RSM Tenon Share Discussion Threads

[envirovision] 13/4/2011 22:40

nigelpm thanks for that, I had not read that Raynor article. Talking about him and the bods at TNO's coal face worth remembering:

Raynor acquired 50K shares at 43.5p in Feb to now hold 2,234,754 shares, also stockdale bought a few token and now holds 5,280,103.

Most notably Bob Morton since February has bought nearly 900,000 shares ranging from 46p down to around 40p and so he and his family now own over 7 Million shares.

I know with the kind of inept idiotic executive class coupled with the dire "legal" accounting fraud allowable these days. Not to mention the vast array of crooks and criminals out there in boardrooms, director purchases don't mean what they used to however from where I am sitting it all seems to add credible flesh to the bones.

[wjccghcc] 13/4/2011 22:35

rmillaree - good point - I should have included H208 to be fair. In H208 they generated 9.9mm of operating cashflow and adjusted PBT of 9.2mm. For the 6 periods, that gives headline PBT of 61mm vs cumulative operating cashflow of -7 mm so only a difference of 68mm!

Regarding your comment on the difference being explained by movements in working capital, it either ends up in exceptionals, provisions or working capital since that's where it has to go to make the accounts tally. My point is that an awful lot seems to end up there whether the business is growing, shrinking, with acquisitions or without.

[nigelpm] 13/4/2011 21:09

Also, on my watchlist.

Worth a read:

Explains some of the "results-hit"

[rmillaree] 13/4/2011 20:46

Hello WJCCGHCC

To be get a fairer picture of the true cashflow we should probably look at whole years rather than 3 bad halves and 2 good halves as there does seem to be a seasonal element to the cashflow.
Looking at the H1 2009 figure of -6.1 million this is fully explained by the £11 million reduction in trade and other payables during this 6 month period - so i have no problems with the cashflow for this period.
Looking at the previous year there was a cash inflow of £18 million from operating activities so at least we are not talking about a company that has never had any signs of cash inflow.

I do have to admit the cashflow is pretty pants whichever way you look at it but it does seem plausible to me that paying for and integrating several new add on units as they have done will be time consuming and costly.
For example from the recent interims
"The physical integration of both acquisitions is now effectively complete, and has included 16 significant property moves and seven office refurbishments. The largest of these has been the creation of a significantly enhanced London presence, combining four West End offices into one, befitting the opportunity available in this market."

How will this all pan out? - who knows - hopefully the management will be sensible enough to realise that all they need to do for the next 2 to 3 years is concentrate on the basics of running what they have and the debt should start to fall after the deferred considerations have paid down - at which point the share price should be much higher.I do admit this is not a share for widows and orphans and if it does all go quickly wrong profits wise in the future then shareholders may end up with nowt - such is life.

[maxcashflow] 13/4/2011 18:22

WJCCGHCC,

Cumulative PBT after exceptionals, amortization, etc for the same 2 1/2 yr period is £21.3m - closer but still a long way out.

I'd expect operating cashflow to be around +£13m in H211 (if they are able to bring debt down from £73 to £60m). So cumulative operating cashflow over 3 years might only be -3mm.

Still pretty poor. But all analysts, and RSM themselves, are talking adjusted EPS numbers. Does the market care about niceties such as cold hard cash? Despite the nasty accounts there might still be a bounce in the share price

Hmm, one to ponder I guess. I'm not a holder right now, but the analysts forecasts are tantalizing....

Cheers, Max

[wjccghcc] 13/4/2011 18:07

I'm not so convinced - IMHO the balance sheet is very weak. I would add the provisions onto the debt since most of it is contingent consideration. Given the working capital volatility, I use average net debt when I look at TNO which gives a figure of 82mm for the last two periods.

I also include exceptional cash outflows in the operating cashflow since they occur every period even prior to the acquisitions! Nett all that and you get the following operating cashflow for the last five 6 month periods

H109 H209 H110 H210 H111
-6.1 +8.0 -6.1 +9.4 -21.0

In that period they reported cumulative PBT of 52mm yet generated cumulative operating cashflow of -16mm.

Clearly that can't go on - either they cut the dividend, raise funds or completely change their business model to start aligning cash generation with reported profitability. A PE of 4 is all very well but it seems to be based on accounting rather than reality.

Or am I being too harsh?

[davidosh] 13/4/2011 17:39

GHF....exactly my reasons and I did ring the company today to establish that nothing had changed from that interims announcement and all seems ok so far....next news will be the IMS in mid (16th) May so we will have to keep fingers crossed to then. If they meet forecasts and debt comes down to £60m then there is no reason for this to be half the price it was before the interims. I will pick up a few more first thing tomorrow now I know so many great minds had the same view.

[glasshalfull] 13/4/2011 17:11

I've also joined the throng.

