Northern Recruitment Share Discussion Threads

[momentos] 04/9/2008 15:46

Can't say my research into the value of his opinion was particularly deep, more along the lines of "great minds think alike" (or "fools seldom differ", take your pick!).

[deswalker] 04/9/2008 15:33

Not really. His valuation of HYNS is all over the place. But that aside NRG is cheap.

[momentos] 04/9/2008 14:45

Clearly a wise man...!

Hi Aleman, As I think I've said before IMHO,Acal(ACL)currently ranks as one of the top three Value shares along with Haynes(HYNS) and Northern Recruitment(NRG).

[momentos] 04/9/2008 14:33

They have traded through several recessions since 1976, so I think they have less to prove than some others!!!! They have actually held at a steady 20m turnover for years.

FWIW my predictions on results:

EPS c 5p (Brewin Dolphin say 4.7p I think, H1 was 2.1p)
Final divi maintained at or near 5p
Request for authorisation to buyback 20% shares.

There are multiple drivers here, including the likely desire of Moran to capitalise on the value of the business she has created. It is partially on that desire that I am expecting my returns.

[harrogate] 04/9/2008 14:19

The problem with NRG is that it has stopped growing - a bit earlier than the others did so down to the company not the market so it has a rating to match - if it starts to grow again that we will get the share price back to where it used to be. The managemnt have a bit to prove i think

[momentos] 04/9/2008 14:16

Indeed, but already on a pretty high PER.

FY Earnings were 1.4m to 31/3/08 (same as last NRG FY!). EPS 5.5p vs shareprice 130p. On a 26 x multiple already....

Funnily enough their balance sheet show 14m intangibles to achieve a NAV of 19.3m, inc 3m cash. For that they get a MCAP of 32m!!

5 x NRG value.

Perhaps NRG should add 6m Goodwill to their balance sheet (for a NAV of 12m vs MCAP 6.3m) then people might see how ridiculous the current valuation is....

[pictureframe] 04/9/2008 13:49

Thanks - currently looking at companies offering this service, the credit crunch will definately boost those companies that provide it.

Penna Plc is one to watch imo

[momentos] 04/9/2008 13:42

Allegedly...



But I don't think its near their core offering / specialism currently.

[pictureframe] 04/9/2008 13:27

Does this company provide outplacement services? Thanks

[momentos] 04/9/2008 13:09

No one else along for the divi ride then, it seems...

At least the downside is reasonably minimal, 23p absolute (cash). Even if the market decides the business is worth 1m only then that 30p.

Personally I think their franchise is remarkably strong, the TotalNRG contract is probably worth a couple of mil on its own. You have to get to page 20+ of the jobs list to find something over a week old....

BTW the MCAP at top of page is rubbish, should be 15.8m x 40 = 6.3m, or est 2.8m net of cash (3.5m). If results deliver 1m, which would be "somewhat" below expectations and last years 1,4m, then that's some attractive multiple!

[momentos] 04/9/2008 11:55

Compare for example..... Staffline....

Turnover 100m MCAP 17.5m, Minimal cash, 25m intangibles (!!), gearing 24%, NAV 22m (er, but 25m intangibles), PBT 1.4m (NRG H1 0.54)

Industry based, but a comparison shows how relatively undervalued NRG is...

[momentos] 04/9/2008 11:43

Balance Sheet at interims, affected since by Divi (430K) / Buybacks (750k) / H2 performance.

A NAV north of 6m (even after interim divi) with MCAP of 6.3m (15.8m x 40p) with nary an intangible in sight to prop up the balance sheet....


ASSETS

Non-current assets 429K

Property, plant and equipment 377K
Deferred tax assets 52K

Current assets 7,997K

Trade and other receivables 3,287
Cash & cash equivalents 4,710

Total assets 8,426K

LIABILITIES

Current liabilities (2,018K)

Trade & other payables (1,854K)
Income tax payable (164K)

Total liabilities (2,018K)

Net assets 6,408

[harrogate] 04/9/2008 11:16

The received wisdom doesn't seem to be working. I agree the Middlesbrough consultant looks intersting but the York one just looks like a replacement for someone who has left

[momentos] 04/9/2008 10:59

Anyway they have 390 jobs on their site, 100 temp, 290 perm.

Hit search with no text entered.



They have also been historically cautious with expansion, Mrs Moran does not like burning cash on acquisitions or huge overblown plans.

It is interesting to see therefore that they continue to be expanding:

[momentos] 04/9/2008 10:52

I thought the received wisdom was that going into a downturn a temporary temporary (!) blip could appear as firms hedge their bets against employing permanent staff.

Perhaps we are past that...

