AWF: Solid year for AWF Madison
Level 6, 51 Shortland Street
PO Box 105 675, Auckland 1143
Tel 09 526 8770
awfmadison.co.nz
MEDIA RELEASE
8 June 2020
Solid year for AWF Madison - firm start to FY2021 trading
AWF Madison [NZX:AWF] today announces an after-tax profit of $2.7 million for the year ended 31 March 2020,
up from $2.0 million a year ago.
EBITDA (earnings before interest, tax, depreciation and amortisation)
i
recovered strongly in FY2020, to $12.4
million, from $7.6 million in FY2019. This was only a little below the guidance given in October 2019.
Group revenue $264 million, down 1.6%
NPAT $2.7 million, up 33%
10-month contribution from JacksonStone & Partners
No final dividend - acknowledging economic uncertainty
The reduction in Group revenue was driven by AWF, where revenue fell by 16% to $97.4 million.
This reflected a number of factors. The Group took the decision in 2018 to start relinquishing low margin, high
cost-to-serve business in favour of customers with higher engagement levels.
In addition, AWF has recently seen growth in permanent recruitment, which furnishes higher margins than
temporary.
Taken together, these factors constitute encouraging momentum by AWF towards a greater contribution to
Group profitability.
In our white collar segment – Madison, Absolute IT and JacksonStone & Partners – revenue rose from $151.9
million in FY2019 to $166.1 million in FY2020, of which JacksonStone contributed $27 million.
Our white collar segment last year contributed 63% of Group revenues, up from 57% in FY2019 and 53% in
FY2018.
Madison and Absolute IT’s contributions fell slightly short of plan but were partially offset by the better-than-
expected performance of JacksonStone & Partners.
POST BALANCE DATE
CEO Simon Bennett said the Group was eligible for the Government’s wage subsidies in two of its businesses,
resulting in retention of the majority of the workforce.
AWF Madison was able to support many of its temporary workforce who were unable to work through Level 4
lockdown, and had more than 1,000 people out working in essential services during that period.
Activity levels early in the new financial year, as we await the return to Level 1, point to a satisfactory first half
of 2021 Group result, he said.
Level 6, 51 Shortland Street
PO Box 105 675, Auckland 1143
Tel 09 526 8770
www.awfmadison.co.nz
“Continued investment in our technology infrastructure and operational platforms has served us well. This has
not only enhanced internal efficiencies, including our internal staff’s ability to work remotely through lockdown;
but has also expanded our capability and service offerings that we are able to provide to our clients.
This additional capability combined with our broadening reach in the market has put us in a strong position to
be able to support the flexible needs of our clients as they navigate an unpredictable economy.”
FY2020 operating cashflow rose by $0.4 million to $9.9 million and the Group ended the year in a strong
position, with net cash of $6.2 million.
The Board has decided to not pay a final dividend this year, which was considered prudent during the
continuing uncertainty, and in an environment where senior management and Directors accepted reduced
remuneration through the critical period.
An interim dividend of 8.0 cents a share was paid in November 2019.
Ends
Simon Bennett For the Board:
Chief Executive Ross Keenan, Chairman 021 685 655
For further information contact Simon Bennett:
09 917 1010
i
EBITDA is a non-generally accepted accounting principle term and reconciles to reported Net Profit After Tax as follows:
EBITDA to NPAT Reconciliation $000’s
EBITDA 12,429
Depreciation and Amortisation Expense (6,194)
Investment Revenue 9
Finance Costs (2,084)
Acquisition-related expenses (263)
Net Profit before tax 3,897
Income tax expense (1,220)
Net Profit after tax 2,677
---
Template
Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Updated as at 17 October 2019
Results for announcement to the market
Name of issuer AWF Madison Group Limited
Reporting Period 12 months to 31 March 2020
Previous Reporting Period 12 months to 31 March 2019
Currency New Zealand Dollars
Amount (000s) Percentage change
Revenue from continuing
operations
$263,527 -1.6%
Total Revenue $26,527 -1.6%
Net profit/(loss) from
continuing operations
$2,677 33.0%
Total net profit/(loss) $2,677 33.0%
Interim/Final Dividend
Amount per Quoted Equity
Security
The Board has resolved not to declare a Final Dividend
Imputed amount per Quoted
Equity Security
Not Applicable
Record Date Not Applicable
Dividend Payment Date Not Applicable
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
-$0.71101572 -$0.47625317
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Please refer to Financial Statements
Authority for this announcement
Name of person
authorised
to make this announcement
David Lazarus
Contact person for this
announcement
David Lazarus
Contact phone number (09) 526 8775
Contact email address David.lazarus@awfmadison.co.nz
Date of release through MAP
08/06/2020
Audited financial statements accompany this announcement.
---
11AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2IL0EDSOFO1 L
Annual Report 2020
SECTION NAME1AWF MADISON GROUP ANNUAL REPORT 2020AWF MADISON GROUP ANNUAL REPORT 2020
Contents
CHAIRMAN’S REPORT 2
CEO’S REPORT 4
GROUP MANIFESTO 6
OUR BUSINESSES 8
OUR EVOLVING LANDSCAPE 10
FINANCIAL COMMENTARY 12
OUR LOCATIONS 13
BOARD OF DIRECTORS 15
CORPORATE GOVERNANCE STATEMENT 16
INDEPENDENT AUDITOR’S REPORT 20
FINANCIAL STATEMENTS 22
NOTES TO THE FINANCIAL STATEMENTS 26
SHAREHOLDERS’ STATUTORY INFORMATION 75
DIRECTORY 80
“It strikes me that our
relevance is more
important now than
ever. Our labour market
is being challenged like
never before, and already
the Government is
hinting at “active labour
market policies”. We are
well-positioned to help.”
Key Financials
RevenueNet Profit
After Tax
FY2019,
$267.8 million
Operating
Cash Flow
Shareholders’
Funds
Total Assets Net Bank Debt
31.03.20
FY2019,
$9.5 million
FY2019,
$2.0 million
FY2019,
$26.6 million
FY2019,
$34.8 million
FY2019,
$95.5 million
$29.8
$9.9
$135.3$33.7
$ 2 .7
$263.5
Million
Million
MillionMillion
MillionMillion
Simon Bennett, CEO
3AWF MADISON GROUP ANNUAL REPORT 2020CHAIRMAN’S REPORTCHAIRMAN’S REPORTAWF MADISON GROUP ANNUAL REPORT 20202
Over the past financial year, AWF Madison
Group has worked hard towards building
a more diversified and innovative business
and this has certainly helped in being able
to deliver a strong year end result, despite
the challenges of the last few months.
The commercial challenges the Group
faced during the financial year were, to a
large extent, a continuation of the trends
seen previously.
The significant efforts made by AWF
towards revenue replacement were
exacerbated by some of our larger
clients whose businesses were negatively
impacted by a less than robust national
economy. Accordingly, we saw significant
demand fluctuation and consequent
inefficient use of skilled labour.
In Madison and Absolute IT, in addition
to the increase in boutique agencies, the
growing trend, by clients, to establish
in-house recruitment teams contributed
substantially to the businesses’ reduced
performance.
The acquisition of JacksonStone &
Partners, providing access into sectors
where the Group has not previously
been well-represented, has been
very positive.
During the financial year, the Group
has followed a strategy of bringing its
constituent businesses closer together by
applying an integrated business strategy
and has invested in platform changes
to facilitate and enhance operational
efficiencies. This has positioned the
businesses to leverage off one another’s
experience and expertise (with an added
advantage of remote capability); and
also providing additional value to those
of our clients to whom we provide
Managed Services.
The advent of COVID-19 in Quarter 4,
and the ensuing lockdown, clearly had
an impact on the Group’s efforts to
see the financial year end on a positive
note. Despite the challenge, the Group’s
competent management, acting firmly
and quickly, enabled the business
to remain operational, both internally
and through its contingent workforce,
thereby meeting the needs of a number
of customers in essential services.
The Board’s decision to not pay a final
dividend this year was considered
prudent during the continuing uncertainty,
and in an environment where senior
management and Directors accepted
reduced remuneration through the
critical period.
It has certainly been a challenging
year for our team, and we acknowledge
their focus on delivering high standards
with particular ongoing attention to
the maintenance of strong Health &
Safety performance.
As a Board, we wish to acknowledge
the wonderful commitment from our
management team led by Simon Bennett,
Chief Executive. They have all risen to the
occasion at a time of unbelievable stress
to the business mission. We have started
the new financial year with a strong
and diversified business grouping, very
committed to delivering growth.
Finally, due to the impact of COVID-19,
the Board has agreed to shift the date
of our Annual Shareholders’ Meeting
from the end of July to Wednesday 30
September, with the intention of being
able to fully update Shareholders as to
the trading performance of the Group for
the six months to 30 September 2020.
For the Board,
Ross B Keenan
Chairman
Chairman’s
Report.
Ross Keenan, Chairman
Dear Shareholder,
We are certainly living in a time
of economic and social upheaval
where there is little experience
we can look to for guidance –
a time indeed, when fortune will
favour those businesses that
are quick to adapt to changed
circumstances, who are
flexible and innovative in their
approach to looking at –
and for – opportunities from a
different perspective.
541AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2
out working in essential services.
Together with clients, we worked hard
to keep them safe and well throughout
this difficult time.
The majority of our internal workforce
and white-collar contractors were able to
work seamlessly through the lockdown,
from home. Our foresight to invest in
infrastructure has positioned us well for
remote capability, and like many we will
use this opportunity to reassess the need
for all staff to return to offices as before.
It is now becoming more widely accepted
that flexibility of workforce will lead to
productivity gains, and this is echoed in
the NZ Productivity Commission’s March
2020 Report regarding the future of work.
This flexibility will be crucial as we as a
country restructure this workforce to get
it back towards full employment. Labour
force flexibility maximises both economic
potential and opportunities for workers.
The COVID-19 pandemic is only the latest
of a number of economic shocks in recent
years (the Christchurch earthquakes and
the GFC also underscored the need for
both employers’ and workers’ agility and
adaptability). Our flexible workforce model
and managed service approach
are gaining significant traction, and we
expect this to grow in the year ahead.
A flexible labour market, coupled with
re-training and upskilling, can contribute
to our company and our nation’s recovery.
We remain cautiously optimistic. Cautious,
because the full economic impact of the
pandemic is yet to be seen; and optimistic,
because we know how relevant and
well-positioned we are. So, while we have
prepared the business for a downturn,
our investment into our operational
platform and continued collaboration
across the Group will be valued by
clients both now and in the long term.
The extraordinary change in the world
over the past few months, as the
pandemic has spread across the globe,
has challenged the population like
many of us have never experienced.
Paradoxically, at a time of unparalleled
access to information and globalised
channels of communication, countries
have shut down borders and there is a
drive for independence and nationalism.
At the forefront of our strategy
is the vision for AWF Madison:
“To grow our impact as New
Zealand’s leading recruitment
and resourcing company.”
“We strive to make a big impact on the
growth and success of New Zealand.
Structural challenges in the labour
market require proactive solutions, and
we are uniquely positioned to provide
them. We believe it’s possible to deliver
strong returns for our shareholders in a
way that also provides better outcomes
for our clients, people and New Zealand.”
Our business
has, and
continues to
have, people
at its core.
Our
business
and our
resilience.
It strikes me that our relevance is more
important now than ever. Our labour
market is being challenged like never
before, and already the Government is
hinting at “active labour market policies”.
We are well-positioned to help.
As governments worldwide tackle the
containment of COVID-19, business, and
indeed society, faces unprecedented
volatility. Clients are operating in an
increasingly VUCA (volatile, uncertain,
complex, ambiguous) landscape;
necessitating evolution in the world of
work, and along with it, the approach to
human resource. There are implications
for how businesses lead, plan succession,
identify skills, define roles, manage
performance, leverage technology,
scale and flex. Agility is demanded,
and now forced, by the pandemic.
The contingent workforce is becoming
more prominent as a strategic solution.
Hiring managers need recruiters
who can see the bigger picture and
work with them to gain clarity.
In our sectors, the talent shortage
will largely remain. The cost of hiring
remains a challenge – there have been
consecutive minimum wage rises and
the increased movement in the market
creates pressure on salaries. The migrant
channel for areas of shortage, including
IT and Construction, has closed and
when the door opens it will be a smaller
opening than before. These sectors will
be where initial growth and emphasis
will come from, with a shared focus from
the public and private sectors. Success
lies in our ability to identify transferable
skills in candidates, train them for
redeployment; and convince our clients
of their resilience and ability to learn.
When we developed our social
enterprise, The Work Collective, we
could not have imagined the numbers
of people who would become displaced
from employment in such a short
space of time. This model for utilising
our scale and our skills will become
indispensable as our country seeks to
become fully productive once more.
Over the past 12 months we have
purposefully brought our businesses
closer together through operational
strategy and platform changes. This
is not only to drive efficiencies but
also to leverage the breadth of skills
and knowledge across the Group.
Pre COVID-19, we saw opportunities
across the private sector, with a strong
public sector base. For the year ahead,
we will solidify this public sector base,
where we are a key player; benefiting
from our sector diversification and
the inclusion of Absolute IT and
JacksonStone & Partners in recent years.
With JacksonStone as part of the Group
since 1 June 2019, it is clear that the
business complements the others
well. Being well-regarded by their
clients, particularly in the public sector,
JacksonStone’s relationships at the
executive level are helping to pave client
pathways to Madison, AWF and Absolute
IT. This leverage between the businesses
has proven invaluable for the Group’s
cohesion and ability to cater to client
needs across levels and departments.
To mitigate the impact of revenue loss
due to COVID-19, my executive team,
along with many others in the business,
took a salary sacrifice to ensure we
did not have to reduce staff numbers
significantly. More than 90% of our
internal workforce has been retained;
balancing a leaner workforce with
continued capability. We were grateful to
take up the Government Wage Subsidy,
which enabled us to support many of
our temporary workforce who were
unable to work through the Alert
Level 4 lockdown. This has kept our
contingent workforce intact and able
to be deployed through Alert Levels 3
and 2. Even in the height of Level 4
lockdown, we had up to 1,000 people
Simon Bennett, CEO
CEO’S REPORTCEO’S REPORT
Over the past 12
months we have
purposefully
brought our
businesses closer
together through
operational
strategy and
platform changes.
7AWF MADISON GROUP ANNUAL REPORT 2020GROUP MANIFESTOGROUP MANIFESTOAWF MADISON GROUP ANNUAL REPORT 20206
What
Drives
Us.
Whether it is through building one new
relationship or tackling the challenges within
New Zealand’s labour market, our businesses
aspire to influence the growth and success of
our country. We believe it is possible to deliver
strong returns for our shareholders in a way
that also provides better outcomes for our
people, our customers and our country.
We have a clear proposition in our four
businesses providing distinct advantages in the
channels in which we operate, to our clients and
candidates. At the same time, we are building
strong capability in our shared service functions,
in sourcing, recruitment marketing and digital
design to further enhance and leverage our
business capabilities. The business goals
remain aligned to the same Group aspiration
and the following four strategic imperatives:
1
Our
People.
We will be driven
forward by resilient
and capable people
who are engaged
with our purpose and
strategic direction, and
who have the flexibility
and determination to
do better in the fast-
changing environment.
We will be additive
to the lives of our
workforce and present
them with opportunity.
432
We will choose and
partner with our
clients wisely. We will
add value through our
reputation for quality,
efficiency, relationships
and customised
solutions.
Our
Finances.
Our
Country.
Our
Customers.
We are uniquely
positioned and have a
responsibility to provide
proactive solutions
to address structural
challenges in the
employment market.
We will make an impact
in growing and shaping
our workforce for the
current and future
needs of the country.
We will drive strong
cashflow for dividend
growth. We seek
NPBT growth through
continued execution
and improvement
initiatives impacting
cost and revenue, to
create sustainable
value for our
shareholders.
981AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OUR BUSINESSESOUR BUSINESSES
The Work Collective is an
employment initiative that delivers
social impact by connecting
Employers, Employment Support
organisations and AWF Madison,
New Zealand’s largest recruitment
and resourcing Group. The purpose
of The Work Collective is to provide
meaningful work opportunities
for those who face barriers to
employment. Launched in mid-
2019, The Work Collective offers
organisations a way to deliver social
impact through their staffing supply
chain. Having completed an initial
pilot programme, the initiative
is working towards gaining full
certification as a Social Enterprise.
Madison was established in 1998,
and over the years has become
the recruitment partner to a wide
variety of organisations within
the private and public sectors.
Madison’s service spans entry level
and support roles to professional
and managerial positions. Each
year, hundreds of permanent
positions are filled by candidates
who have been sourced and
matched to specific business
requirements and organisational
culture fit. Every day, employees
work on temporary assignments
across New Zealand’s major cities.
AWF has a 32-year history of
supplying entry level, semi-
skilled and skilled workers to
the infrastructure, construction,
transport and logistics,
manufacturing and primary sectors.
Every day, AWF’s employees are
deployed to client sites. Through its
network of 22 branches spanning
from Kaitaia to Invercargill, AWF
provides hundreds of enterprises
throughout New Zealand with
the human capital necessary to
complete major projects, meet
increased demand in goods and
services, and fill the skills gap in
permanent workforces.
OUR BUSINESSES
Founded in 2000, Absolute IT caters
to the specific recruitment needs of
the technology and digital sectors.
Absolute IT’s specialist recruiters
provide permanent and contractor
staffing services New Zealand-wide
from their offices in Wellington,
Auckland, Hamilton and Christchurch.
From resourcing large transformation
programmes in the public sector,
to sourcing the right fit for large
corporates and attracting world class
talent for New Zealand start-ups,
Absolute IT is relied upon for its
expertise and extensive network.
JacksonStone & Partners is
one of the most experienced
executive search and recruitment
consultancies in New Zealand.
Established in 2011, JacksonStone
works across all disciplines
up to Chief Executive level and
including board appointments,
for organisations in the public,
private and not-for-profit sectors.
JacksonStone offers global search
reach through their membership
of the CFR Global Executive
Search alliance. Their experienced
consultants have the capability
to identify and place talent both
nationally and internationally.
11101AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OUR EVOLVING LANDSCAPEOUR EVOLVING LANDSCAPE
Our
Evolving
Landscape.
In the week before New Zealand
moved into lockdown, the Group’s
Senior Leadership Team was
finalising business plans for the
coming financial year.
Driving Innovative Approaches
When employers are ready to take on
headcount again, we expect some will
undertake the recruitment themselves,
especially in skillsets where there is
an abundance of candidates. It will
be weighing up cost against time as
many employers will also have reduced
their internal recruitment teams. Our
relevance will likely shift to two ends of
the spectrum. At the one end, it will be
our capability to robustly handle high-
volume recruitment and tasks (such as
unbundled recruitment services), and
at the other end, it will be our expertise
in sourcing and shoulder tapping in-
demand talent, our ability to design
solutions, to consult and to bring clarity.
What this means for our businesses is that
at one end there is the need for efficiency,
and at the other there is the need for
insightful consulting. We have therefore
made the strategic decision to push
ahead with building data-driven tools and
consolidating our operational platform
across our white collar businesses. The
implementation of a best in class CRM
and back office integrations is being
led by a strong project team ensuring
that our staff and customers get the
maximum benefit of a highly customised
implementation. We are already reaping
the benefits of efficiency and effectiveness
in improved speed to market.
We count it a privilege to be part of
New Zealand’s employment infrastructure.
Together, we have the determination
and agility to be a valued supplier as
our country recovers and rebuilds.
strategies, however in the post COVID-19
context we expect clients to take a more
balanced view, with a critical need for the
productivity gains that come with a higher
quality of candidate networks and service.
Local Industrial Capability
Whilst we have seen some vertical
construction projects being pushed
out, we are well-aligned to support the
scaling up of shovel-ready projects with
our operations across metropolitan
and regional New Zealand. With the
construction sector having been reliant
on migrant workers, there will be skill
gaps that will result in demand for our
semi-skilled and skilled field workers.
There will be interest in our capabilities
to impart skills and safety training.
Our manufacturing and logistics
recruiters will be cognisant of the great
consideration going into the supply
chain and the desire to reduce overseas
reliance. There is also a drive to market
not only New Zealand food and fibre, but
also the high value exports underpinned
by kiwi engineering and design innovation.
Home-grown Focus
The global pandemic is likely to encourage
the onshoring of contact centres. In
the finance and insurance sector, our
clients have needed to boost local contact
centre numbers due to the unavailability
of offshore partners. Our track record
with government contact centres was
beneficial as government agencies
ramped up their temporary workforce
in the COVID-19 direct response.
We expect to provide further support as
Government rolls out programmes for
the COVID-19 recovery. Opportunities
will come through our strong
relationships in the government and
health sectors and the need will
be across several talent pools.
Sourcing Specialist Skillsets
For executive, technology and other
specialist roles, clients will continue to
find hiring the right people a challenge,
even though the employment market
appears to have an oversupply of
candidates. The people with these
particular skillsets are unlikely to be
active job hunters, which is where our
expertise in building networks, sourcing
talent and promoting job opportunities
is critical. In the central and local
government arena most of these roles are
time-limited, with legislated recruitment
processes required for an appointment.
Technology cuts across several sectors
that are key to New Zealand’s social
and economic recovery. The opportunity
to make gains and promote innovation
to put us back onto the growth
trajectory is exciting. Our database
and exceptional contractor book of
technology talent will be critical.
While the market is vastly changed on the
other side of lockdown, what remains un-
changed is our operational strength, our
enduring brands and collective experience
navigating economic turbulence.
Diversification of Business
and Service Offering
With the addition of JacksonStone &
Partners, our stable of well-regarded
brands and deepened verticals presents
a compelling Group proposition. Clients
value the breadth of our networks, our
whole-of-market view, the range of
services and the opportunities for greater
partnership and volume-leveraged pricing.
In addition to traditional recruitment
services, our size and infrastructure
growth has enabled us to deliver large
projects and managed services where the
staffing solution is designed to deliver
specific outcomes such as training,
onboarding, performance management,
technology integration and employer
branding. We have been delighted to be
able to offer these customised solutions
to more of our long-standing clients.
Aligning with the Local Market
Dedicated to the New Zealand market,
our local presence and focused energy
means we can more quickly deliver added
value to strategic client relationships.
