Public Recruitment Share Discussion Threads

[tiltonboy] 23/4/2007 10:51

I wonder if this was a strategic decision, or by pressure from the lenders?

According to the last lot of prelims, the EBITA was only £0.6m for JCJ, so this looks like a good deal.

tiltonboy

[kimboy2] 23/4/2007 10:28

FWIW I agree Stemis and I got out after the Edison report came out as I wasn't particularly enamoured of the H2/06 forecasts.

Today's deal may be a good move strategically but it will reduce profits and cash flow.

It will reduce debt by £8m which the company describes as 30%. It may just be a rounding error but this makes net debt, prior the deal, £26.6m. This is a couple of million above the year end figure and getting pretty close to their limit.

Anyway IMV if you are going for recovery plays there are perhaps better bets out there.

[amberspyglass] 23/4/2007 10:05

Too soon... this is brilliant news. The locum agency market is dead, highly regulated, so this is a brilliant move. The other markets are fine. This shuld be seriously rerated now as a stock. This should be a £40k stock... so £16 of debt. £24m market cap... retating to 2.5x present.. i look forward to it!

[amberspyglass] 11/3/2007 16:24

colins stewart have not done very good market research if they really think that... at laest the diretors interests are now aligned with the shareholders... although doing better than HLO (doomed to fail ), is hardly somethign to look forward to.

[jeff h] 05/3/2007 23:24

Sector news (Evening Standard):-

Doctor, Doctor! Unfortunately for Healthcare Locums, the demand for locums by the NHS through 2006 has dropped by 25%-30%. But the need for social workers - now around 33% of HLO's business grew. Collins Stewart says a 2007 PE ratio of 6.5 times looks cheap. It thinks the locum market will pick up and the shares will be re-rated.

[kimboy2] 02/3/2007 16:31

The Directors seem to have got themselves 'incentivised'.

"On 2 March 2007 certain of the executive directors were awarded deferred
Ordinary Shares conditional upon the Company achieving a return that is better
than selected comparator companies."

Anybody know what the basis of the 'return' is.

Edison also have a note out.

[tiltonboy] 02/3/2007 16:03

riv,

I would guess the 650K is a purchase and the 500K a sale. If another large trade comes through, then I may change my mind.

tiltonboy

[rivaldo] 02/3/2007 15:56

650k going through at 34.85p is presumably a sell. Overhang now cleared?

I see from the latest RNS the directors are well incentivised...they have to do better than their comparators, though quite how that is measured remains to be seen.

EDIT - and another 500k through...

[rivaldo] 02/3/2007 12:58

Anyone got feedback from the analysts' meeting etc?

[rivaldo] 02/3/2007 09:39

Interesting that EPS came in at 10.5p, well ahead of Edison's forecast 9.7p, whereas if I'm not mistaken adjusted PBT at £3.65m was lower than Edison's £4m.

NJP, ta for the debt-adjusted P/E. I think that explains the appeal, and I'm not worried if turnover in certain divisions is falling if costs are being controlled, margins are stable or increasing and the overall environment is positive, which it is and they are.

This is a highly profitable business with £87m of turnover and an EV of £35m, on a historic P/E of 8.3 and 4.4p EPS forecast for this year. As long as management are capable and focused then the upside is clear, though at this stage as others have said it's not exactly one to bet the farm on.

[kimboy2] 02/3/2007 09:10

I sold out after the Edison report came out as I didn't like the relative performance of the second half compared to the first half.

Turnover(m).H1/05......H2/05
Education...18.4.......15.3
Health......12.........11.8
Social......10.8.......11.9
Total.......41.2.......39

Turnover....H1/06.....H2/06
Education...23.5......14.6
Health......14.3......12.4
Social......11.5......10.4
Total.......49.3......37.4

This is below the level that neccessitated a profits warning in 2005 despite the full contribution of Kellis.

I was told early on in 2006 that there was no seasonality in turnover and it was expected to be the same in the second half as the first.

I would have liked some explanation of this in the results.

[tiltonboy] 02/3/2007 09:00

Interest cover is currently 3x, and should improve over the next couple of years as debt is retired. Agreed, a downturn in business will leave them very vulnerable, but I think this is more than taken into account with the current share price

Now come on directors, give us a lead and buy a few shares.

I have read through the analysts presentation, which will start in 30 minutes time, but there is nothing much in there over and above what they have already said.

tiltonboy

[njp] 02/3/2007 08:55

Redone the p/e adjusted for debt.

EV @ 35p / share = 28.854m x 35p = £10.1m + £24.2m debt = £35.3m

EBITA = £6.06m

Convert EBITA to net for p/e purposes by assuming 30% tax

Net earnings thus £4.24m

Resulting p/e = 8.3

[njp] 02/3/2007 08:37

Yes, riv, language was positive, yet I guess I have some reservations about the market they're in. Still, ought to be a huge safety net in the low p/e rating - though I need to relook at that again with the debt factored in. Will do that calc and report back.

[rivaldo] 02/3/2007 08:26

Same here NJP and Nick, but the language and outlook is extremely positive with nary a negative in there at first glance. As you say, now the results are out I felt it was worth a punt now with such large upside, with maybe a bigger punt later.

Interesting price move though - either there's larger buys still to be reported or there's now absolutely no overhang at all.

[its the oxman] 02/3/2007 08:19

yep happy to maintain a modest holding - at some point these will take off

[gorse] 02/3/2007 08:19

Thanks, Nick.

[njp] 02/3/2007 08:16

Gorse

Because they chose to pay the deferred consideration through debt rather than additional shares - hence no dilution and 10p odd eps per share.

Wd have been £2.5m to pay down debt otherwise.

Nick

Agree debt stops me from having more than a token number of shares here, but if they can maintain this sort of result or, better still, improve it a bit, the price has a lot of room upwards.

[gorse] 02/3/2007 08:12

Why has their debt not been reduced by these impressive adjusted earnings?

[nickcduk] 02/3/2007 08:12

Ive been watching PUG as well Rivaldo but I cant overcome the issue with debt. Its way too high and if trading turns down for any reason they will break bank covenants very easily. Will stand on the sidelines still i think.

[bigbigdave] 02/3/2007 08:10

Nibbled a few. Ta riv. 8-)

[rivaldo] 02/3/2007 08:04

Good! The initial trade at 31.25p was my buy back in - I couldn't believe the price! I can see this going a loooong way now and wish I had more than just a small wodge.

10.5p adjusted EPS gives a historic P/E of just over 3...

[tiltonboy] 02/3/2007 08:02

riv,

Errr...yes...

Director buying will be the key to me.

tiltonboy

[rivaldo] 02/3/2007 08:01

Er...aren't these really good results?!