Public Recruitment Share Discussion Threads

[njp] 17/9/2006 08:53

Kimboy

Your assumptions sound very reasonable, so I'd expect my figures - when I get a chance to have a look - to more or less coincide with yours. On that basis, and of course provided the outlook doesn't look grimmer, the share price should move upwards in due course.

[kimboy2] 17/9/2006 08:37

This is my forecast for Thursday FWIW (not a lot probably).

Turnover........51.24
GP..............11.12

GP%age..........21.70%

Admin...........7.12

Net fee%........36%

Op BAE..........4

int.............0.84

PBT.............3.16 (not including arrangement fee)
Tax.............0.948

PAT.............2.212

Net Debt........23.238

Shares..........28.9

EPS.............7.6p

Assumptions
1. Turnover increased 5% on existing and acquisition.
2. GP margin remained the same as second half. H1/05 was higher then H2/05 on existing businesses but acquisitions margin was much higher in H2. I expect fall in Health and Social margins to be pulled up by Education and full effect of acquisitions.
3. Admin is difficult. The pro rata rate from the H2/05 would indicate about £6m which would suggest a very high net fee conversion of 45%. So I have compromised at 7.12m admin and net fee at 36%.
4. Interest at 7% on 24m.
5. Net debt I have taken £18.8m + £5.9m earnouts - cash flow. £2.9m of the earnouts aren't paid till the second half though.
6. Cash flow I have calculated as £2.212 - £0.45 arrangement fee - £0.3 working capital.

Let's hope it is something like this. The only real uncertainty from the above is the gross profit percentage as has already been mentioned. It would seem to me that if net fee income has held up then so will gross margin and gross profit due to the relative inflexibility of admin costs in the short term.

What do I know though.

[njp] 15/9/2006 22:52

Kimboy

Admin costs, being around 68% of gross margin, wouldn't need to fall as much as you suggest, but otherwise I don't disagree with your comments. It just struck me that the statement was peculiarly circumspect; if EBITA was up, why didn't they just say so.

Whatever the result, the p/e is going to look extraordinarily low at the current share price

[sjulstad] 15/9/2006 16:21

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[kimboy2] 15/9/2006 16:06

NJP
I think it unlikely that profits are going to be down given what we have been told.

Net fee income is normalised EBITA/Gross profit. In the interims last year that ratio was 33.5% and we know from the last trading statement that it has improved since then.

If you are saying that pressure on gross profit has reduced EBITA then that must mean that admin costs have fallen by an even larger amount to increase the ratio.

I don't think this is likely given that there has been organic growth in turnover over 2005 levels.

The most obvious explanation is that gross profit has gone up and admin by not as much resulting in an increase in EBITA and net fee ratio.

The overall level of profitability will be affected by the financing fee in this half, but I expect they will take that as an exceptional.

[kimboy2] 15/9/2006 10:21

One thing I hadn't realised was that Baird's had been taken over by Bridgewell. This was done on 18/10/05 which was a fortnight after the profit warning after which the share price fell out of bed.

This may make the calculations about a potential buyout somewhat different.

[cloudfall] 14/9/2006 16:34

It takes nothing to seriously impact the share price on a small cap company like this. I suspect that many of the people on here have enough holding that if they were to make a serious attempt to ditch it the value of the company could drop by another 50% in a day. I have seen low-traded AIM companies with a market cap of £5m, go to £10m in a week, up to £20m, back down to £10m in a few days. Small buys and sells can greatly impact the share price on a company like this, it's just how it is. The fact is sometimes people need or want to sell some shares, they have use of the funds somewhere else. It's not necessarily anything to do with the underlying economics of the company in which they're selling. When it looks like the price is dropping the sell impetus increases a bit and people think "I' might as well flog those 10k shares now". It doesn't matter if they think the share price might double over the next few months if they have need of the cash elsewhere. Anyway, we all know this. I'll shut up.