As New Zealand forges its way post
COVID-19, clients will look to innovative
suppliers who can add value. It is
paramount for our people to build upon
client relationships in these times of
uncertainty, and this will be championed
by our senior sales team. We will also stay
close to candidates to ensure access to
the right skillsets when clients can forge
ahead with their programmes of work.
Leveraging the
Contingent Workforce
Whilst many employers, and especially
SME businesses, will freeze or restrict
permanent recruitment, likely for
months to come, some will turn their
strategies towards contingent workers.
Our businesses are well-positioned
with strong temporary and contractor
books and in this regard, clients will
have greater confidence in recruiters
with good cashflow and governance.
There had been increased competition
from local and global players using price
Our stable of
well-regarded brands
and deepened
verticals presents
a compelling Group
proposition.
Dedicated to the
New Zealand
market, our local
presence and
focused energy
means we can more
quickly deliver
added value to
strategic client
relationships.
121AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2
AWF LOCATION
MADISON LOCATION
ABSOLUTE IT LOCATION
SELECT LOCATION
JACKSONSTONE LOCATION
KEY
Kaitaia
Kerikeri
Whangarei
Auckland
Waihi
Tauranga
Rotorua
Hawkes Bay
Palmerston North
Petone
Wellington
Christchurch
Invercargill
Dunedin
New Plymouth
Hawera
Whanganui
Nelson
Blenheim
Hamilton
TŌ TĀTOU WHENUA
OUR COUNTRY
AWF MADISON GROUP ANNUAL REPORT 202013OUR LOCATIONS
Revenue
Group Revenue of $264m was at a similar
level to prior year Revenue of $268m.
Revenue sourced from provision of services
to Industry (AWF) was down on the
prior year, due to a strategy of minimising
financial exposure to certain industry
segments (e.g. Auckland commercial
construction), a deliberate strategy of
pricing contract renewals at minimum
desired returns, and reduced client trading.
There was also a push to deliver more
permanent recruitment solutions at higher
margin, which was achieved.
Revenue sourced from provision of services
to Commerce (Madison Recruitment,
Absolute IT & JacksonStone & Partners)
of $166m was up on prior year Revenue
of $152m, with JacksonStone & Partners
providing $27m. The mix of permanent and
contingent was a factor in this reduction
of the existing businesses, with a stronger
economic period earlier in the year leading
to weaker temporary revenue in favour of
permanent hiring in lower level roles.
Net Profit After Tax
After-tax profit of $2.7m was up on the
prior year result of $2.0m. The current
year result included the after-tax cost of
capitalising leases of $0.26m (in accordance
with IFRS16 – Leases). On a like-for-like
basis, the result this year is $2.9m versus
the prior year’s $2.0m.
Dividend
An interim dividend of 8.0 cents per
share was paid on 29 November 2019.
The Directors have resolved not to declare
a final dividend due to the economic
uncertainty caused by COVID-19. The prior
year Dividend stream was 16.2 cents per
share (interim 8.0 cps and final 8.2 cps).
This ensures we can reduce debt and be in a
stronger position to assess the business, as
we see what type of recovery the economy
takes. Directors and management all took
pay reductions. Headcount was trimmed
in a similar vein, and a pause in the dividend
was the appropriate course of action.
Finance Costs
Finance costs for the year at $2.08m
included Interest on capitalised Lease
Liabilities of $0.58m, and Interest on
contingent consideration of $0.1m.
The direct comparison was $1.40m for the
current year and $1.38m for the prior year.
Cash Flow
The year saw continuing strong Cash
Flow from operating activities of $9.9m,
up $0.4m on the prior year.
Borrowings
The $36.0m million term debt facility with
the ASB Bank Limited has been retained and
extended out to October 2021. At 31 March
2020 the facility is drawn to $36.0m following
a $3.0m drawdown to assist funding of the
JacksonStone & Partners acquisition.
Net Current Assets
(excluding cash)
Reduced by $5.6m during the financial
year, from $7.7m as at 31 March 2019 to
$2.1m as at 31 March 2020, with capitalised
lease liabilities accounting for $2.5m of the
reduction and contingent consideration on
the JacksonStone acquisition of $1.5m.
A reduction in lower margin contingent work
ensured that the business could operate
with lower levels of working capital, as was
part of our strategy.
Acquisition
In June 2019 JacksonStone & Partners Ltd
was acquired for $10.52m, with contingent
consideration of $3.2m. The $7.3m paid to
date was funded by a combination of bank
facility drawdown of $3.0m, capital sourced
via the DRP of $1.7m, and the balance from
available cash. The acquisition has been
earnings accretive from day one, and has
offered the group operating leverage and
further diversification.
FINANCIAL COMMENTARY
FINANCIAL COMMENTARY
151AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2IL0EDSOFO1 LIL0EDSOFO1 L
Board of Directors
Wynnis ArmourJulia Hoare
Ross Keenan
Nick Simcock
Simon Hull
Wynnis joined the Board in January 2015
as a non-executive (“non-independent”)
Director. After holding senior
management positions in both the public
and private sectors, (including Adecco –
one of the largest global recruitment
firms) Wynnis co-founded the Madison
Group which was sold to AWF in
2013. She contributes a wealth of
business experience and commercial
acumen and a particular understanding
of the Group’s businesses. Wynnis is
a member of Global Women and the
Institute of Directors and is a Director of
angel investor ArcAngels and of
Armour Consulting.
Julia joined the Board as an
independent Director in 2013
after 20 years as a partner with PwC.
Julia is Deputy Chairperson of the a2
Milk Company Ltd and of Watercare
Services Ltd, and is an independent
Director of Auckland International
Airport Ltd, Port of Tauranga Ltd
and Meridian Energy Ltd. She is Vice
President of the Institute of Directors
and is on the Advisory Panel for the
External Reporting Board.
Ross joined the Board in 2004 in the
build-up to AWF’s listing and is the
group’s Chairman and an independent
Director. He brings to the Board a
wealth of corporate experience gained
as Managing Director of Ansett
New Zealand and later Newmans
Group. Ross held executive
management positions with
Air New Zealand, Air Pacific and Qantas
from 1968 to 2000 in Fiji, Australia,
Los Angeles and London. He is also a
Director of Touchdown Ltd.
Nick joined the Board as an
independent Director in January 2018
after 15 years in Managing Director
roles in New Zealand, Australia,
and Asia/Pacific with Korn Ferry/
Futurestep. Nick brings deep industry
expertise in recruiting, outsourcing,
and talent management. Nick was the
CEO and Director of a start-up SaaS
payments business Wrap It Up, which
was sold in 2017. He is a Trustee on
the Wellington Creative Capital Arts
Trust, and was formerly on the Otago
University Business School Board of
Advisors. Nick is a Chartered Member
of the Institute of Directors.
Simon founded the Allied Work
Force business in 1988. He was AWF
Managing Director for 27 years and is
its largest shareholder. He has been
instrumental in growing what is now the
AWF Madison business from a single
office in Penrose to its current market
leading position. Before founding
Allied Work Force, Simon was involved
in farming, horticulture and small
business management. He continues
to be involved in marine-focussed
businesses as well as pursuing his
onshore and offshore yacht racing
passion. Simon is a non-executive
(“non-independent”) Director.
BOARD OF DIRECTORSAWF MADISON GROUP ANNUAL REPORT 202015AWF MADISON GROUP ANNUAL REPORT 202014
17161AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2CORPORATE GOVERNANCECORPORATE GOVERNANCE
The Board of Directors of AWF
Madison Group Limited (NZX:AWF)
is responsible for the corporate
governance of the Company. The Board
has established a culture that ensures
commitment to and compliance with
good corporate governance principles,
and ethical conduct is at the heart of
the Company’s business practices.
The Company will continue to monitor
developments in corporate governance
practices and update its policies
to ensure AWF Madison maintains
appropriate standards of governance.
Corporate Governance Statement
This statement sets out the corporate governance policies,
practices and processes followed by the Board throughout
the year. AWF Madison complies with the NZX Listing Rules,
which came into effect on 1 January 2019, and the corporate
governance principles set out in the NZX Code of Corporate
Governance. The Company also complies with the principles
in the Financial Markets Authority’s Corporate Governance
Principles and Guidelines.
The Board
The Board is responsible for the affairs and activities
of the Company. It establishes the Group’s objectives,
strategies for achieving these objectives, the overall policy
framework within which the business of the Group is
conducted, and monitors Management’s performance with
respect to these matters. The Board has delegated the
day-to-day management of the Group to the Chief Executive
Officer. Other delegations are covered in a Delegations Policy.
The Company’s Constitution and the Board Charter set out
the policies and guidelines for the operation of the Board.
Board Composition and Operations
As at 31 March 2020, the Board comprised five Directors.
Ross Keenan (Chairman), Julia Hoare and Nick Simcock
have been determined as independent Directors as defined
by the NZX Listing Rules. Simon Hull, and Wynnis Armour
are non-independent Directors.
The Board is elected by the shareholders of the Company.
In accordance with the Company’s constitution and the NZX
Listing Rules, a director must not hold office (without
re-election) past the third annual meeting following the
director’s appointment or three years, whichever is longer.
The Board holds regularly scheduled meetings and
other meetings on an as required basis. Board papers are
circulated ahead of each meeting. The Board has access
to senior executives and external advisers to provide
further information.
Board Remuneration
Directors’ fees for the year ended 31 March 2020
totalled $355,000. A fee of $115,000 per annum is paid
to the Chairman, $60,000 per annum to Julia Hoare,
Nick Simcock, Simon Hull and Wynnis Armour. Further
information is provided in the Statutory Information
section of the annual report.
The terms of any Directors’ retirement payments are as
prescribed in the Constitution and require prior approval
of shareholders in general meeting. No retirement
payments have been made to any Director.
Board Committees
The Board has five formally constituted committees of
Directors. Each Committee has a Charter or terms of
reference that establishes its purpose, structure and
responsibilities. The Committees make recommendations
to the Board and may only make decisions on matters
for which they have been given specific authority.
1. Audit, Finance and Risk Committee
The Audit, Finance and Risk Committee provides
independent assurance and assistance to the Board
and Chief Executive on the Company’s risk, control
and compliance framework, and its external financial
reporting and accountability responsibilities.
The Committee is comprised of a majority of independent
Directors. The members of the Committee are Julia Hoare
(Chairperson), Ross Keenan, Wynnis Armour, Simon Hull
and Nick Simcock.
The Committee meets at least twice per year, with the
external auditors of the Company and the AWF Madison
executives responsible for internal audit management
from within the Company in attendance. The Committee
also meets with the external auditors with AWF Madison
executives absent.
19181AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2
Diversity
The Company has a diversity policy in place (refer to the
website), consistent with the Directors’ belief that a diverse
workforce contributes to improved business performance,
enables innovation and enhances the Company’s relationship
with its customers.
In accordance with NZX’s Listing Rule requirements, the
gender breakdown of AWF Madison Group Limited’s Board
of Directors and Officers as at 31 March 2020 is:
Directors’ and Officers’ Indemnity and Insurance
The Company has insured all its Directors and Officers and
the Directors of its subsidiaries against liabilities to other
parties (except the Company or a related party of the
Company) that may arise from their position as Directors.
The insurance does not cover liabilities arising from
criminal actions.
The Company and Officers have executed Deeds of Indemnity
with Directors, indemnifying them to the extent permitted
by section 162 of the Companies Act 1993.
Risk Management
The Board is responsible for ensuring that key business
and financial risks are identified and appropriate controls
and procedures are in place to effectively manage those
risks. In managing the Company’s business risks, the Board
approves and monitors policy and process in such areas as
internal audit, treasury management, financial performance
and capital expenditure. The Board also monitors expenditure
against approved projects and approves the capital plan.
A Risk Framework is in place (refer to the website).
Principles:
• creates and protects value;
• is an integral part of all AWF Madison’s processes;
• is part of the decision-making process;
• explicitly addresses uncertainty;
• is systematic, structured and timely;
• is based on the best available information; and encourages
open communication;
• is tailored to AWF Madison;
• takes human, cultural factors and diversity into account;
• is transparent and inclusive;
• is dynamic, iterative and responsive to change; and
• facilitates continual improvement.
The Company has insurance policies in place covering most
areas of risk to its assets and business. Policies are reviewed
and renewed annually with reputable insurers.
Directors may seek their own independent professional
advice to assist with their responsibilities. During the 2020
financial year no Director sought their own independent
professional advice.
Interests Register
The Board maintains an Interests Register. In considering
matters affecting the Company, Directors are required to
disclose any actual or potential conflicts. Where a conflict
or potential conflict has been disclosed, the Director takes
no further part in receipt of information or participation in
discussions on that matter.
Disclosure/Shareholder Relations
The Company has a Continuous Disclosure Policy and
procedures in place to ensure key financial and material
information is communicated to the market in a clear and
timely manner.
Consistent with best practice and a policy of continuous
disclosure, external communications that may contain
market sensitive data are released through NZX in the first
instance. Further communication is encouraged with press
releases through mainstream media.
The Company’s website is actively used as a portal
for shareholder reports, news releases and other
communications released to shareholders and media.
The Board formally reviews its proceedings at the
conclusion of each meeting to determine whether there
may be a requirement for a disclosure announcement.
2. Remuneration Committee
The Remuneration Committee’s purpose is to establish
sound remuneration policies and practices that attract
and retain high performing Directors and senior
executives. The Committee ensures that executives and
Directors are rewarded having regard to the Company’s
long-term performance. The policies adopted are
intended to align shareholder interests and employee
interests by demonstrating a clear relationship between
shareholder value and executive performance.
The members of the Committee are Wynnis Armour
(Chairperson), Simon Hull, Julia Hoare, Ross Keenan and
Nick Simcock. The Committee meets at least annually to
review senior executive remuneration and incentives.
3. Nominations Committee
The Nominations Committee assists the Chairman
with an annual evaluation of the Board and Director
performance; to determine Director Independence and
to identify and recommend to the Board individuals for
nomination as members of the Board and its Committees.
All of the Board are members of this Committee.
The Committee meets at least annually.
4. Health & Safety Committee
The role of this Committee is to assist the Board to
fulfil its responsibilities and to ensure compliance with
all legislative and regulatory requirements in relation
to the health and safety practices of the Company as those
activities affect employees and contractors. It ensures
that the Board members themselves are aware of their
own responsibilities and duties under legislation, and are
fully informed on all Health and Safety issues and targets.
The members of this Committee are Simon Hull
(Chairman), Wynnis Armour, Julia Hoare, Ross Keenan
and Nick Simcock.
The Committee members participate in monthly
meetings, and participate in and review reports presented
by the Group Operations Health and Safety Committee.
5. Organisation Committee
The Organisation Committee acts as a reference point
for the Chief Executive in matters around organisational
change as required from time to time. The Committee is
also responsible for assisting the Board in the application
of remuneration policies and best practice for the Board,
Chief Executive and Senior Management.
The members of the Committee are Wynnis Armour
(Chairperson), Ross Keenan, Simon Hull, Julia Hoare
and Nick Simcock.
Remuneration of Auditors
Details of remuneration paid to Auditors are set out in
A4 of the Financial Statements.
Non-Audit Services
The External Financial Auditors Independence Policy sets
out the Company’s position in regard to non-audit services.
Deloitte Limited are the auditors of AWF Madison Group
Limited and whilst its main role is to provide audit services
to the Company, the Company does employ their specialist
advice where appropriate. In each instance, the Board has
considered the nature of the advice sought in context of the
audit relationship. In accordance with the advice received
from the Audit, Finance and Risk Committee, the Board does
not consider these services have compromised the auditor
independence for the following reasons:
All non-audit services have been reviewed by the Audit,
Finance and Risk Committee to ensure they do not impact
the impartiality and objectivity of the auditor;
None of the services undermined the general principles
relating to auditor independence, including not reviewing
or auditing the auditor’s own work, not acting in a
management or decision-making capacity for the Company,
not acting as advocate for the Company or not jointly
sharing economic risk or rewards.
Share Trading
The Company has adopted a Share Trading policy that sets
out the formal procedures Directors and employees are
required to follow to ensure compliance with the Financial
Markets Conduct Act 2013 (refer to the website).
2020 2019
MALE FEMALE MALE FEMALE
NUMBER OF DIRECTORS 3 2 - 3 2 -
PERCENTAGE OF DIRECTORS 60% 40% - 60% 40% -
NUMBER OF OFFICERS 5 4 - 4 4 -
PERCENTAGE OF OFFICERS 56% 44% - 50% 50% -
CORPORATE GOVERNANCECORPORATE GOVERNANCE
GENDER
DIVERSE
GENDER
DIVERSE
21201AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2
Other information
The directors are responsible on behalf of the Group for
the other information. The other information comprises
the information in the Annual Report that accompanies the
consolidated financial statements and the audit report.
Our opinion on the consolidated financial statements does
not cover the other information and we do not express any
form of assurance conclusion thereon.
Our responsibility is to read the other information and consider
whether it is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If so, we are required to
report that fact. We have nothing to report in this regard.
Directors’ responsibilities for the consolidated
financial statements
The directors are responsible on behalf of the Group for the
preparation and fair presentation of the consolidated financial
statements in accordance with NZ IFRS and IFRS, and for such
internal control as the directors determine is necessary to enable
the preparation of consolidated financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the
directors are responsible on behalf of the Group for assessing
the Group’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either
intend to liquidate the Group or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
consolidated financial statements
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud
or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance
with ISAs and ISAs (NZ) will always detect a material
misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis
of these consolidated financial statements.
A further description of our responsibilities for the audit
of the consolidated financial statements is located on the
External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-
practitioners/auditors-responsibilities/audit-report-1
This description forms part of our auditor’s report.
Restriction on use
This report is made solely to the Company’s shareholders,
as a body. Our audit has been undertaken so that we might
state to the Company’s shareholders those matters we are
required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
Company’s shareholders as a body, for our audit work, for this
report, or for the opinions we have formed.
Bryce Henderson, Partner
For Deloitte Limited
Auckland, New Zealand
8 June 2020
Opinion
We have audited the consolidated financial statements
of AWF Madison Group Limited and its subsidiaries (the
‘Group’), which comprise the statement of financial position
as at 31 March 2020, and the statement of comprehensive
income, statement of changes in equity, and statement
of cash flows for the year then ended, and notes to the
consolidated financial statements, including a summary
of other accounting policies.
In our opinion, the accompanying consolidated financial
statements, on pages 22 to 74, present fairly, in all material
respects, the consolidated financial position of the Group as
at 31 March 2020, and its consolidated financial performance
and cash flows for the year then ended in accordance with
New Zealand Equivalents to International Financial Reporting
Standards (‘NZ IFRS’) and International Financial Reporting
Standards (‘IFRS’).
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (‘ISAs’) and International Standards
on Auditing (New Zealand) (‘ISAs (NZ)’). Our responsibilities
under those standards are further described in the
Auditor’s
Responsibilities for the Audit of the Consolidated Financial
Statements
section of our report.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with
Professional and Ethical Standard 1 (Revised) Code of Ethics
for Assurance Practitioners issued by the New Zealand
Auditing and Assurance Standards Board and the International
Ethics Standards Board for Accountants’
Code of Ethics for
Professional Accountants
, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
Other than in our capacity as auditor, we have no relationship
with or interests in the Company or any of its subsidiaries.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
consolidated financial statements of the current period.
These matters were addressed in the context of our audit
of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Key audit matterHow our audit addressed the key audit matter
Impairment testing of goodwill and other indefinite life
intangible assets
Goodwill of $45.1 million (2019: $39.3 million) and other indefinite
life intangible assets (brand names) of $10.5 million (2019: $9.4 million)
are recognised in the consolidated financial statements at 31 March
2020, as detailed in notes B3 and B4 respectively.
Goodwill and other indefinite life intangible assets are tested for
impairment annually or whenever there are indicators that these
assets may be impaired.
For the purpose of impairment testing, the goodwill and other
indefinite life intangible assets are allocated to cash generating units
(CGU). The recoverable amount of each CGU is determined through a
value in use calculation, which reflects significant unobservable inputs,
including forecasted financial performance, discount rates and growth
rates (including terminal growth rate).
The Group has considered the financial effects as a result of COVID-19
on the forecasted financial performance although the situation remains
fluid and there remains inherent uncertainty with respect to the impact
on forecasted financial performance and in turn the carrying values of
goodwill and other indefinite life assets. Management considers that
the general economic impact arising from COVID-19 is expected to
have a negative impact on its underlying CGU’s to varying degrees.
We identified this as a key audit matter because of the significance
of the goodwill and other indefinite life intangible assets to the Group’s
consolidated financial statements and the judgement involved in
determining the value in use of each CGU in particular the forecasted
financial performance.
We have audited the Group’s value in use calculations for each cash-
generating unit (CGU). Our procedures included, amongst others:
• Testing the value in use calculations for arithmetic accuracy;
• Comparing the forecast performance with the approved 2021
financial year budget;
• Assessing the historical accuracy of the Group’s previous forecasts
by comparing prior period budgets to actual performance;
• Challenging Management’s assumptions used in the forecasted
financial performance, including adjustments due to the impact
of COVID-19, by utilising our knowledge of the Group, the past
performance of the CGUs, and their customers;
• Performing a sensitivity analysis on the forecasted financial
performance, growth rates and discount rates and growth rates to
determine the extent to which any changes in these inputs would
result in impairment to the CGUs;
• Involving our internal specialists in assessing the discount rates for
reasonableness in comparison to market data; and
• Evaluating the sufficiency of related disclosures with regards to the
requirements of NZ IAS 36 Impairment of Assets.
Password = @nnualR3port!
Key audit matterHow our audit addressed the key audit matter
Acquisition accounting for business
combination
The Group acquired the JacksonStone &
Partners Limited (‘JacksonStone’) business
on 1 June 2019 as disclosed in note G1.
The acquisition of the JacksonStone business
was significant to our audit due to the size
of the acquisition, and the subjectivity
and complexity inherent in this business
acquisition and the requirements of NZ IFRS 3
Business Combinations
.
The process involved complex and subjective
estimation and judgement by Management
on the following:
• The accounting treatment of the
acquisition;
• The valuation of the consideration
transferred including contingent
consideration;
• Identification and valuation of the assets
acquired; and the liabilities assumed as
at acquisition date; and
• Assessment of the useful lives of the
acquired finite life intangible assets which
is a key input in determining the fair values.
Management engaged an external expert to
assist them in the identification of acquired
assets and the determination of their fair
values at acquisition date.
