Australian Defence Recruitment contract awarded to company with cash flow , cash balance deficit.

On 2 July 2008 The Minister for Defence Science and Personnel, Warren Snowdon MP, witnessed the signing of the new Australian Defence Force (ADF) Recruiting Services Contract with the ASX listed Chandler Macleod. The contract is valued at up to $405 million over the next five years.
Mr Snowdon said that Chandler Macleod was selected by Defence following an extensive and competitive tender process conducted in accordance with Government Procurement Guidelines.
Chandler replaced the much larger and better established Manpower Services Australia (http://www.manpower.com.au/about-manpower/about-manpower.aspx).


Mr Snowdon’s assertion that “Chandler Macleod was selected by Defence following an extensive and competitive tender process conducted in accordance with Government Procurement Guidelines” needs to be seen in light of the following:

In March this year Chandler announced that it had suffered a pre-tax loss of AUD 2,731,000 but a profit after tax of AUD 267,000 for the half-year ended December 31 2008.
For the same period in 2007 it reported a pre-tax profit of AUD 6,994,000 but loss after tax of AUD 2,291,000 .


For the year ended 31 December 2008 the company reported a consolidated profit of AUD 2,744,000 but negative operating cash flow of AUD 99,000. Cash and cash equivalents at the end of the 2008 financial year were in deficit to the sum of AUD 1,408,000.


(see http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ric=CMG.AX)


Not surprising then that in September 2008 , just 2 months after Snowdon's glowing endorsement, Samrtmoney described Chandler McLeod as a “struggling recruitment firm” that had been "thrown a rope" by investment bankers Mark Carnegie and John Wylie who had offered to buy a 19.9% share of the business.
http://www.smartcompany.com.au/leadership/chandler-macleod-gets-10.9-million-from-lazard-carnegie-wylie.html

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