Tuesday, 11 August 2009

Spring is sprung!

(By Anthony Miller – Tuesday 11th August 2009 7:45am). Leading UK ITSA (IT staff agency) Spring's ‘mystery stalker’ (see Spring to be sprung?) has turned out to be Zurich-based staffing giant, Adecco. This will surely be a case of ‘what goes around, comes around’ for Spring CEO, Peter Searle, who left Adecco (home to UK ITSA brand, Computer People) to head up Spring back in Oct. ’06. In an agreed bid, Adecco is offering 62p a share, nearly 50% higher than Spring’s closing price before the stalker story broke. Spring closed at 52.5p last night, valuing the company at just £86m. Adecco's bid therefore values Spring at around £100m.

Spring also brought forward the announcement of its 1H09 results (see here) which were every bit as horrible as we feared after its profit warning last month (see Spring’s profit flatlines). Indeed, Spring went into operating loss (£1.4m) against £224m on the top line, down 10.5% yoy. Net fee income (gross profit) slumped 23% to £26m, a 12% margin.

Soon-to-be parent Adecco reported its Q2 results today, and they didn’t make for attractive reading either. Revenues fell 32% (at constant currency) to €3.6b, with gross profit down 34% (18% margin). EBITA was almost wiped out (€32m), netting a €173m operating loss. UK & Ireland revenues (6% of group) fell 31% and just went into loss. Adecco had €922m (just under £800m) in cash and cash equivalents on the balance sheet at 30th June.

Assuming the deal goes ahead, this is a momentous change for the UK ITSA market and closes a long chapter on one of the more colourful players in the sector. You can see just a smidgen of Spring’s rich history in Spring leaps ahead, but it deserves a longer retelling, which I will do in a future AnalystViews note.

No comments:

Post a Comment