Ferret's Stock to Watch: CANDLE AUSTRALIA LIMITED 09:10, Wednesday, 18 July 2007
ACCELERATING EXPANSION FOR FUTURE GROWTH IS THE WAY TO GO
Sydney - Wednesday - July 18: (RWE Aust Business News) ******************************************************
OVERVIEW ********
Recruitment and staff augmentation company, Candle Australia Ltd (ASX:CND) continues on the acquisition trail with the news yesterday of the purchase of pre-employment screening company Reality Check.
Established in 2005, Reality Check provides rigorous and independent identity, integrity and credential checks, verifying information provided by individuals in their employment applications.
Candle said pre-employment screening, including probity checking, is an effective means of safeguarding an organisation from fraud and corruption and is a legal requirement in many industries, specifically banking and finance.
The company added that Reality Check's services will add value to Candle's recruitment service offerings.
Candle's success in the last decade has been a string of astute expansion acquisitions.
The company decided in April to accelerate future growth rate with this strategy in appointing former chief executive and top operator Robert Collins, who has become Head of Acquisitions.
Mr Collins has been focusing on the establishment of new services, new lines of business, new geographic locations and expansion via acquisition.
In a recent trading update and strategic appointments, chairman and founder Geoff Moles pointed out that since 2001 Mr Collins, as managing director, had developed a strong management team and leadership culture which led to Candle Australia's record profit growth and outstanding returns to shareholders.
Mr Collins has relinquished his roles as CEO and MD to allow some of his team to move ahead, including Jane Bianchini, who is now COO responsible for Candle ICT in Australia and New Zealand and The One Umbrella.
Profit results for the full year look positive after taking in the expansion in the second half of the year.
The interim half year to December 31 showed a 19 per cent growth in net profit to $6.4 million compared with the previous corresponding period.
The result was achieved on revenue growth of 10 per cent to $145.2 million while EBITDA climbed 17 per cent to $10.1 million.
SHARE PRICE MOVEMENTS *********************
Shares of Candle yesterday rose 6c to $3.70. Rolling high for the year is $3.83 and low $3.09. Dividend is 18c to yield 4.86pc. Earnings per share is 25.5c and price/earnings ratio 14.51. The company has 53.4 million on issue with a market cap of $197.7 million.
The latest deal involving Reality Check will give additional servicing to existing clients, while the purchase will also present opportunities to work with organisations that do not currently use recruitment agencies or outsource their recruitment processes.
The contract is subject to a number of conditions precedent which will be satisfied in the next few weeks.
The transaction comprises a modest deposit with incentives for profit growth over three years.
BACKGROUND **********
Candle Australia listed on the Australian Stock Exchange in January 1997.
It is a recruitment and staff augmentation company providing specialist technical, executive and office support personnel in the areas of information and communications technology, banking, finance, insurance, commercial accounting, library, records management, sales and marketing.
Established 23 years ago, Candle Australia has a reputation for high-quality delivery and ethical business practices within the industry, and remains one of the largest and longest standing recruitment suppliers in the region.
Candle Australia operates through four divisions consisting of a number of quality recruitment brands: the information and communications technology division represented by Candle ICT; the accounting, business support and financial services division represented by Alliance; the library and records management division represented by The One Umbrella; and the executive division represented by Lloyd Morgan.
It employs over 470 staff through a network of 31 offices located in Sydney, Melbourne, Brisbane, Perth, Adelaide and Canberra in Australia; Auckland and Wellington in New Zealand; Hong Kong, Beijing, Shanghai, Shenzhen in China; Kuala Lumpur in Malaysia; and Singapore.
Candle's objective is to be the leading recruitment supplier of skilled professionals and support staff to business and government in the region.
Earlier this year Candle acquired EL Consult's Asian operations earlier, established new offices in China, Hong Kong, Malaysia and Singapore and re-branded Parker Bridge, Alliance Recruitment and Freeman Adams to Alliance.
Last year it bought Lloyd Morgan, re-branded Premier Personnel to Alliance Recruitment, a new Alliance Recruitment branch was opened in Parramatta re-branded Executive Search and Selection to Lloyd Morgan, and re-branded Choice IT to Candle ICT.
In 2005 it took out Parker Bridge Australia and Choice IT, new Alliance Recruitment branches were opened in Brisbane, Mount Waverly and Hurstville, re-branded Workskills Professionals to Alliance Recruitment and a new Freeman Adams branch was opened in Brisbane.
2004 saw the purchase of Premier Personnel and The One Umbrella, the launch of Executive Search and 1,700 contractors were on assignment with Candle ICT
In 2003, Candle acquired Workskills Professionals, a new Alliance Recruitment branch opened in Sydney and a new Freeman Adams branch opened in Melbourne.
Robert Collins was appointed managing director in 2001 along with Geoff Moles as chairman
In 1999 Candle acquired Australian IT recruitment specialist Unisys People, 1,500 contractors were on assignment with Candle ICT and Freeman Adams, specialists in banking and finance, was acquired.
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