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

[winner69]

At that time,so long as the present chairman is replaced,it may be worth re analysising the business.
Currently the share price is back to where it was 4 or 5 years ago,with the dividend under threat.

As an aside, it appears to me the way this sector operates has changed, and AWF, instead of being at the forefront of change, have been left behind.

Very perceptive of you percy.

I probably wasted a bit of time watching that AGM video and from that I think your insights are correct.

Maybe Absolute IT is a bit different but their AWF and Madison businesses seem to be dogs.

Loved how one of the Simons used words like adjacenties in his presentation ...he’s read the right books.

[Snoopy]

At that time,so long as the present chairman is replaced,it may be worth re analysising the business.

What is the issue with Chairman Ross Kennan? The only thing that I have specifically noted is this

	Ross B Keenan: Ordinary Shares Held	Ross B Keenan: Restricted A Shares held	Ross B Keenan: Restricted B Shares held
EOFY2015	188,750	18,000	12,000
EOFY2016	156,875	18,000	12,000
EOFY2017	156,875	18,000	0

So Keenan has sold down some head shares during FY2016 and the Restricted B shares he held expired on 1st June 2016 (during FY2017) have not been converted to actual shares at $2.50 (because they were out of the money?)

Currently the share price is back to where it was 4 or 5 years ago,with the dividend under threat.
As an aside, it appears to me the way this sector operates has changed, and AWF, instead of being at the forefront of change, have been left behind.

Not sure how 'being left behind' squares with trying to evolve the business towards the health sector (which admittedly did not work), the white collar sector (with Madison), and the IT sector (with AbsoluteIT). What alternative path forward were you thinking of?

Very perceptive of you percy.

I probably wasted a bit of time watching that AGM video and from that I think your insights are correct.

Maybe Absolute IT is a bit different but their AWF and Madison businesses seem to be dogs.

Loved how one of the Simons used words like adjacenties in his presentation ...he’s read the right books.

Simon Bennett, when appointed, was touted as a new generation of leader. You are saying Winner he is a 'new man' in an 'old shirt'?

Being the only listed business in this sector on the NZX makes it difficult to determine how well AWF are doing compared to their competitors. They claim to be number 1 in New Zealand. But number 1 of what exactly? I was struck by this comment from the 'Our Strategy' section of AR2016 (p11)

"Even the larger players in the New Zealand Recruitment services market have less than 5% share by sector."

An admission that even though AWF Madison is number 1, there is lots of competition out there? I don't know if this competition includes any Human Resource managers of big companies that engage in direct in house recruitment themselves.

Reading through the last three annual reports again, with the benefit of hindsight, can throw up the odd investor gem. When an economy is going well, companies are more concerned with retaining their staff talent. So it is harder to prise staff away from where they are working already. With less people looking to change jobs it is harder to fill new roles. AWF Madiosn get their big pay day when they fill a new role. But if they have to expend more effort to find suitable candidates, they may not be paid for the extra time they have to spend. Contrast this to a more recessionary climate where companies have a culture of employing more temporary talent, so they can turn off the temporary tap when the workloads drop off. Perversely, this means AWF Madison will have higher profit margins when the economy is not so buoyant. This to an extent answers my concerns about lower profit margins in recent years.

The other factor is that there is less competition for placing people in the provinces. Provincial profit margins tend to be higher. I think it is fair to say that over the last three years (FY2015, FY2016 and FY2017) the provinces have not done as well as the cities. Perhaps the current rural upturn will be positive for the AWF unit going forwards?

SNOOPY

[Snoopy]

AWF cash flows over the last 4 years. These redone in a way that better represents cash flows from day to day stuff and those associated with acquisitions and funding.

I always like looking at how much of free cash flow gets paid as dividends

In AWFs case the amount paid in dividends invariably exceeds cash generated on a day to day basis (excluding cost of acquisitions)

AWF have essentially had To increase debt to keep paying the dividends. That’s how I see it anyway. Note that changes in debt and the capital raised is slightly more than what they spent on acquisitions ...the extra gone to keep the dividends up

I would say this year probably won’t be much different.

Hey Winner why have you taken off annual PPE expenditure when looking at operating cashflow, but not included the Depreciation and Amortitsation annual expenses that are the offsetting book allowance to balance the future PPE expenditure?

SNOOPY

[winner69]

Snoops .....in that table we are only looking at cash flows - reflecting cash movements in the year they occur

Depreciation and amortisation (and a few other things) are not cash items so are not part of Operating Cash Flows - consequently the cash cost of PPE needs to shown separately (as Investing Cash Flows).

[percy]

Ross B Kennan.His career has been mediocre,not out standing, such as Rob Campbell,Geoff Ricketts or Elizabeth Coutts.Current director Ted Van Arkel would add more mana.
I wonder whether the likes of LinkedIn and Seek,are the future,and the future may already be here,and AWF is being left behind.?

[Baa_Baa]

... I wonder whether the likes of LinkedIn and Seek,are the future,and the future may already be here,and AWF is being left behind.?

Neither of those platforms generate recruitment fees or contractor margin revenue, they are advertising platforms that charge a fee for the job adverts, and both are used by recruiters and hirers.

[Snoopy]

I wonder whether the likes of LinkedIn and Seek,are the future,and the future may already be here,and AWF is being left behind.?

There was an article in the FY2015 annual report (p18) titled "Brave New World" by group general manager Kerrie Gregory. There is a lot of information there about how AWF Madison are now using the internet to engage with both workers and workplaces.

"When I started in recruitment nine years ago, we reached candidates by putting an ad in the newspaper or on on-line job boards."
"It is far more diverse now. Things have changed dramatically and social media have played a huge part in that."

Madison are now using 'active engagement'. Kerrie is using social media to get 'passive candidates' (those that may not be actively looking for new work, but have the skills). Madison sign a 'preferred supplier agreement' with potential employers. They go out to those employers go inside the business and go to great lengths to understand the business, who the people are and how they work. Everything about the employers organization are then displayed prominently using the company's social media (which is created if they don't have it).

I would say that 'Seek' and 'Linkedin' are just two of the web tools that Madison or AWF can and do use. And yes I just went to Seek and looked up engineering jobs in Christchurch (cos I know Madison can supply such workers) and yes Madison was there with a job description on page 3! It looks to be like Madison are 'on the ball' with the current internet toolbox. Whether they are the best operators of that toolbox is of course another matter!

SNOOPY

[percy]

[QUOTE=Snoopy;712700] Whether they are the best operators of that toolbox is of course another matter!

That is the 'heart' of the matter.
Recent share performance would suggest they are not.?

[BlackPeter]

Great research and discussion, guys!

I was sort of wondering whether I want to take them on my watch-list, but now I think I can use this space for better candidates ;

[percy]

Great research and discussion, guys!

I was sort of wondering whether I want to take them on my watch-list, but now I think I can use this space for better candidates ;

AWF's full year result is due at the end of May,so not far away.
I expect they will surprise us.
However,I very much doubt it will be a pleasant surprise .