Looking after the talent

NetDimensions (AIM: NETD) shares enjoyed a strong recovery in the years following the financial crisis, only to run out of steam last summer. The subsequent 40 per cent fall in the share price looks like it’s now played out, with the stock responding well to recent results.

 Looking after the talent


NetDimensions (AIM: NETD) shares enjoyed a strong recovery in the years following the financial crisis, only to run out of steam last summer. The subsequent 40 per cent fall in the share price looks like it’s now played out, with the stock responding well to recent results.

NetDimensions (AIM: NETD) shares enjoyed a strong recovery in the years following the financial crisis, only to run out of steam last summer. The subsequent 40 per cent fall in the share price looks like it’s now played out, with the stock responding well to recent results.

 

After 40 per cent sales growth in 2014, the top line slowed to a 12 per cent gain last year. Together with a £7 million fundraising at 60p in November, this meant 2015 was more a year of consolidation, with the company remaining a loss-maker. But profits are now expected in 2017 as revenues build from NetDimensions’ significant investment in ‘talent management’ software.

 

Training employees is big business and human resources departments need to keep track of their workers’ qualifications, training records, and learning history. NetDimensions’ software helps them do this, along with closely related tasks like appraisals and evaluation.

 

A key reason for an HR department to invest in specialist talent software is compliance. Companies need to be able to demonstrate that their workers are properly trained and that all qualifications are up-to-date.

 

This has led NetDimensions to focus its efforts on ‘high consequence’ industries – those which are tightly regulated like healthcare, transport, energy and financial services. The aim is to be identified as a specialist provider for these high consequence customers and there are currently 425 active clients, including blue chips like Cathay Pacific, PwC and ING.

 

Following the placing in November the company had net cash of $12 million at the year end, having seen an outflow of $2.5 million from operations during 2015. This gives management breathing space to focus on driving sales forward and moving the company into profitability. Another loss is expected for this year, according to broker Panmure, followed by earnings per share of 2.4 cents in 2017 and 6.3 cents for 2018. This puts the shares on a p/e of 14.2 times two years out.   

 

   

 

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