The Investment Column: CRT recruits Wolffolins for new look

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The Independent Online
That CRT is being rebranded by Wolffolins, the company that dreamt up Diageo, the ghastly new name for Guinness/Grand Metropolitan, may make investors in the IT recruiter sweaty. After all, not everything in black and white makes sense. But Karl Chapman, chief executive of the fast-growing training and recruitment group, insists that CRT's new identity, to be unveiled next May, will go down a treat.

Gathering CRT's many brands under one logo will be more marketable to customers rapidly shrinking the number of their staff suppliers to a few, choice names, he says. Mr Chapman is worth listening to. He floated CRT in 1989 capitalised at pounds 400,000 and worth 40p a share. Today it is valued at over pounds 500m after yesterday's 12p rise to 355p on half-year profits more than doubled and 25 per cent like-for-like growth. Not bad for a group which makes 70 per cent of its profits in the second half.

CRT's success lies largely in Mr Chapman's controversial decision to link arms with Michael Milken, jailbird and junk bond dealer, and Oracle, whose KU group bought a controlling stake in CRT last autumn. That gave CRT pounds 109m cash to expand just when the shortage in computer programmers was starting to get serious. With pounds 50m of KU's cash still left and plenty of private UK consultancies to buy, Mr Chapman believes CRT will be a multi-billion pound company within five years. He also plans to take CRT into non-IT areas, though he won't yet say what.

Plans for rapid expansion and diversification warrant caution. While IT recruitment is relatively counter-cyclical, a move into a new area could expose the company to economic swings. A combination of rebranding and a heady period of acquisitions may also strain CRT's open and flexible small company culture. However, CRT does need to build an international presence to service the global needs of its customers.

CRT is likely to fund acquisitions with equity. Another KU investment is possible. However, prices of IT companies are rising and bargains, even in the private sector, must be getting harder to find. Analysts are forecasting pounds 20.4m for the full year. On a heady 36 times, take profits.

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