Northern Recruitment Share Discussion Threads

[yellowduck] 03/11/2008 19:51

Agree with everything already posted re tender offer and passed dividend. Just shows how powerless minority small shareholders are when controlling interests and financial investers (Jupiter)can do what they want without too much thought for other owners of the business. Nothing illegal of course, but immoral? This is certainly not a fair price.

[mryesyes] 03/11/2008 15:29

Just noticed no trades listed for several weeks, thats rum. dont sell, hold or try to buy

[mryesyes] 03/11/2008 15:08

I'm keeping my shares on this occasion, normally I would sell on a delisting.
To be honest this is actually a buying opportunity. The list of clients they have is massively impressive and even if they permanently resist paying a dividend to themselves its obviously worth a lot more and the only people who know for sure are the exec directors
Fortunately I have under a thousand shares but how mean to exclude investors selling half their holding
If I had 30,000 I would sell some in the market.
Also they will now be working 100% in their own interests. I'd buy as many as you feel happy with and if you are happy with keeping your few just do so
There may be an element of false optimism on their parts as the markets they work in will be slowing recruitment for a year or two as the North will be hit hard after the south but in this case do as the exec directors are doing and leave in it in the capable hands of their greed, you won't be sorry you did hold some into delisting

[erduk] 31/10/2008 08:48

You can see why they wanted to buy back shares and not give a dividend. All that nonsense in the final results about return to shareholders was just a screen for what was going on in the background and a sucessful attempt to drive the price lower :(

Just got a quote, I can either sell my 30,000 shares now for 36p or wait until december to get 40p a share.

[stemis] 30/10/2008 20:09

except they aren't on AIM

Oops, yes.

What I object to is the MBO team (which is what they are) using their control of the company to get the business on the cheap.

Compare if it had been a third party. Because they've bought shares in NRG in the last 12 months, they would have had at least to pay the maximum price paid i.e. 45p. In addition NRG probably wouldn't have passed the dividend. So we'd probably get at least 50p. They'd also have to negotiate with directors acting in shareholders (as opposed to their own) interests.

[deswalker] 30/10/2008 17:59

SteMiS - hard to disagree with any of that except they aren't on AIM.

If it wasn't for the recent market meltdown and poor outlook for the UK economy (and especially the North I suspect) then I'd be extremely pigged off. As it is I'm only very pigged off.

They did EBITD of 1.101m in the year to June. I can see them doing 0.9m this year at best.

At 40p they are on an EV of 2.46m giving an EBITDA/EV of 36.6%. Tax rate of 31.2% gives post tax EBITDA/EV of 25.2%. Cheap.

Repeating the calcs at 55p would give pre- and post-tax numbers of 22.8% and 15.7% which would probably be fair in this market.

It is about 12p too cheap IMO.

[stemis] 30/10/2008 17:21

I'm afraid its the sort of behaviour which gives AIM a bad name. And they wonder why there is no demand for shares in companies like NRG! Its designed to do one thing only and that's line the pockets of the executive/major shareholder; an MBO in drag. The Morans struck when the share price was at its lowest. Jupiter clearly also wanted out but was unable to find a buyer for its 18% stake. What happened to the responsibility of the executives to other shareholders? The passing of the dividend 6 weeks ago dropped the share price from 40.5p to 35.5p at a stroke and is now shown up for what it was; a cynical move from which there has been only one beneficiary. Pretty shabby.

I'd expect NRG to be sold in the not too distant future (Lorna is getting on a bit). The price will be quite a bit north of where it is today. Unfortunately only the Morans will left to benefit.

[campbed] 30/10/2008 17:08

Hi Erduk

If you do not accept the tender price or otherwise sell ahead of delisting, your shares don't suddenly worthless. But you will no longer hold shares in a quoted company but rather in an unquoted private company, Northern Recruitment Ltd. You won't be able to sell any of your holding to a market maker and will likely be locked in by the absence of any buyer until the major shareholders (the Morans who are executive directors) sell out. But lots of people hold shares in private companies (private equity backers for one though they write in all sorts of protection if they are to take minority position).

