Work Group Share Discussion Threads

[deswalker] 14/6/2012 10:54

A few further comments ...

- Simon Howard said they were going to start a quarterly newsletter for employees and shareholders

- The share register was quoted as being approx 53 names. I guess some of those will be nominees but it's clearly very tightly and narrowly held

- SH's reduced salary accurately reflects the pro-rata time spent on WORK and does not represent some covert pay hike. I was very impressed with the two non-execs and beleive them to be diligent and very capable.

- I was worried about just how parochial the Hale office of AC was. I was reassured that just because it is in Manchester does not mean it is dealing with the region. Indeed 35% of that office's sales are outside the UK and as one would hope there is much movement and interaction between London and Manchester. It also means they are able to attract some very capable people on to the staff who don't want to live and work in London. They have the option.

- They are aware how important it is to retain key staff hence the pay reviews re-introduced last year and the Friday evening drinks for staff. However, SH stressed that all client relationships are with WORK and not the individual so it's not a case of these walking out the door each night.

- I highlighted staff and Director pay and the "isn't this a great place to work" culture. Clearly all this is important but I made it clear that there was another body of people to consider - the owners of the business (shareholders). If they weren't aware of this before (which I think they were to be honest), they most certainly are now.

- Some client names mentioned during the meeting - Visa, JP Morgan, WPP, HSBC, some pharma co's in Boston MA, Astrazeneca ....

- I mentioned possible geographic expansion elsewhere in the US such as Chicago. Right now they are happy that they can cover the nation from NYC with lots of travelling (SF, Boston, ...). There are five staff in NYC in an office that they feel happy to bring clients to. The other one wasn't great for brand image. However they are obviously aware of the huge market in the US. Personally I would like to see any carefully thought-out geographical expansion to be into other cities over there but Rose and Simon certainly know what they're doing. They also know how easy it is to open offices but how costly it can be to close them.

- which brings me on to my final point - the Exceptionals. I was reassured that none of these were linked to normal run-of-the-mill redundancies that all companies make regularly and don't report as exceptional. They are all linked to one-off restructurings / redundnacies / office closures. The FD (Julian) told me they would be much lower this year than in the past.

[stevemarkus] 14/6/2012 09:30

Yes, many thanks from me too. Reassuring to hear that they are ready to consider the interests of shareholders and will regularly return to the question of how to create value for them.

Cheers,
Steve.

[stemis] 14/6/2012 08:52

Yes, thanks for the update Des.

[battlebus2] 13/6/2012 23:04

Thanks for the update Des what a shame you were the only shareholder. Some interesting discussion there reference a trade sale. I think that's the eventual outcome we have hoped for since buying. Did Rose mention another stint in the States or how they are overseeing that.

[glasshalfull] 13/6/2012 23:03

Des,

Reassuring update & the fact that you appear so positive....is very much a positive in my book ;-)
I appreciate you taking the time and trouble to post it. Many thanks

Steg,

I didn't interpret it as a profit warning and the update from Des aligned to the statement indicates they've won a decent sized contract which will mitigate the slow start to the year.

I would suggest that with the share price bumping alon the bottom, that this is more than factored into the shareprice.

Regards
GHF

[deswalker] 13/6/2012 22:17

Here's my AGM report.

I was the only shareholder there so had plenty of opportunity to talk with all the Directors especially Simon and Rose. I asked some pretty tough questions.

I can't add anything to the trading statement except for saying that they've recently moved into into a better, more client friendly office in NYC, that they've recently won an exciting major piece of business for a global mega-name based in San Francisco against some much larger agencies and that this business will extend to Russia, Asia and elsewhere and that they have no plans to expand their number of offices for the time being.

The biggest positive from the meeting was the repeated assurances I got from all Directors that they are committed to creating shareholder value for all, that they are not interested in any shenanigans regarding delistings / MBO's etc, that the two non-execs are excellent and very independent, that they appreciate how important trust is in business and will not do anything to put that into question at WORK.

At the end of the meeting I asked the Board whether they thought the company was substantially undervalued. To a man they nodded their heads in parallel. This followed an earlier conversation with Simon Howard where he said that AIM would never value this company correctly but that at some point a trade sale on a private company valuation (multiple of NFI) would be the outer and that this would imply a multiple of the current share price. He emphasised that there would be no delisting from AIM in the interim but that this listing would never be any sort of mechanism for correctly valuing the company due to illiquidity and general AIM inefficiencies. They spent a few months last year considering all options one of which was selling the company. All options will remain on the table and will be revisited from time to time.

