Mice Group Share Discussion Threads

[boadicea] 22/11/2006 08:26

The share price this morning wasn't going anywhere nice unless forecasts were well beaten. They haven't been and, as commented above, it is still 'Jam tomorrow'.
However, the results are not bad. The improvement in N America is encouraging while the increase in turnover exceeds the increase in trade debtors implying an improvement in credit control. The average payment cycle appears to have reduced by about 5 days.
The statements about options for reducing borrowing are vague. The implication of a possible placing will worry the market. If disposals of non-core businesses were contemplated, why not say so?

I am happy to wait for another 18 months if that is likely to see the debt problem resolved. The company appears to have adequate institutional backing. That will certainly be crucial if the demands of increasing turnover require a capital injection. (Imho/dyor etc.)

[stemis] 22/11/2006 08:26

Price is well down and no surprise.

What a truly disappointing set of results. Dress it up as you like but underlying profits are down and cashflow is negative.

jelfsie is right. This is exactly what MICE was supposed to be getting away from - empty turnover growth, with no benefit in either profit or cash. We are left with clinging to the hope that this is a period of investment in preparation for everything to come right (investment in working capital and investment in staff and systems and.....er some other, unspecified, one off costs). Debt is now only £7M less than before the rescue rights, despite raising £25M.

What also annoys me is the attempt to dress it all up as a good performance.

Normalised Basic Earnings per Share up 38% to 1.13p (1H06:0.82p pre exceptional costs)

Since when did "Foreign exchange on exiting hedging arrangements" become a normal part of the business? They leave it in the current year because otherwise normalised earnings would show a fall from 0.82p to 0.62p.

What is reassuring is that I don't think that institutions who put up £25M at 34p 18 months ago are going to put up with this rubbish much longer and if management don't deliver by the year end then we could see MICE put into play. Until either of these become apparent I'm afraid this is likely to be dead money.

[rivaldo] 22/11/2006 08:18

Must admit to having reassessed and sold at the open, mainly because my lot were ISA'd so wanted to protect my profits. The figures do look fine overall to me, just not spectacular, but it could be a case of going nowhere for a long time and maybe drifting, especially given MEG's tendency to volatility. A shame - I may well be back.

[substp] 22/11/2006 08:11

Business may look better in the short term but I would raise an eyebrow to the longer as outside influences may be a problem :

[scburbs] 22/11/2006 08:07

Jelfsie, Debt is marginally under brokers forecast. The markdown this morning is the penalty for woolly statements IMO.

[scorpionwinger] 22/11/2006 08:06

The market would appear to agree with us cynics......the line about needing to consider options with regard to the debt is particularly spooky - rights issue? Dispose of an underperforming business with declining margins........?

SELL SELL SELL

[jelfsie] 22/11/2006 08:02

Debt has got out of hand again. A worrying development. This, coupled with declining margins (whatever reason is given) gives me cause for concern. These were supposed to be the results where everything was going to be sorted out. Instead, MICE's twin demons rear their heads again. Avoid IMHO. EPS of 5p from Iandippie. Dream on. Wait for the broker downgrades!.

[spooky] 22/11/2006 08:00

You guys are a lot more upbeat than i would be.I had better go back and read the statement again to see why my overall picture was so negative,perhaps i missed something.

[scburbs] 22/11/2006 07:40

UK division: Turnover up 26%, operating profit up 25%
International division: Turnover down 2%, operating profit flat
North American division: Turnover up 38%, operating profit £1m from £0.2m loss

However, debt is up £6m and the operating profit gains above have been eaten by an "increase in central costs, largely due to investment in staff and systems and certain one-off items of expenditure."

These costs appear to be being put in place to support future growth and with turnover growing strongly together with the new opportunities arising in the Middle East this seems reasonable.

Debt position in H1 is in line with EVO forecasts, however H2 statement is unclear on the primary culprit the UK division:

"The Division has a seasonally strong pipeline of activity for Q3 and we expect working capital to continue to increase to support this, with a cash inflow expected in Q4, historically the Division's quietest period."

"the Board remains committed to delivering on the financial objectives
set out at the time of the Preliminary Results in May 2006 and is actively
pursuing a number of options for restoring net debt to a more appropriate level."

Hopefully we should see some disposals of non-core businesses coming through on the cash flow front. That last statement is far to woolly for my liking!

[chef] 22/11/2006 07:37

I like the profit etc but hope margin and debt still get sorted. They have turned the business around now so next job is debt which they state is high on the agenda. Overall it is as you said mate, steady as she goes.

[scorpionwinger] 22/11/2006 07:36

Hmmm - feels like more jam tomorrow, which has been the promise for as long as I can remember. Do not like the working capital and debt especially with rising interest rates - this was supposed to be under control a year ago. Time to take profits and move to fresh pastures

[rivaldo] 22/11/2006 07:35

Tell us what you think then Chef!

