Management Consulting Share Discussion Threads

[dil] 21/4/2001 00:11

Sardine : These were written up in SCSW this month.

Dil

[morose] 20/4/2001 20:12

Disappointing response - does no one else follow this Company?

[sardine] 20/4/2001 11:42

Doddy: I take it that you are no longer short?

[mr tb] 20/4/2001 11:36

sold few weeks ago at 85p, is it time to jumb in again.

[morose] 20/4/2001 10:47

Looks like the worries about the misleading presentation of the results is over now.
Stock quickly making up lost ground.
Anyone know why - good volume of purchases - who is buying?

[mug punter] 22/3/2001 14:36

Whoosshhh,

Down again Today 13.7% this time.

Plus another 50,000 MM trade 1p below the bid just gone through.

[goodfella] 22/3/2001 13:46

Market Maker just sold another 50k below the bid.

Stock behaving exactly like Wiggins and looks like heading to 200Day MA at 38p

[raybow] 21/3/2001 14:13

100k buy whats happening with this
I lost my bottle and sold on Monday at .67 (a right decision at last)!!

[dodddy] 21/3/2001 11:43

50k mm sale under the bid looking weaker every day

[dodddy] 21/3/2001 11:40

50k mm sale under the bid doesnt look encouraging if you are long

[gokelstone] 20/3/2001 10:23

mmc are not the only ones to be issuing results like this. last year co's shouted internet in order to gain investor value. in years before, co's used to claim of unsolicited t/o's, etc, etc to get the share price moving. it is all legal and justifiable and it stops the board from getting fired! this kind of thing is not uncommon. for example, we recently saw a similar distorted p/e in the likes of onl as a result of the afn flotation.

i guess that at the end of the day a profit is a profit. however, as mw states there's a fat chance that they'll be able to declare the same kind of results next year. i, for one, believe that mmc will be a solid growth stock in the future. for the first time in years, they now actually have cash in the bank to go out and do something.

[hifi] 20/3/2001 01:16

Great stuff Goodfella....see you post the story on other boards on this name where you never appear before. Hope it all goes well for you as I would hate for you to lose!! Get MW Email but really not too impressed....to date...he is a bit of a two faced sword and he cuts his comments both ways. What you gain on the swings you tend to lose on the roundabouts. Still he is a bit of a tongue in the cheek guy and can amuse. Good luck as the institutions are fairly active in MMC and if too short you may get squeezed.

[argy2] 20/3/2001 00:47

Bearish piece by Michael Walters today about Annual Report...rumour in the City is that he has 'shorted' the shares..allegedly!

[goodfella] 20/3/2001 00:39

He does not like his e mails distributed but it is not very pretty.

I have been looking at the company and with asubstantial exposure to the USA and a ridiculous PE of 182 this one has a long way to fall.

[wilsmx] 20/3/2001 00:17

In the words of Corporal Jones - "Don't Panic, don't panic!"

[raybow] 20/3/2001 00:07

Why all the selling today??????
And whats the other MMC thread about ????

[mug punter] 19/3/2001 15:25

Thanks Pommy for posting the full Walters article and also I think we should take our hat off to Walters in this instance for admitting he had the wool pulled over his eyes.

[pommy] 19/3/2001 15:16

This is a disgrace, if I was a holder of this stock I would be ringing the company and their advisors straight away to demand an explanation!!

Looks like Walters has copped onto the problems at MMC.

==========================================================
Michael Walters' Investment Comments
UPDATE: 19 March 2001
==========================================================

