Ann: First Half Trading Update, page-24

Here's the Bell Potter update; there is nothing about cutting out the dividend. In fact, it states clearly apm can afford to pay the dividend but asks whether it's prudent. imo the company will pay the dividend as it will want to keep its good track record and can afford to. I've topped-up at this insane sp.

Trading update sees lower profit guidance,
and questions on dividend Recommendation
Hold (unchanged)
Price
$1.325
Target (12 months)
$1.50 (previously $1.90)
Analyst
Marcus Barnard 618 9326 7673

Authorisation
Bradley Watson 618 9326 7672
GICS Sector
Commercial Services and Suppliers
Expected Return
Capital growth 13.2%
Dividend yield 7.6%
Total expected return 20.8%
Company Data & Ratios
Enterprise value $2.0bn
Market cap $1.2bn
Issued capital 917.2m
Free float 30%
Avg. daily val. (52wk) $2.4m
12 month price range $1.08-2.64
Price Performance
BELL POTTER SECURITIES LIMITED
ABN 25 006 390 772
AFSL 243480
DISCLAIMER:
THIS REPORT MUST BE READ WITH THE DISCLAIMER ON PAGE 9 THAT FORMS PART OF IT. Page 1
(1m) (3m) (12m)
Price (A$) 1.27 1.93 2.42 Absolute (%) 6.7 -30.1 -44.2 Rel market (%) 6.5 -34.3 -45.4
Trading update guides to lower HY figures
Following the AGM profit warning on 10 November, the company have given a detailed
view of where the H1 FY24 results are expected to land. Revenue is expected to be
approx. $1.14bn, compared to historic revenue of $854.3m in H1 FY23 (PCP) and
above our previous expectation of $1,067.8m. Underlying EBITDA is expected to be
approx. $148m compared to $167.6m in PCP and is 19% below our previous
expectation of $181.8m. Underlying NPATA is expected to be approx. $55m. This
compares to $74.6m in PCP and is below our expectation of $77.8m. Group EBITDA
margins are looking like 13% in H1 and NPATA margins and just below 5%. These
compare with Post IPO/FY22 margins of 23% and 12.5%.
Is the dividend safe?
H1 NPATA of $55m is just slightly higher than the 5c half yearly dividend cost of $46m
meaning the dividend is 1.2x covered by profit. On a cash basis it is also finely
balanced. Our reckoning suggests the dividend is covered by operating cash less
interest, tax and lease costs, but the company will have little scope to reduce debt until
profitability improves at Employment Services. The company can undoubtedly afford to
pay the interim dividend, but we think the board should consider whether it is prudent,