Ann: Quarterly Activities/Appendix 4C Cash Flow Report, page-3

Pretty much as flagged by the company. I haven't had to change my forecast chart below at all. Note all comments / charts my noodling only and welcome corrections/feedback DYOR.

• Revenues in line and on track for ~$50-55m FY (FY 21 was $44m ex Jobkeeper). The company noted $60m medium term revenue target in October 2021. I've taken "medium term" as a 22/23 target based on timing of the call. At this stage I see no reason to doubt this target as on a monthly run rate we're on around $4.6m now with only 8-9% growth required to reach $5m ($60m annualized). Over the next 3 year plan I'd expect to see a horizon to $80m now that the national footprint and enabling infrastructure (IT, processes, culture/people) are looking solid.

• Low EBITDA conversion for the first 2 quarters of FY (actuals of ~4% of EBITDA vs long run average >10% and target >14%). Despite this being in line with expectations, I would have liked management to have identified that they flagged this in October and be clear on drivers + confirm FY guidance of >$3m. To achieve >$3m from here the next 2 quarters need to revert to ~9-10% conversion or with continued revenue growth 8-9%. Worth noting that over the longer run, the average conversion pre FY22 when revenues were > $4.6m per month is ~20% showing the ability to obtain economies of scale from the model. It seems with the current growth focus the front ending of recruitment combined with completion of integration and IT/Transformation is creating a drag on conversion. Management noted that there are covid effects flowing through but really what will be on show over the next few quarters is ability to manage growth and EBITDA conversion in balance. Opteon and Saunders and Pitt from my research operated at 15% conversion prior to their respective acquisitions, Opteon through scale and Saunders and Pitt through small business management.

Overall looking good. ACU is moving through into a semi - major position in its space and as such given recent stability will be starting to raise some eyebrows in PE as well as with its major peers. Recalling the Anacacia / Opteon transaction in 2020 was struck at ~$119m revenue and about 9x EBITDA as a non-controlling stake (35%). Looking forward to say FY23 - ACU at ~$65m rev x 9 + $10m cash / 174m SOI = 53c. For a take-out premium >60c.