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

[minimoke]

..........

[winner69]

I wouldn't worry about it. It seems all dependent on SP hitting $2 sometime in the next year and I cant see that happening a long shot. Labour hire companies are popping up left right and center at the moment.

Theres a good chance the Triangular employment relations bill will get passed soon (its past its second reading) and the impact of the increase in the Minimum Adult Wage has yet to be reported. Headwinds ahead.

Snoopy buying heaps might get share price up to 2 bucks

[percy]

Snoopy buying heaps might get share price up to 2 bucks

Mission improbable.?..lol.

[winner69]

I think the announcement said they made a miserly $2m this year but because things are so honky dory the divie won’t be cut and next year is going to be a real boomer

http://nzx-prod-s7fsd7f98s.s3-websit...227/300787.pdf

[minimoke]

..........

[winner69]

Jeez. A year ago you could have bought a share for $1.85. And for the risk they return a net profit of $0.06 and a share reduced to $1.70. Why would you bother.

Because on a normalised result F19 was pretty good growth ......and this time next year the share price will be $2.30 odd and you would have collected a divie or two.

[minimoke]

..........

[Snoopy]

I'll have to look closer for the good words this year

Have you got that telescope trained on AWF HQ Minimoke? That's the only way you will get to see this years weasel words in the result, as no Annual Report has been released and it is already July. Granted we are only one week later in the AR publication date schedule than in previous years. But in the last five years shareholders have been able to peruse the Annual Report before the DRP share price is set. Not so this year, as AWF have announced that DRP price is $1.82. There has been no chance for the market to react to the full year accounts, so it is hard to know if that $1.82 price is fair. Superficially as a DRP participant I am happy, but only as happy as a mushroom shareholder can be. I expect more timely disclosure from management than we have received this 2019.

SNOOPY

[Snoopy]

Financial Year	2015	2016	2017	2018	2019 (estimate)
EBITDA (Snoopy produced *) {B}	$12.729m	$11.945m	$12.751m	$11.751m	$10.304m
Finance Cost {C}	$2.109m	$1.333m	$1.193m	$1.297m	$1.274m
Interest Coverage {B}/{C} (target >3)	6.0	9.0	10.7	9.0	8.1
Net Bank Debt {D}	$18.608m	$21.870m	$32.383m	$29.731m	$27.331m
Leverage ratio {D}/{B} (target <3)	1.5	1.8	2.5	2.5	2.7

(* I calculated EBITDA from the income statement using the formula: EBITDA = NPBT + I + DA)

The table below has been used to calculate the covenant figures for the composite twelve months made up from the second half year of FY2018 and the first half year of FY2019.

Financial Year	HY2018	2018	2HY2018 {A}	HY2019 {B}	2HY2018+HY2019 {A}+{B}
EBITDA (Snoopy produced *) {B}	$7.093m	$11.751m	$4.652m	$5.152m	$9.810m
Finance Cost {C}	$0.741m	$1.297m	$0.556m	$0.637m	$1.193m
Interest Coverage {B}/{C} (target >3)	NM	9.0	NM	NM	8.2
Net Bank Debt {D}	$23.183m	$29.731m	$29.731m	$27.331m	$27.331m
Leverage ratio {D}/{B} (target <3)	NM	2.5	NM	NM	2.8

That EBITDA banking debt covenant is still a worry. We are getting close to that bank ceiling of 3 and still well away from the management target of 2. Nevertheless it looks like things have turned the corner!

The actual figures are out for FY2019 and I have been proved wrong in my estimates.

Financial Year	2015	2016	2017	2018	2019
EBITDA (Snoopy produced *) {B}	$12.729m	$11.945m	$12.751m	$11.751m	$7.679m
Finance Cost {C}	$2.109m	$1.333m	$1.193m	$1.297m	$1.380m
Interest Coverage {B}/{C} (target >3)	6.0	9.0	10.7	9.0	5.6
Net Bank Debt {D}	$18.608m	$21.870m	$32.383m	$29.731m	$26.643m
Leverage ratio {D}/{B} (target <3)	1.5	1.8	2.5	2.5	3.5

(* I calculated EBITDA from the income statement using the formula: EBITDA = NPBT + I + DA)

The table below has been used to calculate the covenant figures for the composite twelve months made up from the second half year of FY2018 and the first half year of FY2019.

Financial Year	HY2018	2018	2HY2018 {A}	HY2019 {B}	2HY2018+HY2019 {A}+{B}
EBITDA (Snoopy produced *) {B}	$7.093m	$11.751m	$4.652m	$5.152m	$9.810m
Finance Cost {C}	$0.741m	$1.297m	$0.556m	$0.637m	$1.193m
Interest Coverage {B}/{C} (target >3)	NM	9.0	NM	NM	8.2
Net Bank Debt {D}	$23.183m	$29.731m	$29.731m	$27.331m	$27.331m
Leverage ratio {D}/{B} (target <3)	NM	2.5	NM	NM	2.8

That EBITDA banking debt covenant has been broken for FY2019! No comment I can see in the annual report about this, other than:

"The banking facilities require the group to operate within defined financial undertakings. The group has complied with all covenant requirements during the year."

The above statement appears to be untrue! Perhaps paying down $3m of the once $36m debt is enough to keep the ASB satisfied?

SNOOPY

[Snoopy]

Net Bank debt in the FY2018 results announcement is as follows:

	FY2018
Cash & Cash Equivalents: {A}	$6.269m
Non Current Borrowings:	$36.000m
less Current Borrowings:	$0.000m
less Overdraft:	$0.000m
equals Total Borrowings: {B}	$36.000m
Total Net Borrowings: {B} - {A}	$29.731m
Net profit after tax {C}	$5.153m
MDRT {B} - {A} / (C}	5.8 years

The net debt has gone down, but the ability to repay debt has gone down as well :-(. I do prefer this figure to be less than five years. But with the DRP, AWF have taken measures to reduce debt going forwards. The debt situation should continue top be monitored. But there is nothing here to make me tuurn off my investment tap based on this information.

Shocked at the apparent breaking of AWF's banking covenants, I have decided to look at AWF's debt issues from another angle. 'MDRT' is the answer to the question:

"If all profits for the year were put towards paying off the company's debts, how long would that take?"

My rule of thumb for the answer in years is:

years < 2: Company has low debt
2< years <5: Company has medium debt
5< years <10: Company has high debt
years >10: Company debt is cause for concern

	FY2015	FY2016	FY2017	FY2018	FY2019
Cash & Cash Equivalents: {A}	$3.151m	$0.0m	$1.225m	$6.269m	$6.357m
Non Current Borrowings:	$0.0m	$18.500m	$18.500m	$36.000m	$33.000m
add Current Borrowings:	$21.759m	$2.500m	$0.0m	$0.0m	$0.0m
add Overdraft:	$0.0m	$0.870m	$0.108m	$0.0m	$0.0m
equals Total Borrowings: {B}	$21.759m	$21.870m	$18.608m	$36.000m	$33.000m
Total Net Borrowings: {B} - {A}	$18.608m	$21.870m	$17.323m	$29.731m	$26.643m
Net profit declared {C}	$5.416m	$5.202m	$5.867m	$5.048m	$2.013m
MDRT ({B} - {A}) / (C}	3.4 years	4.2 years	3.0 years	5.8 years	13.2 years

I am still shocked. And here is the Chairman;s excuse (p2 AR2019)

"We have suffered in the construction sector, where the level of client failure in the face of their own dealings with major construction firms has caught AWF with high bad debt levels. These losses are the greatest we have experienced in more than 30 years dealing in the sector."

But will things get better in FY2020?

SNOOPY