Expecting FY22 1H results tomorrow or next week some time....

Expecting FY22 1H results tomorrow or next week some time. Recently purchased shares last month after doing a lot of upfront research and speaking to Nathan over a Zoom call. Few things of note here.

- Lack of Acquisitions or divestures in FY22 (besides the tax banter option). I’m expecting some integration costs on paragem to be sure, but for the most part a lot of the costs such as the hub24 transaction costs, impairment charge on divestures, interest expenses are just not going to be here in FY22. I had normalised FY21 post tax earnings at ~ 13c per share, putting this business as a modest 8x PE or so, perhaps in FY22 this will be even less depending on growth in the business. I note a ~5 month contribution from the remainder of taxbanter as well.

- significant rise in the fees per authorised representative, and have been assured that the limited AR has stabilised recently, with pricing models all shifted across from the share model to fixed fees. We should see the net revenue figure start to more closely reflect the normal revenue of the business, and the statutory margins to look significantly better, in line with the net revenue margins. There has been an industry wide trend of aggressive licensee fee raises across the board which too is interesting.

- Care and GPS are hard to estimate in terms of platform revenue, but presumably will be decent. They culled a specific platform fee that they were unsure legally about last report so note that it will impact the comparable result here probably.

- intent to carry out their ‘triple net revenue’ goal via. Predominately acquisitions, and more specifically in the wealth area of the business. To date the M&A has been more good than bad, but not exactly executed well with consistently. This will be something to keep an eye on.

- dividends I have been told are viewed not as a payout ratio but as cents per share. I would be surprised to see them raise this before tripling net revenue to be honest, as dilution shouldn’t really be much of an option. buyback authority is there but doubt they will use it, as they want to reach scale to generate the increased interest a higher market cap brings, as opposed to a higher per share value.

- remuneration plan incentive is to increase net revenue by 150% and generate a 25% TSR p.a. Return over the next 3y (June 2021-24). Good incentives I suppose, could be more focus on ROE/ROIC but all in all, happy with this.

- Accounting businesses really are my favourite part here, grow organically very nicely with no need for capital, pure value add. As an accountant, knowledge shop and taxbanter really are great services, and have some dominant positions in the industry. More and more specific laws are coming forward such as the PCG guidelines, Super changes and so on. Furthermore, it seems they are considering providing wealth compliance services for self-licensed advisers, which would be a great and natural shift, given their know-how owning 3 of their own licensees now.

excited for the results in conclusion, along with the ASX:AFL results (another I hold). I have already been pleasantly surprised with the ASX:KPG results I received a few weeks back. These 3 are my only holdings on the ASX