In short, I left feeling very positive that not only am I invested in a share that is way too cheap but also that the Board believe this too and are committed to creating and realising this value for the benefit of all shareholders. I am very satisfied that we have the right non-execs in place to oversee independence and fairness. I am pleased that I asked some awkward questions which the Board answered to my satisfaction. They now know they've got at least one external shareholder who is overseeing their actions and they seemed happy about that.

That's all for now. I may add more later.

Des

[battlebus2] 13/6/2012 18:39

Don't believe it's a profits warning more a tough trading environment. Des may have more insight.

[stegrego] 13/6/2012 18:27

"It is clear, however, that overall economic conditions are making it difficult to forecast the second half of the year with very much certainty, with little in the way of discernible patterns. Despite a slow start at the beginning of the year we are encouraged by our recent trading performance."



Hmmm not sure what to make of that. Is that why they didn't give an outlook statement in the full year results?

Is it a profit warning? I dunno.

[battlebus2] 13/6/2012 18:06

A mixed bag in that AGM statement but will await Des's view tomorrow.

[battlebus2] 11/6/2012 18:59

Welcome Stegrego it's looking like the hall of fame here now. Des i'd been planning for ages to get to the AGM but won't be able to make it now, i'm a bit disappointed but will make next years. Thanks if you can post your synopsis. No better person for the job.

Harry.

[deswalker] 11/6/2012 13:58

GHF,

Yes I'll post my impressions on Thursday.

I just think these are wrongly priced my quite a margin.

Des

[glasshalfull] 11/6/2012 13:52

So I convinced you then steg! Welcome.

Des - you know my circumstances preclude attendance, appreciate any tit-bits you are able to post. Hope they release details on current trading and importantly how they stack up against forecasts.

Kind regards,
GHF

[deswalker] 11/6/2012 08:37

Welcome Stegrego.

I'll be at the AGM on Wednesday. It would be good to see any holders.

Des

[stegrego] 11/6/2012 08:32

I managed to move the market by buying just a couple of grands worth...

Looks like an easy double if the world doesn't implode.

[battlebus2] 24/4/2012 20:37

Have to say i'm very impressed with the new webpage for Work hadn't been on it for a while it's an audio visual delight! Was only able to pick two out of three in the emotions task, try it.

[battlebus2] 05/4/2012 18:37

Am i to take it that all todays trades are buys then?

[deswalker] 05/4/2012 11:53

Just posted this on TMF ...

At 12.75p mid this has a market cap of £3.56m. Finals to 31 Dec 2011 show a net-cash balance of £1.34m so it is currently on an EV of approx £2.22m.

They have been restructuring for a couple of years but H2 2011 showed a much improved performance with a pre-exceptional PBT of £588k for the six months. A few years ago this company generated large profits and traded at six times the current share price. Consequently and IMO, the performance in H2 2011 and its proven substantial profitability in the past lend credence to current year broker forecasts of £1.1m PBT equating to an EBITDA of approx £1.22m. That's an EV / EBITDA of 1.82 which is rather cheap IMO especially for a company with real growth potential.

The Outlook statement reads of quiet confidence and even if they miss current 2012 estimates (which are only double that already achieved in H2 2011 remember) and achieve an EBITDA of only £850k then it is still on an EV / EBITDA of 2.62. Quite a margin of safety IMO.



Comments appreciated.

[deswalker] 05/4/2012 11:05

harrogate,

Fair point about trusting twitter etc but these tweets hardly read like that. There are also six vacancies on the Work Comms site ( and five on the Armstrong Craven site (

Des

[deswalker] 05/4/2012 09:40

See tweets dated 15,5 & 2 March.

(I'm not a twitterer myself but found this somehow)

Now call me biased but they sound very upbeat to me at Work Comms.

[glasshalfull] 05/4/2012 09:30

Des - I'm signed up for twitter but a novice in navigating.

Obliged if you could point me in the right direction. I can't seem to find Work Comm or Armstrong Craven feeds....I'm not trying very hard truth told.


Regards
GHF

[deswalker] 05/4/2012 09:08

Yes 15k. Bargain IMO. Was only looking at their twitter feed y'day and they talk of winning contracts and hiring staff. I honestly think this could multi-bag in due course.

[glasshalfull] 05/4/2012 09:05

Ha ha....crossed posts.

Yep, took another 25k ;-)


Regards
GHF

[glasshalfull] 05/4/2012 09:04

Take it that you've topping up as well des?

I tried to add further last week but wasn't entertained much below 14p offer so pleased to get opportunity this morning.


Regards
GHF

[deswalker] 05/4/2012 09:02

Is that you GHF ? Me earlier.