Public Recruitment Share Discussion Threads

[njp] 05/9/2006 08:33

Weren't we expecting interims today?

[tole] 01/9/2006 11:02

Quick shake pre-results?

[sleepy] 31/8/2006 18:43

I believe options should be given on a regular basis every 12 months or possibly even every 6 months. I do not believe in repricing options - once you start where do you stop?

Sleepy

[cloudfall] 31/8/2006 09:42

The problem with waiting if they do a reasonable job is that if people think their life-cycle might have moved on before there is any opportunity of reward, it's difficult to be incentivised. If for example it's going to take 3 years to get this back to £1.26+ and one of the directors has decided he's going to be living somewhere else and doing something different whatever happens in 2 years, because he wants a change of lifestyle - then they're probably not going to incentivised to do a great deal. I'm not suggesting this is the case, by the way. I broadly agree with amberspyglass. The options need re-basing so that management have more impetus to sing and shout about the company.. the reward should be clear to the management, they should be able to smell it.

[kimboy2] 31/8/2006 09:09

I have to disagree I am afraid.

Firstly the options are dated to 2014/15. McLaney has 571,259 and Williams 200,000 and they are priced at 146p and 126p respectively. It may be a long time to wait but there is a big payoff there waiting for them if they do a reasonable job.

Secondly they also have 285,314 and 158,370 deferred shares dependent on the performance of the company rather than the share price We don't know the length of time of this deferrment but I suspect it is fairly short term.

Perhaps I am just being mean to the poor dears.

[amberspyglass] 31/8/2006 08:42

the thing i would like to see is that the management share options are reduced to 60p exercise price. i think we would see some serious upside if the management interest matched shareholders. at current all they can reasonably get out of it is salary, and teh share options probably rankle.

[kimboy2] 30/8/2006 22:55

I don't quite know what news you are expecting with the results. We know more or less what the figures are because they were virtually announced in the TS on June 30th.

The only new news will be a trading update for the second half and the outlook statement.

I think the point about this company is that it is an unglamourous sector, has had recent problems (that appear to have been resolved) and is well and truly off the radar.

Patience required I think.

[cloudfall] 30/8/2006 22:39

If you are expecting good news, you would expect people to be buying in whilst it's still a bargain, nudging the price up.

[kimboy2] 30/8/2006 18:43

Why should it be going up ahead of news ?

[amberspyglass] 30/8/2006 16:58

price should be going up ahead of the news? ! Whats happening....

[pictureframe] 29/8/2006 15:10

Thanks for the interesting posts guys, guess we all agree it very undervalued at this price. I hope to buy another 10,000 before results fund permitting ;0)

[kimboy2] 29/8/2006 10:45

Interims are a week today. I don't think there are any current forecasts in the market as I suspect they will be rewritten after that.

[gonnabuildmeahouse] 29/8/2006 10:34

Edit : Wrong stock soz , still not used to SC yet.

G.. :0)

[kimboy2] 26/8/2006 09:55

For any bid to succeed they need GB on board and we don't know what their thoughts are. However they did convert £4.6m of variable loan at 133.5 last September.

This was, rather amusingly for us, shortly before the profit warning. IMV the profit warning was probably a short run problem. It perhaps indicates the problem of working in a government regulated environment.

I think they will probably feel the arguments relating to their conversion still stack up.

[vida] 26/8/2006 08:50

Kimboy

On the second part I agree completely. Any bid would need to be well north of here. I belive that the company is in a better position now than when it was worth more than 1-1.20.

AS I said, I have not bought for a bid but for value, but I don't see that it's a case of being immune. GB do not even have a place on the Board now (if I remember rightly). They have the choice of (i) selling into a rising price which would be a little annoying for us (and slow for them) and (ii) stating a price for a potential bidder who could approach them legitimately for their stake. A company wanting to get into the public sector recruitment arena would surely do the latter. It's also a low cost way of getting a guaranteed winning bid away as you're assured success if you come to a deal with GB.

We will wait to see. Fortunately I see little downside either way. For what it's worth I fear a bid in the 80p range which will not reflect the value of the franchise..

