Public Recruitment Share Discussion Threads

[njp] 27/4/2006 08:39

As you rightly say, SteMis, Barclays would have seen the very latest trading data and presumably must have been satisfied. Still, as recently as March the outlook was very positive. Hopefully the AGM will banish any remaining doubts the market may have.

[david77] 27/4/2006 08:33

"David77
Are you still going to the AGM?" Yes - please tell me what you want to know.

[pictureframe] 27/4/2006 08:24

eps of 13p and the share price is just 42p ? That cant be right can it?

[kimboy2] 27/4/2006 08:21

Rivaldo
This announcement has changed the EPS calculation. On the forecast profit level of last November, £5.4m, the EPS is 13p.

[pictureframe] 27/4/2006 08:20

Well imho there is plenty of room for the the share price to rise, the market cap is still only £9 million !

[rivaldo] 27/4/2006 08:18

NJP sums it up nicely and succinctly. We know from recent RNS's (and an even better outlook on the web site) that PUG is trading well, and now we can surmise that the banks believe PUG to be viable too.

On 10.6p EPS this year and 12p EPS next year PUG is on a forward P/E of 3.3...

[stemis] 27/4/2006 08:17

Excellent news.

At 31.12.05 net debt was £18.8M. A further £2.5M has now been paid as earn outs, making proforma net debt of £21.3M.

£16.5M of this is funded through term loans, leaving £4.8M to be covered by cashflow since 31.12.05, invoice discounting (up to £12.5M) and working capital financing of £1.5M.

What everyone needs to bear in mind is that not all the £12M is available. Debtors at 31.12.05 were £11.9M of which some will be prepayments. If trade debtors were, say, £10M and the cover is, say, 1.5 then they could draw down £6.67M of invoice discounting. The £12M is to give them room to finance the increase in debtors arising from future increases in turnover.

What is particularly good however is that Barclays will have had sight of latest trading performance v budget (certainly for Q1) and forecasts. They were obviously very comfortable with them otherwise they would not have lent £16.5M on what is effectively an unsecured basis (okay they will have a fixed and floating charge, but other than the debtors, what else does PRG have as security in a receivership?).

Almost as good as a trading update. All we need now is some director buying (presumably they could not until this announcement was made).

SteMiS
[Hoping price won't go tooooo far so I can top up]

[kimboy2] 27/4/2006 08:17

David77
Are you still going to the AGM? If so it may be an idea for the board to think of a few relevant questions to be asked.

[pictureframe] 27/4/2006 08:08

All the positive f/mentals were being wiped out by the fear of funding issues, now this has been removed where will the share price go? Look at the chart to see how far this has fallen.

Anyway enough from me...btw I added another 7500 shares

[tole] 27/4/2006 08:06

Yes agree with NJP - maybe holding a little news back for the AGM too...the beginning of some positive newsflow at last.

I take it that Bridgewell havent released anything sofar - so still expecting a bullish broker update to come as well.

[pictureframe] 27/4/2006 08:05

this should at least double over the next few weeks imho. No share dilution, markets happy that they now have funding to pay earnouts. Looking very very good now

[njp] 27/4/2006 07:55

Results were recent enough (March) and outlook covered then (very positive). Working capital facilities is just plain good sense - company is growing. Terms of the loan - don't see any reason to be suspicious here; makes sense for both parties to ensure that they aren't too onerous.

I'm happy with it. Wouldn't like to see them madly discounting invoices, though.

[babysitter] 27/4/2006 07:46

why no mention of terms for the loan?
why no update on trading?
why need for £1.5m working capital if trading improving?

out at the high 30's looking to get back in subject to these questions.

[rivaldo] 27/4/2006 07:12

Excellent stuff - just what the market's been waiting for:


"New Banking Arrangements

Public Recruitment Group PLC ('PRG'), the public sector recruitment and services group specialising in the education, healthcare and social work sectors, announces details of its new banking arrangements.

Barclays Bank PLC is to replace Fortis Bank S.A./N.V. with immediate effect.

The new facility comprises Term Loans of £16.5m, Invoice Discounting of up to a
maximum of £12m and a revolving working capital facility of £1.5m; total £30m.

The increase in the overall facility will allow outstanding earn out payments to the vendors of Kellis Group Limited and JCJ Limited to be settled in cash and loan notes rather than in PRG shares.

Commenting on the above arrangements, Darren McLaney, Chief Executive said:

'The appointment of new bankers is an important step for PRG. It allows us the
option of settling all currently outstanding earn outs in a combination of cash
and loan notes, thereby avoiding a heavy dilution of earnings for the existing
shareholders of PRG. The facilities that we have agreed with Barclays will be
sufficient to fully support our future growth plans'."

[njp] 26/4/2006 10:45

Hard to see anything other than substantial upside in this if trading is going as well as it appears to be. Some good analysis, kimboy.

