Saturday, February 27, 2016

Transfield :Defending and growing unsustainable cashflow in search of a better takeover offer :What is Transfield worth without NSW Schools, detention center contracts?

by Ganesh Sahathevan

While one can get hugely impressed with corporate valuation models, this writer has always been obsessed with simple  cashflow. Perhaps analyzing and writing about  highly valued South East Asian  companies that vanished during the Asian Crisis of 97 has something to do with it, but I digress.

Readers may be aware that Transfield Services (now known as Broadspectrum) is the subject of a takeover offer from Spain's Ferrovial  Readers will also be aware that Transfield has already rejected Ferrovial once before,but is happy to consider another approach, if the suitor offers a bigger dowry.

Meanwhile, Transfield's CEO Graeme Hunt is under pressure to improve cashflows
He has made no secret of the fact that he is reliant on the Australian Government's  detention center contracts.However he is finding out even now that  those cashflows are not only highly vulnerable (for example ,due to changes in government asylums seeker policy, which has proven to be erratic) they  have also proven to be detrimental to shareholder sentiment.

Under the circumstances, it is no wonder that Hunt is in the hunt for other similar government funded cashflows, but which are largely out of the public  eye. Unfortunately , as Hunt is discovering even now, keeping things quiet these days is an exercise in futility,as the story below demonstrates.
Trying to squeeze out a positive cashflow by employing disabled and other long term unemployed as quasi-contractors was always going to be an exercise fraught with danger.


Saturday, February 27, 2016

Federal and NSW Liberal Governments creating a contract work force for Transfield out of long term unemployed: Centrelink recipients forced to work for Transfield like contractors 

by Ganesh Sahathevan

The Turnbull Government, working via the Department Of Human Services , is forcing Centrelink benefit recipients  into quasi-contract   work as  school cleaners for  Transfield Ltd (now known as Broadspectrum).The terms and conditions of work are in effect those of contract cleaners, with workers expected to use their own vehicles to get to multiple sites and over split shifts.

Transfield has been awarded the contract to clean and maintain schools in New South Wales 
Transfield boasts that it has  "successfully placed 70% candidates in cleaning positions on the Transfield Services School contract. All (sic) of whom are job seekers with disabilities, homelessness, long term unemployment and other employment barrier".

However,what is not said in its promotional material, but which it states clearly at its cleaner interview and information sessions is this:
You will commence  your employment on a casual basis and maybe 
asked to do multiple sites and shifts in the first instance. 
Performing employees will be presented with opportunities to go 
permanent either on a part-time  or full-time basis. 

Candidates are told that ownership of a vehicle is "desirable" and nothing is said about
reimbursement of costs for the use of one's own vehicle. 

Transfield works with a number of Job Active service providers ,who are in turn delegates for the
Secretary ,Department Of Social Services.  Job Active network clients who refuse to consider the  Transfield "offer" are threatened with a suspension of benefit payments. By Transffield's own admission, its workers in these school cleaning roles are job seekers with " disabilities, homelessness, long term unemployment and other employment barrier".
Under changes introduced by the Abbott Government Job Active service providers are paid a fee for placing workers in even part-time work, so they too have every incentive to collaborate in this scheme. 

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