revenue may be found in AR2022 p33.

Division	AWF	Combined White Collar	Total
Revenue	$79.600m	$141.894m	$221.494m
Percentage of Revenue	35,9%	64.1%	100.0%
Apportioned Administration Charge	$1.039m	$1.854m	$2.893m

This means the underlying divisional net profit for Accordant Group for FY2022 can be broken down as follows

Division ->	AWF	Combined White Collar	Total
Divisional Profit	$0.904m	$7.780m	$8.693m
less Apportioned Administration Charge	$1.039m	$1.854m	$2.893m
less Apportioned Interest Charge	$0.303m	$0.792m	$1.095m
equals NPBT	($0.429m)	$5.134m	$4.705m
less Income Tax @28%	$0.0m	$1.438m	$1.438m
equals Calculated NPAT	($0.439m)	$3.696m	$3.257m
Declared Income Tax @36% Paid			$1.706m
Declared NPAT			$2.999m

In the table above, the difference between the declared NPAT, and the calculated NPAT can largely be explained by the actual tax paid being higher than the statutory 28% rate. There could be several reasons for this disparity. Actual tax paid may include a wash up amount relating to tax underpaid in the previous year. It is possible that some expenses incurred during the year were not tax deductible. Administration costs may not have been apportioned according to revenue as I had assumed. Nevertheless for 'prediction' purposes, the the $3.257m total overall profit figure stands as my yardstick.

Looking at my white collar business unit prediction only, my earlier $7.2m prediction is nearly twice the $3.696m actually achieved. How far out was I on the prediction of the AWF business unit profit (see post 994)?

SNOOPY