Networkers International has sold its stake in its Saudi Arabia joint venture to its partner for $4.2m.
After taking into account tax the net figure should be $3.5m. The IT staffing provider set up the joint venture with Saudi Telecoms Systems eight years. A joint venture in Dubai, which offers recruitment services in the Middle East, excluding Saudi Arabia, will continue.
Networkers had invested £122,000 in cash in the joint venture although it also invested management time. The stake was valued in the balance sheet at £1.7m and the post-tax profit on the disposal should be around £450,000. The joint venture contributed £240,000 to group profit in the first half of 2008 – the contribution was not consolidated after that .
Networkers’ net debt was £10.9m – or £11.2m including other financial liabilities - at the end of 2008 and this has fallen to £8m even before the cash has been received for this disposal.
Reducing the company’s debt will make it more attractive to investors.
The shares rose 0.5p to 16.75p each, which values Networkers at £15.6m. That values the company at less than five times historic earnings. Profits are expected to dip from £5.57m to £4m but that still leaves the shares on just over six times 2009 forecast earnings.
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