AGL - Accordant Group. was previously AWF Madison, Allied...

[Snoopy]

Results out and management claim they are disappointed but really things are better than they appear. Dividend maintained.

There is a $1.3m 'one off' adjustment mentioned in the Chairman's address. Later is mentioned a $0.3m provision due to a 'Christchurch problem'. This came about because of 'significant growth in key infrastructure projects' (!??!*!). The head contractor is not approving payment to a subcontractor and AWF is owed by the sub-contractor or something like that. Actual amount in dispute is $1.3m, but AWF says only $0.3m of that is the provision at risk. I am not clear if the $0.3m 'Christchurch Provision' is included in the $1.3m 'one off' provision or not.

I have searched through the Annual Report for FY2016. There is no further mention of the $1.3m adjustment referred to in the Chairman's address. I hope he is right and the benefits of this adjustment flow thorough to future years. But in the absence of further information, as an investor, I believe I should treat this as a 'normal business expense' that does not distort the result for this year.

The most disappointing sentence in AR2016, I think is in the strategy section (p11).

"While most staff, client and candidate experiences remain distinct between AWF and Madison...."

I'm sorry, what was the purpose of this merger again? Was 'zero synergies' one of those bullet points?

Also disappointing was the hint dropped on raising the final dividend at half year result time which didn't happen becasuse of the disappointing second half.

Nevertheless eps was 16cps (let's forget about this 'underlying profit' that management like to speak about). dps was 15.2cps.

At $2.30 I get a net yield of 6.6%, and a gross yield of 9.2%. You would have to be in some sort of financial trouble to want to sell out at those levels I would have thought. This still looks like a good 'bottom drawer keeper' for the income investor. I could make an argument for adding a few at $2.30, even if I hadn't bought most of my comfortable little holding at that price already!

SNOOPY