[harrogate] 04/9/2008 10:45

Temps will not be picking up - I work in the industry and can tell you it is not working like that - not to say they can't win new business and grow but the market will not be helping

[momentos] 04/9/2008 10:39

BTW I fully expect them to maintain a final divi of 5p per share (interim 2.5p) with the FY divi at 7.5p.

That makes the yield pretty damn good. It only puts a 790k dent in the cashpile to do so. The trading statement hints they will:

The Board will review its final dividend at the time of the full year results.
In considering the full year dividend the Board will take account of not only
the anticipated level of earnings but also the strength of the Group's balance sheet.

[momentos] 04/9/2008 10:34

Well, I doubt they are doing much for Northern Rock any more....!

Otherwise their site seems to show plenty of vacancy throughput. They said the (lower margin) temp work was impacted in the trading statement. Economic conditions may have caused this to pick up now.(temp vs perm).

Plus MArket trades, a few lumpy ones last couple of days:



04/09/2008 10:06:21 40.90 5,000 O 2,045.00
03/09/2008 15:01:20 40.00 25,000 O 10,000.00
03/09/2008 12:47:15 42.00 25,000 O 10,500.00
02/09/2008 14:16:12 43.04 5,000 O 2,152.00

LSE:

3/9/08 A90000PQ7B 39.0 25000 OK 38.0 44.0 9:05:40 25,000

[harrogate] 04/9/2008 10:24

It is difficult to argue with you - I think it will be worth seeing what the outlook is on Friday - a number of recruiters are being very cautious so if they are or have lost a large bit of business for example they could get cheaper

[momentos] 04/9/2008 10:19

An Absolute bargain, hence the reason the company bought back 10% of its shares (max allowed by articles) mostly at 45p.

Cash at interims was 4.7m. 1.7m shares bought back at 750k. Divis of 430k. So about 3.5m cash left. 15,832,155 shares outstanding, ie 22p per share CASH.

No borrowings, NO INTANGIBLES and H1 EPS of 2.1p. So even if H2 is completely flat, the EPS with cash stripped out is 8.5.

Cashflow remains positive, the warning is relatively mild. The company also effectively "owns" the TotalNRG franchise - " NRG has recently been appointed as one of only 7 companies on a pan-government framework contract to supply temporary administrative and clerical staff to government organisations across the UK."

Is all this really worth only 3.5m after cash is taken out? Methinks not, whatever the economic conditions.

And the cash is being taken out slowly but surely, the aggressive dividend policy continues and I expect a substantial divi whatever the finals. Its the best way for Mrs Moran to get the value out of the business.

And what she gets, the rest of us get.

Bargain!!!

[harrogate] 01/9/2008 07:53

Hi. I have been watching these guys as well - The only question for me is will they get cheaper first - I also have some concern at the age of the main board but that could mean that they are looking for an exit I guess. The markets they are in are not going to be good for another 12 months - Next results will be interesting - they were out about now last year

[rainmaker] 01/9/2008 01:57

I've been investing in Value shares for many years and IMHO I don't think there are many "Value" shares currently offering better value or potential price appreciation than NRG. I've looked at the Company's trading and dividend history(they've missed just one interim dividend in the last 10 year), it's current multiple of five year average earnings, it's gearing (or rather net cash)and it's earnings estimates among other things and feel this Company offers just the right combination of safety and reward.

Famous Value Investor and Teacher, Ben Graham(Warren Buffett, the World's richest Man was his star Pupil, the only one he ever gave a A+ to in 22 years of teaching at Ivy League, Columbia University) once said that a good investment was a good speculation, that if a share's downside was limited then there must be good potential for profit.


regards

[stemis] 23/7/2008 08:09

The financial year ended on 30 June so pretty soon (if not already) they should have a good view of the outturn for the year. My sources tell me that business is steady with no sign of any panic/troubles. The company spent £750,000 buying back 9.6% of its share capital in May/June at around 45p.

If they hold the final dividend at 5p then that alone constitutes a yield of 13.5% (20.3% if you include the interim dividend). It will cost them £792,000. The share buybacks will have saved them £84,000 in final dividend. Brewin Dolphin are forecasting a cut in dividend to 4.8p (i.e. final of 2.3p) which would save them £430k.

Market capitalisation is £5.9m. Based on the interims they should have around £4.0m of cash left (+/- any cashflow in the final half of the year).

Brewin Dolphin's current 2008 forecast is a profit of £1.19m. That would mean a profit of £650k in the 2nd half. Knock off tax of £195k and that should cover the interim dividend of £438,000 paid in H2. I wouldn't expect any adverse working capital movement as sales are not likely to have grown. Consequently I don't expect any adverse cashflow in H2.

[slaine777] 23/7/2008 01:20

Well at least we went up today. I'm confident these will do well in the medium to long term. Crazy value but then again I see a lot of that at the moment.