Litcomp Share Discussion Threads

[abc125] 21/8/2009 13:58

September results now.

It looks like the bond issue will (redemption date 31st October), in all probability be now resolved with the results. A good thing I think.

[egoi] 21/8/2009 13:36

An explanation would have been nice!

'The Board of LitComp plc, a provider of After the Event Insurance and a national supplier of medico-legal reports, announces that it will be releasing its Final Results for the twelve months ended 31 March 2009 on Thursday 24 September 2009.'

[abc125] 19/8/2009 10:52

Has anyone tried to buy any shares recently?

It looks like MM's have closed up buying ahead of the results. Can only buy 1500 shares online for the last week or so. To buy more, you would have to go to market and see if MM's are willing to sell - not tried myself yet. If they are not willing to deal in larger amounts, it would indicate the next movement in the share will be upwards.

BTW, can sell plenty though.

[egoi] 11/8/2009 12:52

Results within the next three weeks posibly sooner; noticed a few small buys yesterday; I reckon this could be a very shrewd time to be topping up! I think people will see the low p/e, strong cash position etc, and am hopng for good news re cash and conclusion of conversion issue.

[the big fella] 06/8/2009 17:50

As soon as Hangers starts de ramping it goes blue. Works every time (CPR excluded - where he was surprisingly bullish!)

[abc125] 06/8/2009 17:26

possibly, but today you could have sold a max of 30k shares online at 28.5p yet buy only 3.5k.

[mr hangman] 06/8/2009 17:18

28.5p bid online could indicate they don't really want any stock, just a thought..

[abc125] 06/8/2009 17:16

You could be right bigfella. Another 25k trade went through today at 31.5p. So it looks like MM's are buying stock at 31.5p and selling at 33p to satisfy demand, yet only bidding 28.5p online? This would indicate they have no stock, but don't want to move the spread up until results. Maybe director buys post results will be the trigger for a rerating and/or a successful resolution of the bond issue.

[the big fella] 06/8/2009 09:55

Hangers

Glad you have turned up. Every time you post on a thresd where I hold they at least go up 100% - normally much more LOL!

[mr hangman] 06/8/2009 09:41

Yes defo a sale, lol

[the big fella] 06/8/2009 09:30

I reckon the 50k yesterday was a sale. Otherwise we would have been up on 100k of buys.

[abc125] 05/8/2009 20:12

Someone managed to pick up 50k at 31.5p, well within the spread. Probably executed through a discretionary broker who are sometimes able to negotiate a better price.

Can't buy much online - 3.5k max - but can sell plenty for the last few sessions.

[abc125] 02/8/2009 11:16

PRESS RELEASE

31st July 2009

Elite Joins the Legal Expenses Insurers Group
as the Business Continues to Grow


Elite Insurance Company Limited (Elite), a leading underwriter of after the event legal expenses insurance, is pleased to announce that it has joined the Legal Expenses Insurers Group (LEIG).

The LEIG is a trade body for legal expenses insurers and intermediaries and aims to work with insurers to protect and advance the rights of claimants to justice and fair levels of compensation. With nine current members, including Elite, it is estimated that LEIG members account for over half of the before the event (BTE) and after the event (ATE) legal expenses insurance market.

Being part of an organisation such as the LEIG highlights Elite's professionalism and brings the Company closer links with industry specific bodies and the Government.

Furthermore, Elite's underwriting division has seen an increase in business over recent months and this has lead to the recruitment of two new underwriters. Increasing the number of underwriters will allow Elite to continue to provide the high quality service that the Company prides itself on. This division now has seven underwriters to service increased volumes.

Finally, Elite has recently established itself as a branch within the UK located at its Grantham office. This will see a greater improvement in service levels which remains at the focus of Elite's strategy.

Commenting on the development Jason Smart, Chief Executive Officer of LitComp plc (Elite's parent company) said:

"The Legal Expenses Insurers Group is a well established, reputable trade group and we are delighted to be associated with such an organisation. We look forward to working closely with all the members to ensure the advancement and protection of the rights of our claimants.