[kimboy2] 14/9/2006 16:25

I think they draw attention to the conversion from net income because the gross profit figure is pretty stable.

Spoke to a director today who knew nothing of any court case.

Bridgewells will also be doing a note after the interims.

I am not sure you can read back any information from the behaviour of the share price in this share.

[stemis] 14/9/2006 16:00

The trading statement said turnover and conversion from net income to net profit were both up. That effectively means that sales are up, overheads are down as a % of sales but that the quantum of net profit is probably down (cos they'd have said if it was up) due to pressure on gross margin.

I've no idea if that's true, but it would be pretty misleading if that's the case. To draw attention to conversion from net income to net profit being up, whilst profitability has actually deteriorated, would be pretty close in my book to intentionally misleading. FWIW I made this point in an email to Nick Williams. Personally I suspect that this isn't the case but expect that PUG will announce a deterioration in trading conditions since the half year. It is hard to believe that the share price has fallen by 25% in 2 weeks just because of nerves [having said that small companies can have their share price wrecked just through one determined seller].

[njp] 14/9/2006 11:27

Looks to me like a case of nerves here. Purely on the numbers, PUG looks to be way oversold. Last year's adjusted eps was 12.5p. This year is likely to be down on that, but could be a long way down and still the share price would be dirt cheap.

The trading statement said turnover and conversion from net income to net profit were both up. That effectively means that sales are up, overheads are down as a % of sales but that the quantum of net profit is probably down (cos they'd have said if it was up) due to pressure on gross margin. So, how far down are profits? Well, the fact that they said H1 was encouraging gives some comfort. I can't see a collapse here. Say we're down 20% to 10p eps for the current year, so an interim result of around 5p (I forget how seasonal business is). That'd still give a p/e of 3.5, too low even considering the debt.

If there's truth in the rumour of a court case, that won't help sentiment, but I find it hard to contemplate anything other than a short term dampener on the SP, if only because we're already at rock bottom prices.

[mjcrockett] 14/9/2006 11:06

Possibly there are problems here. However, I expect there will a number of people invested in SBT and other gambling stocks with some nasty margin calls to satisfy - just might be a factor here.

MJ

[tiltonboy] 14/9/2006 10:54

Well, Somebody's desperate to take well below the bid to sell 59K. It is a worry to see the share price falling ahead of the figures, and trust there is no substance to the rumour of yesterday.

tiltonboy

[mjcrockett] 13/9/2006 18:38

Amber, you are not looking for a low entry point are you?

Has anyone contacted the company about this supposed rumour?

MJ

[amberspyglass] 13/9/2006 18:06

i wonder if the results are being delayed pending this alleged court case? clearly we are past early september now.

[kimboy2] 12/9/2006 17:55

I would have thought if there were going to be a significant court case then it would have been announced before now. The piddling trades would tend to support this.

Furthermore any misuse of data would be ferociously difficult to prove IMV, even if it were true.

I think it is just drifting before results.

[amberspyglass] 12/9/2006 17:00

it might be more to do with a court case, than 10,000 sells.... there is a rumour going around that one of their businesses has been utilising candidate and/or client data which is alleged not belong to them but to one of their competitors.

[pictureframe] 12/9/2006 13:25

a couple of 10,000 sells and the prices comes down 10%. Waiting to top up if we get to 37p to buy

[mjcrockett] 05/9/2006 11:04

Early September is late this year!

MJ

[tiltonboy] 05/9/2006 10:59

Figures 21st September, just had it confirmed.

tiltonboy

[kimboy2] 05/9/2006 09:24

My information only came from Waterhouse which said that the 5th was a confimed date, though I haven't seen it anywhere else.

[mjcrockett] 05/9/2006 09:18

Kimboy2 seemed pretty confident it would be the 5th - and it could still be.

MJ

[stemis] 05/9/2006 08:55

I'm not sure where that came from. The trading statement said early September.

[cloudfall] 05/9/2006 08:49

That's what people are reckoning.