Cambian Share Discussion Threads

[care123] 30/12/2016 20:00

The problem you have with this company is that it has alienated itself from its customers. It only has one customer: the state. Only local authorities purchase Cambian's children's services and 1)they no longer wish to use them and 2) Cambian have the wrong product: local authorities want foster care not residential. This combined with the impact of the national living wage and local government cuts means Cambian will go under as soon as they have used up the money from the sale of the adult division. My guess is GI Capital will pick up all the pieces as majority shareholder as the managing partner for Europe is heavily involved in children's services and looking at new acquisitions outside of Cambian. Cash out now while you can

[treble in 1999] 24/12/2016 13:14

General Meeting on 27th. Sale to be cleared.

Then the company start the process of delivering the value to shareholders, debt free.

21p per share being returned to shareholders.

Looking forward to 2017.

[papy02] 13/12/2016 21:26

Hi. I am invested, but wondering is this an accurate precis - they drove the business into the ditch (possible insolvency if don't sell part of the business to settle debt when due next year). Ok they got a good price from someone who thinks they can run it more profitably.

Why do we think the existing management will do better when running the remaining rump, especially as they ref plans for more debt to fund acquisitions?

[treble in 1999] 13/12/2016 20:35

Don't think much is going to happen this side of General Meeting.

After that we have the cash, Suppose what Mr Market wants is the deal done first, before rising.

We also have the ongoing management fees as stated in the announcement, look at as a cost reduction.

Still think its got £2 all over it by Spring. Should hold this level and it will be new support.

[bennytheball] 09/12/2016 08:23

A lot of people came in on the rise from 55p, and more from 80p. They're clearing out. Won't go on for ever :-)

[nfs] 09/12/2016 08:22

Continues to go down , unexpected given the numbers arising from the deal

[treble in 1999] 05/12/2016 16:14

gotta be henderson's selling down. when they've finished the price will be more reflective of the 21p divi

[treble in 1999] 05/12/2016 13:25

We know the company will be debt free,cash rich and have a property portfolio of 100m.

Enough to start with, what can this very experienced management do with it.

Their market is massive, and they are already number 1.

[brwo349] 05/12/2016 13:20

Bottom line there is not enough information in the RNS to make anything more than an educated guess. We don't know what assets and liabilites are going with the disposal and which will remain.

[evil_doctor_facilier] 05/12/2016 13:18

yes indeed. i used the debt figure 254 mill from the last results as i did not get chance to see the presentation and also did not envisage the extra 18 million transaction costs.

[brwo349] 05/12/2016 13:14

thanks sj

Dr Evil You could be right but as a quick estimate I don't agree with your numbers.

I just ignore goodwill and intangibles and the current assets and liabilities cancel out. The amount after costs is £359M and the debt plus other long term liabilities is about £300M. So that leaves about £50M. Then assign less than half of the property plant and equipment to the remaining business, so about £150M

So no debt or other liabilities and a very simple estimated balance sheet looks like;


Property Plant and Equipment = £150M
Net cash = £50M


Market cap is £260M
Remaining business has £18.4M EBITDA


but could be completely wrong so DYOR!

[evil_doctor_facilier] 05/12/2016 13:13

Hi Treble, yes just seen the difference in the debt figures from the half year results and the one used in today' presentation, also the extra transaction costs at 18 million?

However, that said, the adult business was sold on a basis of 2.9x earnings

The child service earnings this year are circa 160 million.

The group will be debt free with asset backed at 100 million plus cash plus child service division.

[treble in 1999] 05/12/2016 13:11

Would suspect Henderson's are selling up.

[treble in 1999] 05/12/2016 13:08

E-D-F

The cash position is likely to be 359-293=66, less 40m, = 26m
Add 1.5 x ebitda of say 20m, so to invest over 50m.

Property portfolio circa £100m per presentation, at net book value. Also, no one approached the company to buy the whole company.

I think they are going to grow the numbers, so if 1700 customers equates to £18m ebitda, gross £96m, then adding £50m to property portfolio should add (???) 850 customers. EBITDA at worst £30m. Probably the 2018 target.

If 25m sold for £377m, then could be worth £450 million, probably a lot more. 240p share price, plus dividends

Thoughts anyone

[evil_doctor_facilier] 05/12/2016 13:02

Brwo, if anything i am underplaying it!

[sailing john] 05/12/2016 12:51

brwo
Try here
Looks like about a 50-50 split although I note at least one property appears under both adult and children listing
Just done a quick scan and not a detailed comparison/approx valuation
Good enough for a rough valuation though
SJ

[brwo349] 05/12/2016 12:42

ok I think you might be over-estimating a little but I get your drift.
What about all the property assets? Any idea what will remain?

[evil_doctor_facilier] 05/12/2016 12:16

Yes the adult service division. The child services division remains.
Post sale, the company will be debt free with 147 mill cash and a child service division business that if sold on 2x9 earnings basis, akin to the announced adult division, would be worth alone 400 million alone!

Or in simple terms the business sold for 377 million (Adult Services ) had capacity of 1,152
The remaining business has - (Children's Services) has capacity at 1,790

The adult service is valued at cash 377 mill
Today the market cap is 260 mill and Cmbn will be left with the child service division plus circa 130 million free cash debt free.
Subtract the free cash from the market cap and this puts a value on the child service division of just 113 million or less than 1x revenue. teh adults services sold today fro 2.9 x revenue.

Way too cheap..

[brwo349] 05/12/2016 12:13

but do we know what assets get sold?
Can anyone make a stab at what the balance sheet looks like post-disposal?

[evil_doctor_facilier] 05/12/2016 11:59

i covered the amount i sold at open on this pull back, by all conventional measurements of value this is cheap.

[sailing john] 05/12/2016 11:21

Bought in today - new company for me and I can't say I have adequately researched but the debt terms (1H results - note 6) looked extremely onerous and once removed will make a significant difference to the bottom line.
SJ

[kemche] 05/12/2016 10:04

Nearly a two bagger......
:)

[evil_doctor_facilier] 05/12/2016 09:55

Exactly, look at the valuation obtained on the sale of the adult service division- 2.9 x revenue
If the same value was ascribed to the child service division, the enterprise value of that would be over 400 million, add in the cash surplus of 147 mill and you have a pro rata market cap of 517 mill as against the 257 mill today.

This surely has a long way to go over the next 6 months. I believe a little profit taking from people who bought in for the expected asset sale news occurring this am.

[gbill11] 05/12/2016 08:51

Yes I agree looks way too cheap based on this transaction. I'd have expected the shares to rise much higher this morning.

Also 40 million (21p per share) to be returned in a capital payment in 1st half of next year.