Contents:
---------
Management Consulting - please read the fine print



The more the accounting aces tinker to make it simple, the worse it gets. I am indebted to one of my e-mail correspondents for drawing my attention to the nonsense which surrounds reported profits and the way they are presented.
His particular target was Management Consulting Group (MMC), the old Proudfoot Consulting. I have recommended the shares in the past, and advised taking profits at just above the current level. Neither of us have any great criticism of the way the new managers are reshaping the company,or any particular reason to attack the share price.
But their latest announcement does serve to illustrate the growing gulf between presentation and comprehension when it comes to company announcements Taking some of the key points in the order they were set out in the preliminary announcement to the Stock Exchange, Management Consulting reported -
"Shareholder value increased by £60m - an increase of over 300%."
Hard to find any direct explanation of how this £60m arose, even though the full statement ran to 14 pages when I printed it out. It might be reasonable to suppose that this had something to do with shareholders' funds. But they moved from a deficit of £10.3m to a surplus of £22.4m - a strong advance. But not a £60m gain.
After much head-scratching, I rang the company's financial PR advisers.
Simple, they said, the chairman was referring to the rise in the share price. That had been - oh, well, they could not quite remember. Looking in the fine print, there is a note that the average market price during the year ended December 31, 2000 was 43.4p, against 19.5p a year earlier. Delve further, and you see the weighted average number of shares in the year was 97.8m. That suggests a gain of around £23m.
Hold on, though. They must be comparing the actual December 31, 1999 price with the actual price a year later, not the average price. Could that be it? That would mean the shares, which started 2000 at 21p, must have ended the year at about 82p, within an ace of their all-time high.
Perhaps.
Strange, though. The only graph I can find suggested the shares were at 75p or 76p at December 31, and did not top 80p until mid-February. That does not make a £60m gain. Mind you, if you work it out on what appears to be the current issued capital of just over 113m shares, then a 55p price rise would support a gain of £60m.Funny, though. Where it uses issued capital elsewhere in the statistics, the boys choose a weighted average.
Oh, wait a minute. There was a rights issue of 6.74m shares in April last. That raised a couple of million. Should we count that new money from shareholders as a gain for them? Surely not. And how should we treat the options granted to directors?
If you have read this far, perhaps you are screaming at the tedious, nit-picking notion of it all. So you should be. But we are dealing here with a public company, where things should be clear and correct. We should know we are dealing with something objective, which goes beyond merely presenting it in a fashion which makes things sound good for the sake of it.
Hard to resist, by the way, pointing out that shareholder value has fallen by close on £15m since mid-February, taking the current market capitalisation. If the board wants to take credit - and perhaps they should - for last year's share price rise, should they now be apologising for this year's fall so far?
Tell that to the board of BT. Or Cable & Wireless. Or any one of hundreds of the walking wounded. Imagine them starting their preliminary announcement with the statement "Your board has wiped £5bn off shareholder value."
Silly, isn't it? But I never started this. The Management Consulting board and their advisers did, by putting this vague rise in value at the top of the list of key points for last year.

"Profit before tax £20.0m (1999: loss £1.8m)"
That is key point number four in the preliminary announcement. Naturally, when you get into the nitty-gritty, you realise that the group realised an exceptional gain of £26m before tax from selling Proudfoot Japan. Good stuff, but not something to present unadorned, with no explanation - though that does emerge in a later key point. None of the key points bothers to mention that, stripping out the one-off gain from selling out of Japan would mean that there was actually a loss for the year. Never mind. We understand. We know you mean . . . well, just what?

"Excluding investment spend of £7.9m on marketing and sales, training, new management and infrastructure, underlying operating profit of £0.3m (1999: loss of £3.6m)"
That is key point number five. An operating profit, eh? Pretty good.
Hard to find it in the detailed tables later in the statement if you look to see what an operating profit actually means - what has to be taken off before it becomes a conventional pre-tax profit. And pretty breathtaking to see how they arrived at that £300,000 operating profit. They don't count spending on marketing and sales? Surely that is part of the normal operating costs Hard to run a consultancy company without that.
Can you really take off the money you spend on training? Most people would consider that at the heart of any company. Especially if they are meant to be management consultants. I'm sure it does matter that they know what they are doing.
Perhaps not, though.
And who knows what costs of new management and infrastructure take in?
What is it there that is not worth counting as a cost against profits? A new tea trolley, perhaps. A bigger desk for the new boss. Whatever, it sounds like the expenses of running a business.
Never mind, though, The new team wants shareholders to feel they are making progress, somehow. And £300,000 profit is a £300,000 profit. Even if it did not include the cost of goodwill amortisation, share scheme charges, and the impact of acquisitions and disposals.