Our procedures, amongst others included:
• Reading the sale and purchase agreement relating to the acquisition to understand key
terms and conditions and confirming our understanding of the transaction with Management;
• Assessing Management’s evaluation of terms and conditions within the sale and purchase
agreement to determine the associated accounting treatment by comparing those terms
and conditions against the requirements of NZ IFRS 3 Business Combinations and other
relevant guidance;
• Evaluating the measurement of the consideration transferred including contingent
consideration by testing the mathematical accuracy of the underlying calculation, agreeing
the financial projection prepared to the specific financial period specified in the agreement
and analysing the key assumptions adopted by Management;
• Considering the completeness of the identified assets and liabilities by evaluating the terms
of the sale and purchase agreement;
• Recomputing the resulting goodwill to be recognised on acquisition;
• For the measurement of the identified assets and liabilities, evaluating:
– The valuation methodologies in determining the fair values of the identified assets and
liabilities at acquisition date;
– The cash flow forecasts used in the measurement of the identifiable intangible assets,
which included assessing the appropriateness of the future cash flow forecasts and discount
rates applied;
– Management’s assessment of the attributed useful life of the identified finite life asset when
recalculating fair value; and
– The competence, capabilities, objectivity and expertise of Management’s external valuation
expert and the appropriateness of their work as audit evidence for the relevant assertions.
• Engaging our own internal valuation expert to assist in understanding and evaluating the
work and findings of Management’s expert; and
• Evaluating the related disclosures about the acquisition of the JacksonStone business included
in note G1 in the consolidated financial statements.
To the Shareholders of AWF Madison Group Limited
Independent Auditor’s Report
INDEPENDENT AUDITOR’S REPORTINDEPENDENT AUDITOR’S REPORT
23221AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2WDO1O0D1PFIE1EL LOEIWDO1O0D1PFIE1EL LOEI
AWF Madison Group Limited
Statement of comprehensive income
For the year ended 31 March 2020
AWF Madison Group Limited
Statement of financial position
As at 31 March 2020
GROUP
20202019
Note$’000$’000
Revenue from contracts with customersA2263,527267,805
Investment revenueA3926
Direct costs(2,462)(2,687)
Employee benefits expenseF1(239,208)(245,683)
Depreciation and amortisation expenseA4, B1, B2, B3(6,194)(3,445)
Other operating expenses(9,691)(11,782)
Finance costsA4(2,084)(1,380)
Profit before tax
3,8972,854
Income tax expenseA5(1,220)(841)
Profit for the year
2,6772,013
Other comprehensive income for the year––
Total comprehensive income for the year
2,6772,013
Earnings per share
Total basic earnings per share (cents/share)C37.96.1
Total diluted earnings per share (cents/share)C37.96.1
The notes to the Group financial statements form an integral part of these financial statements
GROUP
20202019
Note$’000$’000
Assets
Non-current assets
Property, plant and equipmentB13,1933,038
Right of use assetsB211,107–
Intangible assets – goodwillB445,06839,271
Intangible assets – otherB316,19413,929
Total non-current assets75,56256,238
Current assets
Cash and cash equivalentsC56,1786,357
Trade and other receivablesC653,07132,629
Contract assetsA2458295
Total current assets59,70739,281
Total assets
135,26995,519
Equity and liabilities
Non-current liabilities
Deferred tax liabilitiesA53,1222,462
BorrowingsC736,00033,000
Lease liabilitiesB29,098–
Contingent considerationG11,841–
Total non-current liabilities50,06135,462
Current liabilities
Trade and other payablesC846,16924,186
Contract liabilitiesA2202530
Taxation payableA5950280
ProvisionsF2189241
Lease liabilitiesB22,501–
Contingent considerationG11,463–
Total current liabilities51,47425,237
Total liabilities
101,53560,699
Net assets
33,73434,820
Capital and reserves
Share capitalC230,86829,165
Group share scheme reserve330544
Retained earningsC12,5365,111
Total equity
33,73434,820
For and on behalf of the Board who authorise the issue of the financial statements on 8 June 2020:
ROSS KEENAN, Chair JULIA HOARE, Chair, Audit and Risk Committee
The notes to the Group financial statements form an integral part of these financial statements
25241AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2WDO1O0D1PFIE1EL LOEIWDO1O0D1PFIE1EL LOEI
AWF Madison Group Limited
Statement of cashflows
For the year ended 31 March 2020
AWF Madison Group Limited
Statement of changes in equity
For the year ended 31 March 2020
GROUP
Share
capital
Group share
scheme reserve
Retained
earnings
Total
equity
Note$’000$’000$’000$’000
2019
Balance at 31 March 201827,5983838,87836,859
Effect of changes in accounting policies
resulting from the adoption of NZ IFRS 9 & 15––(374)(374)
Balance at 1 April 2018 (restated)27,5983838,50436,485
Comprehensive income
Profit for the year––2,0132,013
Other comprehensive income––––
Total comprehensive income––2,0132,013
Transactions with shareholders
Issue of share capitalC2, C41,569––1,569
Share issue costsC2(2)––(2)
Dividends paidC1, C4––(5,406)(5,406)
Share based paymentsF1–161–161
Total transactions with shareholders1,567161(5,406)(3,678)
Balance at 31 March 201929,1655445,11134,820
2020
Balance at 31 March 201929,1655445,11134,820
Comprehensive income
Profit for the year––2,6772,677
Other comprehensive income––––
Total comprehensive income––2,6772,677
Transactions with shareholders
Issue of share capitalC2, C41,703––1,703
Dividends paidC1, C4––(5,581)(5,581)
Stock appreciation rights modifiedF1–(329)329–
Share based paymentsF1–115–115
Total transactions with shareholders1,703(214)(5,252)(3,763)
Balance at 31 March 202030,8683302,53633,734
The notes to the Group financial statements form an integral part of these financial statements
GROUP
20202019
Note$’000$’000
Cashflows from operating activities
Receipts from customers267,767275,022
Payments to suppliers and employees(255,072)(262,813)
Net cash generated from operations12,69512,209
Interest received926
Other receipts538–
Interest paid on bank overdrafts and loans(1,401)(1,380)
Interest paid on lease liabilities(582)–
Income taxes paid(1,370)(1,378)
Net cash from operating activitiesC59,8899,477
Cashflows from investing activities
Proceeds from disposal of property, plant and equipment6081
Purchase of property, plant and equipmentB1(899)(1,606)
Purchase of intangible assetsB3(143)(1,025)
Net cash paid on acquisition of JacksonStone & PartnersG1(5,153)–
Repayment of deferred consideration to the vendor of JacksonStone & PartnersG1(616)–
Net cash (used in)/from investing activities(6,751)(2,550)
Cashflows from financing activities
Proceeds from the issue of share capitalC2, C41,7031,569
Share issue costs–(2)
Dividends paid to share holders of the parentC4(5,581)(5,406)
Proceeds from borrowingsC73,000–
Repayment of borrowingsC7–(3,000)
Payment of principal on lease liabilitiesB2(2,439)–
Net cash from/(used in) financing activities(3,317)(6,839)
Net increase/(decrease) in cash held(179)88
Cash and cash equivalents at start of the year6,3576,269
Net cash and cash equivalents at end of the yearC56,1786,357
The notes to the Group financial statements form an integral part of these financial statements
27261AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
IN THIS SECTION
The notes to the financial statements include information
that is considered relevant and material to assist the reader
in understanding changes in AWF Madison Group Limited
and its controlled entities (“the Group”) financial position
or performance.
Information is considered relevant and material if:
• the amount is significant because of its size and nature;
• it is important for understanding the results of the Group;
• it helps explain changes in the Group’s business; or
• it relates to an aspect of the Group’s operations that is
important to future performance.
AWF Madison Group Limited is a Company limited by shares,
incorporated and domiciled in New Zealand and registered
under the Companies Act 1993 and listed on the NZX.
The address of its registered office and principal place of
business is disclosed in the directory to the annual report.
The principal services of the Group are the supply of
temporary staff, contractor resource and recruitment of
permanent staff.
BASIS OF PREPARATION
These financial statements have been prepared:
• in accordance with New Zealand Generally Accepted
Accounting Practices in New Zealand (‘GAAP’). They
comply with New Zealand equivalents to International
Financial Reporting Standards (‘NZ IFRS’), International
Financial Reporting Standards (‘IFRS’) and other applicable
Financial Reporting Standards as appropriate for profit-
orientated entities;
• in accordance with the requirements of the Financial
Market Conduct Act 2013, the Companies Act 1993, and the
NZX listing rules;
• on the basis of historical cost, as modified by revaluations
to fair value for certain classes of assets and liabilities as
described in the accounting policies;
• on a going concern basis, which contemplates continuity
of normal business activities and the realisation of assets
and the settlement of liabilities in the ordinary course of
business; and
• in New Zealand dollars (which is the Group’s functional
and presentation currency), with values rounded to
thousands ($000) unless otherwise stated.
The financial statements were authorised for issue by the
directors on 8 June 2020.
Significant event prior to reporting date Global pandemic
of coronavirus disease 2019
A significant event arose in March 2020, prior to reporting
date, that has had and continues to have an impact on the
Group’s earnings, cash flows and financial position. Refer
to section on ‘Global pandemic of coronavirus disease 2019’
further below and Note F6 for further information.
The Directors have determined that the Group’s application
of the going concern basis of accounting remains appropriate
in light of this event.
Adoption of new and revised Standards and Interpretations
New standards and amendments and interpretations to
existing standards that came into effect during the current
accounting period
• NZ IFRS 16 Leases
The Group has adopted NZ IFRS 16 Leases which became
effective for the year beginning 1 April 2019.
Disclosures relating to the impact of the adoption of
NZ IFRS 16 on the Group’s financial statements are
outlined in note G2.
• NZ IFRIC 23 Uncertainty over Income Tax Treatments
This Interpretation sets out how to determine the
accounting tax position when there is uncertainty over
income tax treatments.
The Interpretation requires an entity to determine whether
uncertain tax positions are assessed separately or as
a group
(depending on which approach gives a better
prediction of the resolution of the uncertainty)
, and assess
whether it is probable that a tax authority will accept an
uncertain tax treatment used, or proposed to be used,
by an entity in its income tax filings.
If it is probable a tax authority will accept the treatment,
the entity should determine its accounting tax position
consistently with the tax treatment used or planned to be
used in its income tax filings.
Otherwise, the entity should reflect the effect of uncertainty
in determining its accounting tax position by estimating
the tax payable (or receivable), using either the most likely
amount or the expected value method.
The adoption of this standard had no material impact on
the Group as it has not taken any uncertain tax positions.
• Amendments to NZ IFRS 9 Prepayment Features with
Negative Compensation
The Group has adopted the amendments to NZ IFRS 9
for the first time in the current year. The amendments to
NZ IFRS 9 clarify that for the purpose of assessing whether
a prepayment feature meets the ‘solely payments of
principal and interest’ (SPPI) condition, the party exercising
the option may pay or receive reasonable compensation for
the prepayment irrespective of the reason for prepayment.
In other words, financial assets with prepayment features
with negative compensation do not automatically fail SPPI.
The adoption of this standard amendment had no material
impact on the Group.
• Annual Improvements to NZ IFRS Standards
2015–2017 Cycle
The Group adopted the amendments included in the
Annual Improvements to NZ IFRS Standards 2015–2017
Cycle which became effective for the year beginning
1 April 2019.
The Annual Improvements include amendments to
four Standards:
• NZ IAS 12 Income Taxes
The amendments clarify that the Group should
recognise the income tax consequences of dividends
in profit or loss, other comprehensive income or equity
according to where the Group originally recognised the
transactions that generated the distributable profits.
This is the case irrespective of whether different tax
rates apply to distributed and undistributed profits.
The adoption of this standard amendment had no material
impact on the Group.
• NZ IAS 23 Borrowing Costs, NZ IFRS 3 Business
Combinations, and NZ IFRS 11 Joint Arrangements
The amendments relating to NZ IAS 23 Borrowing Costs,
NZ IFRS 3 Business Combinations, and NZ IFRS 11
Joint Arrangements, while adopted by the Group, do not
currently apply to the Group and therefore the adoption
of these standard amendments had no material impact
on the Group.
New standards and amendments and interpretations to
existing standards that are not yet effective for the current
accounting period beginning on 1 April 2019
The Group has not early adopted any new standards,
amendments and interpretations that have been issued but
are not yet effective.
There are a number of new standards and amendments to
standards and interpretations that are not yet effective for
the year ended 31 March 2020.
None of these new and amendments to standards and
interpretations have been early adopted by the Group in
preparing these financial statements or been identified as
having a material effect on the Group’s financial statements
in future.
OTHER ACCOUNTING POLICIES
Accounting policies that are relevant to an understanding
of the financial statements (other than those provided
throughout the notes to the financial statements) are set
out below:
Fair value measurement
For financial reporting purposes, ‘fair value’ is the price
that would be received to sell an asset, or paid to transfer a
liability, in an orderly transaction between market participants
(under current market conditions) at the measurement date,
regardless of whether that price is directly observable or
estimated using another valuation technique.
When estimating the fair value of an asset or liability, the
entity uses valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs. Inputs
to valuation techniques used to measure fair value are
categorised into three levels according to the extent to which
the inputs are observable:
• Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can
access at the measurement date.
• Level 2 inputs are inputs other than quoted prices included
within Level 1 that are observable for the asset or liability,
either directly or indirectly.
• Level 3 inputs are unobservable inputs for the asset
or liability.
Goods and services tax (GST)
All revenue and expense transactions and cashflows are
recorded exclusive of GST and other value added taxes. Assets
and liabilities are similarly stated exclusive of GST, with the
exception of receivables and payables, which are stated with
GST included.
Impairment of tangible and intangible assets
excluding goodwill
At the end of each reporting period, the Group reviews
the carrying amounts of its tangible assets (note B1) and
intangible assets (notes B2 and B3) to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists (and at least
annually for indefinite life intangible assets) the recoverable
amount of the asset is estimated in order to determine the
extent of the impairment loss (if any).
The recoverable amount is the higher of an asset’s fair value
less costs to sell and value in use. In assessing value in use,
the estimated cash flows are discounted to their present value
using a pretax discount rate that reflects current market
assessments of the time value of money and the risks specific
to the asset for which the estimates of future cash flows have
not been adjusted.
If the recoverable amount of an asset is estimated to be less
than its carrying amount, the carrying amount of the asset
is reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss.
Where an impairment loss subsequently reverses, the
carrying amount of the asset is increased to the revised
estimate of its recoverable amount, but the increased carrying
amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for
the asset in prior periods. A reversal of an impairment loss is
recognised immediately in profit or loss.
Financial instruments
Financial assets and financial liabilities are recognised
on the Group’s Statement of Financial Position when the
Group becomes a party to the contractual provisions of
the instrument.
All of the financial assets of the Group, which include trade
and other receivables (note C6), are classified as financial
assets at amortised cost.
Notes to the Financial Statements
29281AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
The Group’s trade and other payables (note C8) and deferred
consideration (note G1) arising from business combinations
are classified as financial liabilities at amortised cost.
The Group’s contingent consideration amounts arising from
business combinations (note G1) are classified as a financial
liability at fair value through profit or loss. Contingent
consideration is categorised within Level 3 of the fair
value hierarchy.
Financial liabilities and equity instruments issued by the
Group are classified according to the substance of the
contractual arrangements entered into and the definitions
of a financial liability and an equity instrument. An equity
instrument is any contract that evidences a residual interest
in the assets of the Group after deducting all of its liabilities.
Equity instruments
Ordinary share capital (note C2) is classified as equity
when there is no obligation to transfer cash or other assets.
Incremental costs directly attributable to the issue of
new shares are shown in equity as a deduction, net of tax,
from the proceeds.
Costs which are not directly attributable to the issue of
new shares are shown as an expense and included in
other operating expenses expenses in the Statement of
Comprehensive Income.
Government grants
Government grants are not recognised until there is
reasonable assurance that the Group will comply with the
conditions attaching to them and that the grants will be
received.
Government grants are recognised in profit or loss on
a systematic basis over the periods in which the Group
recognises as expenses the related costs for which the
grants are intended to compensate.
Government grants that are receivable as compensation
for expenses or losses already incurred or for the purpose of
giving immediate financial support to the Group with no future
related costs are recognised in profit or loss in the period in
which they become receivable.
For the year ended and as at 31 March 2020 the Group
recorded the following:
Amounts recognised in Statement of Comprehensive Income:
• Deferred Grant Income release of $1.046m recognised
against Employee Benefits Expense
Amounts recorded in Statement of Position:
• Grant Income Receivable of $22.286m (refer note C6)
• Deferred Grant Income of $21.778m (refer note C8)
Cash outflows recognised in the Statement of Cashflows:
• Grant Income receipts of $0.538m under the heading
of Other Receipts.
KEY JUDGEMENTS AND SOURCES OF ESTIMATION
UNCERTAINTY
In the process of applying the Group’s accounting policies
and the application of accounting standards, Management
are required to make a number of judgements, estimates
and assumptions about the carrying amounts of assets and
liabilities that are not readily available from other sources.
These estimates and associated assumptions are based
on historical experience and various other matters that
are considered to be appropriate under the circumstances.
Actual results may differ from these estimates.
Judgements and sources of estimation uncertainty that are
considered material to understand the performance of the
Group are found in the following notes:
Note – B3
Estimating the remaining useful lives of identifiable customer
relationships and restraint of trade assets and testing the
carrying value of brand assets.
Note – B4
Impairment testing of the carrying value of goodwill.
Note – A2 & C6
Expected credit losses from trade and other receivables and
contract assets.
Note – A2
Expectation of refund liabilities and rebates to customers.
Note – B2
Determination of the expected lease term and the incremental
borrowing rate applicable to a lease.
Note – F2
Rehabilitation under the ACC Partnership programme.
Note – G1
Identification and valuation of intangible assets arising in
a business combination and the estimation of the earn-out
contingent consideration in a business combination.
GLOBAL PANDEMIC OF CORONAVIRUS DISEASE 2019
On 11 March 2020, the World Health Organization declared
an ongoing global outbreak of a novel coronavirus, known as
‘coronavirus disease 2019’ (‘COVID-19’), as a pandemic.
In response, the New Zealand Government has and continues
to implement a range of:
• public health and social measures to prevent and contain
the transmission of COVID-19; and
• economic responses to provide financial stimulus and
welfare support to mitigate the economic impacts of the
COVID-19 pandemic.
The public health and social measures implemented include
restrictions on some non-essential movement/travel, closure
of some non-essential businesses and schools. To achieve
this, the New Zealand Government has implemented a four-
level COVID-19 alert system which specifies public health
and social measures to be taken in response to COVID-19.
These public health and social measures have lowered overall
economic activity and confidence. The economic responses
implemented have mitigated some of the economic impacts.
The Group’s earnings, cash flow and financial position have
been impacted since the outbreak began and up to the date of
the signing of these financial statements (8 June 2020).
The Group is in the business of the supply of temporary staff,
contractor resource and recruitment of permanent staff.
Under the public health and social measures, the Group was
not classified as a provider of essential services, and whilst
some of the Group’s employees were able to work remotely
from their homes, the Group was unable to fully operate
from 27 March 2020 and up to the date of the signing of these
financial statements (8 June 2020).
The Group’s revenue is derived from customers who are both
providers of essential and non-essential services and the
Group has already seen a significant impact on its business
to date.
The Group’s two operating segments, ‘AWF’ and ‘Madison,
Absolute IT and JacksonStone & Partners’ primarily earn
revenue from their customers from the temporary and
permanent placement of staff and the provision of payroll or
employee related services (refer to A2 for further information
on the Group’s revenue streams).
The COVID-19 pandemic and responses described above,
continue to inhibit general activity and confidence levels
within the community, the economy and the operations of
the Group’s business. While the scale and duration of these
developments remain uncertain as at the date of signing
these financial statements, the Group continues to monitor
developments and initiate plans to mitigate adverse impacts
and maximise opportunities.
In response to the COVID-19 pandemic, management has:
• Implemented appropriate health and safety responses to
ensure the continuity of its business operations under each
of the Alert Levels, whilst complying with the applicable
public health and social measures for that level.
• Implemented measures to reduce operating costs and
capital expenditures (where applicable deferring non-
essential capital projects).
• Applied for the COVID-19 ‘Wage Subsidy Scheme’
developed by the New Zealand Government, which is
available to certain New Zealand businesses that are
adversely affected by the COVID-19 pandemic (refer to note
F6 for more detail).
• Assessed the impact of reduced economic activity and
lower revenues due to the COVID-19 pandemic on the
valuation of the Group’s financial and non-financial assets
(i.e. impairment assessment of cash generating units).
As a result of the ongoing COVID-19 pandemic, the Group’s
impairment assessments as at reporting date, of the
specific assets noted, took into account:
– the temporary cessation of operations;
– the actual experience;
– expected decline in demand;
– pricing;
– profitability; and
– other specific considerations noted below.
Management has considered the financial impact on the
following items:
– Non-financial asset impairment/changes in assumptions
for impairment testing;
– Increases in expected credit losses for financial asset
and contract assets;
– Increased costs and/or reduced demand requiring
provisions for onerous contracts to be recognised; and
– Changes in the assumptions for the fair value of
contingent consideration.
Non financial asset impairment/changes in assumptions for
impairment testing
• Indefinite life intangible assets – goodwill (note B4) and
brand (note B3)
Forecast cashflows over a projection period of five years
factor into the impairment assessment for goodwill and
indefinite life intangible assets, such as brand. However
due to present economic circumstances with respect to
COVID-19 as described above, there remains an inherent
uncertainty with respect to the impact on forecast
cashflows and in turn the carrying value of goodwill and
brands. The Group has prepared revised cash flow forecasts
for the purposes of the Group’s annual impairment
testing of goodwill and brand.
This assessment has confirmed the carrying value of
goodwill and brand assets as at 31 March 2020.
• Finite life intangible assets – customer relationships and
restraint of trade (note B3)
This assessment has confirmed the carrying value
of customer relationships and restraint of trade assets
as at 31 March 2020.
• Right of use assets (note B2)
This assessment has confirmed the carrying value of right
of use assets as at 31 March 2020.
• Property, plant and equipment (note B1)
This assessment has confirmed the carrying value of
property, plant and equipment as at 31 March 2020.
