In 2005, Allied Work Force listed on the New Zealand stock exchange having established itself as the country’s largest labour hire provider through its first 17 years of growth.

15 years on and the pace has not abated. In 2013, generalist recruiter Madison was acquired. Specialist recruiter Absolute IT joined the fold in 2016, and last year the third substantial acquisition added executive search and contracting business JacksonStone & Partners.

In each of our operating businesses lies a rich history – a reputation built through the belief in its company values and countless hours connecting with job hunters and employers, all fuelled by an entrepreneurial spirit navigating the ever-changing employment market.

We are proud of our stable of brands, and the role they play in workplaces throughout New Zealand.

What’s behind this decision

We are now a diverse group of companies. The culmination of expertise and breadth of service offerings means our current identity as AWF Madison Group is no longer fit to best showcase our existing make up, nor our future aspirations.

To date, our Group entity has been the vehicle of interaction with our shareholders. The name of this entity will change on the 19th of October, and this date will also mark a significant step change for our business.

Our vision moving forward is that our Group entity will be more prominent in our day-to-day operations. We will be working to ensure that anything we put our name behind has meaning – be it for our clients, our candidates, our workforce, our service delivery people, or in the wider landscape. Our breadth and scale provides a unique standpoint to contribute to the broader conversation about labour market forces, business productivity and organisational change.

The world of work is evolving at an incredible rate of knots, a reality brought home by the events of 2020. Organisations, and indeed whole sectors, are operating in unprecedented volatility and complexity. More and more often, we’re asking for the opportunity to work with our clients in our capacity as a Group, to gain clarity and deliver solutions that likely go beyond traditional recruitment services.

Accordant: who we are and what we stand for

We go from a name embedded in our history, to a name grounded in purpose.

The name Accordant signifies the bringing together of our various businesses. It’s not just about a collection of standalone operations, but a collaborative way of working that draws from our collective capability to deliver more additively for our clients and candidates than is possible when operating apart.

We have invested significantly into an innovative operating platform, and have notable capability in our internal marketing, IT and finance teams for our businesses to draw upon.

So it does not matter what sort of organisation, which sector, where in the country, the type of role or the reason why work is sought. Members of the Accordant Group will work together in an agile way to see people gainfully employed and meet the needs of New Zealand’s diverse workplaces.

When the changes will come into effect

Our new name will come into effect on Monday 19th of October, 2020. On that day, the NZX ticker will change from AWF to AGL, our branding will change and our online presence will be refreshed.

Over the coming months Accordant will become more visible in support of our various brands’ identities resulting in subtle changes to existing collateral and office signage. And in due course, we also look forward to sharing new developments and initiatives with Accordant as the launchpad.

• Steve Jackson, previously the COO of Madison Recruitment Limited, has been appointed General Manager Commercial. Steve will be focussing his attention on Group-wide projects, amongst which is the further development of innovative solutions such as Managed Service; and the refinement of existing operational systems and processes to meet the needs of clients and candidates;
• Christian Brown, previously Chief Sales Officer, has been appointed General Manager Madison. He has a strong pedigree in white collar recruitment and leadership, with experience in the NZ and UK markets. He brings a fresh approach to drive our existing business enabling our growth; and
• Tony Staub, who has been responsible for the Finance function of the Group, on a contract basis since the departure of Nick Williams last year, will permanently assume the role of Commercial Director, where his focus will remain on the Finance function.

The above appointments report to the CEO, AWF Madison Group Limited, and take immediate effect.
Contact: CEO – Simon Bennett +64 21 0368 387
Chairman – Ross Keenan +64 21 685 655

• Revenue up 8.9% to $279 million
• NPAT at $5.0 million down 14% from $5.9 million
• Increase in net cash flow from operations from $7.6 million to $11.5 million
• Final dividend steady at 8.2 cents per share
• Introduction of a Dividend Reinvestment Plan

