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Technology people Peoplebank boss claims all is sweet after share price plummet
Technology people Peoplebank boss claims all is sweet after share price plummet | Peoplebank boss claims all is sweet after share price plummet |
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| by Stan Beer | |
| Thursday, 31 July 2008 | |
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Page 2 of 3 "I can't tell you what our debt is going to be because we
release our results in about three or four weeks but we've got less
than two times EBITDA cover for our debt and our debt is less than 40
million," he says.Featured Whitepaper
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Most popular skills tags.NET Active Directory C# Cisco Development HTML Infrastructure Management Network Oracle Project Management SAP SDLC SQL Server Support Sybase TCP/IP Unix VB.NET Web Services/SOAP XMLThe merger with Ambit has provided Peoplebank with a good spread of clients across the government and corporate sectors, as well as more even geographical diversity. However, some industry watchers have postulated that the company may be vulnerable because it's client base is heavily weighted toward the contractor market space rather than permanent placements. Not surprisingly, Mr Lau rejects this argument, saying that in fact the opposite is true. "That's a plus for us going forward in the current economic cycle. If business confidence becomes a slowing economy, which it apparently is, if you have a high permanent recruitment component of your business, you will suffer more than if you have a high contracting component. "The reason is that when business confidence drops and people stop hiring, they stop hiring permanents to keep their headcount down. Contractors tend to stay on for the life of the projects. "What happens then is that new projects may not get started but there's always a fixed 12 to 18 months lag time if you're going into a very steep downturn for contractors to get laid off. That's only happened to my knowledge twice in 27 years. "The general rule in the cycle is that the more contracting you've got in a downturn, the more resistant you are to a downturn in the economy because that's an ongoing revenue and margin coming in. If you're heavily biased towards permanent, that falls off a cliff in two or three months and you're caught there with all your infrastructure, salaries, staff and the rest of it." So what of Navis, who bought a controlling interest in Peoplebank at about double the current share price? Are they happy with the way things are going? |
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