@madamswer
Madam
Ok, you've twisted my arm and I've done a deep dive into half year costs versus revenues. Frankly, I think I'm more confused now than I was before I started. To be honest, I'm not a big fan of reading too much into half year fluctuations (in truth, not even into annual fluctuations).
For instance, if it was now August 2015, and we had seen employee numbers drop from 19 (@ June 2014) to 15 (@June 2015), we could have made all sorts of determinations about where staff costs might be headed, and we probably would have been wrong.
Here is what actually happened in the relevant half year periods (using "admin costs" as a proxy for staff costs):
AC = admin costs
SN = staff numbers
HY Jun 2013; AC=$0.768m ; SN=19
HY Dec 2013: AC=$0.832m ; SN=?
HY Jun 2014: AC=$0.723m ; SN=15
HY Dec 2014: AC=$0.768m ; SN=?
HY Jun 2015; AC=$0.754m ; SN=23
The problem is, as you know, with such small staff numbers, things can be very lumpy. In particular the actual timing of firing/hiring has a big influence, not to mention changes in staff make-up (eg shifts to part-time or casual etc).
Further, if you look at admin costs going back to FY2011, the changes in the last FY look like little more than noise:
HY Dec 2010: $0.820m
HY Jun 2011: $0.758m
HY Dec 2011: $0.773m
HY Jun 2012: $0.831m
HY Dec 2012: $0.788m
HY Jun 2013: $0.768m
HY Dec 2013: $0.832m
HY Jun 2014: $0.723m
HY Dec 2014: $0.768m
HY Jun 2015: $0.754m
HY Dec 2015: $0.805m
HY Jun 2016: $0.818m
I think you said it best when you said "there are so many moving parts".
In fact, the biggest contributor to cost increases in H1 and H2 of FY16 were not admin costs (which I am using as a proxy for "staff costs") but rather "other costs" (the bulk of which will have been "postage, printing & handling").
Here are some cost increases on pcp's (AC=admin costs; PPH=postage, printing & handling[#])
HY Dec 2013: AC increase: $0.045m ; PPH increase: -$0.001m
HY Jun 2014: AC increase: $-.044m ; PPH increase: $0.011m
HY Dec 2014: AC increase: -$0.065m ; PPH increase: -$0.138m
HY Jun 2015: AC increase: $0.031m ; PPH increase: $0.081m
HY Dec 2015: AC increase: $0.037m ; PPH increase: $0.096m
HY Jun 2016: AC increase: $0.063m ; PPH increase: $0.222m
[#]: here I am making an estimate of PPH half year costs , based on annual reported numbers, and HY reported numbers for aggregate "other costs".
So what am I saying? I'm not 100% sure, to be honest. What I am sure about is that what may be driving the H1 FY17 result will be heavily contingent on the following, probably in the order indicated:
And that's just too much for my little brain to handle.
- changes in registry fee revenue, vs pcp
- changes in "client disbursements recovered", vs pcp
- changes in "postage, printing & handling" costs, vs pcp
- changes in admin costs (aka staff costs), vs pcp
What I am more certain about (though not 100% certain), is that the feat of H2 FY16 will not be repeated (which you too have commented on). And this was pretty much the main thrust of my last post.
On this last point, H2 FY16 looks very uncharacteristic for the following two key reasons:
1. Registry fees almost matched those of H1. In the prior 7 financial years, H2 fees averaged about 84% those of H1.
2. "client disbursements recovered" climbed to over 23% of total sales revenue, whereas in the prior 11 HY periods it had always been no greater than 20%, and had averaged about 18% (even less in H2 periods).
So, if there is actually a revenue recovery occurring (which I readily concede is quite possible), I suspect there are too many variables at play too have sufficient certainty. So for me, it's best to see what the full H1 FY17 accounts tell us. This may mean I miss the opportunity to buy before any upswing is in full view. However, as I suspect H2 FY17 results may disappoint, I am prepared to wait for any consequent opportunities at that point.
PS: On the subject of differences between our "staff cost" numbers, I think the issue is that I was including directors fees as well as equity based compensation. Though I think there was an error in your FY16 value (though the real value only reinforces your argument). In any case, this is, in my opinion, not material to the issues discussed.
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