As we had signalled last year, we have concentrated our resources where needs have dictated. This has seen revenue and earnings in our white collar area grow beyond 51% of total revenue for the first time.
Our acquisition of Absolute IT has delivered a strong capability in the rapidly changing IT sector. It is a sector where ‘contract resource’ is the norm, where internal recruitment teams are less effective recruiting directly, and do not tend to manage contractors. Absolute IT delivered year on year profit and turnover growth and assisted the white collar division grow turnover from $98.7m to $148.9m with segment profit (EBIT) increasing from $3.4m to $6.0m. We have successfully inducted the Absolute IT business and transferred the intellectual property held by the former principals.
The Census Project contributed a large portion of the increased volume as we successfully delivered an innovative and robust solution to Statistics New Zealand. This was a significant and successful learning experience and made a positive contribution, but required a great deal of mobilisation in order to scale up, which we can now leverage. Importantly, our internal learnings helped us further develop our Managed Service delivery model. As a result we were able to bid for and successfully negotiate a large long-term Managed Service contract with a government agency which commenced in April this year.
We will continue to develop our service offerings to be relevant in this changing market. We consider the provision of ‘Managed Services for contingent workers’ to be a growth opportunity. With this platform in place we expect to replicate this offering across both segments to targeted clients. The recurring revenue and certainty of tenure, a cornerstone of this platform, balances our ‘just-in-time services’ and provides added certainty to underpin investment in innovative solutions.
We have continued to drive our platform change and process efficiency in AWF, this was done within the backdrop of a difficult changing market. AWF turnover dropped from $157.7m to $130.0m during this transition phase, but we expect to recover over the ensuing 24 months. Matching market demand and supply has become more challenging. We have become much more selective about clients. Likewise, one-off smaller jobs are difficult to deliver safely. Our sweet spot is mid to large organisations, with fair margins, and ongoing rather than sporadic demand.
We see the decline in AWF as cyclical. We anticipate a stronger contribution in the coming year, leveraging off the transformation. Clients recognise the growing value in our service, integrating training delivery, workforce planning and Health & Safety standards and procedures. As with our white collar sector, AWF expects to deliver a Managed Service with a key client this financial year.
“The regulatory, economic and political environment changed during the year on the back of the 2017 election process and the formation of a new coalition Government. Administrative delays caused the process of recruiting migrant labour to stall, resulting in a January influx, which was inopportune,” says Group CEO Simon Bennett.
Whilst construction in Auckland creates an opportunity, there are cost constraints and the sector is fragmented. Management of credit risk during this stage of the cycle remains front of mind and we are happy with the current debtor’s book.
“Continuing delays in obtaining approvals across the construction sector meant that we were unable to optimise the logistics of matching supply and demand of contingent labour. Unfortunately we received negative publicity from our Filipino migrant business, where several factors including delays made smooth deployment difficult. The skilled migrant sector is important to AWF and NZ and we will continue to work with the regulators to ensure we have an efficient and compliant model.
“The future of work will require a strong contingent and flexible workforce. New Zealand still lags behind OECD counterparts with approximately 10% of our workforce being contingent, compared with 20-30% of the labour force in the US and EU15. Skill shortages will continue in the short to medium-term, and we are positioned well to capitalise on these across our business,” adds Bennett.
The sector offers people fantastic pathways to permanent work, flexibility and variety of roles; whilst allowing companies and government agencies the ability to flex up and efficiently manage their workforce. This was illustrated with our management of Census fieldworkers, where we mobilised up to 3000 workers.
Our net bank debt decreased from $32.4m to $29.7m, and allowed us to complete the purchase of Absolute IT at the end of the year and paying $3.25m in earnout. Net cash flow from operations at $11.5 million was strong (last year $7.6 million), and excellent debtor management resulted in 93% of debtors being current by Year End. There are no debtor issues such as those referred to last year, and full provisions are in place to cover future contingencies.
Whilst we remain comfortable with our debt levels, the Board has for some time considered a review of its capital structure and dividend policy, with a view to determining its capacity to invest in future growth initiatives and reduce bank debt. It has taken independent advice on this, and to this end proposes (subject to NZX approval) introducing a Dividend Reinvestment Plan (DRP) this year. This will allow shareholders to reinvest up to 50% of their dividend in new equity. Simon Hull, the majority shareholder, has indicated he will fully participate in this scheme as will the CEO and the remainder of the Board. Despite a dip in earnings, the strong cash flow and positive outlook enables us to pay a final dividend of 8.2 cents per share, consistent with the prior year.
Group CEO Simon Bennett says “The DRP is a great way to make a meaningful reduction in our core debt over the coming year. It will enable us to repay the debt raised to acquire Absolute IT, once more giving us ‘headroom in the balance sheet’ for future opportunities. It allows the Board flexibility to increase the capital base, with the support of key shareholders, while allowing other investors the opportunity to reinvest in new shares (up to 50% of the final dividend), at a share price to be determined according to VWAP calculated on 5 business days from Ex Date, being the day before Record Date.”
It is disappointing to announce a drop in NPAT at $5 million, 14% below the previous year’s $5.8 million. The robustness of our white collar business countered what was a challenging year for AWF.
The outlook for the year ahead is good. The Board is satisfied with the strategic direction and the plan for the year ahead. We have good client and sector diversity and have a good pipeline for new client acquisition across all of our businesses. We will continue to invest in internal efficiencies, innovation and build stronger candidate engagement across changing engagement methodologies. The digital landscape is well-suited to us and an area of continued opportunity and investment.
Simon Bennett
Chief Executive
For the Board:
Ross Keenan 021 685 655
Chairman
For further information contact:
Simon Bennett 021 036 8387
 
Appendix 1
Appendix 7

• that Nick Williams, the incumbent CFO, had signalled his intention to resign his position, effective 16 June 2017; and
• that Jannine Mountford was appointed as CFO-designate, pending Nick Williams’ departure from the business.

AWF advises that Jannine Mountford has resigned and will not be commencing the CFO role. Nick Williams has agreed to delay the date of his departure, in order to facilitate the transition to a replacement CFO in due course.
Contact: CEO — Simon Bennett +64 21 0368 387
Chairman — Ross Keenan +64 21 685 655