Litcomp Share Discussion Threads

[abc125] 25/6/2009 14:47

Glashalfful

Re your profit cals, going forward, (assuming bond holders convert) the company will make savings on interest paid of around £300k a year, so this will drop straight to the bottom line and boost pre tax profits. Also, worth remembering that the company will be left with net cash balances of £3m and no debt.

Successful bond conversion is the key though.


edit: just noticed that diluted EPS are adjusted for loan note interest.

[abc125] 24/6/2009 20:55

Bond issue has to be sorted by 31/10/09, so that may be why they have decided to publish their results in august - they should have an idea by then of who is going to convert.

It would be nice if the company could get a few holders to give irrevocable undertakings to convert (similar to last years one year extension), which would reduce uncertainty. It looks like the market is waiting for clarity on this issue.



"LitComp has received irrevocable undertakings to vote in favour of a resolution to be proposed at the GM for, inter alia, the twelve month proposed extension to the terms of the Trust Deed and certain amendments to the conditions of the Loan Stock from holders of Loan Stock holding, in aggregate, £2,367,700 Loan Stock, representing approximately 75.3 per cent. of the Loan Stock."



80% eventually went for the one year extension, while the remainder were paid off.

edit: a promise of a divi may help waverers decide.

[the big fella] 24/6/2009 11:50

Watching and waiting. There are a few large sellers around which could squeeze the price short term. All about timing old boy.

[mr hangman] 24/6/2009 11:34

Big Fella, seen LOQ ? buying opp

[the big fella] 24/6/2009 11:22

Egoi - Gavin is on 2 weeks hols!

[egoi] 24/6/2009 09:54

Thanks TBF, yes a more realistic strategy i think.

PS: Cheers, I've replied again at UQ.

[the big fella] 24/6/2009 07:59

Indeed, and in reality not much has changed as the fall appears to be due to an accounting policy change rather than an actual trading issue.

[glasshalfull] 24/6/2009 07:52

Year to 31st March


Sales

2007A - £6.23m
2008A - £11.29m
2009E - £25m


Pre-tax Profit

2007A - £0.83m
2008A - £1.11m
2009E - £1.8m (alter this by 10%-15% to account for "slightly comment)
= £1.53m - £1.62m

ie. 38% - 46% growth over 2008.

Puts yesterdays statement in perspective I think.

Regards,
GHF

[the big fella] 23/6/2009 21:28

Hangers - everyone is entitled to their opinion. I have just started recruiting again. It's been aa while since I have said that. So I say what I see, and clearly in some areas there is much pain still to go.
Don't forget markets tend to look 12 - 18 months ahead. I personally see markets trading treading water for a long while yet, but some stocks will do well. Just need to find them!

Jim - you have a reply. I will make a couple of calls.

[egoi] 23/6/2009 17:37

Agree with others' sentiments, though as you say GHF a bit nnore detail would have helped.

O/T:
TBF you should have p-m at UQ; though the last one I sent to someone else never got to its target!

[mr hangman] 23/6/2009 17:16

We have not seen the worst yet IMHO...

[the big fella] 23/6/2009 17:02

GHF

I think that sums it up nicely. 7.5 - 8 p EPS would still demonstrate significant year on year growth during the worst of the recession.

[glasshalfull] 23/6/2009 16:58

Trading during the 12 months ended 31st March 2009 remained strong. However the Company has made prudent reserves against certain claims and other risks arising during the period. As a result the Company believes that despite revenues for the period being broadly in line with management expectations, profits were slightly below market and management expectations.
Commenting, Chairman, Doug Smith said, "The Directors are pleased that the Elite business has continued to grow profitably, but in the present economic
circumstances it is felt that it is appropriate to adopt more conservative
reserving policies, particularly against claims."

The important fact is that the business is still performing / growing...phew! It would have been lovely to get an exceeds expectation statement but in the current climate and with share price more than halved during the last 2 years despite Elite's performance I believe a fall off in business was built into the share price. Trading remained strong and business is continuing to trade profitably after year end. As I say, I can live with profits slightly below market expectations when the company was priced for Armageddon.

I believe that 8.9p EPS was factored in so like the posters above I would estimate slightly as 10%-15%...so 7.5p-8p EPS expectation reasonable I would say. And, the company has indicated that revenues were broadly in line with expectations (usually slightly weaker in my book) and the slight profit shortfall is down to conservative reserving policies which again is something I can live with.

The main thing since Dec 2008 announcement was to get a feel for whether Elite was still performing / growing. Thankfully this is still the case and like most other companies in all sectors the current economic environment would appear to have affected the company, albeit marginally.

Been nice to get an indication of cash balance and how Medico had performed in the period but nothing in the statement has set alarm bells ringing.
I plan to maintain my holding but if the opportunity avails itself to pick up stock cheaply it would be churlish to refuse. Still think this is a long term winner once bond issue resolved and economy starts to recover.

At 29p share price my implied EPS would equate to a PER of 3.6 - 3.8 as a rough guesstimate. Happy for any additional comment or correction.

My take.

Regards,
GHF

[the big fella] 23/6/2009 15:20

Agree with the comments here. It isn't really a problem but maybe a sign of slowing of future earnings growth, which does concern, although their growth rates are hardly reflected in their rating!!!

[8trade] 23/6/2009 14:45

They will probably a decent jump when the announce the figures.

Until then the 2 mm's will just make on the spread on the two
way pull.

[abc125] 23/6/2009 14:35

agree. Daniel Stewart had 10p EPS, so 8p would still be perfectly reasonable.

[the big fella] 23/6/2009 11:59

As a result the Company believes that despite revenues for
the period being broadly inline with management expectations, profits were
slightly below market and management expectations.

This would lead me to reduce forecast EPS by 10% (as in profit warning terms slightly below is generally in that region, otherwise they would not have to notify).

So hardly a disaster EPS of 9P on the current rating.

[abc125] 22/6/2009 18:55

If we don't get a holding RNS in the next week or two, it may mean MM's have taken the stock onto their own books, sure in the belief they will be able to clear it post results.

Watch out for director buys.

The chairman bought £10k worth of stock twice previously b4 results. I was half expecting the same this time.

[glasshalfull] 22/6/2009 18:36

As we thought at the time of that 400k trade.
Interesting to see who's picked it up.

Regards,
GHF

[egoi] 22/6/2009 16:34

Overhang gone:

The Board of LitComp, a national provider of After the Event Insurance and medico-legal reports, announces that on the 16 June 2009 the Company was notified by Midas Investment Management Ltd that it has reduced its shareholding, via Pershing Nominees Ltd A/c MDCLT, from 417,500 being 6% of the issued ordinary share capital of the Company, to NIL.

[glasshalfull] 21/6/2009 22:35

Sifting through emails received last week and came across an update from "The GE&CR May Stocks & Markets Review" dated 13th June.


"LitComp has strengthened its Elite Insurance business unit through the appointments of Charles Wright and Martin Davey. Wright has a demonstrable track record and wealth of experience in the insurance sector, with particular experience in After The Event insurance. He has previously held senior management positions at leading international insurers while Davey has experience in litigation both as a solicitor and as an underwriter at a leading After The Event insurer.
The share price continues to fail to reflect the profitability and cash generation of this business and our stance remains buy."

Regards,
GHF

[abc125] 20/6/2009 17:23

I think the company will be hoping that all bond holders convert. They need good cash balances for regulatory bonding purposes and I expect they will not want Nigel Wray to have a too big a stake in the company. Even if all bond holders convert, NW will still own around 25% of the company.