Public Recruitment Share Discussion Threads

[pictureframe] 07/3/2006 09:05

agree with you Rivaldo, once confirmation recd we should see a big rise imho.

Cant see any reason they would not get decent terms since they are profit making and forward earning statements are bullish.

[rivaldo] 06/3/2006 20:24

As stated above, no doubt a few scalpers have had to sell their T trades so nowt to worry about. When PUG issue an RNS concluding the loan scenario then that should spark a big rise imho.

[cloudfall] 06/3/2006 17:36

Bit of a dismal end for the day! :-(

[empirestate] 06/3/2006 15:52

personally happy to stay around here for a few months as an investment rather
than a short term punt.

[pictureframe] 06/3/2006 15:32

Agreed a few T traders who no doubt though it would double in a day are getting out. Just come back in 3-4 months, thinks we will be happy with the result

[empirestate] 06/3/2006 15:30

a few t10 out

[empirestate] 05/3/2006 21:29

it could be a few weeks before we see a clearance of the seller here, worth holding on though

[amberspyglass] 03/3/2006 15:28

big thing for this is when the takeover approach is made..
no 1 in teachers
no 2 in doctors
no 2 in social workers..
Some big boy is gonna come knocking

Then will be left with a cash shell

[kimboy2] 03/3/2006 11:17

I notice that Oriel are forecasting £6.4m for 2007 and an EPS of 12p. On a fully taxed basis, by my calculation, they are calculating the number of shares inissue at 37.3m.

If they can sort out the bank facility and keep the share issue at the present 28.9m this would provide an immediate upgrade to 15p for 2007. If you also factor in the better than expected 2005 outturn and the more postive outlook than when the forecast was made on 4th November, after the warning, then there may well be a significant upgrade in this forecast.

[wjccghcc] 03/3/2006 08:13

I suspect upgrades will wait until it's clear whether they're redeeming the loan notes for cash or shares.

[pictureframe] 03/3/2006 08:10

be interesting to see if the director, institutions buy more shares today or next week. Also if we get any broker upgrades

[tole] 02/3/2006 20:42

Have to say - I noticed you pull this one up a few weeks back, and I used to follow PUG a while back and actually thought it looked reasonable value back then!!. Saw it fall the way down towards the end of last year, and was actually almost tempted a few times then. Will admit to following quite a few recruiters in my portfolio - large holding in STAF, funnily enough, in reference to the post above. Though will definately put my hands up that you were braver than me getting back in pre-results. But on having another look today I had to say a great call and it definately looks a good recovery play at these levels. Looking forward i'd be amazed if the market doesnt see the drop was drastically overcooked...

[rivaldo] 02/3/2006 20:25

Aw shucks Tole :o)) I see you get the UK-Analyst round-up too - that should attract a few people's attention tonight on a historic P/E of 3.4.

[tole] 02/3/2006 18:52

Noticed the nice rise here today - looks a good recovery play.
Admittedly a good call rivaldo, since I see you bought in a few weeks back :)

The Stock Market Report for Thursday March 2nd from UK-Analyst.com

Shares in Public Recruitment were near the top of the class after the specialist recruiter of teachers had a bumper year. Its shares rose 4p top 42p. In the 12-month period to December 31st, turnover rose 49% to 80.2 million pounds and pre-tax profits came in at 1.699 million pounds compared with 853,000 pounds in 2004. Basic earnings per share were flat at 2.6p, but adjusted earnings per share rose to 12.5p from 7.7p in 2004. The company was upbeat on its outlook ands said it expected to make further progress in the current year.

[wjccghcc] 02/3/2006 16:08

Hi Kimboy,

I don't think the loan notes are in the net debt figure since they were issued after the year end. However the contingent consideration they replaced was in the statements in the form of the diluted EPS calculation (note 5), so the net effect (if they redeem the notes for cash) would have been to increase the EPS and increase the net debt.