"We are delighted with the recent developments within the Elite business. The addition of two new underwriters and the establishment of a UK branch demonstrates Elite's continued growth and is extremely encouraging in these challenging markets"

-END-

[glasshalfull] 23/7/2009 20:43

A few small trades....there is life in this share after all :-)

Reckon a few taking positions on the run up to results.

Regards,
GHF

[8trade] 12/7/2009 00:36

Patience.

We did the same thing on Amu/Mubl, it was all head banging why it would
not get a reasonable rating but it's finally happening, the same thing
will happen to Lin.

[abc125] 11/7/2009 22:01

With reference to the link I posted earlier, Gibraltor plan to introduce a low flat rate of corporation tax:

"By mid-2010 the Government will have introduced an across the board flat, low corporate tax rate. This will most probably be set at 10%, but in any event not higher than 12%. This will be similar to arrangements that already exist in Ireland, Cyprus, Malta and other EU Countries."

Litcomp H1 EPS were 3.8p, but EPS would have been some 35% higher at 5.1p if corporation tax was capped at 10%.

[abc125] 05/7/2009 22:18

Thanks for that GE&CR update GHF. £32.5m revenue would be a good result - a near tripling from the previous year.I had penciled in £25m previously. Elite have recently taken on a divisional MD, so maybe my £50m target for the FY march 2010 is not too outlandish.

Their 7.64p EPS is based on a full conversion of the £2.6m outstanding bonds. But not all bond holders will convert imo. Thus there is scope for an increase in EPS by up to 2p.

GE&CR refer to Elite's 'cash generation' which is a good sign - directors may be confidant they can fund up to say a £1m of bond redemptions whilst maintaining good cash balances.

I can't see why they have decided to put results out in august (instead of june/july), unless they need time to canvass bond holders about their intentions. I might be reading too much into it though.

I'm reminded by what Warren Buffett (I think) once said, 'the stock market in the short term is a voting machine, but in the long term it is a weighing machine'. Wise words. I think i've backed the right horse so I will continue holding, though at times it has been rather worrying by the lack of punters interested in this stock !

[glasshalfull] 04/7/2009 17:26

Sifting through a multitude of emails received while away & came across the GE&CR monthly review dated 1st July.

My estimates following the trading update and which I posted over a week ago are bang in line with the commentary from GE&CR.


LitComp*

The company provided a trading update on 23rd June stating that although sales revenues were in line with expectations, a decision has been taken to increase provision reserves. As a result pre-tax profit expectations are running behind our earlier forecast and we have edged back our expectations by some £0.2 million ahead of the preliminary announcement due in August. However, we continue to believe that the share price fails to reflect the profitability and cash generation of this business and our stance remains buy.

LitComp*

EPIC: LIN
Share Price: 29p
Market: AIM
Market Cap: £1.80 million

Estimate Year to 31st Mar 2009

Sales (£ million)

£32.5m

Pre-tax Profit (£ million)

£1.6m


Earnings Per Share (p) [fully diluted]

7.64p

Price Earnings Ratio

3.8

Dividend Per Share (p)

0.0

Dividend Yield (%)

0.0



Reiteration of my earlier post;

Glasshalfull - 24 Jun'09 - 07:52 - 204 of 220 edit

Year to 31st March


Sales

2007A - £6.23m
2008A - £11.29m
2009E - £25m


Pre-tax Profit

2007A - £0.83m
2008A - £1.11m
2009E - £1.8m (alter this by 10%-15% to account for "slightly comment)
= £1.53m - £1.62m

ie. 38% - 46% growth over 2008.


So, looks like we will be close to 45% growth y-o-y.
Not bad considering the current macro climate.

Also, now had a chance to reflect on your post above abc.
I think I'm coming round more to your line of thinking and scenario you paint in Option 2. Maintains a high cash balance and allows for a decent EPS progression.

