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

[Snoopy]

Finance Period	Operational Cashflows	'Dividend Declared' minus 'DRP Reinvestment' (1)
HY2015	$8.330m	($1.986m)
2HY2015	($2.145m)	($1.916m)
HY2016	$6.495m	($2.660m)
2HY2016	($4.437m)	($2.392m)
HY2017	$11.399m	($2.636m)
2HY2017	($3.773m)	($2.602m)
HY2018 (1)	$11.879m	($2.476m)
2HY2018	($0.370m)	($2.645m)
HY2019	$6.143m	($1.931m)
2HY2019	$3.334m	($1.906m)
HY2020	$6.875m	($1.959m)
2HY2020	$3.014m	($1.919m)
HY2021	$21.950m	Nil
2HY2021	($0.053m)	Nil
HY2022	?m	($2.815m)

Notes

(1) From the HY2018 dividend, the 'capital preserving' dividend reinvestment plan was introduced.

I have used 'operational cashflows' because I believe that best reflects the picture of the on
going business as a going concern.

My main concern with holding AGL as a 'good dividend payer' is that if the expectation is for the restoration of a dividend of 16.2cps, as was the case pre-Covid-19, is that this dividend rate was well ahead of profits over FY2019 and FY2020. The reason that paying dividends greatly exceeding profits has happened in the recent past is that cashflow has supported this. And this 'extra cashflow' is largely determined by the amortisation of both 'Customer relationships' and 'Restraint of Trade' assets. If you look on p48 of AR2021 you will see that both of these amortisations have almost 'played out' (a total of $3.379m or 9.8cps left). Thus it would seem obvious that looking out beyond FY2022, dividends will be more closely tied to operational profits. Unless annual profits rise to around $6m per year on a consistent basis (a figure well beyond recent profitability), then dividends from FY2023 onwards could reduce.

I have to admit to being a little slow at getting my head around this cashflow thing. I have Winner to thank for pushing me into re-educating myself on this matter. The table below shows how despite dividends being frequently ahead of profits, Accordant has been able to maintain what I would have once regarded as 'over the top dividend payments' before, quite comfortably.

Finance Period	Operational Cashflows	'Dividend Declared' minus 'DRP Reinvestment' (1) (2)
HY2015	$8.330m	($1.986m)
2HY2015	($2.145m)	($1.916m)
HY2016	$6.495m	($2.660m)
2HY2016	($4.437m)	($2.392m)
HY2017	$11.399m	($2.636m)
2HY2017	($3.773m)	($2.602m)
HY2018 (1)	$11.879m	($2.476m)
2HY2018	($0.370m)	($2.645m)
HY2019	$6.143m	($1.931m)
2HY2019	$3.334m	($1.906m)
HY2020	$6.875m	($1.959m)
2HY2020	$3.014m	($1.919m)
HY2021	$21.950m	Nil
2HY2021	($0.053m)	Nil
HY2022 (2)	$5.654m	($2.865m)
2HY2022	$?m	($2.231m)

Notes

(1) From the HY2018 dividend, the 'capital preserving' dividend reinvestment plan was introduced.
(2) From HY2022, the period in which the final dividend from FY2021 was paid, the dividend reinvestment plan was suspended.

Since FY2019 you can see that dividends have well exceeded cashflows. Prior to that we had the rather strange phenomenon of lots of cashflow in the first half of the year, more than fully covering the dividend for both halves. I hope this trend does not continue, because operational cashflow for the first half has now dropped to an eight year low! To try and understand this, I think it is worthwhile to look at Accordant's amortisation expenses over the last few years.

SNOOPY