LONGBRIDGE INTERNATIONAL PLC Executive Search in the City

Dear all,

A few months ago I went for a meeting with Mr Frank Varela of LGI, spent a couple of hours discussing the sector, and LGI, plus the problems they experienced in 2001 culminating in a drop of their shareprice from the heights of £3.565, to a recent low of around 16.50p mid. I noticed that Mr Varela had been buying his own stock to 47p in December 2001, and had increased his share to 55.20% of the company, firstly IMHO a sign of confidence, secondly the famous owners eye so important in the Jim Slater Zulu Principle on investing.

This morning LGI opened at 35p, being an illiquid stock it has moved significantly since, so no surprises really that LGI is once more recovering hopefully back towards it's highs, noting currently the numbers per Sharescope indicate as follows:-

LGI summarised:-

1994 made a profit of £100k EPS of 3.77p
1995 made a profit of £ 1k EPS of 0.52p
1996 made a profit of £370k EPS of 7.62p
1997 made a profit of £530k EPS of 11.73p
1998 made a profit of 710k EPS of 11.45p
1999 made a profit of £370k EPS of 22.20p
2000 made a profit of 1.27m EPS of 22.82p
2001 made a loss of £4.66m EPS loss of 104.29p

The bit I really liked as/if was the fact that the dividends of 1998 5.00p, 1999 5.50p, 2000 6.00p and 2000 7.00p represented approximately 12.50%, 13.75%, 15.00% and 17.50% dividend yields each year respectively on the 40 pence ask price earlier today. I also liked the fact that Mr Varela himself had bought at 47p!

It does not seem to make sense to me that a company with a turnover of somewhere between £10.12m and £11.72m turnover in 2000 to 2001 would be trading at a price earnings ratio as/if of 2 on 2000 EPS, or valued by the market at 16.20% to 18.77% of probable turnover.

Apparently roughly half of LGI is legal search, including boom areas like insolvency, plus insurance recruitment at roughly 10%, including major broking and underwriting teams. Nicely diversified throughout financial services sectors.

I have my notes in London on the meeting, will post more on LGI when I get all the data together.





Any views positive/negative welcome.

Best regards

Ashley