Clarius (I still can’t bring myself to call them by their awful new name, Ignite Services) has just reported a disastrous 2016/17 financial year result.
In a year when Hays reported their combined Australian and New Zealand operations drove gross profit up by 11 per cent and operating profit up by 14%, Clarius managed to go in the other direction to an embarrassing extent.
year- end share price
Breaking down Clarius’s four operating units yielded no good news anywhere.
Their core Australian recruitment business sales dropped 18% (This reduction was primarily due to the decline in demand from our largest customer from the prior year. Annual Report page 7).
The On Demand division results dropped 25.7% to sales of $9.8 million (This decline was mainly due to the completion of several major projects in the first half of the 2017 financial year and the subsequent reduction in demand associated with a key customer, Annual Report page 7).
People Services went backwards a calamitous 30.8% to $2.7 million (… due to the unsuccessful investment in and expansion into new geographic markets. Annual Report page 7).
The least worst news was that China dropped back less than 1 per cent after impressive gains in the China North Region were cancelled out by a very poor performance in the China South region (In order to address this underperformance a more suitable regional director was appointed subsequent to the reporting date. Annual Report page 7).
If you went looking in the Annual Report for any evidence that Clarius understood, and was addressing its core problem, then you would be sorely disappointed.
All I found was more depressing corporate navel gazing dressed up as a 2020 Vision.
Mission and Vision
In the second half of the 2017 financial year we developed and announced our new mission statement:
We exist to:
- Ignite the potential of our people and our customers;
- Reimagine the future of the working world; and
- Deliver exceptional and sustainable outcomes for all our stakeholders.
This mission statement is supported by our 2020 vision: To be one of Australasia’s leading providers of recruitment, on demand and people services.
To achieve our 2020 vision we will continue to focus on our people, our customers, our candidates and our operating efficiency. The combination should deliver a return to profitability in a timely, sustainable and scalable manner.
Could this be any more generic, uninspiring and, frankly, unnecessary? It’s like the captain of the Titanic deciding a new paint job is in order immediately after the iceberg was struck. Any company that can publicly release a Mission Statement that contains the phrase ‘we exist to reimagine the future of the working world’ must believe that Utopia is a documentary series. Do they expect anybody to take this sort of stuff seriously? I mean, c’mon people.
But wait, there were ‘People Initiatives’!
Focus on our people has commenced and includes a range of initiatives that will:
- Improve the leadership capabilities amongst our executives and business leaders;
- Reduce the time and investment required to take a consultant from induction to productivity; and
- Increase the productivity of our consultants through a new technology enabled sales platform.
These initiatives should improve our ability to attract, acquire, train and retain our people
Other equally limp motherhood statements were rolled out under sub-headings: Our Customers, Efficiencies, Reporting and Deliverables.
It was all uninspiring and was the opposite of what is obviously required at Clarius: Stop friggin’ around with your non-core businesses – sell them or close them! The evidence is staring you in the face: On Demand, People Services and China (recruitment) are each, and all, a massive distraction. The underwhelming results in each of those divisions, in the face of booming recruitment-focused competitors, makes the action required obvious.
Clarius Board: You run an Australian recruitment business. Get back to core business.
Instead, you ruminate with Mission and Vision Statements and a Strategic Plan that avoids, or doesn’t demonstrate an understanding of, the focus required to return Clarius to profit.
In the past five years, Clarius has accumulated a net loss of $62.5 million. What other evidence do you need that the peripheral businesses you operate are a waste of time, money and energy? In that time there has been multiple CEOs, rebrands and board members. Nothing has stopped the rot.
Julian Sallabank was appointed CEO just before Christmas last year. After a six month probation period was completed, Sallabank was granted 335,000 five year options. I note from the Clarius Annual Report that Sallabank does not hold any Clarius shares, nor has he purchased any since he joined the Clarius Board in September 2014. A big show of confidence by the CEO in his own plans to turn Clarius around would be to buy a parcel of Clarius shares at an all-time low. I mean 100,000 shares would only cost him $7000!
After I wrote my blog criticising Sallabank’s appointment, I received a phone call from Julian Sallabank. He wanted me to understand what he was trying to do at Clarius. We met for lunch and spent a convivial 90 minutes together. I liked him – in fact it’s impossible to dislike Julian Sallabank, he’s a genuinely nice guy. But nothing he said to me in the time we spent together gave me any confidence he was the CEO Clarius needed to turn things around.
The Board must like what they are seeing from Sallabank as they have confirmed his permanent appointment. I can only assume that the business results in the back end of the last financial year were heading strongly in the right direction.
I mean if you can’t get things back into the black in the current market, then you are totally screwed when the market turns, as it inevitably does.
The clock is ticking at Clarius, and there’s precious little time left.