"FRS 14 earnings per share 18.8p (1999: loss 4.2p)"
That is another key point. And what a key point. Sounds pretty good. With one mighty leap, the company goes from minus earnings to a pretty hefty plus. But watch the fine print. As usual, the basic earnings are calculated on the weighted average number of shares outstanding during the year. Everybody does that. But it means that the issued capital has risen since, so net attributable profits need to be greater to stop earnings falling this year. Stop counting all spending on tea trolleys at once. Crucially, the 18.8p earnings figure includes the benefit of that one-off gain from selling the business in Japan. That was exceptional by anyone's standards, surely? So we are not talking here about normal earnings from repeatable trading, which is what most people would consider the proper measure of progress. The boys can only make £26m by selling out of Japan once.
Never mind. That Japan-inflated earnings figure is the one the managers count as worthy of inclusion in the key points. Bet they will not use that as the comparative figure when they present earnings in the key points next year.
It gets clearer in the notes, where there are four varieties of earnings on display. Here you can find headline earnings, which are much less flattering. They show, not a profit, but a loss. The headline earnings loss has risen from 4.2p a share to 6.4p. There is also an adjusted headline, with the loss at 5.5p a share against a loss of 3.5p a share. This adjusted headline does not count the cost of the management incentive plan.
A really stubborn kind of shareholder, the sort who does it by the book, would conclude that the company actually fared worse, not better, last year. Certainly did, if you confine your attentions to what most would consider to be the proper reported earnings figure.

If you have got this far, reward yourself with a nice cup of tea. Or something. Sorry if it seems pretty tedious stuff. It is pretty tedious. But it is worth ploughing through in order to illustrate the muddle and minefield even some of the simpler elements of company announcements have become. And - save us - these are the figures from a management consultancy company. Presumably the staff will be telling others around the world how they should present their business.
Equally important, as my correspondent observed, is that financial journalists might not get to grips with this properly. I know. I was there. In a newspaper City office you have limited time to decide what to write, and how to understand what you are writing about. It is easy to grab at the key points, and go with them. Anyone doing that on this Management Consulting announcement would be doing their readers no favours.
In fact, I could find only one brief mention of these figures in the financial press on the day after the announcement. That failed to address any of the issues. Maybe everyone else took one brief glance, and gave up on a busy day.
If there is a lesson for investors in this, it is that you do need to look at the detailed announcements from companies. If you are accessing them on the internet, read the full RNS version. Do not rely on the AFX version. That is often fine and helpful. But it ignores the detail. In these markets, perhaps, you do not need the detail. You just watch the share price. That will tell you if the news was good or bad. Fine, if you want to play it that way. But if you have any wish to understand things a little more (you will never understand it all), read carefully, and question the way your directors present the news.
As for Management Consulting, it may be worth pointing out that the new team is reshaping the business with real vigour, and does appear to have transformed the company for the good. But the company has been making losses by normal standards, and is capitalised at over £80m.
And shareholders must be careful about presentation.
The top boys are all heavily incentivised with share options. They want the share price higher. That is good, up to a point. You want them to do well for themselves, and to do well for you in the process. If, though, it prompts them to over-egg the pudding, you may wish to proceed with caution. You can sell your shares, while they are locked into the incentive plan.
If you think they are pushing things too hard, there is nothing to stop you from stepping aside, selling the shares, and watching for a while.
Good luck.

[dodddy] 19/3/2001 15:13

now we have evil k and goodfella with short positions bloody glad i sold

[goodfella] 19/3/2001 15:11

I am afraid I cannot say but everything he shorts tends to fall by at least 30%

[argy2] 19/3/2001 15:06

goodfella........Is that man a friend of Michael Walters by any chance? Could it be Evil?

[pommy] 19/3/2001 15:01

Looks like Walters has copped onto the problems at MMC.

==========================================================
Michael Walters' Investment Comments
UPDATE: 19 March 2001
==========================================================