For me the loan notes conversion provides a nice backstop. The business generates ample cash to support the current debt while allowing repayment of principle over 4 or 5 years so if the bank considers it imprudent given their current performance to increase the facility, then they strengthen the balance sheet at 37.5p per share and PUG is still on a PE of 4-5.

Of course, if the operating performance deteriorates then things won't look so rosy but the social worker and education division look ok (H2 was lower due to the summer holidays) and they indicate the health side has stabilised.

But definitely a risk/reward judgement everyone should be aware of.

[rivaldo] 02/3/2006 16:04

Yep. Hopefully they're largely out now. Amazing that there's been no trades reported since 12.16 - I suspect there'll be a load suddenly showing at 4.29 onwards...

[empirestate] 02/3/2006 15:59

there must be some seller on here for this not to have moved considerably higher on the levels of buying today.

[kimboy2] 02/3/2006 15:24

Hi WJ
I understand where you get your net figure from however aren't some of these earn outs already included in the net debt figure. Changing them to bank debt will increase interest charges but not net debt.

Overall I thought the result was about half a million better than the £3.9m given in the profit warning.

Turnover was down from the first half, despite the acquisitions of Kellis and Just Us. This was mainly down to the education sector but I presume this may be a seasonal thing.

Health declined from £12m in the first half to £11.8m in the second depite the acquisition of Just Us which maybe added £2.5m to the second half. This is clearly the problem area.

I calculated admin costs at £11.572m which seem a lot to me. It works out at £60 for every staff placing. There seems to be scope here for cuts and I think they have already taken some action though no figures on savings were given.

It will be very interesting to see what figures the brokers come up with after these results and the proposed bank facility rather than equity issue. Oriel were forecasting £5.4m pbt for 2006. If they maintain the number of shares at 28.9m this will equate to an EPS of 13p.

Looks good to me on a risk/reward basis.

[pictureframe] 02/3/2006 14:56

just need a bit of patience, sure it will move of its own accord

[rivaldo] 02/3/2006 12:24

Nice post WJ. That's what I like - even with dilution rather than increased facilities there's still obvious value, but the increased facilities are well covered on all risk factors. A rise back to £1.40 is too much to ask just yet, but at this level the rating is far too cheap imo on a P/E of 4 or 5.

[wjccghcc] 02/3/2006 11:10

Going through the earnout agreements, they've basically issued 4.8mm of loan notes repayable this year which, if not redeemed, convert to shares at 37.5p (for the majority). So if everything is redeemed for cash, they'll have the current 28.1mm shares in issue and net debt of 24.1mm. Their current blended interest rate on debt is 6% so that would imply interest expense of 1.45mm.

With organic growth continuing in each sector and Q4 seeming to have performed better than they expected I suspect they'll beat the current year forecast of 5.4mm pretax, but even if they only meet it, free cashflow should increase by 1.5mm to around 6.7mm implying interest cover of 4.6x and after tax debt repayment of 3.6mm which should enable them to repay the debt over 5 years.

From a banking perspective, provided the prospects for the underlying business have stabilised, that's not a particularly risky lending proposition.

Of course, if they don't increase the lending facilities, we'll be diluted with the issue of 12.8mm new shares at 37.5p but even then you're looking at EPS of 9.1p post dilution and a PE of 4.8 with a strengthened balance sheet.

Not one to bet the house on but certainly you could argue fair value should be in the 60-80p range.

[empirestate] 02/3/2006 11:01

can any one give me the online quotes at 40/44

[rivaldo] 02/3/2006 10:58

Yep, increasing the spread surely means there's not much stock around now. Hopefully any buying now could have an interesting effect.

Thx for the update tiltonboy. I wonder if the directors can buy any stock now they're out of the closed period? If the bank negotiations are ongoing then they're not in possession of unpublished info, so now might be a good time to pile in?

There should be a good run-up now that any caution over the results and outlook has been dismissed.