Today's the day
à According to the updated Jimmy Crow Prospectus from 27/7 the
"Final Demerger allocations of the following Consolidated Group assets and liabilities originally allocated to Trustees Australia Financial Services Group (were stated to be as follows):
(i) other receivable for recovery of 2016 administration costs of $169,750;
(ii) accrued unpaid director salaries of $512,347;
(iii) director related leave provisions of $414,466; and
(iv) accrued legal costs of $30,000 on a property related bond recovery."
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#
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| 2 |
Item
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Description
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SepQ
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DecQ
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MarQ
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YTD
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JunQ
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Explanation Provided
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6.1
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Payments to Directors of Entity & their Associates
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Aggregate amount of payments to these parties included in item 1.2
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27,000
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149,000
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115,000
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291,000
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TBA
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7.1
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Payments to related entities of the entity & their associates
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Aggregate amount of payments to these parties included in item 1.2
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0
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169,000
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0
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169,000
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TBA
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2016 admin cost recovery paid to Trustees Australia Limited
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Item (i) presumably relates to AHF given that after today (assuming that the demerger is approved), TAU's shareholding in AHF will shift into Jimmy Crow. But then, this is where TAU and Hackett need to be very careful. Under existing Company disclosures /approvals:
- $350,000 is the amount approved for directors’ fees.
- At 11/7 Strategy Position, Hackett’s 2017 fees were stated to be $75,000 + super, and Rowley’s at $50,000 + super.
- Skene’s fees are not relevant here as he is CEO first and executive director /board appointee, second, so therefore not part of the 1 disclosure regime. That is, his salaried arrangements are already reflected in and captured as part of the usual salary and wages disclosure for AHF. In 11/7 STP, the following was stated to this same effect: “Peter Skene is a fulltime executive as CEO and a director, his remuneration is as disclosed in the financial reports.”
- Previously, in F16, the total amount paid under 6.1 (when there were 3 directors in place) was $108,000, at a time when the directors were being paid - $30,000 each = super (Rowley & Jackson) and $40,000 + super (Hackett) which was spot on from a reconciliation perspective.
- Since then, the SepQ provided for the usual payment arrangements (as before), then changed markedly during the DecQ, once Jackson resigned (leaving only 2 on the Board).
- At best, Jackson would have received 2/3 of the DecQ payment allocation, meaning - $5,475. At the same time, any so called increase in fees for Rowley and Hackett would only have come into effect post Jackson’s exit, so therefore 1/3 of a quarterly contribution. Reason: because nothing else had changed up to at least end SepQ and the AGM was held in late Nov16. But even if you allowed for a whole of quarter contribution for Rowley and Hackett (which is also overstating it a bit), the DecQ figures should have come to à MH = $14,145 (low end) - $20,530 (high end), whilst for AR it would have been, AR = $10,037 (low end) - $13,687 (high end) after taking into account a 2/3 mixture of the former rate and a 1/3 mixing in of the new rate.
- Putting this all together, then the DecQ item 6.1 payments should have been no more than à $29,657 (call it $30,000) at the low end, or $39,692 (call it $40,000) at the high end.
- So, if all payments were being made along the way, as the 2016 CF quarterly disclosures was saying, then there should have been no built up amounts owing, etc.
- All things being equal therefore, the DecQ 6.1 payments should have been no more than $30,000 - $40,000 (in rounded terms), or if precisely stated, then no more than $29,000 - $39,000 (in line with their previous approach of rounding down to the nearest whole ‘000). If so, then what was the other $110,000 - $120,000 amount for? (ie: $149,000 - $39,000 = $110,000; or $149,000 - $29,000 = $120,000).
- Equally, so, then for the MarQ, the required payments should have normalised to – MH = $20,531, and AR = $13,687, for a total of $34,218, or rounded down to $34,000.
- Accordingly, of the $115,000 paid in MarQ, $34,000 can be explained by reference to the updated directors’ fees (normalised) for MH and AR. So, assuming this, to what did the other $81,000 relate?
- Within two quarterly periods, the unexplained amount arising under item 6.1 of the CF quarterly has included unexplained amounts of $110,000 - $120,000 (DecQ), and $81,000 (MarQ). Putting it simply, that’s between $191,000 - $201,000 in unexplained amounts stated however to be in reference to “Payments to Directors of Entity & their Associates”.
- Given that item 6.1 corresponds directly to the amount paid as REM to directors (being the external directors so therefore not including Skene who is already captured as part of wage and salaries), then the most that the JunQ 6.1 component can be is $59,000 without it then breaching the upper limit of existing shareholder approvals as well as materially mis-stating or causing the statements made of 11/7 STP to be be misleading.
- The reality however is that upwards of $200,000 has been diverted through the item 6.1 disclosure line in circumstances where either (*) the payments being made are wrong and erroneous, (*) the disclosures made according to 6.1 are in error, (*) the 11/7 STP was wrong and misleading, (*) some combination of these, (*) or that TAU is using some other alternate /albeit connected means to try and strip crucial cash from out of AHF.
- So, given the Jimmy Crow Prospectus of 27/7, which suggests that a further $169,000 was still owing to TAU as at 27/7, this still leaves $190,000 - $200,000 wholly unexplained for, plus any added extra amounts that will be reflected in today’s CF disclosure (particularly concerning items 6.1 and 7.1).
All things said and done, it reminds of the songs and the associated lyrics from the Black Eyed Peas:
- I GOTTA FEELING è for Michael & Co (before any resulting shareholder backlash erupts); or
- SHUT UP è in how the shareholders are viewing what TAU and its extended cohort have done to AHF, especially with the partial lyrics:
We try to take it slow
But we're still losin' control
And we try to make it work
But it still ends up the worst
So, today’s going to start telling, one way or another. Is Michael, in, or is he, out (on the way, out)? And that extends at least to Adrian, if not also to Peter. Time will very soon tell on all this.
Net cash below $1.1M and it will be curtains come November. Even net cash above this but below the MarQ mark will mean that, at best, AHF is holding its own, but nor improving from this. Yet, if below $1M, then the risk of further, ongoing erosion of cash (ie: ripping out by TAU, et al) will likely point to the need for a private placement very soon, or near so in time.
Time will tell, but time very soon will not be with Michael. Not for that much longer.
In effect, he has taken both a farm group, a vertically integrated solution, and a processor solution and within 15 months, turned them all into veritable shadows of their former selves.
So, what’s in store, next?
Again, time will very soon tell on all this, especially with the financials also required within the next month (yet how will Jimmy Crow be able to provide this service going forward as it doesn’t have its own capability in this regard and is itself reliant on TAU in order for the so called “shared services” to be provided?).