[tole] 26/4/2006 10:30

Anybody know if anything has been released yet by bridgewell since thet took over as broker? Suppose if not they might be waiting until AGM too

[cloudfall] 26/4/2006 08:49

As amberspyglass has said (and I think I have mentioned on here before) I think the board have ulterior motives for letting this share languish at these levels, possibly management buy-out stuff. It wouldn't take a lot of news flow, just basic PR to get this moving upwards and it's ridiculous to me that the company have not been doing this. A company is supposed to act in the interests of all it's shareholders, unless there is some other clever game plan it doesn't really look like the board of this company have been doing so. They should have addressed people's concerns earlier! The longer a share sits down in the doldrums the harder it can be to shift as an increasing "queue" of people get nervy and make the decision to sell when the opportunity arises, the number of sellers naturally increases and becomes more difficult to clear and for longer. Yeah yeah, market forces should eventually win out - but it might take some time unless the board themselves want this to happen. Don't get me wrong, I think this share is seriously undervalued and that's exactly why the lack of PR or reassuring comment from the company is very odd. Lets see what happens the next few days.

[kimboy2] 26/4/2006 08:36

The first Kellis date is this Friday that they have to come up with £2m by. If there is no announcement by then I presume it will have been paid otherwise they would need to announce the issue of equity.

Anyway its the AGM on the 3rd May so I presume everting will be clarified then if not sooner. My wishlist is;

1. Bank loan agreed for payouts. This will improve potential 2006 EPS, based on £5.4m profit, from 9.5p for 2006 to 13p
2. Good trading update mentioning the organic growth, strong demand and the robust margins as on the website.
3. Increased forecast in brokers report. I suspect Kellis is trading at least £1m/pa better than in the forecast on the 4th November and the rest of the group seems to have improved since then. I would hope for a forecast of £6.5m which would mean an EPS, assuming earn outs paid in cash, of 15.7p

If I was being really greedy I would also say;
4. Some director buying.

It seems ridiculous to imagine a share producing potentially 15p EPS being available for 32p.

It might be yet. We shall find out on the 3rd May no doubt but on the evidence it seems little downside and a lot of potential upside.

[kimboy2] 24/4/2006 08:02

You can fool some of the people some of the time...

[amberspyglass] 23/4/2006 22:28

kimboy. .you seem to know your stuff. which other companies do you dabble in?

[kimboy2] 23/4/2006 21:54

I think there is litle doubt that the brokers estimate understates the present situation. Kellis I think is doing extremely well. The acquisition RNS was announced on September 6th 2005;



It said that the expected initial consideration was £9.5m. This made up of
1.£6.5m cash
2.£0.409k in shares
3.A deferred consideration of £1m paid in cash on 31/12/05
4. An earn out based on performance to 31/10/06

The first 3 add up to £7.9m so they must have been expecting an earnout of £1.6m. In actual fact it turned out to be £3.9m. Ironically this success has created a problem now because they need an additional loan to pay the earn out.

As they bought it in September and had the figures for the nine months to 31/7/05 that would suggest something spectacular happened in the last quarter.

Unfortunately we haven't been given the earn out calculation so cannot calculate the exact amount of profit.

[amberspyglass] 23/4/2006 19:45

i hope that sense will prevail. this was a feather in the cap of the GB, now its an embarassment and will be affecting their credibility. "give in" to management and get share price moving all imho

[stemis] 23/4/2006 16:52

Performance in 2005, pre exceptional and goodwill was H1 H2 Total
Turnover 41,164 39,060 80,224
EBIT 2,842 2,621 5,463
Interest -594 -506 -1,100
PBT 2,248 2,115 4,363PRG announced on 4 November that the PBT would be £3.9M for the year, i.e £1,652,000 for H2. The actual result for H2 was 28% better, which means (even allowing for a certain amount of conservatism in the forecast) that they must have had a very strong last quarter. By the sounds of it, that has carried forward into Q1 2006. H1 06 will also benefit from 6 months of Kellis (H2 05 included only 4 months).

If (and it is an if) they can return performance to the levels of H1 2005, then the acquisitions would add about £2-3M EBIT to an underlying annualised EBIT of £5.7M. Knock off £1.5M for interest and you have PBT of about £6.2-7.2M. Clearly the brokers forecast of £5.4M is some way off that.

Plenty to play for.

[kimboy2] 23/4/2006 12:11

amberspyglass
I understand what you are saying and I think it always pays to be highly suspicious of mangement.

However in this situation 44.4% of the shares are owned by Granville Baird, a private equity group. They also have a representative on the board.

By my calculations they have invested £10.8m in PUG since Oct 2002.

The company is presently worth £8.8m

£4.6m of this was invested last September at 133.5p.

I cannot see them agreeing to a rebasing of management options and I think they would point to the fact that they presently have 2015 to run to. I am sure they must be very unhappy with the share price movement and have perhaps considered bidding for the whole lot.

They are also prevented from topping up at these levels by Takeover Panel rules so it is either the whole lot or no more.

It wouldn't surprise me to see mangement buying once the AGM is out the way. That may explain the poor PR.