31301AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
This section explains the financial performance of the Group,
providing additional information about individual items in the
Statement of Comprehensive Income, including:
(a) accounting policies, judgements and estimates that are
relevant for understanding items recognised in revenue.
(b) analysis of the Group’s performance for the year by
reference to key areas including: performance by
segment, revenue, expenses and taxation.
A1 SEGMENT PERFORMANCE
Operating segments are reported in a manner consistent
with the internal reporting provided to the Group’s Chief
Executive, who is the chief operating decision maker.
The Group’s reportable segments have been identified
as follows:
• AWF
• Madison, Absolute IT and JacksonStone & Partners
These segments have been determined on the basis, of the
trading brands that operate under each; that discrete financial
information is available for these segments; and that their
operating results are regularly reviewed by the Group’s chief
operating decision maker.
AWF
The ‘AWF’ segment operates branches under the brand
names AWF (throughout New Zealand) and Select (Dunedin).
These brands primarily derive their revenues from temporary
staffing services to industry.
Madison, Absolute IT and JacksonStone & Partners
The ‘Madison, Absolute IT and JacksonStone & Partners’
segment operates branches under the brand names Madison
Recruitment, Madison Force, Absolute IT and JacksonStone
& Partners (from June 2019) in major cities throughout
New Zealand. These brands derive their revenues from
temporary, contract and permanent staff services to
commerce.
All revenues from external customers, and non-current
assets other than financial instruments, deferred tax assets,
post-employment benefit assets, and rights arising under
insurance contracts are attributed to the Group’s country
of domicile.
A. Financial Performance
IN THIS SECTION
Segment revenueSegment profit
2020201920202019
SEGMENT REVENUE AND RESULTS$’000$’000$’000$’000
Continuing operations
AWF97,448115,8591,6921,260
Madison, Absolute IT and JacksonStone & Partners166,079151,9467,1565,597
Total for continuing operations263,527267,8058,8486,857
Other income926
Central administration costs and directors fees(2,876)(2,649)
Finance costs(2,084)(1,380)
Profit/(loss) before tax3,8972,854
Income tax expense(1,220)(841)
Profit for the year2,6772,013
Revenue reported above represents revenue generated from external customers. Inter-segment sales in the year were $82,372
(2019: $360,642) and have been eliminated from the above table. Inter-segment sales were eliminated from the originating
segment. No one customer accounts for more than 10% of the Group’s revenue (2019: One customer accounted for 11.0% of
the Group’s revenue, relating to the Madison and Absolute IT segment, no other customers individually accounted for more
than 10% of the Group’s revenue).
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in this report.
Segment profit represents the profit earned by each segment without allocation of central administration costs and directors’
fees, investment revenue, finance costs, and income tax expense. This is the same measure reported to the chief operating
decision maker for the purpose of resource allocation and assessment of segment performance.
Increases in expected credit losses for financial asset
and contract asset
• Trade and other receivables (note C6) and contract
assets (note A2)
Expected credit losses are based on historical credit loss
experience adjusted to reflect current conditions and
estimates of future economic conditions. In making this
assessment, Management takes into account information
about current and prospective macroeconomic factors
affecting the ability of the debtors (associated to the
contracts) to repay the receivables or from which to
recover contract assets.
This assessment has decreased the carrying value of
trade and other receivables and contract assets as at
31 March 2020.
Increased costs and/or reduced demand requiring
provisions for onerous contracts
The Group considered and determined that there weren’t
any increased costs and/or reductions in demand requiring
any provisions for onerous contracts.
Changes in the assumptions for the fair value of
contingent consideration
The fair value of contingent consideration is estimated
by applying a discount factor to the potential undiscounted
amount of all future payments that the Group could
be required to make under contingent consideration
arrangement.
The COVID-19 pandemic is not expected to materially
adversely impact the forecast financial performance of the
JacksonStone & Partners cash generating unit (note B3),
to which the Group’s contingent consideration financial
liability (note G1) is related as at 31 March 2020.
• Management has considered and reaffirmed the the
Group’s application of the going concern basis of
accounting remains appropriate as at date of the signing
of these financial statements (8 June 2020).
The key factors in Management’s considerations include:
– The Group’s cash and cash equivalents position.
– The Group’s existing borrowings and undrawn loan and
overdraft facilities.
– The current Alert Level under the COVID-19 alert system
(Level 2) and the impact the restrictions under this level
have on the Group’s ability to operate.
– Undertaken an analysis of the Group forecast cashflows
for 12 months.
This analysis includes the consideration of reasonably
possible changes in key forecast assumptions.
Forecast sensitivities indicate that the Group has the
ability to continue to operate and trade through the
anticipated challenges arising from the COVID-19 pandemic,
acknowledging the impact the COVID-19 pandemic has
already had on short-term trading.
Management has determined the Group has sufficient
available cash and cash equivalents and borrowing facilities
to maintain the application of the going concern basis of
accounting for the 12 months from the date of signing these
financial statements (8 June 2020).
The Company has cash and cash equivalents, together
with a $12.0m undrawn bank overdraft which provides
sufficient operating cashflows for the Company’s
immediate requirements.
The Directors and Management have determined that the
Group’s application of the going concern basis of accounting
remains appropriate.
These financial statements have been prepared based
upon conditions existing at the end of the reporting period,
31 March 2020, and considering those events occurring
subsequent to that date, up to the date of the signing
of these financial statements (8 June 2020), that provide
evidence of conditions that existed at the end of the
reporting period.
As the outbreak of COVID-19 pandemic occurred before
31 March 2020, its impacts are considered an event that is
indicative of conditions that arose prior to reporting period.
Accordingly, as at the date of the signing of these financial
statements, all reasonably known and available information
with respect to the COVID-19 pandemic, has been taken into
consideration and all reasonably determinable adjustments
have been made in preparing these financial statements.
33321AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
20202019
SEGMENT ASSETS
$’000$’000
AWF47,92430,856
Madison, Absolute IT and JacksonStone & Partners84,70261,652
Total segment assets132,62692,508
Unallocated assets2,6433,011
Total assets
135,26995,519
For the purposes of monitoring segment performance and allocating resources between segments, the chief operating decision
maker monitors the tangible, intangible and financial assets attributable to each segment. All assets are allocated to reportable
segments other than cash, cash equivalents and tax assets of the parent.
20202019
SEGMENT LIABILITIES
$’000$’000
AWF26,54410,295
Madison, Absolute IT and JacksonStone & Partners29,10813,329
Total segment liabilities55,65223,624
Unallocated liabilities45,88337,075
Total liabilities
101,53560,699
For the purposes of monitoring segment performance and allocating resources between segments, the chief operating decision
maker monitors the liabilities attributable to each segment. All liabilities are allocated to reportable segments, other than bank
loans and tax liabilities of the parent.
Depreciation and
amortisation
Employee
benefits
Non-current
assets
Net additions to
non-current assets
OTHER SEGMENT
INFORMATION
20202019202020192020201920202019
$’000$’000$’000$’000$’000$’000$’000$’000
AWF2,04172088,497105,82817,21013,9093,302835
Madison, Absolute IT and
JacksonStone & Partners4,1532,725149,146138,16058,22442,32915,894(1,794)
Unallocated––1,5651,695128–128–
Total 6,1943,445239,208245,68375,56256,23819,324(959)
A2 REVENUE FROM CONTRACTS WITH CUSTOMERS
Accounting Policy
Revenue recognition from contracts with customers
Revenue is measured at the fair value of the consideration
received or receivable. Revenue is recognised once value
has been received by the customer, when the performance
obligations have been satisfied and control has transferred.
This is typically on successful placement of a candidate.
The transaction price is allocated to performance obligations
based on their relative standalone selling prices.
Revenue earned on temporary placement – over time
Revenue from temporary placements, represents amounts
billed from the supply of semi-skilled and skilled temporary
staff, including the wage cost of these staff is recognised
when the service has been provided. Revenue is recognised
over time as services are provided. Performance completed
to date is based on the number of hours worked.
The factors considered by Management on a contract by
contract basis when concluding the Group is acting as
principal rather than agent are as follows:
• Whether the customer has a direct relationship with
the Group;
• Whether the Group has the primary responsibility for
providing the services to the client, and engages and
contracts directly with the temporary worker or other
recruitment companies; and
• Whether the Group has latitude in establishing the rates
directly or indirectly with all parties.
Revenue earned on permanent placement – point in time
Revenue from permanent placements, represents amounts
billed from the placement of permanent candidates.
Revenue is typically based on a percentage of the candidate’s
remuneration package, this income being recognised at the
date an offer is accepted by a candidate and where a start date
has been determined.
In general, where a candidate fails to remain in the position for
greater than twelve weeks a guarantee is provided to replace
the candidate.
Revenue earned on a retained basis – point in time
Where the Group is engaged on a retainer basis, revenue
recognised is typically based on a percentage of candidate’s
remuneration package, this income being recognised on the
completion of defined stages of work. The defined stages
are: on confirmation of vacancy and after job briefing; on
presentation of shortlist; and candidate placement.
Revenue is recognised when the underlying performance
obligation is satisfied – the successful placement of
the candidate.
Revenue earned as other services are provided – point in time
Where the Group is engaged to provide payroll related services
to manage the administration of contractors sourced by its
customers directly, revenue is recognised when the underlying
performance obligation is satisfied – upon the provision of
services, charged at hourly or daily rates.
Where the Group is engaged to provide contractors, they are
covered by the Group’s indemnity insurance cover. A fee
for this indemnity insurance cover is recognised when the
underlying performance obligation is satisfied – upon the
provision of cover, charged at hourly rates.
Where the Group is engaged to provide other employee related
services, such as psychometric assessments, advertising and
candidate background checks, revenue is recognised when
the underlying performance obligation is satisfied – upon the
provision of services, charge at agreed rates.
Variable consideration
The Group pays customer rebates (for revenue from temporary
and permanent placement), provides credit notes and
warranties over the contract period for certain recruitment
services (for revenue on a retained basis). Revenue is
constrained to the extent that recognition would result in
a significant reversal of revenue. When the uncertainty is
resolved, the consideration is recognised.
Significant financing component
Payment is typically due within 30–60 days from the invoicing
of a contract. There is no significant financing component in
any of the Group’s contracts with customers.
35341AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
KEY JUDGEMENTS AND ESTIMATES – DETERMINING THE TRANSACTION PRICE FOR REVENUE
FROM CONTRACTS WITH CUSTOMERS
Refund guarantees
For revenue on a retained basis, Management estimates
the expected refund guarantees to customers based on
historical experience of candidates leaving within the
guarantee period. The estimate is updated for key reporting
periods. Refund guarantees relate to the placement of
individual candidates.
Rebates
Management estimates the expected rebates to
customers on inception of the contract based on past
precedent and future expected sales. The estimate is updated
for key reporting periods. Rebates relate to the placement
of a portfolio of candidates and the discount is applied to all
qualifying placements.
GROUP
20202019
CONTRACT ASSETS
$’000$’000
Customers yet to be invoiced for services rendered458295
Less provision for impairment––
Total contract assets
458295
Classified as:
Current 458295
Non-current––
Total contract assets
458295
CONTRACT ASSETS
Services rendered, invoice yet to send
Payment for services rendered
(i.e. revenue earned on
temporary placement – over time) are not due from the
customer until the Group has invoiced the customer. Contract
assets are balances due to be recovered from customers
for work performed, that have yet to be invoiced. When the
customer is invoiced, any amounts previously recognised as a
contract asset are reclassified to trade receivables. Contract
assets amounts are invoiced within 30 days, with payment
typically due within 30 to 37 days from the invoice being
issued. There is no significant financing component in any
of the Group’s contracts with customers.
Appropriate allowances for expected irrecoverable amounts
are recognised in profit and loss which are measured using
the simplified approach permitted by NZ IFRS 9 Financial
Instruments, which requires lifetime expected losses for
contract assets to be recognised from initial recognition of
the assets. The Group determines the expected credit losses
from contact assets in a manner consistent with the approach
described for trade and other receivables in note C6.
GROUP
20202019
REVENUE FROM CONTRACTS WITH CUSTOMERS
$’000$’000
Revenue earned on temporary placements
– AWF95,723114,684
– Madison, Absolute IT and JacksonStone & Partners125,907113,122
Total revenue earned on temporary placements221,630227,806
Revenue earned on permanent placements
– AWF1,642963
– Madison, Absolute IT and JacksonStone & Partners9,90610,979
Total revenue earned on permanent placements11,54811,942
Revenue earned on a retained basis
– Madison, Absolute IT and JacksonStone & Partners4,13280
Total revenue earned on a retained basis4,13280
Other service revenue
– AWF83212
– Madison, Absolute IT and JacksonStone & Partners26,13427,765
Total other service revenue 26,21727,977
Total revenue263,527267,805
37361AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
GROUP
EXPECTED LOSS RATES
FOR CONTRACT ASSETSCurrent1 – 30 days30 – 60 days60 – 90 days90+ daysTotal
31 March 2020
Expected loss rate (%)-%-%-%-%-%-%
Gross contract assets ($’000)458––––458
Provision for impairment
of contract assets ($’000)––––––
Net contract assets458––––458
31 March 2019
Expected loss rate (%)-%-%-%-%-%-%
Gross contract assets ($’000)295––––295
Provision for impairment
of contract assets ($’000)––––––
Net contract assets295––––295
GROUP
20202019
CONTRACT LIABILITIES
$’000$’000
Guarantee refund liabilities62355
Rebate liabilities140175
Total contract liabilities
202530
Classified as:
Current 202530
Non-current––
Total contract liabilities
202530
KEY JUDGEMENTS AND ESTIMATES – EXPECTED CREDIT LOSSES FROM CONTRACT ASSETS
Management has reviewed and assessed contracts and
the provision for impairment represents the best estimate
of the expected credit losses based on historical credit
loss experience adjusted to reflect current conditions and
estimates of future economic conditions.
In making this assessment, Management takes into account
qualitative and quantitative information about current and
prospective macroeconomic factors affecting the ability
of the debtors (associated to the contracts) to repay
the receivables.
The impairment provision is based on assumptions about
the risk of default and expected loss rates. The Group
uses judgement in making these estimates and developing
inputs to the calculation. The inputs are based on the
Group’s past history, external market conditions as well
as prospective information.
CONTRACT LIABILITIES
Contract guarantees
For revenue on a retained basis, the Group’s standard
contract terms for under permanent placement revenue
contracts, includes a guarantee that the candidate placed
will remain in the role for more than 12 weeks. If the candidate
does not remain in the role for more than 12 weeks, the Group
will endeavour to replace the candidate with another individual
at no further cost to the customer. If the Group is unable
to replace the candidate then the customer is entitled to a
credit against the customer’s account.
Upon placement, a refund liability is recognised with a
corresponding adjustment to revenue. This refund liability
is measured using a rate derived utilising the Group’s
historical experience of candidates who have left before
12 weeks. This historical experience rate is measured using
the portfolio approach permitted by NZ IFRS 15 Revenue from
Contract with Customers. This estimate is updated regularly
at each reporting period.
Contract rebates
For revenue from temporary and permanent placements,
under the Group’s contract terms with certain customers,
a rebate is payable/applied to customers based on agreed
percentages of amounts billed over a specified period.
These agreed percentages can either be a single fixed rate
or incremental based on thresholds.
At the beginning of the specified period, a rebate liability
is recognised with a corresponding adjustment to revenue.
This rebate liability is measured using a rate derived utilising
the Group’s expectation of the amounts to be billed to the
customer over the specified period. This expectation is
based on historical experience with the customer adjusted
to reflect forecast estimates of the placements required
by the customer over the specified period.
This estimate is updated regularly at each reporting period.
KEY JUDGEMENTS AND ESTIMATES – GUARANTEE AND REBATE LIABILITIES
Guarantee refund liabilities
Management has reviewed and assessed the historical
experience rate and the contract liabilities for refund
guarantees represents on a portfolio basis, the best estimate
of expected candidates leaving within the guarantee period.
Rebate liabilities
Management has reviewed and assessed the past precedent
and future expected sales for individual customers and the
contract liabilities for rebates that represent the best estimate
of expected rebates to customers. The estimate is updated for
key reporting periods.
GROUP
REVENUE RECOGNISED THAT WAS INCLUDED IN THE CONTRACT LIABILITY
BALANCE AT THE BEGINNING OF THE PERIOD
20202019
$’000$’000
Guarantee refund liabilities175116
Rebate liabilities355224
Revenue recognised that was included in the contract liability balance at the
beginning of the period530340
A3 INVESTMENT REVENUE
Accounting Policy
Dividend and interest revenue is presented as investment
revenue in the statement of comprehensive income.
Dividend revenue
Dividend revenue from investments is recognised when the
shareholder’s right to receive payment has been established.
Interest revenue
Interest revenue is accrued on a time basis using the effective
interest method.
GROUP
20202019
INVESTMENT REVENUE
$’000$’000
Investment revenue926
Other revenue––
Total investment revenue926
39381AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
A5 TAXATION
Accounting Policy – current tax
1 Income tax expense represents the sum of the tax currently
payable and deferred tax.
2 Taxable profit differs from profit before tax reported in
the income statement as it excludes items of income and
expense that are taxable or deductible in other years and
also excludes items that will never be taxable or deductible.
3 Current and deferred tax are recognised as an expense
or income in profit or loss, except when they relate to
items recognised in other comprehensive income or
directly in equity, in which case the tax is also recognised
in other comprehensive income or directly in equity, or
where they arise from the initial accounting for a business
combination. In the case of a business combination,
the tax effect is taken into account in calculating goodwill
or in determining the excess of the acquirer’s interest
in the net fair value of the acquiree’s identifiable assets,
liabilities and contingent liabilities over the cost of the
business combination.
4 Income tax expense is the income assessed on taxable
profit for the year.
5 AWF Madison Group Limited’s liability for current tax
is calculated using tax rates that have been enacted
at balance date, being 28% (2019: 28%) for New Zealand.
GROUP
20202019
INCOME TAX EXPENSE
$’000$’000
Current tax
In respect of current year 1,7471,235
In respect of prior year 107(199)
1,8541,036
Deferred tax
In respect of current year (498)(351)
In respect of prior year (136)156
(634)(195)
Total tax expense
1,220841
Reconciliation to profit before tax
Profit before income tax3,8972,854
Income tax at 28%1,091799
Tax effect of expenses that are not deductible in determining taxable profit12942
Income tax expense
1,220841
Effective tax rate for the year31.3%29.5%
GROUP
20202019
CURRENT TAX ASSETS AND LIABILITIES
$’000$’000
Current tax liabilities
Income tax payable950280
Total current tax liabilities
950280
A4 EXPENSES
GROUP
20202019
BAD AND DOUBTFUL DEBTS EXPENSE
$’000$’000
Impairment losses recognised 1231,109
Changes in provision for impairment losses 132(445)
Total bad and doubtful debts expense255664
GROUP
20202019
DEPRECIATION AND AMORTISATION EXPENSENote
$’000$’000
Depreciation of property, plant and equipmentB1898921
Depreciation of right of use assetsB22,798–
Amortisation of intangible assetsB32,4982,524
Total depreciation and amortisation expense6,1943,445
GROUP
20202019
FINANCE COSTS
$’000$’000
Financial liabilities measured at amortised cost
Interest on bank overdrafts and loans1,4011,380
1,4011,380
Financial liabilities measured at fair value through profit or loss
Interest on contingent consideration101–
101–
Lease liabilities
Interest on lease liabilities582–
582–
Total finance costs2,0841,380
GROUP
20202019
AUDITOR’S REMUNERATION TO DELOITTE FOR:
$’000$’000
Audit of the financial statements
Audit of the financial statements224162
Total auditor’s remuneration to Deloitte224162
41401AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
Accounting Policy – deferred tax
1 Deferred tax is recognised on differences between the
carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the
computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available
against which deductible temporary differences can be
utilised. Such assets and liabilities are not recognised if
the temporary difference arises from goodwill or from the
initial recognition (other than in a business combination)
of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
2 Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, except
where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
3 The carrying amount of deferred tax assets is reviewed at
each balance sheet date and reduced to the extent that it
is no longer probable that sufficient taxable profits will be
available to allow all or part of the assets to be recovered.
4 Deferred tax is calculated at the tax rates that are expected
to apply in the period when the liability is settled or the
asset realised based on tax rates that have been enacted
or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the
manner in which the Group expects, at the reporting date,
to recover or settle the carrying amounts of its assets
and liabilities.
5 Deferred tax assets and liabilities are offset when there
is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to
income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities
on a net basis.
DEFERRED TAX BALANCES
The following are the major deferred tax assets/(liabilities) recognised by the Group, and the movements thereon, during the
current reporting period:
GROUP
Right of use
assets & Lease
liabilities
Employee
benefits
Other
provisions
Identifiable
intangible
assets Total
$’000$’000$’000$’000$’000
At 1 April 2018–1,405323(4,331)(2,603)
Prior period adjustment–(157)–1(156)
Business combination–––(54)(54)
Charge (credit to profit or loss for the year)–(132)(149)632351
As at 31 March 2019–1,116174(3,752)(2,462)
Prior period adjustment–165(33)4136
Business combination–––(1,294)(1,294)
Charge (credit to profit or loss for the year)101(304)(79)780498
As at 31 March 202010197762(4,262)(3,122)
GROUP
20202019
IMPUTATION BALANCES
$’000$’000
Imputation credits available for subsequent reporting periods at 28%10,1089,539
The above amounts represent the balance of the imputation account as at the end of the reporting period at 28%, adjusted for:
• Imputation credits that will arise from the payment of the amount of the provision for income tax; and
• Imputation debits that have arisen from the payment of dividends recognised as a liability at the reporting date.
The consolidated amounts include imputation credits that would be available to the parent entity if subsidiaries paid dividends.
The imputed portions of the final dividends recommended after reporting date will be imputed out of existing imputation credits
or out of imputation credits arising from the payment of income tax in the next reporting period.
