Public Recruitment Share Discussion Threads

[amberspyglass] 07/4/2006 07:57

a dead rotten elephant is a dead rotten elephant however big it is. only of use to vultures and the like. now is this one playing dead?

[empirestate] 06/4/2006 17:10

thx kimboy for the post, i hope it is not one of thoses cases where it is too good to be true in terms of ´´cheap´´ relative to other sector players. personally holding at 39.5 and very tepmted to top up. this one has been suffering from overhang for some time now and the lack of buyers to shift it has not helped.

[pictureframe] 04/4/2006 14:36

with turnover of £80 million and a marketcap of just £8 million this is sure to be taken out even with the debt its a bargain

[tole] 04/4/2006 14:14

A few buyers returning today after that 375k X trade earlier.

[sleepy] 04/4/2006 09:42

Kimboy,

Thank you for your well-researched post.

Have you included all the earn-out liabilities or could there be more in 2007 and beyond?

Regards,

Sleepy

[amberspyglass] 04/4/2006 07:47

at this rate they'll get taken over by another recruitment business, who could offer a premium of say 50%, and there would be a lot of takers.

[njp] 04/4/2006 02:53

Kimboy

Good post, and a fair assessment of the worst case scenario - p/e of under 4 and £15m debt - which pretty well coincides with my view. Happy to wait for the inevitable correction and to add at current levels as funds permit. Recruitment isn't a favoured sector for me, but these are so cheap it seems a crime not to.

I do find myself wondering what Granville Baird's thoughts are on the precipitous drop in November. Indeed, given the outlook statement and how the finals have turned out, one wonders why the trading statement was so negative in tone.

[kimboy2] 03/4/2006 23:07

Had a word with the company. The trading statement on the website is current.

"Trading in the current year is ahead of budget, margins are robust and demand in education, health and social care are strong."

They didn't seem to think that this said any more than the finals outlook statement and just confirmed that they were making progress in 2006.

The fact that they say they are ahead of budget would suggest that they are atleast on track to meet the brokers forecast of £5.4m PBT.

Clearly the fact that there is a discussion going on with a bank regarding these earn outs is weighing heavily on the share price at the moment. The effects on the company financials if things go badly (no bank loan) or well (a bank loan) are;

1. No bank loan
Kellis are owed £3.9m convertible at 37.5p which is 10.4m shares.
Action First are owed £0.5m, at 30p say, is 1.666m shares.
JCJ have already been paid £0.5m but are owed another £0.9m in December 2006 which would be , at 30p, another 3m shares.

There are alrady 28.9m shares in issue these loan notes would make it 43.966m shares. If the £5.4m forecast PBT was achieved this would mean an EPS of 8.5p.

The net debt level would be the £18.804m at 31/12/05 minus the cash flow for the year which may be £3.8m which would leave net debt at £15m.

2. Bank Loan
I believe the company are trying to raise £3m to settle the first Kellis payment of £2m and the payments of £0.5m to Action First and JCJ. I think they believe that cash flow will pay the £1.9m Kellis earn out at the end of July and the £0.9m earn out for JCJ at the end of December.

In this situation the £5.4m PBT will produce about an EPS of 13p.

The net debt would be £18.804 + £3.9 (Kellis)+ £0.9m (JCJ) + £0.5m (Action First) = £24.104. If the cash flow is £3.8 the year end figure will be £20.3m.


The problem has been one of lower share price creating greater dilution going into a spiral which has been impossible to stop. It seems to me a worst case scenario is for a P/E of under 4 and debt of £15m makes the shares very cheap.

A comparable that produced results the other day is Healthcare Locums (HLO). Their figures were:

T/O....£43.9m
PBT....£1.628m
Debt...£10.9m
MktCap.£36.4m
P/E....8.9 (2006 forecast EPS)

[amberspyglass] 03/4/2006 14:56

volvo... if you like it tell us why? i like undervalued shares where the reason for the undervalue is market sentiment.

[Abuse team] 03/4/2006 14:38

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[Abuse team] 03/4/2006 14:37

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[volvo] 03/4/2006 14:37

I like this share and am tempted at this price but there is something going on behind the scenes here with a fund raising taking place at probably 25p or something that lead to loss of value to shareholders.

[cloudfall] 03/4/2006 13:18

The lack of news or any other effort in stopping this slide - all stinks a bit to me. I wonder whether anyone will take a bet that PRG Directors are looking to do a MBO at some point in the near future. Only reason I can think of why the Directors are not managing news more effectively to maintain interest in the stock.

[njp] 03/4/2006 12:46

You need to give 'em a bit more than 5 minutes, cloudfall.

This won't move until people hear something about the debt restructuring.

[cloudfall] 03/4/2006 12:43

hehehe clearly not ;-)

[cloudfall] 03/4/2006 10:33

I wonder if this lot will be able to stimulate some action on these shares!

[rivaldo] 03/4/2006 07:40

Now this IS good news - Bridgewell are about the most respected and active of the new breed of brokers. They wouldn't have taken on PUG imo without the expectation of decent financing news soon...



"Public Recruitment Group PLC (the 'Company'), the public sector recruitment and services group specialising in the education, healthcare and social work
sectors, announces the appointment of Bridgewell Securities Limited as nominated adviser and broker to the Company with immediate effect."

[david77] 28/3/2006 17:15

200,000 T trade @ 33p = mid price
150,000 sell @ 32.25

[sleepy] 27/3/2006 11:04

This share may be fantastic value but has anyone tried to quantify the potential liabilities? Are there further earn-out payments/liabilities? Will they need to raise equity as part of the fundraising?

[oldmaid] 24/3/2006 13:06

yep certainly a lot of ocmpanies say we know of no reason for the move in share price if there is no reason.

[kimboy2] 24/3/2006 09:50

Yes it certainly doesn't add up. The fact is that it is forecast to produce PBT of over £5m next year, supported by a fairly bullish statement in the finals, yet is valued at under £10m.

The obvious ones to takeover would be Granville Baird who already own 44% and must be smarting about paying so much in September. At present prices the rest of the company would cost a bit over £5m and there is £2m in cash on the balance sheet.

The negotiations with the banks regarding the pay offs is clearly a drag. However if the statement on the website is true then it should be released as an RNS and I think that would have a significant effect on a ompany with a prospective P/E of about 2.5.

I shall see if I can get any sense from the company.

[cloudfall] 24/3/2006 09:24

Hmmm the earlier post from amber has now gone, but in any case - I also find it very odd that a company which has a lot to sing about, isn't doing so. It is normal for public companies to address the concerns of their shareholders when such a massive drop in value accurs, irrespective of the reason. It would not take much from a good financial PR company to get this moving in the right direction, so I find it it surprising that it isn't being done. I have seen this type of thing happen in a couple of other companies which 'co-incidentally' have then had MBO attempts. Maybe I am just getting paranoid!

[kimboy2] 24/3/2006 08:38

Hi amber
How do you know about JCJ?