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

[noodles]

They came out with a strong first quarter. EBITDA up 250%. If they continue at this rate, we could see eps=30c.
I have taken the last year EBITDA, multiplied by 1.20. Reduced interest cost (because they have paid down debt), and removed amortization of the Maddison acquisition
.

Ebitda	15120
Depn	1000
ebit	14120
Interest	1110
NPBTA	13010
tax	3642.8
NPATA (underlying)	9367.2
underlying earnings	0.289
pe	8.0

EDIT: Changed profit uplift from 25 to 20%

[DarkHorse]

I've been interesting to see Percy's comments (being a fan of your wisdom) and now Noodles'. I don't think they've ever had protection from new entrants or high margins. The other side of the coin is low PS (one man's meat...). They certainly do look cheap even with no or low growth. Would be interested to hear any thoughts on how cyclical their revenues are in present form, and where margins are likely to go.

[percy]

I wish I had gone to the meeting,then I would have been confident to have made informed comments.
Did anyone go?
If so what was the body language, and mood of the meeting.?

[stoploss]

Here are the presentations from the meeting if you haven't seen them .

http://news.media.mdgms.com.s3.amazo...2bb1608ed9d350

[noodles]

I've been interesting to see Percy's comments (being a fan of your wisdom) and now Noodles'. I don't think they've ever had protection from new entrants or high margins. The other side of the coin is low PS (one man's meat...). They certainly do look cheap even with no or low growth. Would be interested to hear any thoughts on how cyclical their revenues are in present form, and where margins are likely to go.

There is no doubt that they are cyclical. During the GFC, revenues dropped by 20%

Their labor hire business has performed very poorly in the last couple of years. This is mainly due to competition. Overall profitability has been masked to an extent by the Maddison acquisition. Share price performance has been bogged down by poor communications over the capital raise and then the actual capital raise.

All these headwinds may now be behind the company. The 20% increase in EBITDA may be a catalyst for a rerate back to an average pe=13. That would be a 60% gain.

DISC: HOLDING

[winner69]

Noodles, you say first quarter ebitda up 25% - report says up 20%

[noodles]

Noodles, you say first quarter ebitda up 25% - report says up 20%

Just checking that you were paying attention.
I have updated the table.

[noodles]

Percy, have a listen to this!

http://podcast.radionz.co.nz/busines...spects-048.mp3

[percy]

Yes I am sorry to leave.AWF has been very kind to me.I think I brought in around $1.03/$1.05.Then added more.Then sold some just over $3,and recently took up the cash issue.
From what I can understand, there is little to stop new entrants to the labour hire sector,and I think in fact, AWF cut back on their low margin business,so to really to stay in business ,or expand they needed Madison.The projections made on the Madison acquisition have not been achieved.
So where to with Madison?.Well I am not sure.From what I am told "social media" is altering the whole sector.Employers are going, via social media, direct to the people they wish to recruit,by passing agencies,such as Madison.

I have just reread the agm presentation.Reading it yesterday I thought it was a bit glib.
So although my reasons for selling remain, there were a lot more positives in the agm presentation for shareholders,that I missed yesterday;
1] Growth has been a lot higher than I thought.If this continues I was wrong to sell.
2]The business is now fully focussed.Focus was lost with the on/off again capital raise.
3]The balance sheet is again very strong with the debt reduction,and will be even stronger with further debt reduction from earnings,The ratios are now very modest and the divie is excellent.
4]The new CEO,Simon Benntt coming from such a successful career at Maddison,will see where the opportunities are,and the company is in the position to take up those opportunities.
5]Left a little uncertain about the need to "strengthen the board".
So for shareholders,your company is sound,well run and looks "well positioned", and you should only sell if you see something a lot better [difficult!] or growth does not eventuate.

[winner69]

Be interested in Roger's view of his practice of eliminating amortisation to come to a normalised earnings number

Why not eliminate depreciation as well?

Answer would probably say using multiples like PE ratios is cheating - do the hard yakka and generate proper cash flows