The following diminishing value rates are used for the depreciation of property, plant and equipment
• Motor vehicles 25 to 36%
• Fixtures and equipment 10 to 60%
• Leasehold improvements 4 to 14%
GROUP
Motor VehiclesFixtures and
equipment
Leasehold
Improvements
Total
Note$’000$’000$’000$’000
Cost1,0024,4371,3936,832
Less accumulated depreciation(743)(2,925)(666)(4,334)
Net book value at 1 April 20182591,5127272,498
Additions369396321,607
Disposals – cost(251)(1,202)(49)(1,502)
Depreciation expenseA4(78)(721)(122)(921)
Eliminations on disposal – depreciation1851,148231,356
Net book value at 31 March 20191511,6761,2113,038
Additions100592207899
Business combinations–151183334
Disposals – cost(121)(420)(183)(724)
Depreciation expenseA4(63)(702)(133)(898)
Eliminations on disposal – depreciation9934798544
Net book value at 31 March 20201661,6441,3833,193
Cost5065,5642,1048,174
Less accumulated depreciation(340)(3,920)(721)(4,981)
Net book value at 31 March 20201661,6441,3833,193
B. Assets used to generate income
This section shows the assets the Group uses to generate
operating income. In this section of the notes there is
information about:
(a) property, plant and equipment
(b) intangible assets
(c) goodwill
B1 PROPERTY, PLANT AND EQUIPMENT
Accounting policy
1 Fixtures and equipment, motor vehicles and leasehold
improvements are stated at cost less accumulated
depreciation and any accumulated impairment losses.
2 Depreciation is charged so as to write off the cost of assets,
over their estimated useful lives using the diminishing
value method.
3 The gain or loss arising on the disposal or retirement of
an item of property, plant and equipment is determined as
the difference between the sales proceeds and the carrying
amount of the asset and is recognised in the Statement of
Comprehensive Income.
IN THIS SECTION
43421AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
B2 LEASES
RIGHT OF USE ASSETS AND LEASES LIABILITIES
Accounting policy
1 The Group leases various properties (including offices),
motor vehicles and computer equipment. Property lease
contracts are typically made for fixed periods of 3 to 9 years
but may have extension options as described below. Motor
vehicle and computer equipment leases are typically made
for fixed periods of 1 to 5 years without extension options.
Lease terms are negotiated on an individual basis and
contain a wide range of different terms and conditions.
The lease agreements do not impose any covenants,
but leased assets may not be used as security for
borrowing purposes.
2 Until 31 March 2019, leases of property, plant and
equipment were classified as either finance or operating
leases. Payments made under operating leases (net of any
incentives received from the lessor) were charged to profit
or loss on a straight-line basis over the period of the lease.
From 1 April 2019, leases are recognised as a right-
of-use (‘ROU’) asset and a lease liability at the lease
commencement date.
3 The right-of-use asset is initially measured at cost, and
subsequently at cost less any accumulated depreciation
and impairment losses, and adjusted for certain
re-measurements of the lease liability.
Costs included in the measurement of the right-of-use
asset comprise the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the
commencement date; less any lease incentives
received; and
• any initial direct costs incurred by the lessee.
Depreciation is charged so as to write off the cost of assets,
over the lease term using the straight-line method where
shorter than the useful life of the right of use asset.
4 The lease liability is initially measured at the present value
of the future lease payments over the lease term that are
not paid at the commencement date, discounted using
the interest rate implicit in the lease or, if that rate cannot
be readily determined, the lessee’s incremental borrowing
rate, being the rate that the lessee would have to pay to
borrow over a similar term, and with a similar security,
the funds necessary to obtain an asset of a similar value
to the right-of-use asset in a similar economic environment
with similar terms and conditions.
Generally, the Group uses the lessee’s incremental
borrowing rate as the discount rate.
Lease payments included in the measurement of the lease
liability comprise the following:
• the exercise price under a purchase option that the
Group is reasonably certain to exercise that option; and
• lease payments in an optional renewal period if
the Group is reasonably certain to exercise an
extension option.
There are no leases with variable lease payments which
depend on an index or rate as at the commencement date.
The lease liability is measured at amortised cost using
the effective interest method. It is re-measured when
there is a change in future lease payments arising from
a change in an index or rate, if there is a change in the
Group’s estimate of the amount expected to be payable
under a residual value guarantee, if the Group changes
its assessment of whether it will exercise a purchase,
extension or termination option or if there is a revised
in-substance fixed lease payment.
When the lease liability is re-measured in this way,
a corresponding adjustment is made to the carrying
amount of the right-of-use asset, or is recorded in profit
or loss if the carrying amount of the right-of-use asset
has been reduced to zero.
None of the Group’s leases include variable lease payments
that depend on an index or a rate.
KEY JUDGEMENTS AND SOURCES OF ESTIMATION UNCERTAINTY
Extension and termination options
Extension and termination options are included in a number
of leases across the Group. These terms are used to maximise
operational flexibility in terms of managing contracts.
The majority of extension and termination options held are
exercisable only by the Group and not by the respective lessor.
Critical judgements in determining the lease term
In determining the lease term, management considers
all facts and circumstances that create an economic
incentive to exercise an extension option, or not exercise
a termination option.
Extension options (or periods after termination options)
are only included in the lease term if the lease is reasonably
certain to be extended (or not terminated).
The assessment is reviewed if a significant event or a
significant change in circumstances occurs which affects this
assessment and that is within the control of the lessee.
The following factors are normally the most relevant:
• If there are significant penalties to terminate (or not
extend), the Group is typically reasonably certain to extend
(or not terminate).
• If any leasehold improvements are expected to have
a significant remaining value, the Group is typically
reasonably certain to extend (or not terminate).
• Otherwise, the Group considers other factors including
historical lease durations and the costs and business
disruption required to replace the leased asset.
Incremental borrowing rates
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily determined,
which is generally the case for leases in the Group, the
lessee’s incremental borrowing rate is used, being the rate
that the individual lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value to the
right-of-use asset in a similar economic environment with
similar terms, security and conditions.
Critical judgements in determining the lease term
To determine the incremental borrowing rate, the Group:
• where possible, uses recent third-party financing
(currently, the Group’s sole term facility provider, ASB Bank
Limited) received by the individual lessee as a starting
point, adjusted to reflect changes in financing conditions
since third party financing was received;
• uses a buildup approach that starts with a risk-free
interest rate adjusted for credit risk for leases held by
Group subsidiaries, which does not have recent third party
financing; and
• makes adjustments specific to the lease, e.g. term,
location, and security.
GROUP
Property
Motor
vehicles
Computer
Equipment Total
RIGHT OF USE ASSETSNote$’000$’000$’000$’000
CostG210,248810–11,058
Additions1,919–231,942
Business combinationsG1905––905
Depreciation expenseA4(2,324)(468)(6)(2,798)
Net book value at 31 March 202010,7483421711,107
Cost13,0728102313,905
Less accumulated depreciation(2,324)(468)(6)(2,798)
Net book value at 31 March 202010,7483421711,107
45441AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
B3 INTANGIBLE ASSETS
Accounting policy
1 Intangible assets acquired in a business combination are
identified and recognised separately from goodwill where
they satisfy the definition of an intangible asset and their
fair values can be measured reliably. The cost of such
intangible assets is their fair value at the acquisition date.
2 Intangible assets acquired separately with finite useful
lives are carried at cost less accumulated amortisation
and accumulated impairment losses. Amortisation is
recognised on a straight-line basis over their estimated
useful lives (72 months). The estimated useful life and
amortisation method are reviewed at the end of each
reporting period, with the effect of any changes in estimate
being accounted for on a prospective basis.
3 Intangible assets acquired separately with indefinite useful
lives are not amortised and are reviewed for impairment
on an annual basis and whenever there is an indication that
the asset may be impaired as per NZ IAS 36 Impairment
of Assets (refer also B4).
Other intangible assets (excluding goodwill) represent the value of client relationships, brand names and restraints of trade
acquired through business combinations (where the economic value can reliably be assessed) and computer software.
GROUP
Computer
Software
Customer
Relationships
Brand
Name
Restraint
of Trade Total
Note$’000$’000$’000$’000$’000
Cost2,39613,3729,4461,30426,518
Less accumulated amortisation(1,040)(8,871)–(528)(10,439)
Net book value at 1 April 20181,3564,5019,44677616,079
Additions180194––374
Amortisation expenseA4(350)(1,956)–(218)(2,524)
Net book value at 31 March 20191,1862,7399,44655813,929
Additions143–––143
Business combinations–2,1851,0291,4064,620
Disposals – cost(41)–––(41)
Amortisation expenseA4(356)(1,665)–(477)(2,498)
Eliminations on disposal – amortisation41–––41
Net book value at 31 March 20209733,25910,4751,48716,194
Cost2,67815,75110,4752,71031,614
Less accumulated amortisation(1,705)(12,492)–(1,223)(15,420)
Net book value at 31 March 20209733,25910,4751,48716,194
The amortisation expense has been included in the line
item “depreciation and amortisation expense” in the
Statement of Comprehensive Income.
Brand names of:
• $7.465 million identified and recognised from the
Madison acquisition are allocated to the Madison Group
cash generating unit; and
• $1.980 million identified and recognised from the
Absolute IT acquisition are allocated to the Absolute IT
cash generating unit.
• $1.029 million identified and recognised from the
JacksonStone & Partners acquisition are allocated to the
JacksonStone & Partners cash generating unit.
KEY JUDGEMENTS AND SOURCES OF
ESTIMATION UNCERTAINTY
Brand assets are indefinite life non-financial assets.
Determining whether brand assets are impaired requires
an estimation of the value in use of the cash generating unit
to which brand relates to. The impairment testing of brand
is undertaken in conjunction with the impairment testing of
goodwill related to the cash generating unit (refer to note
B4 for further information).
The impairment assessment of customer relationships and
restraint of trade assets requires a judgement and estimation
of the expected remaining useful life of these assets.
GROUP
20202019
LEASE LIABILITIES
$’000$’000
Property11,241–
Motor vehicle342–
Computer equipment16–
Total lease liabilities
11,599–
Classified as:
Current2,501–
Non–current9,098–
Total lease liabilities
11,599–
Maturity analysis contractual undiscounted cashflows:
Less than 1 year2,818–
Later than 1 year and not later than 5 years inclusive8,818–
More than 5 years1,377–
Total undiscounted lease liabilities 31 March
13,013–
Amounts recognised in Statement of Comprehensive Income:
Interest on lease liabilities(582)–
Expenses relating to short term leases(122)–
Total amounts recognised in Statement of Comprehensive Income
(704)–
Cash outflows recognised in the Statement of Cashflows:
Recognised within cash flows from operating activities
Interest elements of lease payments(582)–
Total recognised within cash flows from operating activities
(582)–
Recognised within cash flows from financing activities
Principal elements of lease payments(2,439)–
Total recognised within cash flows from financing activities
(2,439)–
Total cash outflows recognised in the Statement of Cashflows
(3,021)–
47461AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
B4 GOODWILL
Accounting policy
Goodwill arising on the acquisition of a subsidiary is
recognised as an asset at the date that control is acquired
(the acquisition date). Goodwill is measured as the excess
of the sum of the consideration transferred, the amount
of any non-controlling interest in the acquiree and the fair
value of the acquirer’s previously held equity interest (if
any) in the acquiree over the fair value of the identified net
assets recognised.
Goodwill is not amortised, but is reviewed for impairment
at least annually. For the purpose of impairment testing,
goodwill is allocated to each of the Group’s cash generating
units (‘CGUs’) expected to benefit from the synergies of
the combination.
Cash generating units to which goodwill and indefinite
life intangible assets have been allocated are tested for
impairment annually, or more frequently when there is an
indication that the unit may be impaired. The recoverable
amount is the higher of fair value less cost to sell and
the value in use. If the recoverable amount of the cash
generating unit is less than the carrying amount of the unit,
the impairment loss is allocated first to reduce the carrying
amount of any goodwill allocated to the unit and then to the
other assets of the unit pro-rata on the basis of the carrying
amount of each asset in the unit. Any impairment loss on
goodwill is recognised immediately in profit or loss and
is not subsequently reversed.
GROUP
20202019
Note$’000$’000
Balance at 1 April39,27138,620
Business combinations – Select (allocated to the AWF CGU)–651
Business combinations – JacksonStone & PartnersG15,797–
Balance as at 31 March
45,06839,271
Allocation to cash generating units
• AWF11,21211,212
• Madison Recruitment20,22320,223
• Absolute IT7,8367,836
• JacksonStone & Partners 5,797–
Total goodwill
45,06839,271
Annual test for impairment
The Group tests goodwill annually for impairment or more
frequently if there are indications that goodwill might
be impaired.
The recoverable amount of each cash-generating unit is
determined from value-in-use calculations which use a
discounted cash flow analysis. The key assumptions for the
value-in-use calculations are those regarding the discount
rates, growth rates and forecast financial performance and
cashflows. Management estimates discount rates using
rates that reflect current market assumptions of the time
value of money and risk specific to the cash generating units.
The growth rates are based on management’s best estimate.
Forecast revenues, direct and indirect costs, are based on
historical experience/past practices and expectations of future
changes in the markets the Group operates and services.
COVID-19 has had an impact on the operations of the Group.
Management has used its judgement to determine a point
within the range of models that reflects its best estimate
of the future which takes into account financial performance
achieved in previous years. Cash flows are sensitive to the
economic environment and the ability of the cash generating
units to return to pre-COVID-19 financial performance by the
end of FY2021.
In particular AWF Limited and Madison Recruitment
Limited are sensitive to changes in financial performance
assumptions. In respect of AWF Limited, the forecast
assumes that operating performance will normalise by the
end of FY2021. The Board considers AWF is well positioned
to offer temporary personnel for businesses wishing to
secure blue collar labour on a variable basis, in a COVID
environment. Madison Recruitment is similarly positioned
to offer temporary white collar personnel together with
a range of unique customer tailored solutions. Forecast
modelling for Madison Recruitment shows that a 1% increase
in the discount rate would result in the estimated recoverable
amount to be equal to the carrying amount of this cash
generating unit.
The Group prepares cash flow forecasts derived from the most
recent financial budgets approved by the Board for forecast
years 1 to 2 and estimates of future cash flows based on
an estimated terminal growth rate of 1.5% (2019: 1.5%) for
years 3 to 5 and into perpetuity. This rate does not exceed the
average long-term growth rate for the relevant markets.
The discount rate used to discount the forecast cash flows is
9.14% (2019: 9.14%). The discount and growth rates have been
consistently applied to all cash generating units.
In assessing the goodwill for impairment, a sensitivity
analysis for reasonably possible changes in key assumptions
was performed.
This included:
– a range of reasonably possible forecast cashflows;
– reducing the estimated growth rate by 0.5%;
– reducing the terminal growth rate by 1%;
– increasing the discount rate by 1%.
These reasonably possible changes in rates did not result
in any impairment of goodwill.
KEY JUDGEMENTS AND SOURCES OF ESTIMATION
UNCERTAINTY
Determining whether goodwill is impaired requires an
estimation of the value-in-use of the group of cash-generating
units to which goodwill has been allocated. The value-in-use
calculation requires Management to estimate the future cash
flows expected to arise from those cash-generating units and
a suitable discount rate in order to calculate present value.
The discount rate applied to future cashflows has been
obtained through an independent assessment of Group’s
weighted average cost of capital which takes in to
consideration a risk-free rate based on New Zealand
Government Bonds, a market risk premium and an equity
beta based a selection of comparable recruitment companies.
49481AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
This section explains the Group’s reserves and working
capital. In this section there is information about:
(a) equity and dividends
(b) net debt; and
(c) receivables and payables
C. Managing funding
IN THIS SECTION
C1 RETAINED EARNINGS
GROUP
20202019
RETAINED EARNINGS AND DIVIDENDSNote$’000$’000
Opening balance at 1 April5,1118,878
Effect of changes in accounting policies resulting from the adoption
of NZ IFRS 9 & 15–(374)
Opening balance at 1 April (Restated)5,1118,504
Total comprehensive income for the year2,6772,013
Dividends paidC4(5,581)(5,406)
Stock appreciation rights modifiedF1329–
Closing balance at 31 March2,5365,111
C2 SHARE CAPITAL
GROUP
2020201920202019
ORDINARY SHARE CAPITAL
NoteNo of SharesNo of Shares$’000$’000
Issued and fully paid:
Balance at 1 April33,423,39932,555,19329,16527,598
Issue of sharesC4902,143868,2061,7031,569
Conversion and cancellation costs–––(2)
Total
34,325,54233,423,39930,86829,165
The share capital reflected in the following note represents the ordinary share capital of AWF Madison Group Limited.
All ordinary shares carry rights to dividends and distribution on wind-up.
C3 EARNINGS PER SHARE
GROUP
20202019
EARNINGS PER SHARE
Note$’000$’000
Comprehensive income for the year net of tax2,6772,013
Number of ordinary shares:
As at 31 MarchC234,325,54233,423,399
Weighted average number of shares for basic earnings per share33,910,54232,993,554
Total basic earnings per share (cents per share)
7.96.1
Weighted average number of shares for diluted earnings per share33,910,54232,993,554
Total diluted earnings per share (cents per share)
7.96.1
On 9 May 2019, the Group announced the lapse of all SAR’s and therefore as at 31 March 2020, there are no outstanding SARs.
On 9 May 2019, the Group announced the establishment of a new short term incentive plan for the CEO (‘STI Plan’). The STI Plan,
detailed in Note F1, could potentially dilute earnings per share in the future, but currently are anti-dilutive.
The restricted shares detailed in Note F1 could also potentially dilute earnings per share in the future, but currently are anti-
dilutive (2019 were anti-dilutive).
C4 DIVIDENDS
Accounting policy
Dividend distributions to the Group’s shareholders are recognised as a liability in the Group’s financial statements in the period
in which the dividends are approved.
GROUP
20202019
Cents per shareTotal $’000Cents per shareTotal $’000
Recognised amounts:
Prior year final dividend8.202,8068.202,704
Interim dividend8.002,7758.002,702
5,5815,406
Final dividend declared––8.202,806
Dividend Reinvestment Plan (DRP)
During the financial year, the Board continued with the DRP
which enables shareholders to reinvest up to 50% of their
dividend in newly issued ordinary shares in AWF Madison
Group Limited.
In conjunction with the final dividend declared for the financial
year ended 31 March 2019 a total of 465,365 ordinary shares
at $1.82 per share for a total of $847,000 were issued (2019:
a total of 402,415 ordinary shares at $1.92 per share for a
total of $773,000 were issued).
In conjunction with the interim dividend declared for the
financial year ended 31 March 2020 a total of 436,778 ordinary
shares at $1.96 per share for a total of $856,000 were issued
(2019: a total of 465,791 ordinary shares at $1.71 per share for
a total of $796,000 were issued).
Subsequent event
On 8 June 2020 the directors resolved not to declare a
final dividend due to the economic uncertainty caused
by the COVID-19 pandemic (as described under ‘Global
pandemic of coronavirus disease 2019’ in the notes to these
financial statements).
51501AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
C5 CASH AND CASH EQUIVALENTS
Accounting policy
Cash and cash equivalents
Cash and cash equivalents comprise of cash held by the Group
and short-term bank deposits with an original maturity of
less than three months. The carrying amount of these assets
approximates their fair value.
For the purpose of the statement of cash flows, cash and
cash equivalents include cash on hand and in banks and
investments in money market instruments, net of outstanding
bank overdrafts.
Statement of cash flows
The following terms are used in the Group’s statement of
cash flows:
• Operating activities are the principal revenue producing
activities of the Group and other activities that are not
investing or financing activities;
• Investing activities are the acquisition and disposal of long
term assets and other investments not included in cash
equivalents; and
• Financing activities are activities that result in changes
in the size and composition of the contributed equity and
borrowings of the entity.
Interest paid and interest received may be classified
as operating cash flows because they enter into the
determination of profit or loss.
Cash payments for the interest portion of a financial liability
or lease liability, have been classified as part of operating
activities and cash payments for the principal portion for
financial liability or lease liability, have been classified
as part of financing activities.
Interest received on cash at bank have been classified as part
of operating activities.
GROUP
20202019
CASH AND CASH EQUIVALENTS
$’000$’000
Cash at bank6,1786,357
Total cash and cash equivalents6,1786,357
Cash at bank and bank overdraft are financial instruments that are subject to offset. The Group has a legally enforceable right
to offset and an intention to settle on a net basis. Cash at bank and bank overdraft have not been offset in the presentation
of the Group’s statement of financial position, however have been offset in the presentation of total cash and cash equivalents
in the Group’s statement of cash flows and above.
GROUP
RECONCILIATION OF NET PROFIT AFTER TAX
TO CASH FLOWS FROM OPERATING ACTIVITIES
20202019
$’000$’000
Net profit after income tax2,6772,013
Adjustments for operating activities non-cash items:
Depreciation and amortisation6,1943,445
(Gain)/Loss on disposal of property, plant and equipment and intangible assets12064
Movement in doubtful debts provision plus bad debt write off in current year255664
Movement in deferred tax(633)(195)
Equity-settled share-based payments114161
Interest on contingent consideration to the vendor of JacksonStone & Partners 101–
Total non-cash items6,1514,139
Movements in working capital excluding movements relating to purchase of subsidiaries:
(Increase)/ decrease in trade and other receivables, and contract assets(17,997)7,871
Increase/(decrease) in trade and other payables, and contract liabilities18,626(4,299)
Increase/(decrease) in provisions(52)41
Increase/(decrease) in taxation payable484(288)
Total movement in working capital1,0613,325
Cash flow from operating activities9,8899,477
C6 TRADE AND OTHER RECEIVABLES
Accounting policy
Trade and other receivables are measured on initial
recognition at fair value and subsequently at amortised cost
using the effective interest method.
Appropriate allowances for expected irrecoverable amounts
are recognised in profit and loss which are measured using
the simplified approach permitted by NZ IFRS 9 Financial
Instruments, which requires lifetime expected losses for trade
and other receivables to be recognised from initial recognition
of the receivable.
There are no trade and other receivables with a significant
financing component.
The Group determines the expected credit losses by calculating:
• a probability weighted amount that is determined by
evaluating a range of possible outcomes;
• time value of money;
• reasonable and supportable information that is available
at the reporting date about past events, current conditions
and forecasts of future economic conditions.
When reassessing expected credit losses the Group also
considers any change in the credit risk and quality of the
receivable from the date credit was initially granted up to
the end of the reporting period, referring to past default
experience of the counterparty and an analysis of the
counterparty’s current financial position.
The Group determines the expected credit losses for all trade receivables and other receivables (including those that are past
due and neither past due) by using a provision matrix, estimated based on historical credit loss experience based on shared
credit risk characteristics and the days past due status of the debtors. The expected loss rates are based on the payment profiles
of sales over a period of 60 months. The historical loss rates are adjusted to reflect current conditions and estimates of future
economic conditions affecting the ability of the debtors to repay the receivables.