Looks good to me on first reading. This is a blue chip international business being nicely turned around in a slow and steady manner.

I particularly like the big turnaround to a £1m profit in the USA - this has the potential to really drive profits forward.

The working capital/investment side is necessary, but a shame. What were EVO's etc expectations?

Nice £1.3m hedging gain too which flatters the figures somewhat.

To quote the Raconteurs, steady as she goes. Should be good for a continued re-rating imo, on first look as I say.

[iandippie] 22/11/2006 07:30

If they match last year's H2 eps, then eps for 2007 will come in at around 5. forward pe of 8. Of course, given the fact that H1 eps this year (1.13) is 40% of last year (0.82), I suspect they will be looking to do better than that. Perhaps forward eps of 7, or even 6?

On the other hand, margins have decreased and net debt increased.

However, when it comes to reading accounts, my 4 yr old daughter could do a better job than me.

[verger] 22/11/2006 07:29

Report peppered with words such as solid, excellent, significant, exciting.

[chef] 22/11/2006 07:24

So what do people think then?

[fadilz] 21/11/2006 17:58

scburbs, like you I have built up a stake over the past 6-12 months, in the expectation of a re-rating, and I too reckon that all they need to do is confirm that the recovery plan is on track. Sounds like you would be happy with a £6m cash outflow for the reasons given, with a promise of balance by year end.

Are there any other views on what would make an acceptable set of results? A number of people have expressed concerns about cash flow and borrowing.

[fadilz] 21/11/2006 17:54

Verger, I agree with you that it is strange that large trades (500k+) have taken place over past 6 months, without affecting the price, when on most days, 100k is enough to move the price by about 1p.

My guess is that there are really two markets, one between large (institutional) investors, who agree a trade and then execute it through the normal channels at or near the mid-price - they have to operate like this because there is not enough liquidity to support their transactions in any other way. The other market is when the likes of you or I trade, and here the normal rules of supply/demand apply.

The encouraging thing is that this institutional price has been steadily rising, reaching 41p yesterday.

If anyone has another angle on this, I would love to hear it. I'd also love to have an explanation of what the different trade types signify. For example the 700k at the end of today is described as VW (Volume weighted average price), which I suppose means that it was executed in separate chunks (presumably the buys we saw reported during the day)... but what lies behind that? Has someone approached a broker saying sell this in whatever way you can, but not below x price? If so how is it that the sale declaration can be delayed to end of the day in this way? If anyone can recommend some reading matter to explain the mechanics of dealing at this level I'd be really grateful.

[verger] 21/11/2006 16:46

What a strange share! So many big bundles of stock have been moved around recently, with no immediate effect on share price Will results tomorrow be accompanied by a rights issue?

[scburbs] 21/11/2006 12:33

All buys today except for a 569 sell. The 25,000 shown as a sell is wrong, it is one my buys. Looks like quite a few people are topping up. Solid and sustainable as predicted is exactly what I want to see tomorrow as this should lead to a move to a more appropriate rating.

[scburbs] 21/11/2006 11:07

I have made a couple of top ups for tomorrow's results (2*25k@40.9p). I am expecting a solid set of results with a strong outlook statement for H2.

[mistertibbs] 20/11/2006 19:15

The last paragraph in the trading update clearly talks up the year end as being steady sustainable progress therefore suggest H1 will simply show much the same. Maybe slightly less so as it is only half time.

[rivaldo] 20/11/2006 11:19

Not bad at all - AXA tend to go up and down a bit, but this is their largest holding to date.

Results on Wednesday - good to see increased institutional buying and now a tick up...

[scburbs] 20/11/2006 10:29

Come on AXA, don't let HSBC have 0.93% more than you, buy another few million. This top up is c.1.2m shares in 10 days.

Mice Group PLC
20 November 2006

MICE Group Plc ('the Company')

Holding in Company

MICE Group Plc, the international marketing services group, has today been
advised by AXA Investment Managers UK Ltd on behalf of AXA SA and its Group
Companies that it has an interest in 24,667,944 ordinary shares of 4p each in
the Company representing 14.06% of the issued share capital of the Company.

10 November 2006

MICE Group Plc, the international marketing services group, has today been
advised by AXA Investment Managers UK Ltd on behalf of AXA SA and its Group
Companies that it has an interest in 23,486,244 ordinary shares of 4p each in
the Company representing 13.39% of the issued share capital of the Company.

[scburbs] 20/11/2006 10:11

TTNY,

For reference this is what EVO had after the trading statement and a discussion with management.

FY PBT £9.8m (H1 £2.3m) last year £8.8m (£1.9m)
Cash outflow H1 £6m taking debt to £50m reducing back to £44m for year end.

The cash outflow statement is the one to look at closely as management clearly indicated to EVO that there was an increased H1 working capital requirement in the UK linked to increased sourcing from Asia (i.e. cheaper cost, but earlier payment date) so we shouldn't be expecting too much from H1 cashflow.