Ncc Share Discussion Threads

[welsheagle] 22/2/2017 16:36

tsmith - Well predicted at £1.05 - £1.10 this morning.

[opodio] 22/2/2017 16:33

BID BID BID BID

[opodio] 22/2/2017 16:33

should bounce to 150p

[ileeman] 22/2/2017 16:17

Market muggers.

[miahkaysor] 22/2/2017 16:15

Get into IRR! possible breakout

[spoole5] 22/2/2017 16:14

Mm's absolutely mugged pi's here this morning.

[tsmith2] 22/2/2017 16:13

Yes staylow

[investment dave] 22/2/2017 15:56

booom again

[staylow1] 22/2/2017 15:56

Reminds me of the RCN update day.

[investment dave] 22/2/2017 15:46

still riding this one. Think we could see 1.10 before close

[miahkaysor] 22/2/2017 15:44

I'm out! Nice £1350.

[7kiwi] 22/2/2017 15:25

My take.

THe Assurance division in clearly in some difficulty.

At the half year, they said H1 EBITDA was £21.3m (split £10.3m for escrow and £13.1m for Assurance, presumably less some central costs). They forecast £46.5m for the full year. Now they are saying it will be 20% off that, to give £37.2m total, or £15.9 for H2.

If Escrow continues at a similar run rate, then EBITDA for Assurance in the second half will be around £5.6m.

That's much less than half the run rate in H1, and totally at odds with the warm words in the half year report.

They also said:

"Whilst sales levels are traditionally significantly higher in the fourth quarter, they are unlikely to utilise fully the cost base deployed across the Assurance Division in the current financial year."

I think it is a fairly good assumption that 4Q will see negative EBITDA for the Assurance division. The fact that the downturn appears to be across all geographies means this isn't simply a problem with the Fox IT acquisition, which was largely NL (and continental Europe) based.

Let's take a look at what that might mean.

Utilisation rates are low. Staff will be on the bench and getting bored.
It is likely they will have to write down the value of their recent acquisitions.
It is entirely likely they will have to let go some staff to get utilisation into better shape and match revenues with costs.
It is a hot sector, so retaining the best staff may well be an issue.

So, I would expect dire results for the year end - remember EBITDA is not the same as profit. They will have to deduct interest on the debt, tax on the profits to date and amortise the goodwill in the acquisitions as well as probably write off some of it. And there will probably be some sort of 'restructuring' provision.

Plus it appears as though they have a big task ahead in transforming the operating model of the Assurance business so they can sell better.

I think there's quite a bit still to so here, and the management team are pretty weak. The Escrow division is the cash cow and what they know best so there is underlying cashflow, but too early to be dipping in until we know the full extent of the Assurance problems and how they plan to fix them.

[ileeman] 22/2/2017 15:22

Hammer reversal on chart and seems to be holding above previous yearly major support/resistance.

Looks set to continue tommorrow. Some chunky buys being put through aswell.

[qs99] 22/2/2017 15:20

its not an asset backed business Henchard but agree where the rev recog risks could be....but momentum still taking it towards £1.10 mark now IMO>...

[henchard] 22/2/2017 15:05

Does anyone know if they have breached their banking covenants or are in danger of doing?

Net debt £48.8m at 30 Nov. FY EBITDA guidance £36.4m to £38m, so net debt/EBITDA around 1.3x - covenant likely to be significantly higher than that (borrowing facilities are over £100m), so plenty of headroom I'd say.

However, I think there have to be concerns about revenue recognition (aggressive?) and major goodwill impairment. e.g. Fox-IT acquisition for £94m, of which only £23m was net identifiable assets with £71m goodwill and Accumuli bought for £53m, of which less than £1m was net identifiable assets and the remainder goodwill etc.

Very little tangible asset backing for £276m market cap at 100p.

[investment dave] 22/2/2017 15:01

booooooooooom

[miahkaysor] 22/2/2017 14:56

£1.10p here it comes!!

[qs99] 22/2/2017 14:52

oops sorry, double clicked by accident!

[qs99] 22/2/2017 14:52

through £1.....yes she-ra, for me this is not an investment, but a momentum play on being oversold at under 90p! US has opened and buying IMO looking good to push this beyond £1....not without its risks as a trade or an investment.....DYOR and gla

[qs99] 22/2/2017 14:52

through £1.....yes she-ra, for me this is not an investment, but a momentum play on being oversold at under 90p! US has opened and buying IMO looking good to push this beyond £1....not without its risks as a trade or an investment.....DYOR and gla

[ileeman] 22/2/2017 14:46

lol dontay

[dontay] 22/2/2017 14:44

A delisting and being taken private with a view to a breaking it up could be more likely than a sale.

[patientcapital] 22/2/2017 14:44

No rush to get suckered in. These warnings have a nasty habit of coming in threes - CPI caught people out as did RR. Just because it's fallen a lot does not mean it can't fall further. Sooner see an uptrend established than try to find the bottom.

[she-ra] 22/2/2017 14:43

QS99 - I'm just worrying they aren't being candid as they seem to have not been in the past.

[tsmith2] 22/2/2017 14:41

Whoosh coming up?