Cello Health Share Discussion Threads

[coopstock] 12/12/2008 12:42

Westcoastostrich.

Your target price of 5p puts a value on the group of around 2-3m. There are accounts in the business, and divisions within the various companies, worth more than that on their own cf. the research division's guaranteed contracts with the nation's favourite retailer.

Credit lines all look secure. Their real issue - not something traders ever seem to understand - will be every day cashflow, if there has been a sudden slowdown in projects commissioned.

If that's the case, of course there are redundancies - as there are across the whole sector at the moment (violin's missus would be unlikely to get a job at any other ad agency at the moment - hiring freezes and collapsing share prices everywhere). It's what you do to defend profitability and avoid going back to the city with bad news.

I'm not saying there won't be a profits warning. You can expect a deluge of them from here to March. Just that these are strange times and any short term hits will have little relevance to the genuine values of companies like these.

Can't work you out. If you're shorting, there can't possibly be enough shares in play to make this worth your while. Most of the big stockholders look happy to sit on these, expecting them to come back. If I were a broker I'd make the same call.

[lpf] 12/12/2008 11:27

If the acquired companies increase earnings, there's money to pay the deferred earnouts.

If they don't, then there aren't earnouts to be paid.

The clue is in the name "earnout"

HTH.

[westcoastrich] 12/12/2008 09:10

dont know how they will pay the deferred earnouts

[westcoastrich] 09/12/2008 23:53

lololol

banks will make the pips squeal


just ask yourself about the chance of a profit warning given the dire economic situation ----- if the chance is 50% or more, you need to worry imho

[coopstock] 08/12/2008 12:39

All deferred payments for this group are based on a formula of around 7/9 of actual profits generated over earn-out periods. Ceilings are capped pretty low too. Cello can't lose on these.

[westcoastrich] 06/12/2008 15:47

target of 5p here - debt too high and deferred payments outstanding

[welsheagle] 06/12/2008 15:21

From November's 'Company Refs', when price was 44.5p:-
a/ Prospective PE ratio of 3.85 (based on two broker forecasts, one recommending 'overweight', and one with no recommendation).
b/ Forecast growth in eps of 6.58%.
c/ Positive cash flow per share of 14.7p.
d/ Net cash per share of 15.4p.
e/ Positive gearing of 12%.
f/ Price to sales ratio of 0.15.
g/ Turnover up from £14.7m to £108m in three years.
h/ Net asset value per share of 125p.
i/ Four directors buying in last seven months.

[westcoastrich] 12/11/2008 20:11

these guys need to cut deep and hard into the employee base before its too late imho

start off by cutting the directors salaries imho.

[westcoastrich] 27/10/2008 22:16

5p target

who is the debt with?

[whiterussians] 23/10/2008 12:29

This so is still in denial. They need a profit warning now.

[grahamite2] 08/10/2008 01:57

Survival in a tough climate isn't a matter of luck but of good management. If the company comes through the next 6-12 months in one piece it could be a very strong buy.

I have updated the header so the link to the company website actually works again.

[wcjan26] 07/10/2008 23:55

hsbc- they will be lucky to survive

[hsbcpremier] 23/9/2008 07:33

My own target is 30p
I can see businss drying up as clients spend less

[welsheagle] 16/9/2008 20:36

Evolution have reiterated their 'buy' recommendation, with a target price of 84p.

[moob] 07/9/2008 09:23

Directors' Remuneration


Kevin Steeds 298
Mark Scott 298
Mark Bentley 211

[hsbcpremier] 09/7/2008 18:57

must be expectying a profit warning here????

[wcjan26] 08/7/2008 14:44

qs9. maybe.

the point remains from my first post on this board a couple of weeks ago that the company is in the position of having a balance sheet loaded with debt and assets that are mostly intangible, whilst being extremely at the mercy of market sentiment to the sector

when i first posted, i said that i was surprised that cll and the rest of the sector has emerged relatively unscatched (compared with retailers for example) and that has already changed significantly.

check our peer CRE today, being murdered despite re-iterating no issues in the business yet recently.

imo this is still very much sentiment driven and a large possibility of us talking ourselves in to an avoidable recession

come back to this in october

[qs9] 08/7/2008 07:28

wcjan26: yes, but they have already estimated £x as £15m as of today (goes up or down with earnings from company in earn-out), my point is that over the next 3 years CLL's OP conversion into cash should be able to more than pay this down. IMO therefore it should be comfortable....

[wcjan26] 08/7/2008 07:14

qs9 no way, imo. normally you get £x in payment for each £y in earnout earnings with x>y

[nil pd] 07/7/2008 09:09

This time of year is bad for agencies seeking new research project business. Very seasonal and although expected by senior management they still shout at their directors and juniors to get the business! Bad for morale! It'll pick up again strongly in September after the holidays - just need to keep in customers' faces as a reminder.

[qs9] 06/7/2008 21:29

And what are the profits needed to generate the £15m earn-outs over the next 3+ years then? Assume future profits pay future earn-outs??

[hsbcpremier] 06/7/2008 21:17

net debt at 30 June 2008 to be c.£15.0m but future earnouts of £15m. ouch!!