Over the last two years Afterpay founders Anthony Eisen and Nick Molnar have pocketed a combined $307m by selling their shares in the company as its market value has risen by nine times to $18bn.
The last share sale was on Tuesday at $250m, at the same time the company is raising $800m to fund its expansion.
There is something a little unnerving about founders selling out at the same time as the company has its hands out looking for money. To be fair, the founders did so ahead of the raising, so no one is in any doubt about what is happening, and they did confide there will not be another sale until the annual meeting which is due in November.
Given the two founders still have 18.4 million shares each you can bet other things being equal they will be selling.
They are not the only ones in their sector, with Zip chair Philip Crutchfield SC, chief Larry Diamond and executive director Peter Gray pocketing a combined $48m in share sales last month.
Some scratch their heads at the fact that Afterpay, which is yet to report a profit, has the same market value as Bendigo and Adelaide Bank, Bank of Queensland and Suncorp combined.
The latter three report combined profits of over $1bn and Afterpay is yet to report a profit.
For the year just gone it will be earnings before interest, tax and depreciation-positive for the first time since it started in 2014.
The company reports stunning growth in volume, with sales doubling in a year to $11.1bn.
Active customers are also growing fast and the US and Britain now account for 50 per cent of sales.
It works on a net transaction margin of 2 per cent, which means for each transaction they make money, and unlike the banks which would prefer you extend the loan, Afterpay makes more money if you pay on time.
Citi (one of the underwriters with Goldman Sachs) last week valued the stock at $58 a share against a floor price for the raising of $61 a share and a target price of $64.25 a share.
Growth is the selling story and the stockmarket works on forecasts, so what has happened in the past is not always so relevant.
The fact is in actual payments terms — money changing hands — official RBA data says the buy now pay later sector accounts for $6bn in $1 trillion of payments after five years.
The RBA’s digital transaction system is closer to $300bn in less time.
The market is looking forward to offshore growth and the founders are obviously quick to take their cash when they can.
Working together
Two weeks ago the Coles chilled distribution centre in the outer Melbourne suburb of Laverton was hit with a potential crisis when one of its 600 staff tested positive for COVID-19.
The centre, which distributes chilled and fresh food through Victoria and as far north as Deniliquin in NSW, was hit with massive staff shortfalls as staff called in sick and the normal workforce of 600 fell down to around 50.
The centre is now back to normal and on Monday night Coles was able to end all restrictions on product sales as business headed back to normal.
At its worst the centre was five days behind and its stores faced massive shortages, with fears supplies would be as low as 10 per cent on the shelves by last Friday.
But the recovery effort highlights how business and government worked together to keep operations moving.
In this case, daily meetings including National COVID Coordination Commission (NCCC) member Paul Little, the head of Victoria’s Jobs Department Simon Phemister and Coles supply chain operations boss Tony O’Toole were held to ensure supplies kept up.
One of Little’s tasks was to talk with the folk at Linfox and Toll, who are existing logistics suppliers, to ensure staff could be diverted to Laverton to help the process.
Unions and health officials were on the job, and the process was a team effort which included where possible bypassing the distribution centre altogether, with suppliers like Lion and milk processor Saputo supplying the stores directly.
The DCs are lot more complicated than the old days, with sophisticated bar code readers and high lift reach trucks (three-storey forklifts) needed to work their way around.
The NCCC’s task started with troubleshooting jobs like this one, with the business representatives able to leverage their knowledge and contacts to ensure work is done.
Taxing times
The ATO should simplify its rules for dealing with deceased estates and work with state administrations, according to the Inspector General of Taxation Karen Payne.
In a report released on Tuesday Payne notes 160,000 people die in Australia each year and are subject to different rules and multiple notifications by states and the tax office.
Some 45 per cent of people die with no will, which can complicate the process before the ATO makes it worse.
In most jurisdictions probate is not required, depending on the level of assets, whether there are named beneficiaries and whether there is a will, but in dealing with ATO probate is often required.
This complicates and delays the process.
Payne also urges changes to how the ATO deals with assets earning income after death.
If someone dies with assets earning money, like equities or an interest-bearing account, the tax office treats the asset as being in a trust.
The ATO requires a filing up to someone’s death, but treats income after death as though it was in a trust, which Payne wants changed.
Payne notes most people wouldn’t think of their late mother in terms of trusts.
Franking credits are also complicated for deceased estates, even though it is relatively simple to have credits released on application when the person is alive.
The Inspector-General of Taxation is an independent government agency aimed at reviewing and recommending on systemic problems with tax administration.
The report on deceased estates is one of two present investigations, with the other, on ATO debts, on hold pending the COVID-19 pandemic.
The Inspector-General receives around 3500 complaints a year.
Other recommendations included to allow digital filing and closer engagement with other relevant authorities in state and federal governments.
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