Public Recruitment Share Discussion Threads

[tiltonboy] 04/7/2006 15:14

I've got Healthcare Locums presenting to me next Wednesday, so I will see if I can get any feedback on PUG.

tiltonboy

[empirestate] 03/7/2006 11:31

the spread is awful, but it would be nice to see a tad more interest

[kimboy2] 02/7/2006 10:52

A couple of things. Firstly we have comparatives in the health market with Nestor, Healthcare Locums, Multi and Allied Healthcare. However does anyone know a comparable company in teaching?

The focus is generally on health but more than 50% of PUG's profit comes from teaching.

Secondly the net fee income to operating profit ratio that PUG refer to isn't really margin. It only refers to hao much of gross profit is eaten up with admin costs.

I only mention it because the GP% was a lot higher in the acquisitions and the admin a lot lower.

[kimboy2] 30/6/2006 09:01

I think this is a slightly stonger statement than the previous one in so far as margins have improved. They calculate margins as EBITA/Gross profit.

It would seem that EBITA of £3.6m is in the bag for the first half with whatever organic growth or margin improvemnt there is on top.

The interest bill will perhaps be £0.2m more due to the earn outs and a arrangement fee of £0.5m

This would give a PBT of £2.3m + growth and margin improvemnt. If we assumed growth and margins took it up to £2.5m then this makes 6p earnings in the first half and 7.2p in the second half without the bank arrangemnt fees.

I thought the tone of the statement was a little more downbeat than the last one, though what they were saying was slightly better. In the end the numbers will speak for themselves, as always.

[vida] 30/6/2006 08:39

Stemis, on your point 2, I take it to mean exactly that. It really cannot normally mean anything else. They used the phrase in the statement with the changing of banking facilities. For me this confirms that this trend has continued and that they are doing well notwithstanding the fears about the national contracts.

[stemis] 30/6/2006 07:56

Trading update:-

The Board is pleased to announce that the Group has had an encouraging first
half. Revenue has grown organically over 2005 levels, and the conversion of net
fee income to operating profit ratio has improved.

Whilst this is certainly good news, there is an element of opaqueness in this which is unfortunate.

H1 was by far the stronger half last year with EBIT of £2.842M. Acquisitions in H2 contributed EBIT of £0.823M. On a proforma basis (ignoring the fact that the acquisitions were not for a full half year) that's £3.665M. On top of that we have;

1. Organic growth (okay pretty clear, sales are up before the impact of the acquisitions)
2. Improvement in the operating profit to net fee ratio (okay less clear, does this mean margins [i.e. EBIT as a % of sales] are up?)
3. Some further benefit from a full half year for acquisitions

My original forecast for H1 06 was £3.481M, which is 5% less than £3.665M. I think the statement would have to turn out to be pretty misleading for my forecast to be missed.

[vida] 30/6/2006 07:46

Well, this should reassure some people as to the value. Good conversion of fee income to the bottom line.


Trading Update

RNS Number:4161F
Public Recruitment Group plc
30 June 2006



Public Recruitment Group PLC

Trading Update





Public Recruitment Group PLC (the "Group" or "PRG"), the public sector
recruitment and services group specialising in the education, healthcare and
social work sectors, announces a pre-close trading statement ahead of its
interim results for the six months ended 30 June 2006.



The Board is pleased to announce that the Group has had an encouraging first
half. Revenue has grown organically over 2005 levels, and the conversion of net
fee income to operating profit ratio has improved.



The National Framework Agreement, which governs the locum doctor market, is
being implemented across the country and our market share is increasing, albeit
at the expected lower contracted margins.



Both the education and social work sectors are performing satisfactorily.



Whilst the trading environment remains challenging, the outlook for 2006 and
beyond remains positive.



Public Recruitment Group PLC will announce its interim results for the six
months ended 30 June 2006 in early September 2006.

[amberspyglass] 08/6/2006 18:15

hlo has a recruitment management team and is prepared to announce when they get contracts. pug for some reason seems to think that 4 x £5m contracts awarded are not important enough to be bought to attention of prospective investors.

[stemis] 08/6/2006 10:12

Well spotted Kimboy.

Interesting to compare the two (especially as both have identical year ends)£000 HCL PRG
Turnover 43,859 80,224
Gross Profit 10,123 16,990
EBIT 3,157 5,463

Enterprise value 46,676 34,791
Debt 10,856 24,371
Market cap 35,820 10,420Even if PRG was valued the same as HCL its share price would be 79p. On a valuation pro-rata to EBIT that would increase to 200p! Actually HCL has increased borrowings by £8.65M with 2 acquisitions post the above. I will be charitable and say that takes HLO's profit to the same level as PUG. On the same enterprise valuation that would give a PUG share price of 110p.

Just shows how massively undervalued PUG is.

Note 1 -
HCL makes slightly better margins - GM 23.1% compared to 21.2% and EBIT 7.20% compared to 6.81%. You could read this as PRG being slightly more price competitive or having more efficiencies to gain.

Note 2 -
PRGs' figures includes £1,066,000 EBIT which was for 4-5 months contributions from acquisitions.
HCL's figures includes £1,555,000 EBIT which was for 7 months contributions from acquisitions.
i.e roughly same benefit to 2006 from full year contribution from acquisitions.

