Interserve Share Discussion Threads

[richardbroughton] 06/5/2016 08:19

A lot of reputational damage which won't help win future contracts.

[edmundshaw] 06/5/2016 08:19

...on that basis a dividend of 15p-16p down from 24p. Unless they just take a holiday for a year (again a bit unlikely given so many buy for the dividend, and debt is cheapish). So would £3 seem to be some kind of support, given a propspective 5% yield at that point?? Already through that though :-(.

[edmundshaw] 06/5/2016 08:15

Headline profit before tax was £115 for 2015. The hit of £35 for 2 consecutive years (assuming no "opportunity to mitigate this situation" transpires) is a 30% chunk of this. With an additional hit for one year due to the living wage, profits for 2016 are looking 40% off, and maybe 25-30% off for 2017. Personally, I'd expect a similar hit on the dividend. Of course if Ringrose gets replaced the divi may be rebased further down I suppose, but given that after 1-2 years there should be a recovery in earnings (barring another failed contract), that seems unnecessary. My guess is around 40% divi hit. We shall see...

[value viper] 06/5/2016 08:15

assume dividend ok ?! as no mention BUT can these guys be trusted with how this has come out today. happy friday (NOT)

[philo124] 06/5/2016 08:15

Thiz leaked and warning belated. Awful.

[salpara111] 06/5/2016 08:13

Quite a fall from grace and that really is a big hit in terms of cash flow.
I guess the divi might be trimmed now.
Just be careful buying at this level given that the current market cap would see them automatically demoted from the FTSE 250 at the next reshuffle in about 4 weeks time which means that the tracker funds will start to sell.

[cc2014] 06/5/2016 08:12

in auction again.

[richard98765] 06/5/2016 08:11

I bought in for the divi. The last RNS seemed decent so I didn't foresee this. My strategy means I sell on divi cut so I'll still hold, debating whether to top up or not now

[sundance 13] 06/5/2016 08:10

Well it's down more than I expected already, now 30% off its starting price on Monday, looks excessive given its a specific contract issue rather than a downturn in overall trading.

[value viper] 06/5/2016 08:01

absolute shocker this - out of nowhere - few days after a good contract win etc etc
where does this leave the dividend ?

[sundance 13] 06/5/2016 07:49

Certain investors must've known Edmund, the fall on Wednesday in particular was bonkers, couldn't just have been due to a broker downgrade.

[edmundshaw] 06/5/2016 07:47

Hard to believe some didn't know about this in advance given recent falls..

Also, the news of the new contract timing, then this warning later in the week is appalling timing, like a sucker punch to anyone investing on the basis of the first RNS.

[sundance 13] 06/5/2016 07:39

Difficult to know how much is already priced in given the circa 15% fall this week.

[spacecake] 06/5/2016 07:27

More misery to be dished out today !

[jeffian] 05/5/2016 23:25

I sometimes wonder if people actually follow what the companies they invest in are up to. There have been two 'bearish' themes running on this thread recently -
1) The resignation of the head of Equipment Services (to be replaced by his long-term experienced deputy). It is possible that this might have had something to do with it - "In light of the changing shape of our portfolio over the last few years, we have started a strategic review of our Equipment Services business (RMD Kwikform)". In my book "strategic review" = sale!
2) The complaint that intangibles are rising. IRV set themselves a challenging target to double earnings per share in the 5 years 2010-2015. (They didn't quite make it; they did just over 70%). They specifically said that they would do this partly by organic growth but largely by acquisition. Acquisitions (including the recent substantial purchase of Initial Services) = intangibles.

You may not like it, but to talk of "ramp(ing) up the future profits by by borrowing spree" is to completely ignore the stated policy the company has been following for years.

[rmillaree] 05/5/2016 19:11

shawzie

You raise a good point - the last time i invested in the IRV a couple of years back the debt was reducing to the point where they moved into a surplus cash situation - that de-risked the business and it was probably no coincidence the shareprice rose quickly as that time.

I was a little surprised to see the debt has risen so much in the meantime - but if future broker forecasts (recent Numis 77p eps) are to be believed presumably they have ramped up the future profits by by borrowing spree - i am not sure how safe the debtors ledger is compared to the old days - presumably the debt is mostly in relation to the Initial Facilities purchase. At 330 mill debt this is only 3 years post tax profits - so as long as they generate anything like 100m in profits the debt is a non issue. I guess is all factored in on the low pe you pays your money and takes your chance.

[shawzie] 05/5/2016 16:44

A couple of years ago Interserve was a reasonably good investment.
However the past two years has seen an unwelcome change where the "intangibles" are greater than the "total net worth" of the company. Now I am aware that this is of no concern to many investors, but to me this looks like a good stock to short - following CLLN.

[wad collector] 05/5/2016 15:49

Numis predict 77p EPS for next year. That is a lot for a share now valued under £4.

[the juggler] 05/5/2016 13:37

Not a sudden departure! Working his notice period which is probably 6 - 12 months. Too coincidental with yesterday's fall though. More turbulence and an ever declining shareprice. Disappointing, although I have reiterated more than once that I did not expect a stellar performance anytime prior to 2017.

[ferries5] 05/5/2016 07:41

Not to sure what to make of that RNS, as clear as mud. Sudden departure, I think it will fall further today.

[spacecake] 05/5/2016 06:50

Tiny margins of 2% and small ROCE of 8%.
Is there any pricing power in their business ?, trying to do business on contract price alone is a race to the bottom.

[spacecake] 05/5/2016 06:50

Tiny margins of 2% and small ROCE of 8%.
Is there any pricing power in their business ?, trying to do business on contract price alone is a race to the bottom.

[jeffian] 04/5/2016 23:19

I guess the issue is that with a "future workload" reported of £7.7bn, a £46m contract reported (even a string of 'em) doesn't cut much ice. To maintain future workload they need to be doing these sort of deals every day, so what's the RNS all about other than puffery?

[the juggler] 04/5/2016 21:07

AGM this month, maybe something will be known then?

[tuscan4] 04/5/2016 16:53

Sounds like a Broker seeing little commission business dreaming up a negative story. An a former Investment Analyst this practice,especially in the quieter months, was fairly common , and as usual the poor clients end up paying the price.