Contents:
---------
Management Consulting - please read the fine print



The more the accounting aces tinker to make it simple, the worse it gets.
I am indebted to one of my e-mail correspondents for drawing my attention
to the nonsense which surrounds reported profits and the way they are
presented.
His particular target was Management Consulting Group (MMC), the old
Proudfoot Consulting. I have recommended the shares in the past, and
advised taking profits at just above the current level. Neither of us have
any great criticism of the way the new managers are reshaping the company,
or any particular reason to attack the share price.
But their latest announcement does serve to illustrate the growing gulf
between presentation and comprehension when it comes to company
announcements
Taking some of the key points in the order they were set out in the
preliminary announcement to the Stock Exchange, Management Consulting
reported -
"Shareholder value increased by £60m - an increase of over 300%."
Hard to find any direct explanation of how this £60m arose, even though
the full statement ran to 14 pages when I printed it out. It might be
reasonable to suppose that this had something to do with shareholders'
funds. But they moved from a deficit of £10.3m to a surplus of £22.4m - a
strong advance. But not a £60m gain.
After much head-scratching, I rang the company's financial PR advisers.
Simple, they said, the chairman was referring to the rise in the share
price. That had been - oh, well, they could not quite remember.
Looking in the fine print, there is a note that the average market
price during the year ended December 31, 2000 was 43.4p, against 19.5p a
year earlier. Delve further, and you see the weighted average number of
shares in the year was 97.8m. That suggests a gain of around £23m.
Hold on, though. They must be comparing the actual December 31, 1999
price with the actual price a year later, not the average price. Could
that be it? That would mean the shares, which started 2000 at 21p, must
have ended the year at about 82p, within an ace of their all-time high.
Perhaps.
Strange, though. The only graph I can find suggested the shares were
at 75p or 76p at December 31, and did not top 80p until mid-February. That
does not make a £60m gain. Mind you, if you work it out on what appears to
be the current issued capital of just over 113m shares, then a 55p price
rise would support a gain of £60m.Funny, though. Where it uses issued
capital elsewhere in the statistics, the boys choose a weighted average.
Oh, wait a minute. There was a rights issue of 6.74m shares in April
last. That raised a couple of million. Should we count that new money from
shareholders as a gain for them? Surely not. And how should we treat the
options granted to directors?
If you have read this far, perhaps you are screaming at the tedious,
nit-picking notion of it all. So you should be. But we are dealing here
with a public company, where things should be clear and correct. We should
know we are dealing with something objective, which goes beyond merely
presenting it in a fashion which makes things sound good for the sake of
it.
Hard to resist, by the way, pointing out that shareholder value has
fallen by close on £15m since mid-February, taking the current market
capitalisation. If the board wants to take credit - and perhaps they
should - for last year's share price rise, should they now be apologising
for this year's fall so far?
Tell that to the board of BT. Or Cable & Wireless. Or any one of
hundreds of the walking wounded. Imagine them starting their preliminary
announcement with the statement "Your board has wiped £5bn off shareholder
value."
Silly, isn't it? But I never started this. The Management Consulting
board and their advisers did, by putting this vague rise in value at the
top of the list of key points for last year.

"Profit before tax £20.0m (1999: loss £1.8m)"
That is key point number four in the preliminary announcement.
Naturally, when you get into the nitty-gritty, you realise that the group
realised an exceptional gain of £26m before tax from selling Proudfoot
Japan. Good stuff, but not something to present unadorned, with no
explanation - though that does emerge in a later key point. None of the
key points bothers to mention that, stripping out the one-off gain from
selling out of Japan would mean that there was actually a loss for the
year. Never mind. We understand. We know you mean . . . well, just what?

"Excluding investment spend of £7.9m on marketing and sales, training, new
management and infrastructure, underlying operating profit of £0.3m (1999:
loss of £3.6m)"
That is key point number five. An operating profit, eh? Pretty good.
Hard to find it in the detailed tables later in the statement if you look
to see what an operating profit actually means - what has to be taken off
before it becomes a conventional pre-tax profit.
And pretty breathtaking to see how they arrived at that £300,000
operating profit. They don't count spending on marketing and sales? Surely
that is part of the normal operating costs Hard to run a consultancy
company without that.
Can you really take off the money you spend on training? Most people
would consider that at the heart of any company. Especially if they are
meant to be management consultants. I'm sure it does matter that they know
what they are doing. Perhaps not, though.
And who knows what costs of new management and infrastructure take in?
What is it there that is not worth counting as a cost against profits? A
new tea trolley, perhaps. A bigger desk for the new boss. Whatever, it
sounds like the expenses of running a business.
Never mind, though, The new team wants shareholders to feel they are
making progress, somehow. And £300,000 profit is a £300,000 profit. Even
if it did not include the cost of goodwill amortisation, share scheme
charges, and the impact of acquisitions and disposals.

