Orbis Share Discussion Threads

[baby cakes] 11/10/2004 22:04

OH even lower now !

OBS is a bargain at this level ! IMHO

[jotoha] 06/10/2004 20:07

Noooooooooo gooood news on the way !!!!!!we are about to retest the lowest of the lows!!!!

[pylon] 06/10/2004 19:14

I'd love to know why Lisa Stone resigned from her directorate at Orbis just a month ago.

May have something to do with this present price collapse!

[rhiannon] 06/10/2004 15:50

MOVING up.

[richardbonny] 06/10/2004 11:41

Not looking good at all I agree. Personally I doubt that it will go bankrupt having agreed financing for a five year period. Also interest payments are well covered by cash flow. But the interesting thing today is despite a drop of 20% nobody is buying or selling. I believe market makers will carry on pushing it down until some sellers are shaken out - but when will that be?! Very dangerous to try and call the bottom on this.

[rhiannon] 06/10/2004 10:39

mmmmmmmmmmm interesting

[slapdash] 06/10/2004 10:11

It certainly doesn't look good. On face value sounds like good value but the interest cover is tiny and it could easily go bankrupt...

Only one for the brave

Slapper

[day_dreamer] 06/10/2004 10:08

Does not look good right now, any sell of any size has been
done at a discount and the mm's have slashed the price possibly
to find a new support level because nobody is buying and any trade
that does come thru is a sell.

Online quotes not great either at this new price range.

8.5p mid price to buy for 50k (usually 25k)
8.12 bid for 25k.

Gravy

[charmer1_23] 06/10/2004 09:41

Well the fall certainly continues here, any news?

[day_dreamer] 30/9/2004 21:00

Took a dive today chaps :

Still watch Obs every day on monitor but you cannot be
encouraged when small sells go through at discounts to
the bid, where is the bottom ?

Gravy

[siri_edit] 24/9/2004 23:49

post removed by ADVFN

[topvest] 12/9/2004 11:32

AGM statement didn't sound promising at all.

[slapdash] 10/9/2004 18:37

richardbonny... I can see your reasoning however it really doesn't matter if they generate plenty of cash if this cash has to go to pay off interest off debt in the near future. As stated the P&L shows the true position of the interest charges over the period (deferred charges doesn't mean they won't have to be paid!!).

On the details I think you are incorrect when you say the 3.338m has been paid and not deferred. If you go to the accounts and find the note relavant to that item it should state that. So on that specific and very important point I disagree with your conclusion. Actually let me quote from page 5

Cashflow: interest paid in the year to 31 March 2004 was £0.3m as (2003: £5.3m) as payments were deferred under the new banking arrangements.

On your other points about ignoring ammortisation of goodwill of course I agree that goodwill should be ignored. Not sure what your D stands for.

Lastly, if something sounds too good to be true it probably is. It really doesn't follow that the group would have this market cap if its 'sustainable' free cashflow is £5m.

Nevertheless, it is certainly true that earnings before exceptional items and goodwill was 11p against the share price of 12.5p and that would appear to be fairly incredible.

However, with interest payable (deferred) in the accounts of £3m and profits before exceptionals of 5.3m the cover isn't excellent. Slightly under two times. A deterioration in the comapany's position toegether with interest rate rises would lead to foreclosure. Both of these things appear to be happening so I am too cautious to buy at present. Really didn't like the AGM statement.

[richardbonny] 10/9/2004 12:57

Slapper,

I don't disagree with your conclusions. However, looking at net cash inflow rather than P&L they do seem to generate plenty of cash. For last year it was £8.736 million (from their statement of cash flow). From that has to be deducted their interest payment - the £3.338 million has actually been paid not deferred as far as I can see - which leaves £5.398 million. Of course in the P&L there is a hefty charge for D&A, but that is a non cash item. So actually it seems to me they have about £5 million of free cash at their disposal per annum. That is an awful lot for a company with a market cap of £1.75 million!

I agree with you they are in a dull business which is easily copied by competitors. But I think the point is their turnover seems to be holding up quite well.

[slapdash] 09/9/2004 20:22

richardbony...

Thanks for your insights... if only everyone on this board did the reasearch you did!!!!!

Firstly, teh debt situation is complex but surfice to say in the P&L they charge about £3.3m which is what would be incurred over the period. This is against net cash flow inflow of about £4m. So the new debt structure leaves the company with relatively little interest cover. In fact there are very few companies with interest cover so precariously low. It doesn't matter that the interest payments are delayed as clearly the P&L says they will have to be paied at some point. I.e. it states that the economic cost of the debt over this period is £3.3m

One thing about the statement that I really don't like is the complaints about the core void business...

This is the company's niche and the rationale for all the acquisitions..they are saying though that all these small companies nipping at their toes can get in on the act..

That is worrying but isn't surprising I suppose given that hte economies of scale for the business aren't that great...

But my point is when the core business of a company gets attacked then returns fall and earnings fall...

To believe a recovery for this stock you really have to believe in the business. Their core business had a niche but their other areas are by and large small operations in large markets.

In summary it will be a long hard slog for them to get out of this mess and I am inclined to wait for further figures.