[kimboy2] 26/8/2006 08:39

vida
I think the PRG is pretty immune to a bid (famous last words). The problem for any bidder is that Granville owns 44% of the company. They are a long way down on this company at the moment and can no doubt see what has happened as well as we can.

I feel any bid would need to be pitched a long way north of where we are, but I would say that wouldn't I.

[vida] 26/8/2006 08:18

Yes, its the changing nature of the margins of the business that I will find interesting over and above the eps, which we all believe will put us on an eps of approx 4. The national health contracts will lead to lower margins compared to the past as shown by the statements, but the market position of PUG has surely been strengthened by the elimination of the smaller players making it more interesting to potential purchasers.

I do not buy for takeovers, as this is fundamentally a value play after the debt restructuring. But if I were part of the management of PUG I would be worried/frustrated at the current share price - it's inviting bidders.

[kimboy2] 25/8/2006 15:18

The only things I would fine tune over are that I calculate the comparable period acquisitions as being £8.7m and I think the interest will be more than 600k. Perhaps about 750k.

I think there will be a slight improvement in margins as the statement at the begiining of May said they were steady. I suspect that the increased margins from teaching has compensated for a fall in health.

It would seem that health has recovered stongly from H2 despite all the headlines though.

We shall see.

[stemis] 25/8/2006 14:34

Is there a current broker's forecast?

The trading statement at 30 June 2006 said

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.

I have agonised long and hard over what that means. After the trading statement on 3 May 2006 myself and others exchanged emails with the FD and he seemed to confirm that 'organic growth' means that turnover will be higher than [the corresponding period last year plus turnover of acquired companies for that period].

The conversion of net fee income to operating profit is rather more difficult to interpret. Net fee income equates largely to gross profit. So operating profit as a % of gross profit has increased. That's clearly not the same as operating profit as a % of turnover has increased. However why say conversion of net fee income to operating profit has improved if operating profit margin has reduced. It would strike me as intending to mislead. So I assume that operating profit margin is at least the same.

Based on these assumptions my forecast is H1 05 Acqns H1 06
Sales 41,164 6,000 47,164
Operating profit % 6.9% 6.9%
Operating profit 2,842 3,254
Interest -594 -600
Profit before tax 2,248 2,654
Taxation -638 -796
Profit after tax 1,610 1,858
Shares 24,516 28,310
EPS 6.6p 6.6pSo basically I would expect an EPS of at least 6.6p, depending on how much organic growth there is and what margin improvement. This excludes the exceptional (if it described thus) refinancing fees of c.£600k.

Interesting I did a similar analysis, on a sector by sector basis, using their 3 May trading statement and came up with a slightly higher profit!

It's hard to believe that the market is expecting an annualised EPS of >13.2p (equivalent to a P/E of 3.3) so either I'm wrong or the price is going to go through the roof. Either way I'm looking forward to the results.

[njp] 25/8/2006 13:31

What thoughts do people have on likely earnings for H1?

H1 2005 was 6.6p adjusted earnings (i.e. amortisation and exceptionals added back). Margins were suffering though, hence the slump in price. H2 came in at 5.9p.

Last broker forecasts (November 05) show 10.6p for 2006. Doesn't appear to be significant seasonality, so 5.3p for H1 2006.

Interest bill will be higher from April, due to £2m paid out to Keller.

I guess if they can do 5p for the half and 10p for the year in 'challenging conditions', that'll put the current share price in perspective.

[kimboy2] 25/8/2006 11:03

The actual date is the 5th September. Hopefully we will get something out of the brokers then as well.

[cloudfall] 25/8/2006 10:52

When actually are the results, do we have rough date?

[pictureframe] 14/8/2006 14:53

3 weeks until results, I am expecting a big re rating now the funding issues are resolved. Should see a nice profit imho

[tole] 10/8/2006 09:16

Yes - starting to stick its head above wateron the chart and looks ready for the next push.

Been a while since you can sell more than buy online (and at a premium to the bid price) - so maybe MMs a little short of stock and have a buyer in the wings?

Sell 37.5k @ 43p
Buy 10k @ 45.77p

L2
1v1
42-46
41-47