NUMERICA GROUP - accountancy integrator that doesn't add up?

Have been running this thread for months on pbb where I am talking to myself, maybe there will be some interest over here. cheers, charlie

charlie - 30 Nov'02 - 22:31 edit

Numerica describes itself as an “accountancy integrator,” that is a quoted company formed to acquire smaller accountancy partnerships. It floated at 100p in October 2001.

Numerica is in a similar business to the other AIM quoted accountancy consolidators Tenon (TNO) and Vantis (VTS). The profit warning from Tenon earlier this week is therefore of interest to Numerica watchers, particularly since the problems seem to relate to industry conditions generally rather than Tenon specifically. Key extracts:

”….economic conditions have proved difficult for certain parts of the professional services sector. No improvement has been seen in the second half particularly in
transactional businesses, and in line with many other businesses in our sector,
we continue to see a significantly reduced level of activity in certain of our
higher margin areas of business.”

" It is obviously disappointing that, in line with many others in our sector,
economic conditions are adversely impacting certain parts of our business.”

The relative share price performance since flotation is as follows:

Tenon float price 120p. Price now 28.5p ( - 76%)
Numerica float price 100p. Price now 103p (+3%)

which suggests that the current Numerica share price leaves considerable scope for disappointment.

charlie - 30 Nov'02 - 22:35 - 1 of 7 edit

Turning to forecasts for Numerica, well the latest I can find is that on 24 June 2002 the Numis forecast was as follows

March 2003 eps 4.7p
March 2004 eps 5.7p

which implies a multiple of 21x falling to 18x, pretty ambitious?

But also see the Tenon profit warning.

DOESN’T ADD UP?

charlie - 30 Nov'02 - 22:44 - 2 of 7 edit

And here is the first paragraph of an article from the ACCA website earlier in the year, describing the poor share price performance of quoted “accountancy consolidators” in Australia.

Can't see why the UK experience should be any better..

Barry J Cooper looks at what is happening to the consolidator groups in Australia
by Barry J Cooper
01 Jul 2002
Australia is often referred to as “Down Under” and it is probably a good description of where the consolidator groups in Australia have been heading lately. There are about 30 consolidator groups in Australia at present and they have all had varied experiences. Of the three biggest, which are all listed public companies, the Investor Group has done best. Nevertheless, it is struggling to maintain its share price, which fell 26% in the past year. Stockford listed at $1.00 and peaked at $2.40, but by early June 2002, was trading at 17 cents. Worst hit was Harts, which lost $93m after a $63 million write down of goodwill and $10.5m in bad debts. The Australian Securities and Investment Commission has since appointed a liquidator. Some consolidators, such as Acquest, imploded before they even got to the listing stage. So, after a fanfare of publicity and promises of great opportunities ahead during 2000, tough times more recently have generally seen consolidators struggling to remain viable

Full article is here:

http://www.acca.co.uk/publications/accountingandbusiness/548739


charlie - 03 Dec'02 - 09:12 - 3 of 7 edit

In terms of the distribution of ownership well there are at least 7 institutional holders so the stock is popular which I think is bearish, and also helpfully means that the stock is easy to borrow. (This may seem a bit cute, but the last stock about which I said it was The Health Clinic, where a total result was achieved ie the company has now gone bust.)

http://www.advfn.com/cmn/pbb/thread.php3?id=608508&from=39&to=102

charlie - 05 Dec'02 - 09:29 - 4 of 7 edit

First-half results today

Profits miniscule, eps 1.6p or -0.6p after goodwill and exceptionals.

There is a profit warning in the Prospects section of the statement

"The Group has continued to make substantial progress during the period. However,as I have previously indicated, the current flat state of the economy is not optimal for our business and is affecting the results of other businesses in our sector.

As we make further acquisitions, the full benefits of integration and our brand
will come through, which will significantly increase the profitability of the
Group. We are now one year through a three year strategy and we still consider
that our medium term targets are achievable. [but not, by implication, our short-term targets?]

We anticipate that in the current business environment the times ahead will be challenging.....

Currently -6.5p on no trades

dodddy - 05 Dec'02 - 09:56 - 5 of 7


good call charlie

charlie - 24 Jan'03 - 22:50 - 6 of 7 edit


An update on those relative performances

Tenon float price 120p. Price now 19p ( - 84%)
Numerica float price 100p. Price now 99.5p (-0.5%)

Don't look down Numerica it's a long long way to fall.

charlie - 30 Jan'03 - 14:13 - 7 of 7 edit

Tenon now 15.5p (-87% from float)
Numerica still 99.5p (-0.5% from float)