Analysis of Broker performance

Im reviewing the financials today.

Three seems to be zero organic growth and the result is propped up by non cash trail receivable adjustments. Any other thoughts?




Comparing the above to the financial statements where I got the following information (business combinations note):

			Revenues	NPAT	NPBT
1
2
3	Centrepoint Finance	1-Sep-18	11,916	434	620
4	Heritage	2-Nov-18	2,856	1,276	1,823
5	Sovereign	8-Feb-19	989	458	654
6			15,761	2,168	3,097

The NPBT assumes NPAT adding back 30% tax which seems reasonable - assuming no depreciation (I note no movement in depreciation in the investor presentation). NPBT is a good proxy for EBITDA as they have minimal interest income and minimal depreciation.

So EBITDA from acquisitions is approx $3.1m and with EBITDA going up $3.4m (plus full year impact on prior year acquisitions (which are not disclosed) the business is in reverse.

Contract assets
Trail income receivable has also increased $3m which is a non cash uplift in profit. The preceeding period it grew $1.2m a large increase (and there was no recognition of trail on new acquisitions according to the financial report).

All EBITDA growth was from acquisitions during the period and non cash trail income increased by $2m over the prior year.

Taking out trail income adjustments and acquisitions, we would be left with the following EBITDA:

		FY19	FY18
1	EBITDA	19.4	16.0
2	Less acqns	-3.1
3	Less trail receivable	-3.0	-1.2
4	Cash EBITDA	13.3	14.8

So cash EBITDA is going backward fast.

The $17m contribution from acquisitions in the investor pack also should have been $15.8m per the financial statements.

Anyone have a different view?