An allowance of $361,000 (2019: $229,000) has been made for expected credit losses arising from trade and other receivables.
Before accepting a new customer, the Group conducts reference checks using external sources. Customer checks and approval
of credit limits are performed independently of the sales function, and are reviewed on an ongoing basis.
The credit period on sale of services is between 7 and 30 days, unless otherwise agreed. No interest is charged on trade
receivables for the first 30 days from the date of invoice. Thereafter, interest can be charged at 1.5 per cent per month on the
outstanding balance.
Included in trade receivables are debtors with a carrying value of $5.6 million (2019: $4.95 million) which are overdue at the
reporting date. Included in other receivables are debtors with a carrying value of $Nil (2019: $Nil) which are overdue at the
reporting date.
The Group does not hold any collateral over these balances.
The Group writes off a receivable when there is information indicating that the debt is in severe financial difficulty and there
is no realistic prospect of recovery, e.g. when the debtors has been placed under receivership or liquidation, or has entered
into bankruptcy proceedings. NZ IFRS 9 includes a rebuttal presumption that a loss event has occurred if debtors are aged
greater than 90 days. Impairment losses on trade and other receivables are presented as ‘direct expenses’ in the Statement
of Comprehensive Income. Any revisions to this amount are credited to the same line item.
GROUP
20202019
TRADE AND OTHER RECEIVABLES
Note
$’000$’000
Trade receivables29,98432,164
Provision for impairment of trade receivables(361)(229)
Total trade receivables29,62331,935
Other receivables1,162694
Grant income receivableF622,286–
Total other receivables23,448694
Total trade and other receivables
53,07132,629
53521AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
GROUP
20202019
PROVISION FOR IMPAIRMENT
Note
$’000$’000
PROVISION FOR IMPAIRMENT OF TRADE RECEIVABLES
Balance at 1 April229143
Effect of changes in accounting policies resulting from the adoption of NZ IFRS 9–371
Balance at 1 April (Restated)229514
Impairment losses recognisedA43011,109
Write-offs to bad debts during the yearA4(123)(1,034)
Impairment losses reversedA4(46)(360)
Balance at 31 March
361229
PROVISION FOR IMPAIRMENT OF OTHER RECEIVABLES
Balance at 1 April–160
Effect of changes in accounting policies resulting from the adoption of NZ IFRS 9––
Balance at 1 April (Restated)–160
Impairment losses recognised––
Write-offs to bad debts during the yearA4–(75)
Impairment losses reversedA4–(85)
Balance at 31 March
––
Total provision for impairment of trade and other receivables at 31 March
361229
GROUP
EXPECTED LOSS RATES FOR TRADE RECEIVABLESCurrent
1 – 30
days
30 – 60
days
60 – 90
days
90+
daysTotal
31 March 2020
Expected loss rate (%)–%–%6.4%15.4%64.9%1.2%
Gross trade receivables ($’000)24,3594,29659231841929,984
Provision for impairment of trade receivables ($’000)–(2)(38)(49)(272)(361)
Net trade receivables24,3594,29455426914729,623
31 March 2019
Expected loss rate (%)–%1.4%2.2%3.9%42.7%0.7%
Gross trade receivables ($‘000)27,2103,33488938734432,164
Provision for impairment of trade receivables ($‘000)–(47)(20)(15)(147)(229)
Net trade receivables27,2103,28786937219731,935
GROUP
EXPECTED LOSS RATES FOR OTHER RECEIVABLESCurrent
30 – 60
days
60 – 90
days
90+
daysTotal
31 March 2020
Expected loss rate (%)–%–%–%–%–%–%
Gross other receivables ($’000)1,162––––1,162
Provision for impairment of other receivables ($’000)––––––
Net other receivables1,162––––1,162
31 March 2019
Expected loss rate (%)–%–%–%–%–%–%
Gross other receivables ($’000)694––––694
Provision for impairment of other receivables ($’000)––––––
Net other receivables694––––694
Other information about customers
No customers individually account for more than 10% of
the 2020 Group revenue (2019: One customer accounted for
11.0%, no other customers individually accounted for more
than 10% of the 2019 Group revenue).
The concentration of credit risk is limited due to the size of
the customer base.
KEY JUDGEMENTS AND ESTIMATES – EXPECTED CREDIT
LOSSES FROM RECEIVABLES
Management has reviewed and assessed debtors on a branch-
by-branch basis and the provision for impairment represents
the best estimate of the expected credit losses based on
historical credit loss experience adjusted to reflect current
conditions and estimates of future economic conditions.
In making this assessment, Management takes into account
qualitative and quantitative information about current and
prospective macroeconomic factors affecting the ability of
the debtors to repay the receivables.
The impairment provision is based on assumptions about
the risk of default and expected loss rates. The Group
uses judgement in making these estimates and developing
inputs to the calculation. The inputs are based on the
Group’s past history, external market conditions as well
as prospective information.
55541AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
C7 BORROWINGS
GROUP
20202019
BORROWINGS
$’000$’000
Bank loans36,00033,000
Total borrowings
36,00033,000
Classified as:
Current––
Non-current36,00033,000
Total bank loans
36,00033,000
Summary of borrowing arrangements
The Group has a term loan facility of $36.0 million with ASB Bank Limited of which $36.0 million was drawn as at 31 March 2020
(2019: $33 million). The loan facilities are secured by first ranking General Security Deed with cross guarantees and indemnities
executed by all Group entities (refer note E1). The banking facilities require the Group to operate within defined financial
undertakings. The Group has complied with all covenant requirements during the year. Interest is calculated on a floating rate
and the annual weighted average rate is 3.13% (2019: 3.90%). The rate is reset every three months. The loan is an interest only
loan and is repayable on 1 October 2021 (2019: 2 September 2019). As at 31 March 2020, the Group has an available overdraft
facility of $12.0 million with ASB Bank Limited, at an interest rate of 4.33% (2019: 5.43%). The balance of the overdraft was $Nil
as at 31 March 2020 (2019: $Nil) and cash at bank was $6.178 million at 31 March 2020 (2019: $6.357 million).
Reconciliation of liabilities arising from financing activities
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash
changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified
in the Group’s statement of cash flows as cash flows from financing activities:
GROUP
Opening balance
1 April
Financing
cash flows
Non-cash
changes
Closing balance
31 March
Note$’000$’000$’000$’000
For the year ended 31 March 2020
Borrowings
Bank loans – ASB Bank Limited
(i)
C733,0003,000–36,000
Other financial liabilities from
financing activities
Lease liabilities
(ii)
–(2,439)13,90511,466
Total33,00056113,90547,466
For the year ended 31 March 2019
Borrowings
Bank loans ASB Bank Limited
(i)
C736,000(3,000)–33,000
Total36,000(3,000)–33,000
(i) The cash flows make up the net amount of proceeds/(payment) from borrowings, repayments of borrowings and repayment of other financial
liabilities in the statement of cash flows.
(ii) Non-cash changes comprise the restated opening balance for lease liabilities of $11.058m, plus new leases entered into during the year of
$1.942m, plus lease liabilities arising on the acquisition of JacksonStone & Partners of $0.905m.
C8 TRADE AND OTHER PAYABLES
Accounting policy
Trade and other payables are initially measured at fair value,
and subsequently measured at amortised cost, using the
effective interest rate method.
Income, expenses, assets and liabilities are recognised net
of goods and services tax (“GST”), except:
• where the amount of GST incurred is not recoverable from
the taxation authority, it is recognised as part of the cost of
acquisition of an asset or as part of an item of expense; or
• for receivables and payables which are recognised inclusive
of GST where invoiced.
Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs.
GROUP
20202019
TRADE AND OTHER PAYABLES
Note
$’000$’000
Trade payables8,2607,029
Goods and services tax (GST) payable3,4043,992
PAYE3,0253,278
Other payables and accruals9,7029,887
Deferred grant incomeF621,778–
Total trade and other payables
46,16924,186
57561AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
This section explains the financial risks the Group faces,
how these risks affect the Group’s financial position and
performance and how the Group manages these risks.
D1 FINANCIAL RISK MANAGEMENT
The Group is exposed to a variety of financial risks comprising:
– credit risk;
– liquidity risk;
– market risk interest rate risk; and
– capital risk.
Credit risk
Credit risk is the risk that one party to a financial instrument
will cause a financial loss to the other party by failing to
discharge an obligation.
The Group’s principal financial assets are cash and cash
equivalents, and trade and other receivables.
The credit risk on cash and cash equivalents is limited
because the counterparty is a bank with a high credit-
rating assigned by international credit-rating agencies. The
maximum credit risk on other balances is limited to their
carrying values without taking into account any collateral held.
The Group’s credit risk is primarily attributable to its trade
and other receivables. The amounts presented in the
Statement of Financial Position are net of allowances for
doubtful receivables.
The Group has no significant concentration of credit risk
as its exposure is spread over a large number of customers
other than outlined in note C6.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty
in meeting obligations associated with financial liabilities.
The Group manages liquidity risk by maintaining adequate
reserves, banking facilities and reserve borrowing facilities
by continuously monitoring forecast and actual cash flows
and matching the maturity profiles of financial assets and
financial liabilities.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate as a result of
changes in market interest rates.
The Group’s exposure to interest rate risk arises mainly
from its interest earning cash deposits and its interest bank
borrowings. The Group is exposed to interest rate risk to the
extent that it invests for a fixed term at fixed rates or borrows
for a fixed term at fixed rates. The Group’s policy is to obtain
the most favourable term and interest rate available.
The Group’s exposure to interest rate risk is to the extent that
it invests for a fixed term at fixed rates. The Group’s interest
rate risk policy is to obtain the most favourable term and
interest rate available.
Capital risk management
The Group manages its capital to ensure that the entities
in the Group will be able to continue as a going concern
while maximising the return to stakeholders through the
optimisation of the debt and equity balance. The Group’s
overall strategy remains unchanged from the prior year.
The capital structure of the Group consists of debt, which
includes the borrowings disclosed in note C7, cash and cash
equivalents (note C5) and equity attributable to equity holders
of the Group, comprising retained earnings and issued share
capital as disclosed in notes C1 and C2 respectively.
The Directors and Management review the capital structure
on a periodic basis. As part of this review the Directors
and Management consider the cost of capital and the risks
associated with each class of capital. The Directors and
Management will balance the overall capital structure through
payment of dividends, new share issues, and share buy
backs as well as the issue of new debt or the redemption of
existing debt.
Fair value of financial instruments
The carrying amounts of financial instruments at balance
date approximate the fair value at that date.
D. Financial instruments used to manage risk
IN THIS SECTION
Liquidity and interest rate risk management
The following tables detail the Group’s remaining contractual maturity for its financial assets and liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial assets and liabilities based on the earliest date on which the
Group can be required to receive or pay. The tables include both interest and principal cash flows. To the extent that interest
cash flows are at floating rates, the undiscounted cash flows are derived from interest rates at 31 March.
Weighted
average
effective
interest rate
Less than
1 month
1 – 3
months
3 – 12
months
1 – 5
years
5+
yearsTOTAL
%$’000$’000$’000$’000$’000$’000
2020
Financial assets
Non-interest bearing0.00%53,529––––53,529
Floating interest0.00%6,178––––6,178
Financial liabilities
Non-interest bearing0.00%(23,565)(20,018)(4,253)(1,841)–(49,677)
Floating interest3.13%(94)(188)(845)(36,470)–(37,597)
36,048(20,206)(5,098)(38,311)–(27,567)
2019
Financial assets
Non-interest bearing%32,924––––32,924
Floating interest0.75%6,357––––6,357
Financial liabilities
Non-interest bearing%(15,411)(5,785)(3,521)––(24,717)
Floating interest3.90%(107)(215)(965)(33,536)–(34,823)
23,763(6,000)(4,486)(33,536)–(20,259)
Sensitivity analysis
The sensitivity analysis has been based on the exposure to interest rates for borrowings and cash and cash equivalents at
31 March. The weighted average interest of cash and cash equivalents at balance date was 0.75% (2019: 0.75%).
A 50 point increase or decrease is used when reporting interest rate risk internally to key management personnel and
represents management’s assessment of the reasonably possible change in interest rates.
INTEREST RATE
+/ – 50 bps
20202019
$’000$’000
Impact on profit and equity180165
59581AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
This section provides information to help readers understand
the Group’s structure and how it affects the financial position
and performance of the Group.
E1 SUBSIDIARIES
Accounting policies
Basis of consolidation
The Group financial statements comprise the financial
statements of the company and entities (including structured
entities) controlled by the company and its subsidiaries.
Control is achieved when the Group:
• has powers over the investee;
• is exposed, or has rights, to variable returns from its
involvement with the investee; and
• has the ability to use its powers to affect its returns
The Company reassesses whether or not it controls an
investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control
listed above.
The results of subsidiaries acquired or disposed of during
the year are included in profit or loss from the effective
date of acquisition or up to the effective date of disposal,
as appropriate. Where necessary, adjustments are made
to the financial statements of subsidiaries to bring the
accounting policies used into line with those used by other
members of the Group.
All intra-group transactions, balances, income and expenses
are eliminated in full on consolidation.
E. Group structure
IN THIS SECTION
The consolidated financial statements include the financial statements of AWF Madison Group Limited and the subsidiaries
listed below. Subsidiaries are entities controlled, directly or indirectly, by AWF Madison Group Limited.
NAME OF SUBSIDIARY
Place of
incorporation
and operation
Proportion
of ownership
interest
Proportion
of voting
power held
Principal
activity
2020
AWF LimitedNew Zealand100%100%Labour hire
Madison Recruitment LimitedNew Zealand100%100%Recruitment
Madison Force LimitedNew Zealand100%100%Recruitment
Absolute IT LimitedNew Zealand100%100%Recruitment and Payroll Services
Probity NZ LimitedNew Zealand100%100%Priority checks
NZ Employed LimitedNew Zealand100%100%Dormant
JacksonStone & Partners LimitedNew Zealand100%100%Recruitment
2019
AWF LimitedNew Zealand100%100%Labour hire
Madison Recruitment LimitedNew Zealand100%100%Recruitment
Madison Force LimitedNew Zealand100%100%Recruitment
Absolute IT LimitedNew Zealand100%100%Recruitment and Payroll Services
Probity NZ LimitedNew Zealand100%100%Priority checks
NZ Employed LimitedNew Zealand100%100%Dormant
F. Other
IN THIS SECTION
This section includes the remaining information relating to
the Group’s financial statements that is required to comply
with financial reporting standards.
F1 EMPLOYEE BENEFITS AND SHARE BASED PAYMENTS
Accounting policies
1 Provision is made for benefits accruing to employees in
respect of wages and salaries, annual leave, long service
leave, and sick leave when it is probable that settlement
will be required and they are capable of being measured
reliably.
2 Provisions made in respect of employee benefits expected
to be settled within 12 months are measured at their
nominal values using the remuneration rate expected to
apply at the time of settlement.
3 Provisions made in respect of employee benefits which are
not expected to be settled within 12 months are measured
as the present value of the estimated future cash outflows
to be made by the Group in respect of services provided
by employees up to reporting date.
4 The Group pays contributions to superannuation plans,
such as Kiwisaver. The Group has no further payment
obligations once the contributions have been paid.
The contributions are recognised as an employee benefit
expense when they are due. Prepaid contributions are
recognised as an asset to the extent that a cash refund
or a reduction in the future payments is available.
5 The Group operates an equity-settled share based
incentive scheme for senior staff and directors that is
settled in ordinary shares. The fair value of these share-
based payments is calculated on the grant date using an
appropriate valuation model. The fair value is included
in employee benefits expense on a straight line basis over
the vesting period, based on the Group’s estimate of the
number of equity instruments that will eventually vest.
The same amount is credited to shareholders equity.
At each balance date, the Group reassesses its estimates
of the number of equity instruments expected to vest.
The impact of the revision of original estimates, if any,
is recognised in employee benefits expense immediately,
with a corresponding adjustment to shareholders equity.
GROUP
20202019
EMPLOYEE BENEFITS
$’000$’000
Employee benefits236,942242,334
Employer contribution to Kiwisaver2,1523,188
Equity-settled share-based payments114161
Total employee benefits expense
239,208245,683
GROUP
20202019
COMPENSATION OF KEY MANAGEMENT PERSONNEL
$’000$’000
The remuneration of key management during the year was as follows:
Salaries and short-term benefits3,0093,102
Employer contribution to Kiwisaver7671
Equity-settled share-based payments9275
Total key management personnel compensation
3,1773,248
The remuneration of directors and key executives is determined by the remuneration committee having regard to the
performance of individuals and market trends.
61601AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
Employee share schemes
The Group has an ownership-based compensation scheme
for senior employees of the Group. In accordance with the
provisions of the restricted share scheme, as approved
by shareholders, senior employees and directors may, at
the discretion of the Board, be granted the opportunity of
purchasing restricted shares at a price determined by the
Board under the rules of the scheme.
Invited participants purchase the shares by way of an interest
free loan from the Group. Participants may convert their
shares from the vesting date and only when they have repaid
the loan from the Group. The shares issued to participants
are held as security for the loan until such time the loan has
been repaid. Restricted shares are entitled to all the rights
as ordinary shares, including dividends and full voting rights,
but are not tradable until they are converted to ordinary shares
based on the terms of the scheme.
A total of 52,000 restricted shares were issued to senior
staff during the year under the terms of the Group share
scheme (2019: 463,000 restricted shares were issued to senior
staff during the year under the terms of the Group share
scheme). At the same time an interest free loan was provided
to staff to purchase these shares pursuant to the terms of
the scheme.
No restricted shares were exercised during the year (2019:
No restricted shares were exercised during the year).
15,000 restricted shares expired during the year (2019: 60,000
shares). The corresponding interest free loan provided to staff
was also cancelled.
At 31 March 2020, there were 796,000 (2019: 759,000) shares
held by staff members and corresponding loans to the value
of $1,704,920 (2019: $1,647,270).
The following share-based payment arrangements were in existence at 31 March 2020:
NumberGrant dateVesting date
Expiry
date
Issue
price
Fair value
at grant date
of the option
RESTRICTED SHARE SERIES$$
D Shares141,00030/07/20141/07/20191/07/20202.570.87
E Shares 2017 Grant28,00023/11/20161/07/20191/07/20202.570.59
F Shares 2017 Grant42,00023/11/20161/01/20221/01/20232.570.79
E Shares 2018 Grant28,0002/08/20171/07/20191/07/20202.640.53
F Shares 2018 Grant42,0002/08/20171/01/20221/01/20232.640.82
E Shares 2019 Grant26,0006/06/20181/07/20191/07/20201.930.33
F Shares 2019 Grant39,0006/06/20181/01/20221/01/20231.930.51
G Shares 2019 Grant151,2001/11/20181/07/20211/07/20221.900.38
H Shares 2019 Grant246,8001/11/20181/01/20241/01/20251.900.55
G Shares 2020 Grant20,80018/06/20191/07/20211/07/20221.850.33
H Shares 2020 Grant31,20018/06/20191/01/20241/01/20251.850.46
Total796,000
The rules of the restricted share scheme (which for accounting purposes are treated as share options) allow participants to
hand back to the Group restricted shares issued to them at the grant date (or during the exercise period) should the market
price of the shares be below the exercise price. If the restricted shares are handed back to the Group, the loan from the Group
is cancelled. Due to the nature of the restricted share scheme, the scheme has been treated as a share option scheme under
NZ IFRS 2 Share-based Payment and a value placed on each restricted share in accordance with the standard.
Restricted shares are valued using Black-Scholes pricing model. Where relevant, the expected life used in the model has been
adjusted based on management’s best estimate for the effects of non-transferability, exercise, and behavioural considerations.
Expected volatility is based on the historical share price volatility over the expected term of the option. The valuation assumes
that senior employees and directors will exercise the options at the end of the allowed one-year loan repayment period.
RESTRICTED
SHARE
SERIES
Grant
date
Vesting
date
Share price
at grant
date
Exercise
Price
Term
to
vesting
Expected
life
Risk
Free
Rate
Annualised
Volatility
Option
Value
$ $ (Days)(Years) % %$
D Shares30/07/20141/07/2019$2.45$2.571,7974.904.00%30.00%$0.87
E Shares
2017 Grant23/11/20161/07/2019$2.55$2.579502.602.40%26.50%$0.59
F Shares
2017 Grant23/11/20161/01/2022$2.55$2.571,8655.102.40%26.50%$0.79
E Shares
2018 Grant2/08/20171/07/2019$2.70$2.646981.902.20%23.10%$0.53
F Shares
2018 Grant2/08/20171/01/2022$2.70$2.641,6134.402.50%26.20%$0.82
E Shares
2019 Grant6/06/20181/07/2019$1.94$1.933901.101.90%26.70%$0.33
F Shares
2019 Grant6/06/20181/01/2022$1.94$1.931,3053.602.30%25.70%$0.51
G Shares
2019 Grant1/11/20181/07/2021$1.84$1.909732.702.00%25.10%$0.38
H Shares
2019 Grant1/11/20181/01/2024$1.84$1.901,8875.202.20%26.70%$0.55
G Shares
2020 Grant18/06/20191/07/2021$1.83$1.857442.001.20%24.90%$0.33
H Shares
2020 Grant18/06/20191/01/2024$1.83$1.851,6584.501.30%24.70%$0.46
The weighted average fair value of the restricted shares granted under the restricted share scheme during the year was $0.58
(2019: $0.48)
The following reconciles the outstanding restricted shares granted under the restricted share scheme at the beginning and end
of the year:
GROUP
20202019
Option
Weighted average
exercise priceOption
Weighted average
exercise price
Number$Number$
Balance at 1 April759,000$2.17356,000$2.57
Granted during the year52,000$1.85463,000$1.90
Exercised during the year–$-–$-
Expired during the year–$-–$-
Forfeited during the year(15,000)$2.57(60,000)$2.57
Balance at 31 March
796,000$2.14759,000$2.17
The number of restricted share options exercisable at 31 March 2020 is Nil (2019: Nil).
The restricted shares outstanding at 31 March 2020 had a weighted average remaining contractual life of 1,476 days
(2019: 1,286 days).
During the year ended 31 March 2020 the share based payments expense recognised by the Group was a charge of $114,225
(2019: charge of $71,731).
