Connect Share Discussion Threads

[grahamburn] 01/5/2018 09:44

Surprised that only edmundshaw has referred to the "resignation" of the CFO as a possible positive, rather than everyone else regarding it as a negative.

My immediate reaction to the wording of the RNS on his departure was that he was mainly responsible for the disastrous handling of the Book Division sale and had to go as a result. Otherwise why mention it? It was almost a backhanded compliment -sorry criticism - of how he walked into a trap set by the purchasers and then promptly caved in to a substantial reduction in the price received.

On that incident alone, it may well be a positive that he has "moved on".

[gfrae] 01/5/2018 09:23

I think you can listen to it at 9.30....see their website.

[gfrae] 01/5/2018 09:21

They are sticking to their full year forecast for Operating Profit Before Tax of in the range of £42- £45 million.
Though I would not be surprised as already implied that a new FD might want to do some "kitchen sinking " and could well reduce the dividend.

[fahads] 01/5/2018 09:18

Is the result presentation published yet? Cant seem to find it on their website...

[edmundshaw] 01/5/2018 09:13

I am in the habit of dumping no-hopers or possibly dodgy businesses on profit warnings where I see worse is probably to come. But this is not in my view a no-hoper; and the share price can sustain a bit worse if need be (such as FY expectations being not met). The underlying business is too strong to give up on.

[nigelpm] 01/5/2018 09:13

Certainly lots of pros and cons in the statement this morning. CFO leaving definitely concerns me though.

[gfrae] 01/5/2018 09:09

And you didn't even mention that almost uniquely their main pension fund is in substantial surplus !

[masurenguy] 01/5/2018 09:07

Very balanced view ES - I agree !

[edmundshaw] 01/5/2018 08:58

speedy that is a very one-sided view.

1) Your very first point about net debt ignored the fact that results are (as ever, but particularly this year) weighted to the second half.

2) Pass My Parcel - finally they are taking on board the reality that this just is not working. Shutting this down or imposing a proper pricing model on their customers would uplift profits over 25% on its own, after some inevitable exceptionals. If they can retrieve some profitable bit of this, great, but at least it will also allow for reallocation of currently scarce driver resources to more profitable streams - like the good parts of Tufnells (probably mainly the original bits plus a bit).

3) New FD not necessarily a bad thing; I suspect he is carrying the can for some bad performance rather than a rat leaving a sinking ship.

4) Headcount reduction and other cost synergies deferred can mean they are not available or can mean what they say - that we shall get them later.

5) Dividend cut is being left up to the new FD; who will probably find a good argument for a "rebasing". This is not necessarily a negative unless they byurn FCF on more PMP style enterprises that don't work out.

6) Underlying profits would put the PE on under 4. With solid businesses working OK within the group, and no debt problems, this has excellent recovery potential in my view.

[fangorn2] 01/5/2018 08:54

CC20141 May '18 - 08:23 - 983 of 985
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Fanghorn - Debt was reduced in H2 last year.

It's gone up since year end.

Cheers.
Was just looking at the comparable half year periods myself.


I see it's risen a smidgeon to £83.6m(Feb18) from £82.1m Y/E debt.

Net debt at the end of the period was £83.6m compared to £82.1m at August 2017 and £149.9m at February 2017. Debt at the end of the first half year is usually higher than the year end position given the weighting of free cash generation in the second half and a higher dividend payment in the first half of the year.

Be interesting to see where it comes in Dec18.

[this_is_me] 01/5/2018 08:39

Isn't David Bauernfeind a non exec. at GHH. Has he got a full time job there? He has certainly been in a number of different jobs and doesn't seem to be in one place too long.

[this_is_me] 01/5/2018 08:34

It looks like:
1. Tuffnells can be sorted out fairly quickly with a big effort .
2. Pass my parcel will either have to be seen to have a way of converting the large increase in volumes into profit or be closed.
3. The main financial target is going to be debt reduction.
4. The company is seriously undervalued.

[cc2014] 01/5/2018 08:23

Fanghorn - Debt was reduced in H2 last year.

It's gone up since year end.

[rcturner2] 01/5/2018 08:16

I've sold out. Taken a small loss.

[massimoj] 01/5/2018 08:14

Let's also remember that the 42-45m is after losses in PMP, which they have determined is unsustainable in its current form. To me that looks like the management accepting that they have made a mistake/tried something that didn't work as expected. Click and collect is a very tough market. Whatever they end up doing, I think it is likely that losses in the PMP/C&C business will be stemmed and those savings will drop to the bottom line next year.

[speedsgh] 01/5/2018 08:07

I would suggest that the situation is not going to change until there is a change at the top. The current CEO's strategy has failed imo. But incumbents rarely admit that they were wrong and are willing to take the necessary action.

Bring in a new board, clear out the cupboard (undoubtedly a kitchen sink or two in there), and set a new strategy focused on core strengths (be that the declining cash cow Early Distribution + Tuffnells, or just Early Distribution by itself), sell off/write down PMP (and maybe Tuffnells), reduce debt with any proceeds, and return excess cashflow to shareholders over time. A strategy that puts the interests of shareholders (the owners of the business) at the forefront of the company's objectives. That is a strategy that I believe markets would lap up. Aimho

[fangorn2] 01/5/2018 08:05

@Nigelpm,

Decent chunk of debt paid off though I see, a positive.
Some £66m odd. Like to see that.