As egoi has mentioned in previous posts, I think that each of the scenarios is potentially a win-win for the shareholders and company and, as you say, if resolution of the bond issue materilises in August then I would anticipate that its resolution will provide a fillip to the share price with cessation of uncertainty over the issue.


Regards,
GHF

[glasshalfull] 03/7/2009 22:55

Back after a few days away. Good to see debate over here and I look forward to going through your projections abc.

Regards,
GHF

[abc125] 03/7/2009 21:42

The worst thing you can do is get bored and sell, because the share price will promptly shoot up....lol.

Sod's law.

[abc125] 03/7/2009 21:29

Like Egoi, i've been doing a few cals on the various outcomes of the bond conversion. Firstly, I think it is safe to assume the two biggest bond holders (£1.5m) will convert. The various smaller holders representing £1.1m of loan notes will seek cash redemption imo.

GE&CR have pencilled in £1.8m pre tax and Daniel Stewart have pencilled in £1.9m (there is a note on the Elite website under the 'news' section). If we are conservative and say pre tax profits come in 15% lower than expected at £1.5m and we subtract a 35% tax charge of £0.5m, and add back loan note interest of £0.3m, we get £1.3m post tax profit.

Three scenarios:


1) Full bond conversion : £2.6m bonds x 3.3 (the rate at which each £1 note converts) = 8.58m shares; +6.2m fully paid shares; + 2.5m director/employee share options = 17.3m weighted average number of shares. This would give EPS of 7.5p on post tax profits of £1.3m.

2) Part conversion: £1.5m bonds x 3.3 = 4.95m + 6.2m + 2.5m = 13.65m shares. EPS 9.5p on post tax profits of £1.3m.

3) No conversion: 6.2m + 2.5m = 8.7m shares. EPS 15p on £1.3m post tax.


I think scenario 2 is the outcome directors/shareholders would most prefer.

Given the wider economic uncertainty, smaller bond holders may be reluctant to take equity in such a small cap, (which they might not be able to sell easily).

I expect the bond issue to be resolved with the results in august. That would make sense. Have I missed something?

[abc125] 01/7/2009 13:16

Another point that needs clarifying after the results is the tax paid by Gibraltor based Elite. Litcomp in the past played up the lower tax charged in Gibraltor (8% I think).

That would also boost post tax earnings/EPS.

[abc125] 01/7/2009 13:07

I don't want to bore everyone but the following is from the recent interims:


6. Earnings per ordinary share

Basic earnings per ordinary share is calculated on earnings of £567,921 (30 September 2007: £234,908) for the period and on 6,144,345 (30 September 2007: 5,106,683) being the weighted average number of shares in issue during the year.

Fully diluted earnings per ordinary share is calculated on earnings for the period adjusted for convertible loan note interest and on 19,119,952 (30 September 2007: 18,489,952) being the potential weighted average number of shares.


It looks like Litcomp did not adjust the number of fully diluted shares lower after the £528k of redemptions. If all of the current £2.6m bond holders convert, there will be 17.3m shares in issue, not 19.1m (this includes director/employee options). H1 post tax earnings of £567k, adjusted for loan note interest (+ £158k) would give EPS of 4.2p, not 3.8p for H1. (Have I got that right?)


It could mean that though overall profits may be slightly lower, EPS might hold up pretty well. Even more so if there are more redemptions.

I'm going for 8.5p EPS.

[the big fella] 30/6/2009 13:04

Having loaded up with APG sub 10p I would be more than happy for a similar outcome here :)

[abc125] 30/6/2009 13:01

In the prelims last year, directors said the two biggest loan note holders representing 46% (which is about £1.5m out of £3.1m outstanding at the time) were willing to convert. The odds are they will be willing to convert this year also. If there are no other takers, LIN will need to raise £1.1m.

Surely that should not be that hard to find?

There would only be 12m shares also, instead of 15m. EPS should benefit.

Any other views?

I'm pretty certain a successful outcome will lead to a quick rerating (I note APG gained 90% yesterday). Litcomp has got to be worth at least 60p, which would put them on a forward PE of 5.