The AGM statement soundly horribly as if it is preceding a future profits warning in my view.

But as ever good luck to all the holders (I'm really a very nice guy)

Slapper

[richardbonny] 09/9/2004 20:07

Slapper,

Re - your 4 Sep note.

1. £15 million of debt has been converted into preference shares which have no voting rights and no interest payable.

2. Interest is payable (and has been paid) on the remaining debt (which stands at around £45 million), but there are no repayments of principal (ie to reduce the amount outstanding) for a period of two years.

3. The new borrowing facilities apply through to 31 July 2008 so there is little chance of the company going bust.

The above is extracted from the restructuring document.

But I agree with you I don't like their AGM statement. Instead of improving their turnover, I would like to see a return of capital to shareholders. If they returned half of their free cash flow, that would be more than the current market capitalisation! Would do wonders for the share price.

[slapdash] 07/9/2004 17:57

Not such a positive statement is how I would interpret it.

Company could easily go bust

Slapper

[day_dreamer] 07/9/2004 12:46

I would welcome any thoughts on the AGM statement below
from the quality posters on this thread please.

ORBIS PLC

Annual General Meeting

Extract from the Chairman's Statement

At the AGM today, The Chairman made the following statement:

'I have pleasure in presenting my first report as your Chairman following my
appointment in June of this year. In the current year our principal aim is to
increase our turnover, particularly in new services and markets, whilst
continuing to manage our costs as effectively as possible and to improve
productivity.

'We have been successful to date in our efforts with new products and services
and have effected a steady improvement in sales. However, these initiatives
remain modest in comparison with our traditional market of void property
protection and this area remains difficult. Whilst we have successfully kept
our main customers and added new ones overall, the number of void properties
requiring protection is decreasing. On the positive side, sales of our re-let
service continue to grow month-on-month and opportunities are now being
developed to form partnerships with major facilities management and repair and
maintenance companies to provide these services.

'In continental Europe sales growth has slowed overall, principally due to
increased competitive activity in France. However, we have continued to grow
sales strongly in Germany, Holland and Poland and have extended our branch
network in France.

'On balance, the effects of these various trends should result in an increase in
turnover later in this financial year.'

The Chairman also announced that Lisa Stone was resigning as a director of the
company with immediate effect. The board thanked her for her valuable
contribution over the past two years, particularly during the refinancing in
2003.

[slapdash] 04/9/2004 22:05

Richard bony.

One thing on your net cash flow of £4m this is only because interest payments on the debt have been defferred. And interest would of been about £3.3m i.e. see the profit and loss account. So the real net cash flow is much lower. And could easily go negative with interest rate changes.

On the restructuring and conversion rights I'll have to look into this. I'm not a holder yet so obviously they didn't send me the restructuring proposals.
So cannot verify what you are saying but will look into it.

Slapper

[slapdash] 02/9/2004 22:36

agm coming up I think - anyone going???

S

[slapdash] 18/8/2004 00:00

thanks richardbonny - I've seen some of Orbis's offerings and essentially they whack a piece of metal grill on the windows and put in an alarm. Not sure how hard that is to do. But they do have the brand and the scale i suppose. Nevertheless, I'm very sceptical of international expansion of a service business. Export products fine but a service business is always more tricky.

I think this one merits a fine reading of the accounts to see if there are any gremlins. But again what it does isn't too complicated and with limited upside. So I guess it is a medium term revaluation and value play. Although I would prefer a stock that is undervalued significantly and has good growth prospects and barriers to entry etc.... so this is a reluctant buy if no other opportunities can be found.

Watch this space

Slapper

[richardbonny] 17/8/2004 16:32

Slapper,

The shares rose to an unrealistic high in the dotcom bubble - mainly because of an electronic tracking system the company was developing for lone worker protection. I think it was somehow viewed as a dotcom stock as a result and it was heavily hyped by tip sheets. But the main problem has been the very high level of debt. I think this originated from the takeovers of Fernlee and Sitex (competitors) coupled with clueless management (since replaced).

I agree with you it is probably not in expansion mode, but it is trying to expand it's offering to include void property improvement. Nevertheless it is a market leader in what it does, seems to have a fairly reliable turnover of around £40 million and is well able to pay the interest on its debts, which have now been reduced to a more manageable level. There is still a lot of scope for its services in places like East Germany and Poland where there remain large areas of depressed property.

[slapdash] 17/8/2004 10:12

Thanks for response. And I will look at the company again. Would you agree though that the company has gone ex-growth? Also if anyone has a short explanation for why the company imploded previously please let me know...

Certainly appears inexpensive but the European expansion provides some risk and the company has made significant errors before. Also it isn't clear whether they can maintain margins in their businesses when essentially scale isn't too important. I.e. while they have expanded accross Europe the group complains of smaller competitors in specific areas that are givin them a hard time.

So I'm not too sure if void property protection is such a winner. But will look into it and other areas of the business. Any comments appreciated

Slapper

[jwoolley] 17/8/2004 09:36

Richardbonny - you think along the same line as me but can not understand why nobody else has seen this...I have thought that maybe I was wrong and did think of selling but something tells me to hang on and hold and top up when spare cash comes along. Good luck to everybody that holds.