There were no restricted share options exercised during the year (2019: none).
63621AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
Stock appreciation rights
On 9 May 2019 the Group announced the lapse of the 2,000,000
SAR’s issued to the CEO. As a result the balance of $329,000
relating to the SARs in the Group’s share scheme reserve was
transferred to retained earnings. There are no outstanding
SARs on issue under the scheme as at reporting date.
CEO incentive plan
On 9 May 2019 the Group announced the establishment of a
new short-term incentive plan for the CEO (‘STI Plan’).
The STI Plan is based on share price growth where the CEO
is offered an option to acquire ordinary shares of AWF Madison
or ordinary shares and cash, if the volume weighted average
price for AWF Madison’s ordinary shares for the 30 days prior
to a day nominated by the CEO between late June 2020 and
31 December 2020 (‘Measured VWAP’) is equal to or greater
than an agreed target value.
The CEO may exercise the option at least 30 days post the
release of AWF Madison Limited’s result for the financial year
ending 31 March 2020 and before 31 December 2020.
The number of ordinary shares or ordinary shares and cash
that the CEO will receive increases as the VWAP target
increases in 10 cent increments up to an agreed cap. Upon
exercise, ordinary shares or ordinary shares and cash will be
issued to the CEO.
The reason for offering the CEO the choice of shares and cash
is to provide him with sufficient funds to pay any income tax
due when the STI Plan is triggered.
Restricted shares are valued using Binomial pricing model.
F2 PROVISIONS
Accounting policy
Provisions are recognised when the Group has a present
obligation as a result of a past event, and it is probable that
the Group will be required to settle that obligation, and a
reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate
of the consideration required to settle the present obligation
at the end of the reporting period taking into account the
risks and uncertainties surrounding the obligation. Where
a provision is measured using the cash flows estimated
to settle the present obligation, its carrying amount is the
present value of those cash flows.
GROUP
20202019
PROVISION FOR MEDICAL COSTS
$’000$’000
Balance at 1 April241200
Payments made during the year(152)(272)
Revaluation of provision100241
Outstanding costs incurred in the current year–72
Balance at 31 March189241
Current189241
Non-current––
Balance at 31 March189241
AWF Limited participates in the ACC accredited employers
full self-cover plan. Under the plan AWF Limited, as employer
undertakes injury management (via its appointed agent) and
accepts financial responsibility for employees who suffer
work-related injuries for a nominated period. AWF Limited
has capped its exposure to total claims and unexpected high
individual claims via stop loss cover.
KEY JUDGEMENTS AND ESTIMATES – REHABILITATION
UNDER THE ACC PARTNERSHIP PROGRAMME
Provisions represent management’s best estimate of the
Group’s liability for ongoing medical and rehabilitation costs
for open claims in terms of the partnership agreement
with Accident Compensation Corporation, based on past
experiences and the nature of the open claims.
F3 RELATED PARTIES
Controlling entity
The SA Hull Family Trust No.2, which holds 18,194,598
(2019: 17,488,884) shares is the ultimate controlling entity
of the Group, having a 53.01% (2019: 52.33%) holding.
Transactions
During the year, Group entities did not enter into any
transactions with a related party that is not a member of
the Group (2019: none).
At reporting date, Group entities do not have any amounts
owed or owing to a related party that is not a member of the
Group (2019: none).
INPUTS INTO THE MODEL
STI Plan
share options
Grant date9/05/2019
Vesting date26/06/2020
Share price at grant date$1.69
Days until vesting414
Expected life (years)1.65
Risk Free Rate1.4%
Annualised Volatility25.0%
Option Value$0.42
.
65641AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
F4 COMMITMENTS
Accounting policy
Operating leases, measurement and recognition
On 1 April 2019 the Group adopted NZ IFRS 16 (refer note G2),
NZ IFRS 16 replaced NZ IAS 17 Leases, the Group previous
accounting policies for leases for the year ended 31 March
2018, prior to the adoption of NZ IFRS 16 was as follows:
1 Leases were classified as finance leases whenever the
terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are
classified as operating leases.
2 Rentals payable under operating leases were charged
to profit or loss on a straight-line basis over the term of
the relevant lease. Benefits received and receivable as an
incentive to enter into an operating lease were also spread
on a straight-line basis over the lease term.
Operating lease payments represent rentals payable by
the Group for its operational properties, motor vehicles
and printers.
Property leases are negotiated for an average term of nine
years and rentals are fixed for an average of three years.
Property leases contain clauses for rental increases in line
with CPI.
Motor vehicles are negotiated for a period of three to five years
and are fixed. Printers are negotiated for between three and
four years.
Operating leases under NZ IFRS 16
Disclosures relating to the Group’s operating leases under
NZ IFRS 16 for the year ended 31 March 2020 are contained
within note B2.
GROUP
20202019
OPERATING LEASES RECOGNISED AS AN EXPENSE
$’000$’000
Minimum lease payments under operating leases recognised
as an expense in the year1223,331
1223,331
GROUP
20202019
NON-CANCELLABLE OPERATING LEASE COMMITMENTS
$’000$’000
Less than 1 year–2,728
Later than 1 year and not later than 5 years inclusive–7,327
More than 5 years–1,838
Total operating lease commitments–11,893
GROUP
20202019
CAPITAL EXPENDITURE COMMITMENTS
$’000$’000
Property, plant and equipment–116
Intangible assets computer software551–
Total capital expenditure commitments551116
F5 CONTINGENT ASSETS AND LIABILITIES
ASB Bank Limited has issued five guarantees on behalf of the
Group totalling $534,000 in support of property leases (4) and
a surety bond to the NZX.
The Group has no other contingent assets or liabilities
at 31 March 2020 (2019: $Nil).
F6 EVENTS AFTER THE REPORTING DATE
Receipt of COVID-19 Wage Subsidy Scheme
The New Zealand Government developed a COVID-19 ‘Wage
Subsidy Scheme’ to help businesses and affected workers in
the short-term, as they adjust to the initial impact of COVID-19
pandemic (which is described under ‘Global pandemic of
coronavirus disease 2019’ in the ‘About this report’ section of
the notes to these financial statements).
The Wage Subsidy Scheme is available to all businesses
that are adversely affected by COVID-19. The Wage Subsidy
Scheme supports employers adversely affected by COVID-19,
so that they can continue to pay their employees, and supports
workers to ensure they continue to receive an income, and
stay connected to their employer, even if they are unable
to work.
To be eligible for the wage subsidy, businesses must make
a series of declarations regarding, actual or forecast revenue
decreases in any four-week period between January and
9 June 2020 attributable to COVID-19, that they will retain
employees named in the grant application for the duration
of the grant, and pay each named employees at either their
normal rates (for any work they do), 80% of income where
reasonably possible, or the full subsidy (the full subsidy
received for each named employee, except where a person’s
income is normally less than the subsidy amount).
Prior to reporting date, in March 2020, the Group received a
grant of $534,000 and in April 2020, the Group received grant
of $22,286,000. Both grants were recognised as liabilities on
the dates they were claimed and shall be recognised in profit
or loss on a systematic basis over the periods in which the
entity recognises as expenses the related costs for which the
grants are intended to compensate.
Global pandemic of coronavirus disease 2019
The COVID-19 pandemic, continues to inhibit general
activity and confidence levels within the community, the
economy and the operations of the Group’s business.
While the scale and duration of these developments remain
uncertain as at the date of signing these financial
statements, the Group continues to monitor developments
and initiate plans to mitigate adverse impacts and
maximise opportunities.
Other
No other subsequent events have occurred since reporting
date that would materially impact the Group’s financial
statements as at 31 March 2020.
67661AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
Significant matters which have impacted the Group’s
financial performance.
G1 BUSINESS COMBINATIONS
Accounting policy
Business combinations are accounted for using the
acquisition method.
The consideration transferred in a business combination is
measured at fair value, which is calculated as the sum of the
acquisition-date fair values of assets transferred by the Group,
liabilities incurred by the Group to the former owners of the
acquiree and the equity interest issued by the Group (if any) in
exchange for control of the acquiree.
Acquisition-related costs are recognised in profit or loss
as incurred.
When the Group acquires a business, it assesses the financial
assets and liabilities assumed for appropriate classification
and designation in accordance with the contractual terms,
economic circumstances and pertinent conditions as at the
acquisition date.
At the acquisition date, the identifiable assets acquired and
the liabilities (including contingent liabilities) assumed are
recognised at their fair value at the acquisition date, except
that deferred tax assets or liabilities or assets related to
employee benefit arrangements are recognised and measured
in accordance with NZ IAS 12 Income Taxes and NZ IAS 19
Employee Benefits respectively.
Goodwill is measured as the excess of the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer’s
previously held equity interest in the acquiree (if any) over the
net of the acquisition-date amounts of the identifiable assets
acquired and the liabilities assumed. If, after reassessment,
the net of the acquisition-date amounts of the identifiable
assets acquired and liabilities assumed exceeds the sum
of the consideration transferred, the amount of any non-
controlling interests in the acquiree and the fair value of the
acquirer’s previously held interest in the acquiree (if any),
the excess is recognised immediately in profit or loss as a
bargain purchase gain.
The Group’s goodwill policy is set out in note B4.
When the consideration transferred by the Group in a
business combination includes a contingent consideration
arrangement, the contingent consideration is measured
at its acquisition-date fair value and included as part of
the consideration transferred in a business combination.
Changes in fair value of the contingent consideration that
qualify as measurement period adjustments are adjusted
retrospectively, with corresponding adjustments against
goodwill. Measurement period adjustments are adjustments
that arise from additional information obtained during the
‘measurement period’ (which cannot exceed one year from
the acquisition date) about facts and circumstances that
existed at the acquisition date.
The subsequent accounting for changes in the fair value of the
contingent consideration that do not qualify as measurement
period adjustments depends on how the contingent
consideration is classified. Contingent consideration that
is classified as equity is not re-measured at subsequent
reporting dates and its subsequent settlement is accounted
for within equity. Other contingent consideration is re-
measured to fair value at subsequent reporting dates with
changes in fair value recognised in profit or loss.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts
for the items for which the accounting is incomplete. Those
provisional amounts are adjusted during the measurement
period (see below), or additional assets or liabilities are
recognised to reflect new information obtained about facts
and circumstances that existed as of the acquisition date
that, if known, would have affected the amounts recognised
as of that date.
G. Significant matters in the financial year
IN THIS SECTION
PURCHASE OF JACKSONSTONE & PARTNERS
Effective 1 June 2019, AWF Madison Group Limited acquired the shares of JacksonStone & Partners Limited (‘JacksonStone &
Partners’). JacksonStone & Partners is a specialist executive search and recruitment consultancy covering all disciplines up
to Chief Executive and Board appointments, for organisations in the public, private and not-for-profit sectors. The acquisition
of JacksonStone & Partners is assisting the Group to access C suite clients and the subsequent opportunities that this brings.
This leverage between the Group entities is proving invaluable for the Group’s cohesion and ability to cater to client needs across
levels and departments. The goodwill and identifiable intangible assets are not deductible for income tax purposes.
The initial accounting for the JacksonStone & Partners business combination has been completed (i.e. the amounts reported
below are not provisional).
NamePrincipal activity
Date of
acquisition
Proportion
acquired
Cost of
acquisition
%$’000
JacksonStone & PartnersSpecialist executive search and
recruitment consultancy
1/6/2019100%10,520
Analysis of assets and liabilities acquiredFair value on acquisition
$’000
Non-current assets
Plant and equipment334
Intangible assets
• JacksonStone & Partners brand1,029
• Customer relationships2,185
• Restraint of trade 1,406
Right of use assets905
Current assets
Trade receivables3,061
Other receivables59
Cash and cash equivalents1,547
Non-current liabilities
Deferred tax(1,294)
Lease liabilities(905)
Current liabilities
Trade and other payables(3,418)
Taxation payable(186)
Net identifiable assets and liabilities4,723
Goodwill on acquisition5,797
Cost of acquisition10,520
The Group used an external valuation specialist to assist in determining a market value for the identifiable intangible assets.
The intangible assets acquired comprise assets that have both finite and indefinite life spans. The JacksonStone & Partners
brand is considered to have an indefinite life span and the customer relationships, restraints of trade and candidate database
have a finite life span. Intangible assets with a finite life span are amortised over the estimated useful lives.
The receivables acquired (which principally comprise trade receivables) in this transaction had gross contractual amounts of
$3.061m. This amount has been received in full.
Cost of acquisition
The cost of acquisition was made up as follows:$’000
Paid in cash on completion date (7 June 2019)6,700
Deferred consideration (12 November 2019) 616
Earn out tranche 1 (November 2020)1,419
Earn out tranche 2 (November 2021)1,785
10,520
69681AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
Deferred consideration
As part of the purchase agreement, deferred consideration
of $616,000 represented an additional cash payment to
the previous owners of JacksonStone & Partners relating
to a working capital adjustment upon finalisation of the
financial position of JacksonStone & Partners Limited as
at 1 June 2019 (acquisition date).
Contingent consideration
As at acquisition date
As part of the purchase agreement, a contingent consideration
arrangement has been agreed.
Under the contingent consideration arrangement, there
will be additional cash payments to the previous owners of
JacksonStone & Partners, where the Group is required to pay:
• an initial capped earn out (‘Earn-out tranche 1’) of
$1.5m subject to achievement of a specified value of
Net Disposable Revenue, agreed by both parties, for
the 12-month period to 30 September 2020, payable in
November 2020; and
• a second uncapped earn out (‘Earn-out tranche 2’) which
is also subject to achievement of a specified value of
Net Disposable Revenue, agreed by both parties, for
the 12-month period to 30 September 2021, payable in
November 2021.
At acquisition date, the potential undiscounted amount of all
future payments that the Group could be required to make
under the contingent consideration arrangement is $1.5m
for Earn-out tranche 1 and $1.958m for Earn-out tranche 2.
• The fair value of Earn-out tranche 1 of $1.419m, was
estimated by applying a discount factor of 3.715% to
the capped earn out amount of $1.5m. Management
determined the amount based on a 100% probability of
meeting the specified value of Net Disposable Revenue.
• The fair value of Earn-out tranche 2 of $1.785m, was
estimated by applying a discount factor of 3.715% to the
uncapped earn out amount of $1.958m. Management
determined this value based on a range of probabilities
of meeting a specified value range of Net Disposable
Revenue and probability weighting these ranges.
As at 31 March 2020
There have been no material changes in the Group’s
estimate of the probable cashflows to the previous owners of
JacksonStone & Partners under the contingent consideration
arrangement. The potential undiscounted amount of all future
payments that the Group could be required to make under the
contingent consideration arrangement remains at $1.5m for
Earn-out tranche 1 and $1.958m for Earn-out tranche 2. The
liability has increased by a total of $101,000 being $45,000 for
Earn-out tranche 1 and $56,000 for Earn-out tranche 2 due to
the unwinding of the discount. The fair value of the contingent
consideration arrangement at reporting date is $1.463m for
Earn-out tranche 1 and $1.841m for Earn-out tranche 2.
Fair value measurement
Contingent consideration is the Group’s only item measured
at fair value. Contingent consideration is categorised within
Level 3 of the fair value hierarchy. The following is information
about how the fair value of contingent consideration is
determined (in particular, the valuation technique(s) and
inputs used).
• Valuation technique
and key inputs:
Discounted cash flow method
was used to capture the present
value of the Group arising from
the contingent consideration.
• Significant
unobservable inputs:
Discount rate
• Relationship and
sensitivity of
unobservable inputs
to fair value:
The higher the discount rate,
the lower the fair value. If the
discount rate was 1% higher/
lower while all other variables
were held constant, the carrying
amount would decrease/ increase
by $28,000
Acquisition related costs amounting to $263,000 have been
excluded from the consideration transferred and have been
recognised as an expense in the Statement of Comprehensive
Income in the year ended 31 March 2020.
Goodwill on acquisition
Goodwill arose in the acquisition of JacksonStone as the consideration paid included amounts in relation to the benefit of future
market development and the assembled client base, candidate data base and workforce. The portion of these benefits that
relates to contracts with major clients, the JacksonStone brand, and the restraint of trade agreements imposed on the vendors
have been valued separately as intangible asset. The remaining benefits are not recognised separately from goodwill as they
do not meet the recognition criteria for identifiable intangible assets.
Net cash outflow on acquisition
$’000
Total purchase consideration10,520
Less non cash consideration
Deferred consideration(616)
Contingent consideration(3,204)
Consideration paid in cash6,700
Less: cash & cash equivalents acquired(1,547)
Net cash paid5,153
KEY JUDGEMENTS AND ESTIMATES
IDENTIFICATION AND VALUATION OF IDENTIFIABLE
INTANGIBLE ASSETS ARISING FROM A BUSINESS
COMBINATION
The measurement of identifiable intangible assets acquired
in a business combination is highly subjective and there
are a range of possible values that could be attributed for
initial recognition. The Group uses the skills and experience
of valuation specialists in establishing an initial range
within which fair value is to be recognised. Judgement is
then applied in selecting the value to be recognised on the
Statement of Financial Position. Judgement is also applied
in determining the useful life of the intangible assets which
impacts directly on the amortisation charges to be incurred
following an acquisition.
In determining the values for identified intangible assets,
being Brand names, Customer relationships and Restraint
of trade, valuations were performed by an external valuation
specialist. The fair values were determined as follows:
• Brand name was valued using the relief from royalty
method under the income approach. This method
essentially looks at the theoretical royalty costs that
are saved by owning the brand name instead of leasing
it. The key inputs are royalty rate, discount rate and
forecast revenue.
• Customer relationships were valued using the multi-period
excess earnings method. This method uses an indirect
approach to determining the value of an intangible asset
by deducting an estimate of the after tax contribution to
earnings of all other assets and deriving a residual or
excess earnings that is then attributed to asset being
valued and capitalised at an appropriate required rate
of return for that asset.
The forecast EBIT is then discounted. It is often used to
value intangible assets that are a core part of the business
where it is difficult to observe a direct contribution or
economic benefit from ownership of the asset. Key inputs
are forecast EBIT, discount rate and implied return on other
identified assets.
• Restraint of trade was valued using the comparative income
differential method. This method involves comparing and
assessing the difference in future earnings with or without
the benefit of future access to or use of the intangible
asset being valued. Key inputs are forecast EBIT and
discount rate.
VALUATION OF CONTINGENT CONSIDERATION RESULTING
IN A BUSINESS COMBINATION
The measurement of contingent consideration resulting in
a business combination is highly subjective and there are a
range of possible values that could be attributed to its fair
value on initial recognition and subsequent measurement.
The determination of its fair value is based on discounted
cash flows. The key assumptions take into consideration
the probability of meeting each performance target and the
discount factor. In establishing the probability of meeting each
performance target, the Group applies judgement based on
the historical and forecasted performance of the acquired
CGU, to which the contingent consideration is attributable.
Judgement is also applied in determining discount factor,
which impacts directly on the interest charges to be incurred
following an acquisition.
Impact of acquisition on the results of the Group
For the period 1 June 2019 to 31 March 2020, included in Group profit after tax is $1.943m and in Group revenue $27.510m
attributable to JacksonStone & Partners.
Had this business combination been effected at 1 April 2019, the revenue of the Group from continuing operations would have
been approximately $33.325m, and the net profit after tax for the year ended 31 March 2020 from continuing operations would
have been approximately $2.405m. Management consider these estimated numbers to represent an approximate measure of the
performance of the combined group on an annualised basis and provide a reference point for comparison in future periods.
In determining the estimated revenue and profit of the Group had JacksonStone & Partners been acquired at the beginning of
the current year, Management have:
• Calculated borrowing costs on the funding levels, credit ratings and debt/equity position of the Group after the business
combination; and
• Calculated amortisation of identifiable intangible assets acquired based on the value of these assets at date of acquisition.
71701AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
G2 CHANGES IN ACCOUNTING POLICIES
Impact of the adoption of NZ IFRS 16 Leases
This note explains the impact of the adoption of NZ IFRS 16
on the Group’s financial statements and discloses the new
accounting policies that have been applied from the date of
initial application (1 April 2019).
NZ IFRS 16 replaces NZ IAS 17 Leases. NZ IFRS 16 eliminates
the distinction between operating and finance leases for
lessees and will result in lessees bringing most leases onto
their Statements of Financial Position.
The main changes affect lessee accounting only – lessor
accounting is mostly unchanged from NZ IAS 17.
NZ IFRS 16 introduced the following:
• Use of a control model for the identification of leases:
This model distinguishes between leases and service
contracts on the basis of whether there is an identified
asset controlled by the customer.
• Distinction between operating and finance leases
is removed:
Assets (a right-of-use (‘ROU’) asset) and liabilities (a lease
liability reflecting future lease payments) will now be
recognised in respect of all leases, with the exception of
certain short-term leases and leases of low value assets.
– ROU assets: The ROU assets will be depreciated
in accordance with NZ IAS 16 Property, Plant
and Equipment.
– Lease liabilities: The lease liabilities will be accredited
based on the effective interest method, using a discount
rate determined at lease commencement (as long as a
lease reassessment or modification and a change in the
discount rate have not occurred) and reduced by lease
payments made.
– Cashflows: Payments to suppliers no longer includes
operating lease payments, unless payments are for
short-term and low value leases. Operating lease
payments are now split between their principal and
interest elements and presented as ‘principal amounts
of lease payments’ under cash flows from financing
activities and ‘interest paid’ under cash flows from
operating activities.
The Group has adopted and applied NZ IFRS 16 from 1 April
2019 in accordance with the transitional provisions outlined
in NZ IFRS 16. The Group has used the modified retrospective
approach outlined in NZ IFRS 16 C5(b) and C8 (b) (ii), whereby
the ROU asset recognised is measured at an amount equal to
the lease liability, adjusted by the amount of any prepaid or
accrued lease payments relating to that lease recognised in
the Statement of Financial Position immediately before the
date of initial application.
Accordingly, comparative financial information presented
in these financial statements have not been restated and
continues to be reported under NZ IAS 17 and reclassifications
and the adjustments arising from the adoption of NZ IFRS 16
have been recognised in the opening Statement of Financial
Position on 1 April 2019.
The adoption of NZ IFRS 16 had a material impact on the
Group’s financial statements.
Definition of a lease
Previously, the Group determined at contract inception
whether an arrangement is or contains a lease contract under
NZ IFRIC 4 Determining whether an Arrangement contains
a Lease.