"FRS 14 earnings per share 18.8p (1999: loss 4.2p)"
That is another key point. And what a key point. Sounds pretty good.
With one mighty leap, the company goes from minus earnings to a pretty
hefty plus. But watch the fine print.
As usual, the basic earnings are calculated on the weighted average
number of shares outstanding during the year. Everybody does that. But it
means that the issued capital has risen since, so net attributable profits
need to be greater to stop earnings falling this year. Stop counting all
spending on tea trolleys at once.
Crucially, the 18.8p earnings figure includes the benefit of that
one-off gain from selling the business in Japan. That was exceptional by
anyone's standards, surely? So we are not talking here about normal
earnings from repeatable trading, which is what most people would consider
the proper measure of progress. The boys can only make £26m by selling out
of Japan once.
Never mind. That Japan-inflated earnings figure is the one the
managers count as worthy of inclusion in the key points. Bet they will not
use that as the comparative figure when they present earnings in the key
points next year.
It gets clearer in the notes, where there are four varieties of
earnings on display. Here you can find headline earnings, which are much
less flattering. They show, not a profit, but a loss. The headline
earnings loss has risen from 4.2p a share to 6.4p. There is also an
adjusted headline, with the loss at 5.5p a share against a loss of 3.5p a
share. This adjusted headline does not count the cost of the management
incentive plan.
A really stubborn kind of shareholder, the sort who does it by the
book, would conclude that the company actually fared worse, not better,
last year. Certainly did, if you confine your attentions to what most
would consider to be the proper reported earnings figure.

If you have got this far, reward yourself with a nice cup of tea. Or
something. Sorry if it seems pretty tedious stuff. It is pretty tedious.
But it is worth ploughing through in order to illustrate the muddle and
minefield even some of the simpler elements of company announcements have
become. And - save us - these are the figures from a management
consultancy company. Presumably the staff will be telling others around
the world how they should present their business.
Equally important, as my correspondent observed, is that financial
journalists might not get to grips with this properly. I know. I was
there. In a newspaper City office you have limited time to decide what to
write, and how to understand what you are writing about. It is easy to
grab at the key points, and go with them. Anyone doing that on this
Management Consulting announcement would be doing their readers no
favours.
In fact, I could find only one brief mention of these figures in the
financial press on the day after the announcement. That failed to address
any of the issues. Maybe everyone else took one brief glance, and gave up
on a busy day.
If there is a lesson for investors in this, it is that you do need to
look at the detailed announcements from companies. If you are accessing
them on the internet, read the full RNS version. Do not rely on the AFX
version. That is often fine and helpful. But it ignores the detail.
In these markets, perhaps, you do not need the detail. You just watch
the share price. That will tell you if the news was good or bad. Fine, if
you want to play it that way. But if you have any wish to understand
things a little more (you will never understand it all), read carefully,
and question the way your directors present the news.
As for Management Consulting, it may be worth pointing out that the new
team is reshaping the business with real vigour, and does appear to have
transformed the company for the good. But the company has been making
losses by normal standards, and is capitalised at over £80m.
And shareholders must be careful about presentation.
The top boys are all heavily incentivised with share options. They want
the share price higher. That is good, up to a point. You want them to do
well for themselves, and to do well for you in the process. If, though, it
prompts them to over-egg the pudding, you may wish to proceed with
caution. You can sell your shares, while they are locked into the
incentive plan.
If you think they are pushing things too hard, there is nothing to stop
you from stepping aside, selling the shares, and watching for a while.
Good luck.

[thomas10] 19/3/2001 14:46

just had a email from Mike Walters does not look good so you may get your wish. I am out today

[spooky] 19/3/2001 14:43

I have held the stock and believe the shares will ultimately go substantially higher,but i do not currently hold any shares.Thus i regard my opinion as unbiased.

The article in question is pathetic,it is factually correct but we are all big boys and i'm sure we can figure out for ourselves the underlying trading position of the company.Anyone who cannot should not be investing in the first place.

In the current market this article will have an impact far beyond it's real value,but perhaps that is the purpose of the article in the first place.Perhaps his cronies are short,or perhaps someone wants to buy them at lower levels.Shame on you Mr. Walters you should have something better to do with your time.

For myself i am delighted,i do not own the shares and i want buy them back,push them low enough and you will make me a very happy man :-)

[goodfella] 19/3/2001 14:40

Goldman Sachs just downgraded all Staffing stocks, no doubt consultancy will be next.