[nigelpm] 01/5/2018 08:04

OUTLOOK
"Expectations for the full year are unchanged from the trading statement issued on 22 January 2018, with Full Year Adjusted Profit Before Tax in the range of £42m-£45m." Expectations are unchanged... for now.

A reminder that the market cap is £150m!

[speedsgh] 01/5/2018 07:56

So much to not like in this morning's interims. It would be quicker to go through the positives but, seeing as it is virtually impossible to find any, here is a selection of the lowlights.

Note that the CFO handed in his notice yday (see below) which also has been confirmed this morning in a separate rns -

FINANCIAL SUMMARY:
> all metrics negative apart from improvement in adjusted FCF
> at first glance Net Debt of £83.6m appears to be down impressively; it is on a 12-month basis; they just forget to mention that Net Debt at 31/8/17 was £82.1m; so Net Debt has increased marginally over H1 2018; not quite so impressive.

PASS MY PARCEL
"it is clear that the growth of returns parcels alone cannot provide a sustainable platform in the absence of significant new customers and a material improvement in the margin mix"

"we have concluded that the proposition cannot continue in its current form, and consequentially we have written down the £2.0m of associated assets on the balance sheet to £nil"

"The re-engineering of our role in the Click & Collect market is focusing on how we can best leverage our proven last mile capability without incurring unsustainable fixed and variable costs"

TUFFNELLS
"revenue per consignment has reduced as a consequence of the price competition and an increasing mix of smaller B2C deliveries from our customers."

"The level of change across the business has impacted service and given rise to a number of cost challenges in the period. Driver vacancies continue to be a significant drain on both cost and service - and this was compounded by a high turnover of depot managers and key operational roles in the period. This loss of experience and process know-how reduced our ability to manage the changing conditions with sufficient speed and agility. The business was further impacted by the delivery and collection of Pass My Parcel volumes that are not well suited to the core operation."

"In April 2018 we entered an agreement with specialist recruitment agency ADR Network, to improve driver recruitment and retention, and a new contract with asset managers TIP is delivering cost efficiency and greater flexibility to our fleet."

"In the period, we have appointed a number of experienced depot and distribution managers to strengthen our capability and vacancies have now returned to a normal level."

"Meanwhile, the underlying Irregular Dimension & Weight (IDW) market is strong and its characteristics are a good fit to the Group's capabilities."

TRANSFORMATION
"Our strategy is to leverage the capabilities of our core business in a way which provides compelling propositions for both the Early Distribution and IDW markets"

"Planned headcount reduction has not proceeded as quickly as we had anticipated and operational challenges in the period mean our £15m savings target over two years will now be weighted to next year."

DIVIDEND
"Looking ahead, in the light of the disposal of Books and Education & Care divisions, the Board will carefully consider the optimum allocation of the Group's excess free cash, balancing the capital requirements of the business and shareholder returns with an ambition to reduce net debt over time." i.e. dividend cut on the way.

BOARD CHANGES
"On Monday 30 April 2018, David Bauernfeind informed the Board of his decision to step down from his current role of Chief Financial Officer, to pursue a new opportunity".

OUTLOOK
"Expectations for the full year are unchanged from the trading statement issued on 22 January 2018, with Full Year Adjusted Profit Before Tax in the range of £42m-£45m." Expectations are unchanged... for now.

[cwa1] 01/5/2018 07:54

Mark Cashmore, Chief Executive Officer, commented:

'David has played an important role in the execution of our strategy to focus the Group's activities, and in the successful disposals of our former Education & Care and Books divisions. I would like to thank David for his contribution over the last two years and wish him well for the future.'!

[fangorn2] 01/5/2018 07:53

Spot on Nigel.

Had my finger over the buy button here for a while but was waiting for these results.

Think I'll post pone my interest for a while longer.

CFO leaving is a big red flag imo.

[nigelpm] 01/5/2018 07:49

Exactly aleman. Big concern for me is the CFO leaving though. Suspect a fall on that alone.

[aleman] 01/5/2018 07:48

It does sound downbeat - but the share price is very downbeat! PTP still indicated at £42-45m against a market cap only 3 times that. I think it's time Pass my Parcel was closed down (sounds to be under consideration) and the rest of the business was sold off to the highest bidder. What would we get for PTP of £45-£48m? Offers welcome! If it is not a bid target now, it bloody well should be!

[retsius] 01/5/2018 07:46

Nothing here gives any sense of uplift from a depressing four months.
Div. held which I expected but looks from the wording in the summary, they are laying the groundwork for a reduction on full results.

CFO resigns on 30/04/18. Not good. One of Slater's points of selling a share if I remember.

Pass my Parcel should be wound up.

No mention of disastrous Book division palaver in January.
All in all nothing to say,' Buy'
R.

[rcturner2] 01/5/2018 07:43

They have maintained the full year forecasts which is important.

Losing the CFO is never a good sign though.