Under NZ IFRS 16, the Group assesses whether an
arrangement is or contains a lease based on the following
definition of a lease:
• A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a
period of time in exchange for consideration.
• To assess whether a contract conveys the right to contract
the use of an identified asset, the Group assess whether:
– the contract involves the use of an identified asset this
may be explicitly or implicitly, and should be physically
distinct or represent substantially all of the capacity of a
physically distinct asset. If the supplier has a substantive
substitution right, then the asset is not identified;
– the Group has the right to obtain substantially all of the
economic benefits from the use of the asset throughout
the period of use; and
– the Group has the right to direct the use of the asset.
The Group has this right when it has the decision-
making rights that are most relevant to changing how
and for what purpose the asset is used.
In rare cases where the decision about how and for what
purpose the asset is used is predetermined, the Group
has the right to direct the use of the asset it either:
» the Group has the right to operate the asset; or
» the Group designed the asset in a way the
predetermines how and for what purpose it will
be used.
On adoption of NZ IFRS 16, the Group elected to apply the
practical expedient to grandfather all leases that were
previously identified as leases under NZ IAS 17, as leases
under NZ IFRS 16. Contracts that were not identified as
leases under NZ IAS 17 and IFRIC 4 were not reassessed for
whether there is a lease. Therefore, the definition of a lease
under NZ IFRS 16 was only applied to contracts entered into
or changed on or after 1 April 2019.
As a lessee
The Group leases property, motor vehicles and equipment.
As a lessee, the Group previously classified these leases
as operating or finance leases based on its assessment of
whether the lease transferred significantly all of the risks
and rewards incidental to ownership of the underlying asset
to the Group.
Under NZ IFRS 16, the Group recognises right-of-use assets
and lease liabilities for most leases – i.e. these leases are
on-balance sheet.
The Group decided to apply recognition exemptions for leases
with a remaining term of less than 12 months from the date
of initial application, short term leases and leases of low value
assets. For leases of other assets, which were classified as
operating under NZ IAS 17, the Group recognised right-of-use
assets and lease liabilities.
Significant accounting policies
From 1 April 2019, the Group recognises a right-of-use asset
and a lease liability at the lease commencement date of
any new lease. Refer to note B2 for the Group’s significant
accounting policies for the recognition and measurement
of right-of-use assets and a lease liabilities.
Leases previously classified as operating leases under
NZ IAS 17
On adoption as at 1 April 2019, for leases previously classified
as operating leases under NZ IAS 17, ROU assets and lease
liabilities were recognised.
• Recognition of ROU assets:
Initial measurement of the ROU assets were at an amount
equal to the lease liability, adjusted by the amount of
any prepaid or accrued lease payments relating to those
leases recognised in the statement of financial position
immediately before the date of initial application.
The ROU assets recognised were $12.36m.
• Recognition of lease liabilities:
Initial measurement of the lease liabilities reflects the
present value of lease payments, including reasonably
certain renewals, discounted at the Group’s incremental
borrowing rate as at 1 April 2019.
The lease liabilities recognised were $12.36m.
• Recognition of deferred tax:
A net deferred tax balance of $Nil was recognised,
comprised as:
– deferred tax assets of $3.46m attributed to the overall
lease liabilities balance; and
– deferred tax liabilities of $3.46m attributed to the overall
ROU assets balance.
There was no impact on the Group’s retained earnings as at
1 April 2019.
The Group used the following practical expedients when
applying NZ IFRS 16 to leases previously classified as
operating leases under NZ IAS 17:
• a single discount rate to a portfolio of leases with similar
characteristics.
• Adjusted the right-of-use assets by the amount of NZ
IAS 37 onerous contract provision immediately before
the date of initial application, as an alternative to an
impairment review.
• Applied the exemption not to recognise lease liabilities and
right-of-use assets for leases for which the lease term
ends within 12 months of the date of initial application.
• Excluded initial direct costs from measuring the right-of-
use asset at the date of initial application.
• Used hindsight when determining the lease term if the
contract contains options to extend or terminate the lease.
• Used the practical expedient allowed with respect to lease
and non lease components.
• Excluded short terms leases (less than 12 months lease
term) and low value leases (less than $10,000).
Incremental borrowing rate
When measuring lease liabilities, the Group discounted lease
payments using its incremental borrowing rate at 1 April 2019.
The following was the weighted average rate for each
lease category:
• premises (properties or offices) was 4.95%
• motor vehicles was 4.2%
• computer equipment was 4.2%
Reconciliation of operating lease commitments disclosed as at
31 March 2019 to total lease liabilities recognised on adoption
1 April 2019
$’000
Operating lease commitments as disclosed
in the Group’s consolidated financial statements
at 31 March 201911,893
• Recognition exemption for short-term leases(272)
• Redetermination of lease term574
• Effect of discounting using the incremental
borrowing rate(1,137)
Lease liabilities recognised at 1 April 201911,058
Statement of cash flows
The application of NZ IFRS 16 has an impact on the
consolidated statement of cash flows of the Group.
Under NZ IFRS 16, lessees must present:
• Short-term lease payments, payments for leases of
low-value assets and variable lease payments not included
in the measurement of the lease liability as part of
operating activities;
• Cash paid for the interest portion of a lease liability
as either operating activities or financing activities, as
permitted by NZ IAS 7 Statement of Cash Flows (the Group
has opted to include interest paid as part of operating
activities, consistent with its presentation of interest paid
on financial liabilities); and
• Cash payments for the principal portion for a lease liability,
as part of financing activities.
Under NZ IAS 17, all lease payments on operating leases were
presented as part of cash flows from operating activities.
Consequently, the net cash generated by operating activities
has increased by $2.439m, being the lease payments, and
net cash used in financing activities has increased by the
same amount.
The adoption of NZ IFRS 16 did not have an impact on net
cash flows.
The impact of the application of NZ IFRS 16 on basic and
diluted earnings per share was 1.4 cents per share.
73721AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEIOSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
Impact of the adoption of NZ IFRS 16 on the Statement of Financial Position as at 1 April 2019
GROUP
31 March 20191 April 20191 April 20191 April 2019
As originally
presented
IFRS 16
adjustments
IFRS 16
reclassificationsRestated
Note$’000$’000$’000$’000
Assets
Non-current assets
Property, plant and equipmentB13,038––3,038
Right of use assetsB2–11,058–11,058
Intangible assets – goodwillB439,271––39,271
Intangible assets – otherB313,929––13,929
Total non-current assets56,23811,058–67,296
Current assets
Cash and cash equivalentsC56,357––6,357
Trade and other receivablesC632,629––32,629
Contract assetsA2295––295
Total current assets39,281––39,281
Total assets95,51911,058–106,577
Equity and liabilities
Non-current liabilities
Deferred tax liabilitiesA52,462––2,462
BorrowingsC733,000––33,000
Lease liabilitiesB2–8,931–8,931
Total non-current liabilities35,4628,931–44,393
Current liabilities
Trade and other payablesC824,186––24,186
Contract liabilitiesA2530––530
Taxation payableA5280––280
ProvisionsF2241––241
Lease liabilitiesB2–2,127–2,127
Total current liabilities25,2372,127–27,364
Total liabilities60,69911,058–71,757
Net assets34,820––34,820
Capital and reserves
Share capitalC229,165––29,165
Group share scheme reserveF1544––544
Retained earningsC15,111––5,111
Total equity34,820––34,820
Presentation of the Statement of Comprehensive Income for the year ended 31 March 2020
as if NZ IFRS 16 had not been adopted
GROUP
31 March 2020Year endedYear ended31 March 2020
As reported with
adopting
NZ IFRS 16
31 March 2020
NZ IFRS 16
adjustments
31 March 2020
NZ IFRS 16
reclassifications
Amounts without
adopting
NZ IFRS 16
Note$’000$’000$’000$’000
Revenue from contracts with
customers263,527––263,527
Investment revenue9––9
Direct costs(2,462)––(2,462)
Employee benefits expenseF1(239,208)––(239,208)
Depreciation and amortisation
expense
A4, B1,
B2, B3(6,194)2,798–(3,396)
Other operating expenses(9,691)(3,021)–(12,712)
Finance costsA4(2,084)582–(1,502)
Profit before tax3,897359–4,256
Income tax expenseA5(1,220)(101)–(1,321)
Profit for the year2,677258–2,935
Other comprehensive income for the year––––
Total comprehensive income for the year2,677258–2,935
751AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2I01GL0SPMLGIFIE1ERESGCFDOWSG 1EDSO741AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2OSELIFESFE0LFNGSRUFWDO1OCD1PFIE1EL LOEI
Presentation of the Statement of Financial Position as at 31 March 2020
as if NZ IFRS 16 had not been adopted
GROUP
31 March 20201 April 2019 to1 April 2019 to31 March 2020
As reported
with adopting
NZ IFRS 16
31 March 2020
NZ IFRS 16
adjustments
31 March 2020
NZ IFRS 16
reclassifications
Amounts
without adopting
NZ IFRS 16
Note$’000$’000$’000$’000
Assets
Non-current assets
Property, plant and equipmentB13,193––3,193
Right of use assetsB211,107(11,107)––
Intangible assets – goodwillB445,068––45,068
Intangible assets – otherB316,194––16,194
Total non-current assets75,562(11,107)–64,455
Current assets
Cash and cash equivalentsC56,178––6,178
Trade and other receivablesC653,071––53,071
Contract assetsA2458––458
Total current assets59,707––59,707
Total assets
135,269(11,107)–124,162
Equity and liabilities
Non-current liabilities
Deferred tax liabilitiesA53,122101–3,223
BorrowingsC736,000––36,000
Lease liabilitiesB29,098(9,098)––
Contingent consideration1,841––1,841
Total non-current liabilities50,061(8,997)–41,064
Current liabilities
Trade and other payablesC846,169133–46,302
Contract liabilitiesA2202––202
Taxation payableA5950––950
ProvisionsF2189––189
Lease liabilitiesB22,501(2,501)––
Contingent consideration1,463––1,463
Total current liabilities51,474(2,368)–49,106
Total liabilities
101,535(11,365)–90,170
Net assets
33,734258–33,992
Capital and reserves
Share capitalC230,868––30,868
Group share scheme reserve330––330
Retained earningsC12,536258–2,794
Total equity
33,734258–33,992
The Directors of AWF Madison Group Limited submit herewith the annual financial report of the company for the financial year
ended 31 March 2020. In order to comply with the Companies Act 1993, the Directors report as follows:
The names and particulars of the Directors of the company during or since the end of the financial year are:
Directors NameParticulars
Audit, Finance
and Risk
Committee
Remuneration
Committee
Nomination
Committee
Health &
Safety
Committee
Organisation
Committee
Ross KeenanChairman and Independent Director.
Joined the board in 2005.
Simon HullNon-independent Director.
Founding shareholder.
Chairperson
Julia HoareIndependent Director.
Joined the board in 2013.
Chairperson
Wynnis ArmourNon-independent Director.
Joined the board in 2015.
Founding shareholder of
Madison Recruitment Limited.
Chairperson
Chairperson
Nicholas SimcockIndependent Director.
Joined the board in 2018.
Entries recorded in the Interests Register
Entries in the Interest Register made during the year and disclosed pursuant to sections 211(1)(e) and 140(1) of the Companies
Act 1993 are as follows:
(a) Directors Interests in transactions
1. The Directors had no interests in transactions in the current year.
(b) Share dealings by Directors
The following table sets out each Directors relevant interest in shares of the company as at the date of this report.
DirectorOrdinary shares
Ross B Keenan205,984
Simon Hull18,194,598
Wynnis Armour354,703
Nicholas Simcock10,000
Companies Act 1993 disclosures
77761AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2I01GL0SPMLGIFIE1ERESGCFDOWSG 1EDSOI01GL0SPMLGIFIE1ERESGCFDOWSG 1EDSO
Disclosure of interests by Directors
Where applicable, the disclosures also include directorships of subsidiaries of the relevant companies.
ROSS B. KEENAN
AWF Madison Group LimitedChairman
Touchdown LimitedDirector
Indemnity from the Company under the D&O Insurance policy
SIMON HULL
AWF Madison Group LimitedDirector
AWF LimitedDirector
AWF Christchurch LimitedDirector
Hull Properties LimitedDirector
Nano Imports LimitedDirector
Multihull Ventures LimitedDirector
Marlborough Developments Limited (2007)
Short Properties LimitedDirector
Indemnity from the Company under the D&O Insurance policy
JULIA HOARE
Auckland International Airport LimitedDirector
AWF Madison Group LimitedDirector
Meridian Energy LimitedDirector
The a2 Milk Company LimitedDeputy Chairperson
Watercare Services LimitedDeputy Chairperson
Port of Tauranga LimitedDirector
External Reporting Advisory PanelMember
The Institute of Directors in New Zealand – National Council
Indemnity from the Company under the D&O Insurance policy
WYNNIS ARMOUR
AWF Madison Group LimitedDirector
Armour Consulting LimitedDirector
ArcAngels LimitedDirector
Maby LimitedDirector
Common Grounds Café LimitedDirector
University of Canterbury FoundationTrustee
Indemnity from the Company under the D&O Insurance policy
NICHOLAS SIMCOCK
AWF Madison Group LimitedDirector
Simcorp LimitedDirector
Wrap It Up LimitedDirector
Indemnity from the Company under the D&O Insurance policy
Changes in state of affairs
During the year there was no significant change in the state of affairs of the consolidated entity other than that referred to in the
financial statements or notes thereto.
Director Remuneration
The following table discloses the remuneration of the Directors of the company:
DirectorAnnual
Fees paid
in year
Salary and
Bonus
Share-based
paymentsTotal
$’000$’000$’000$’000$’000
Ross B Keenan115115––115
Simon Hull6060––60
Julia Hoare6060––60
Wynnis Armour6060––60
Nicholas Simcock6060––60
355355––355
CEO Remuneration
The following discloses the remuneration arrangements in
place for CEO of the Company:
Fixed Remuneration
Over the course of the 2020 Financial year, the CEO,
Simon Bennett, earned fixed remuneration of $572,000
(2019 financial year $536,000).
Annual Performance Incentive
The annual value of the CEO’s Short Term Incentive Scheme
(STI) is set at 25% of fixed remuneration if all performance
targets are achieved. The measures used in determining
the quantum of the STI are set annually. Targets relate to
both Company financial performance (60%) and individual
leadership targets (40%).
The STI for the 2020 financial year has yet to be determined.
For the 2019 financial year, the CEO earned an STI payment
of $46,331 paid in the 2020 financial year.
Short-Term Incentive
On 9 May 2019 the Group announced the establishment of a
new short-term incentive plan for the CEO (‘STI Plan’).
The STI Plan is based on share price growth where the CEO
is offered an option to acquire ordinary shares of AWF Madison
or ordinary shares and cash, if the volume weighted average
price for AWF Madison’s ordinary shares for the 30 days prior
to a day nominated by the CEO between late June 2020 and
31 December 2020 (‘Measured VWAP’) is equal to or greater
than an agreed target value.
The CEO may exercise the option at least 30 days post the
release of AWF Madison Limited’s result for the financial year
ending 31 March 2020 and before 31 December 2020.
The number of ordinary shares or ordinary shares and cash
that the CEO will receive increases as the VWAP target
increases in 10 cent increments up to an agreed cap. Upon
exercise, ordinary shares or ordinary shares and cash will be
issued to the CEO.
The reason for offering the CEO the choice of shares and cash
is to provide him with sufficient funds to pay any income tax
due when the STI Plan is triggered.
Long-Term Incentive
The Group operated equity-settled share based incentive
scheme, refer note F1 of the financial statements.
The CEO was granted options to acquire Restricted Shares
funded by interest free loans with future vesting dates:
• 30 July 2014, 90,000 Restricted D Shares at a price of $2.57
per share with a vesting date of 1 July 2019. The participant
has 12 months from vesting date to exercise the option.
• 1 November 2018, 40,000 Restricted G Shares at a price
of $1.90 per share with a vesting date of 1 July 2021.
• 1 November 2018, 60,000 Restricted H Shares at a price
of $1.90 per share with a vesting date of 1 July 2024.
Superannuation
The CEO is eligible to contribute and receive a matching
Company contribution up to 3.0% of gross taxable earnings
(including STI).
Summary of CEO remuneration20202019
Remuneration event
Base salary$545,385$529,500
Short-term incentiveYet to be determined$46,331
Superannuation$16,632$17,275
At risk – long-term incentives:
Restricted D Shares90,000 at $2.5790,000 at $2.57
Restricted G Shares40,000 at $1.9040,000 at $1.90
Restricted H Shares60,000 at $1.9060,000 at $1.90
79781AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2I01GL0SPMLGIFIE1ERESGCFDOWSG 1EDSOI01GL0SPMLGIFIE1ERESGCFDOWSG 1EDSO
Employee Remuneration
Grouped below, in accordance with section 211(1)(g) of the Companies Act 1993, are the number of employees or former
employees of the company, excluding Directors of the company, who received remuneration and other benefits in their capacity
as employees, totalling $100,000 or more, during the year:
Number of Employees
Remuneration20202019
$100,000 – 109,9991610
$110,000 – 119,999136
$120,000 – 129,99979
$130,000 – 139,99986
$140,000 – 149,999103
$150,000 – 159,99954
$160,000 – 169,99916
$170,000 – 179,99933
$180,000 – 189,99921
$190,000 – 199,99913
$200,000 – 209,99941
$210,000 – 219,9994–
$220,000 – 229,999–3
$230,000 – 239,9992–
$240,000 – 249,99912
$250,000 – 259,9991–
$260,000 – 269,99922
$270,000 – 279,99913
$280,000 – 289,99921
$290,000 – 299,9991–
$300,000 – 309,9992–
$330,000 – 339,99911
$360,000 – 369,9991–
$490,000 – 499,9991–
$660,000 – 669,99911
Distribution of holders of quoted shares
Size of holding
Number of fully
paid ordinary
shareholdersPercentage
Number of fully
paid sharesPercentage
1 – 100010113.15%55,1000.16%
1001 – 500029638.55%893,6012.60%
5001 – 1000015520.18%1,186,9033.46%
10001 – 5000018423.96%3,933,10311.46%
50001 – 100000162.08%1,120,5393.26%
100001 and Over162.08%27,136,29679.06%
768100.00%34,325,542100.00%
Substantial security holders
Pursuant to the Financial Markets Conduct Act 2013, the following persons have given notice that they were substantial security
holders in the company and held a “relevant interest” in the number of fully paid ordinary shares shown below:
Fully paid shares in which relevant interest is held
Substantial product holder
NumberPercentageDate of notice
Simon Alexander Hull & David John Graeme Cox18,194,59853.01%5/02/2018
Masfen Securities Limited2,085,5016.08%13/09/2019
Twenty largest holders of quoted equity securities
InvestorTotal UnitsPercentage
Simon Alexander Hull & David John Graeme Cox18,194,59853.01%
New Zealand Central Securities Depository Limited2,695,0397.85%
Masfen Securities Limited2,085,5016.08%
Russell John Field & Anthony James Palmer1,125,0003.28%
Susanne Rhoda Webster426,7501.24%
Peter Abe Hull & Antoinette Ngaire Edmonds & Rennie Cox Trustees No 1 Ltd372,6961.09%
Wynnis Ann Armour & Jocelyn Patricia Dutton354,7031.03%
Ian Harold Holland333,8000.97%
Simon James Bennett280,0070.82%
Philip John Talacek & Brenda Ann Talacek254,7690.74%
Hickman Family Trustees Limited245,1700.71%
Ross Barry Keenan205,9840.60%
Kevin James Hickman & Joanna Hickman200,0000.58%
Lay Dodd Trustee Services Limited & Patricia Anne Neal129,3800.38%
Forsyth Barr Custodians Limited125,2700.36%
Blair Richard Watson Tallott107,6290.31%
James Michael Robert Syme100,0000.29%
Janet Mary Hilder & Dale Paretovich99,3260.29%
Bernard Ralph Fuller88,7500.26%
Custodial Services Limited78,3750.23%
81801AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T21AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2IL0EDSOFO1 LDIRECTORY
Directory
Registered Office
Level 6, 51 Shortland Street
PO Box 105675
AUCKLAND CITY
Ph: 09 526 8770
Directors
Ross Keenan (Chairman)
Julia Hoare (Independent Director)
Simon Hull (Non-Independent Director)
Wynnis Armour (Non-Independent Director)
Nicholas Simcock (Independent Director)
Auditor
Deloitte Limited
Deloitte Centre
80 Queen Street
PO Box 33
Auckland
Phone: +64 9 309 4944
Fax: +64 9 309 4947
Solicitors
Russell McVeagh
Vero Centre
48 Shortland Street, PO Box 8
Auckland 1140
New Zealand
DX CX10085
Phone: +64 9 367 8000
Fax: +64 9 367 8163
Share Registry
Link Market Services
L11, Deloitte Centre
80 Queen St
Auckland
New Zealand
PO Box 91976
Ph: +64 9 375 5998
or: 0800 377 388
821AWF 1MDISOFNGSRUF1OOR1PFGLUSGEFT2T2IL0EDSOFO1 L
Registered Office of
AWF Madison Group Limited
Level 6, 51 Shortland St
PO Box 105675
Auckland City
Ph: 09 526 8770
awfmadison.co.nz
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
Other issuers discussed similar conditions around this time
Matched by meaning across NZX announcement text, not keywords — based on our semantic index of announcement bodies.
- APL — Asset Plus: Financial result for the year ended 31 March 20202020-06-15
“NZX Release 16 June 2020 Financial result for the year ended 31 March 2020 Asset Plus Limited (NZX: APL) announces its financial results for the year ended 31 March 2020, reporting a net loss after tax of $14.69 million, down from a $3.80 million profit in the previous…”
- FBU — Fletcher Building: Fletcher Building confirms FY20 annual results2020-08-18
“The Group’s funding costs for the year decreased by 32% to $80 million, resulting principally from lower debt levels following $650 million of debt repayments since June 2018. A tax benefit of $81 million in FY20 compared to a tax expense of $102 million in the prior year.…”
- FBU — Fletcher Building: Amendment to 2020 Annual Report2020-08-19
“The Group’s funding costs for the year decreased by 32% to $80 million, resulting principally from lower debt levels following $650 million of debt repayments since June 2018. A tax benefit of $81 million in FY20 compared to a tax expense of $102 million in the prior year.…”