I agree. What I like about them is that they have strengthened...

I agree.

What I like about them is that they have strengthened the company for the long term during the terrible recession in the recruitment market. They have looked to move to offer a broader range of HR services to their clients such as: HR outsourcing, Outplacement, executive coaching, succession planning, Human Resource Development.... Their name change reflects this new business strategy. I think this part of their group already makes up 20% of revenue. (please correct me if I'm wrong).

Their core business is still temprary and permanent recruitment. However, they have looked to increase the permanent side of the business which offers higher margins.

They have also expanded internationally. They have offices in the UK, Ireland, New Zealand. With their recent purchase they also have a substantial presence in Asia. (Hong Kong and Singapore).

This acqusition of Spherion, a rival, totally transforms the company and builds on the more sustainable business platform that they've worked on to establish during the downturn. They will double their revenues to $350M pa. It will also diversify their revenue base with Spherion's strong presence in IT, where RHD has been weak. 8% of Spherion's revenue also comes from those 'good things' such as Learning & Development and Outsourcing, which RHD has been focusing on lately. Finally, there should be some cost savings on integrating the back offices.

I feel that this is a classic example of 'what doesn't kill you, only makes you stronger'. RHD now have a stronger business model for the long term, with revenues more insulated to the cyclical nature of their industry. The core group competencies have been retained but they are also now battle hardened.

A lot of the big players in the recruitment market have found it tough going and have exited the industry to focus on their domestic operations. Spherion is an example. This has left a fragmented market with a lot of small players and plenty of opportunities for a growing RHD to play a big part in the rationalisation story that will develop.

This company is also well managed by the sexy :) and ambitious Julia Ross (sexy and ambitious women - just what I like), who decided not to receive any salary last year to help the business during those lean times. Good on her I say, we should all compliment such self-sacrifice. ;)

So RHD becomes the second largest ASX-listed recruitment co. by revenue. Does anyone know who is no. 1??, I would be glad to find out.

Profit guidance for this year by management is for NPAT of between $3.6 and $3.8M. This will be about 5cps taking into account all the share placements to fund the Spherion purchase. Dividends should come in at about 3.5cps.

Next year, the company should make close to $6M with this new acqusition and an upswing in the market, meaning eps of about 8cps. So at current prices, you are paying 10x next years earnings. Not too demanding.

Opinions welcome on this one. Acturle as well, I assume you still hold these and will be subscribing to the SPP.

Jebigabre