If the directors' 9,030,063 Ordinary Shares, represent approximately 57.03 per cent. of the TRV (Total Voting Rights) of the Company then TVR is about 15.835 milliion (m) shares which at 40p/share puts a value on NRG of about £6.3m as jhan66 says, ignoring any to be issued shares such as options. Net asset (all tangible) value at 30 June was reported at about £5.7m, including about £3.9m cash at 30 June, which is about 35.7p/share. Deducting that cash balance from market value of shares gives an enterprise value of about £2.4m for a business that reported an EBITDA of about £1.1m for y/e 30 June and a net post tax cash flow from operating activities of £523k (down from £1.5m in prior year). Paying a little above net tangible asset value for a recruitment business is certainly not generous as the valuable assets of any such business are mostly intangible.


Of course the big unknown looking forward is how NRG's business will hold up during this recession. Post recession (whenever that is) the MD, Lorna Moran, who holds over 50% of shares, established the business years ago in the late 1970's and is now aged late fifties and the FD, aged early sixties, will presumably not want want to go on for ever.

[deswalker] 30/10/2008 16:39

I'd say it's about 10p too cheap based on current fundamentals and outlook.

[jhan66] 30/10/2008 15:57

Interesting turn of events. Easy to be cynical of course but at least there's some activity.

40p = £6.3M Three months ago they had £3.9M net cash, so something like £2.4M for the net company.

The company made pretax profit of £3.15M, £3,74M, £1.95M, £1.17M over the last few years.

[erduk] 30/10/2008 15:03

Taking advantage of the weak market! What happens if we don't sell? are our shares worthless, would we get any dividends in the future?

[harrogate] 30/10/2008 15:02

That is seriously screwing the shareholders

[deswalker] 30/10/2008 14:51

Tender Offer at 40p

[momentos] 14/10/2008 08:33

Mcap is 4.8m. Net cash at finals 3.9m. NAV 5.7m no intangibles.

a 30 year established recruitment franchise for 900k? Hmmm... Roll on the AGM / IMS and further buybacks!

May buy some more methinks.

[momentos] 09/10/2008 21:28

Hmm, I just hope that NRG have their cash stashed somewhere safe (Northern Rock?!) and have their staff trained in "outsourcing" procedures.

Mcap is less than 2m net of cash now.

[deswalker] 12/9/2008 20:31

Your trade is there on Plus Markets where this trades most of the time. Over 94k changed hands on Plus vs 10k on LSE.

To see the trades, click quote at the top of the screen, then type NRG in the search box and scroll down through the exchanges to PLUS. Select this and click search. The Plus ticker will then appear on the right. Click this and get the Plus quote, then click the Trades tab and the list of Plus trades will show up. There's about 20 trades totalling over 94k shares.

HTH

ps I hope you're including the management shares in your HYNS valuation. It's obviously not correct to multiply the share price by the ordinary shares in issue and say this is the market cap (totalling ignoring the millions of other shares) has been done before elsewhere.

[investoree] 12/9/2008 20:14

Having read the previous comments I thought NRG seemed worth a small punt and bought 4,000 @ 36.9p through Hoodless Brennan at 16.17 on 12th September 2008. However, despite the shares being credited to my account there doesn't appear to be any trace of my purchase on ADVFN. Digital Look or an ADVFN competitor. They all only show a single sell of 10,000 at 35p! Even my Investorease program which allows me to download lots of useful data only shows 10,000 shares having been traded today.

Over the years I have tried catching numerous falling knives by buying into value companies with varying degrees of success/failure - only time will tell if I have been premature and bought into a complete dog or a multi bagger.

I had held HYNS for many years and watched them climb to the steady heights of almost £4 (when I should have sold) instead I rode them all the way down to just under £1.40 and instead of topping up then waited until they reached £1.72 on 11th September and then bought for the dividend in my ISA. Most of my ISA stocks are larger caps to avoid them being transferred onto AIM as happened with Metalrax recently. Sorry just realised I have wandered of topic thinking I was on Rainmakers Value thread. Anyway good luck to any others holding NRG.

[deswalker] 12/9/2008 19:55

Nice charts as usual Wilmdav. The profit2 tab is the one I like to look at (EBITDA). Now to me that looks very resilient. Yes the trend is disappointing but does it warrant a share price drop of over 80% from its peak ? I'd suggest not :-)

Anyway enough of trying to teach granny to suck eggs. We all know it's cheap. We either hold or buy more until things improve. That's it.