Note 3 -
I have included debt relating to earn outs for PUG but nothing for HLO (although there could be up to £3M for RS Locums).

[njp] 07/6/2006 23:26

Nice post, Kimboy.

Reading that report just confirms to me that nimble operators in the locum market are likely to still do quite well despite all the doom and gloom. Staff are needed one way or the other, given the demographics, so - short of nationalising the supply market - there's no reason to think that PUG face a declining market.

As for valuations, HLO come out quite well on an EV/EBITA basis - 5.8x on 2006 forecasts. PUG would have the same rating if it achieved EBITA of £5m this year.

[kimboy2] 07/6/2006 21:55

Interesting report today on equitydevelopment.co.uk of Healthcare Locums and is well worth a read. They have an analysis of the market and the say of PUG;

"Aim listed PUG saw it shares plunge nearly 70% to 40p after a trading update last November cited tough trading conditions in its recruitment markets, with education and healthcare weakening.This was blamed on the slow rate at which NHS Tusts have signed up to the National Framework Agreement. Yet the Groups 2005 prelims turned out to be close to original forecasts and better than guidance in the profit warning."

On valuation E-D are forecasting a PBT for HLO in 2006 of £6.5m and an EPS of 7.3p. PUG I reckon will have a PBT of around £6.1m and an EPS of around 15p.

HLO has net debt of around £11m which is about half of PUG. It is however a less diversified company.

HLO at 58p is on a prospective 2006 p/e of 7.9 and E-D have a price target of 100p.

PUG is on a prospective p/e of about 2.5.

[aoeiuv] 03/6/2006 10:10

UK Online Shopping Loyalty Scheme!!!

[sleepy] 03/6/2006 10:08

Does anyone know who PRGs main competitors are?

[njp] 03/6/2006 09:57

Good to see that big chunks of shares are finding a ready home. I'd agree with Kimboy as to the likely source. Presume Granville aren't the buyer, as we ought to have heard via an announcement.

[kimboy2] 03/6/2006 09:29

I am pretty certain that it is not Granville selling. They own 44.4% or thereabouts and would have to inform the market if their holding went below 44%. A change of 0.4% is a bit over 100,000 shares.

I would have thought the most likely source is going to be some of the former owners of the acquisitions who were given shares.

[vida] 03/6/2006 08:50

Any ideas where the larger trades are coming from? I doubt Granville is offloading but you never know - perhaps funds rebalancing. Interesting that the larger trades do not seem to move the price, but the smaller ones do. Indicates that something is going on.

[amberspyglass] 02/6/2006 11:55

the thing is their formula whatever it is is working. they are making massive gains in the medical market....

[empirestate] 02/6/2006 10:33

good to see a positive move at last. i feel confident that the pressure on the share price has now been lifted and that one of these days with a few more buyers we will easily break into to the mid 40's

[tole] 02/6/2006 09:10

Agree - Nice post.
Good to see the price slowly edge back - Share price pushing through the 50day MAs chart wise looks okay now with MACD crossover and turning positive and RSi making a higher low and heading back upwards.

Reckon we are back on for a test of that 42p resistance.

[stemis] 02/6/2006 08:23

Its worth bearing in mind that, despite the 'profit' warning, PRG's financial performance has hardly been a disaster! 2003 2004 2005
---- ---- ----
Sales 22,847 53,825 80,224
PBT* 882 1,937 4,363
As a % sales 3.9% 3.6% 5.4%[*Adjusted for goodwill and exceptional items]

It's not as if the company has made a loss or gone into reverse. My expectation is that in 2006 they will do around £96M sales and £5.7M PBT.

[kimboy2] 01/6/2006 19:47

A rollover of about 1.5% of the company. Also an odd numeral so looks as though it was their complete holding. Could have been as a holding from one of the acquisitions.

Managed to place it at mid price. Good news I would have thought.

[pictureframe] 01/6/2006 19:10

some huge trades today but no movement

[amberspyglass] 01/6/2006 07:16

you dont need to look for for the reason for the fall. the announcements were presented in a very negative way and the senior management team is a little on the thin side. this would be a risky one to short as the portfolio of companies held could result in a takeover bid at any time.

[Abuse team] 01/6/2006 06:04

Post removed by ADVFN

[kimboy2] 01/6/2006 00:41

The earn outs were certainly a vicious circle they got themselves into because they were priced at market price. They behaved pretty much like a toxic PIPE. I wonder if any of those receiving the earn outs shorted the company back in October and November. It wouldn't have taken much to shift the price.

Perhaps I am being too Machiavellian.

Anyway I think the first port of call for a recovery of the share price will be the trading statement at the end of June and hopefully some sort of note from Bridgewell.

The important thing is that trading appears to be holding up well despite the NHS headlines. Having said that more than 50% of profit comes from the education sector.

The role of Granville Baird is also important. They have 44% of the shares so in effect have control over the company which is why it must have been such an embarassment that they initiated their share conversion 6 weeks before a profit warning.

Anyway in October 2002 they invested £5.5m, in April 2003 £0.7m and in December 2005 £4.6m. This adds up to £10.8m for 44% of the company against a market cap for the whole company of £10.4m.

I think we can be fairly certain that Granville will be on the case as far as the share price is concerned.