Des

[wilmdav] 12/9/2008 19:27

I run a spreadsheet online similar that of Des above but with bar charts to illustrate the numbers. On the opening screen, click on the sheet tabs below to see the charts. As Des notes, H2 is better than H1 in terms of profit.



Divi at 5p on 1.674m shares would have cost £837k
Cost of buy-backs was £749k
Cash saving was £88k plus an eps better than it would have been. But the eps benefit will apply to the future as well.

This set-up looks as tough as old boots to me.

[deswalker] 12/9/2008 15:59

There are three possibilities for the cashpile IMO ...

1) Corporate Action. I hope and believe not IMO.
2) Need to keep cash in the business as trading is tough. True to a degree IMO.
3) A war chest to buy back chunks of shares from disillusioned investors. True IMO.

That's how I see it and IF they can get access to large lines of stock at these levels then I'll be delighted that they held back my divi to buy them back (whilst keeping plenty of headroom for the business during this nightmare time for funding smallcaps).

harrogate, I'm not close to the industry. I'm just a numbers investor by-and-large and the numbers (with the exception of the one that counts (the SP) :) are not that terrible. On current levels of profitability they should be trading at 60p IMO (15% EBITD/EV gross yield). 35p prices in a BIG reduction in activity whereas history shows that the company has plenty of spare capacity should the industry improve, and this is priced at less than zero.

Anyway enough of this today. Fortunately it's one of my smaller holdings but nonetheless painful to see this drop on what are pretty reasonable underlying numbers.

Rgds to both you and momentos.

Des

[harrogate] 12/9/2008 15:57

Bu there hasn't been a cycle since 2002 - they did £19.2m T/O in 2002 and £19m 2008 - Just find me another temp agancy that didn't grow in that period -it has been a fantastic time - Now it is not so how are they going to cope - I suggest not well that's all - Isn't that deal at 36p a sell?

[momentos] 12/9/2008 15:46

Someone took a bite this morning, Mr Finn perhaps?

12/09/2008 11:43:54 36.00 25,000 O 9,000.00

[momentos] 12/9/2008 15:43

Previous levels? Looks fairly cyclical to me. Ooh, look down 2001,2,3 and then restored to "previous levels" by the management!


Year - H1 - FY - T/O(FY) - Shares
1998 - 4.5 - 10.3 - 14.0m - 15.8m
1999 - 5.4 - 10.2 - 25.3m - 18m
2000 - 5.4 - 5.1 - 27.1m - 18m (Warning Apr00, 0.75m Prov, FD change)
2001 - 2.2 - 5.0 - 20.0m - 18m
2002 - 0.8 - 3.5 - 19.4m - 18m
2003 - 2.2 - 5.1 - 20.7m - 17.7m
2004 - 4.1 - 12.8 - 22.4m - 17.2m (Positive TS April 04)
2005 - 6.5 - 14.6 - 21.7m - 17.3m
2006 - 4.4 - 7.6 - 18.3m - 17.4m (Mild warning April 06)
2007 - 4.0 - 8.1 - 22.3m - 17.5m
2008 - 2.1 - 4.7 - 19.9m - 15.8m (warning April 08 "somewhat" below exp)

[momentos] 12/9/2008 15:38

I am also long, NOT ONLY for the divi (as hopefully my posts above on the financials show).

I was also fully aware of Brewin Dolphins forecast.

However the IMS steer and the balance sheet etc led me to think that divi maintenance was likely. Makes no odds, the cash is still "with" shareholders, one way or another. Your "ill informed garbage", my incorrect extrapolation of the indications!

Your answers however still don't explain why they need to maintain the cash pile. They can't do any more buybacks until they have authorisation, mid-October AGM at the earliest.

Anyway, pretty much no-one invested on the back of that speculation, trading has been dead for weeks.

[harrogate] 12/9/2008 15:37

Fair enough. The problem you have then is that you have no evidence that this management can actually return the business to previous levels of profitability. Take it from me the world of temps is a tougher place than 3/4 years ago and this underperformance started well before the rot set in with the rest of the industry. Can they do it???.