Debt was always my biggest concern here, especially given the jump in net debt at the interim stage. However, this is forecast to fall to £60m at year end and they have plenty of headroom (£92m from memory). Given that insolvency numbers are forecast to rise in the coming year this looks a decent risk/reward play on value, growth and D/V yield.

Regards
GHF

[masurenguy] 13/4/2011 14:58

I've also now taken an initial position at just under 30p this afternoon !

[jeff h] 13/4/2011 14:45

Bought today sub 30p - last time I did this I doubled my money.

Don't particularly like the constant issuing of more shares and the ever present "exceptionals" in almost every set of results but seemingly good/excellent value unless some nasties come out.

Would like to see them concentrate on cash flow to reduce debt.

Q3 IMS due 16th May - so an update then if not before.

[saucepan] 13/4/2011 14:26

Hi folks. I went long just now (have held in the past) - a falling knife, but I agree the sell-off seems overdone and I am prepared to be patient.

[envirovision] 13/4/2011 14:09

End of February TNO recorded a 53 per cent rise in underlying profits to £13.5m in the six months to December, with profits on the core audit, tax and advisory side doubling to £10.6m. But profits fell in the corporate recovery and turnaround business, mainly because insolvency numbers have not risen as expected. Other parts of the business such as risk and financial management recorded solid organic growth, although operating margins slipped from 12 per cent to 11.2 per cent as a result of a concentration of lower-margin activities in the first half

However interestingly today Begbies Traynor reported a 26% rise in financial distress compared with the fourth quarter of 2010. It stated that an increasing number of U.K. firms face the prospect of going out of business as job cuts, particularly in the public sector, denting consumer spending. In its quarterly Red Flag Alert, Begbies said 186,554 U.K. businesses face 'significant' or 'critical' financial problems compared with 161,601 a year earlier.

It therefore follows TNO will see a 26% uplift in its corporate recovery and turnaround business and this should produce a healthy filip to future profits. None of this is presently factored into brokers forecasts however:

Broker Forecast confirmed last week (8/4) Numis have 2011 EPS at 8.2p with 1.8p dividend, 2012 EPS at 8.5p with 1.9p dividend and 2013 at 9.6p with 2.6p dividend.

Consensus between six brokers comes in at 2011 EPS at 7.74p with 1.79p dividend, 2012 EPS at 8.35p with 1.95p dividend and 2013 at 9.46p with 2.46p dividend.

So currently (and this is without any positive adjustment for latest increased insolvency distress figures) we are sitting on a forward PE Ratio 3.6 for 2012 and 3.2 for 2013.

Peg is also just 0.25 on yesterdays close (even lower today). Five brokers presently rate TNO as a Buy and one Outperform.

[davidosh] 13/4/2011 13:56

Fingers crossed as I have just bought my first ever holding here at 29.25p. Looks oversold on the big seller making an exit but will continue to moniter before going in deeper...Brewins had a new broker note out earlier this month at 38p with a BUY rating and all six covering analysts say BUY so I am just buying the view at a big discount so far. It is a 5% yield down here and well covered too so far from shabby.

[envirovision] 13/4/2011 13:34

Yes got my order filled. I will do a quick recap later on just to remind myself why I am doing this.

[bonio10000] 13/4/2011 13:07

Just had a nibble for £2.5k.

Couldn't resist at this price. I think the price is purely a fall on a distressed seller and should bounce back to 40pish fairly soon.

[envirovision] 13/4/2011 12:55

Wondering if the seller has a 30p limit, I am sitting on the order book with a 29.25p buy but it seems to be a bit of a log jam at the moment. I would agree, MFM slater fund seems the one.

[masurenguy] 13/4/2011 10:56

I think the Seller could be the MFM Slater Growth Fund. If I'm right it might explain why there has been no RNS as they reduced their shareholding to 9.6m last October which took them below the 3% reporting threshold.

[the shuffle man] 13/4/2011 09:41

The seller must still be there.

Come on Uncle Bob buy some more or give us some positive news to stop the rot.

[envirovision] 13/4/2011 07:49

Subject:
Date: Wed 13th Apr 2011 8:45:41
Region:
Market sector:
Company: Begbies Traynor Group PLC

LONDON (Dow Jones)--An increasing number of U.K. firms face the prospect of going out of business as job cuts, particularly in the public sector, dent consumer spending, insolvency specialist Begbies Traynor Group PLC (BEG.LN) said Wednesday.

In its quarterly Red Flag Alert, Begbies said 186,554 U.K. businesses face 'significant' or 'critical' financial problems compared with 161,601 a year earlier. The figure marks a 26% rise in financial distress compared with the fourth quarter of 2010.

The picture varies widely across sectors, with industries highly dependent on discretionary consumer spending suffering the worst. Distress was up by 68% on year in the bar and restaurant sector and 60% in the leisure and culture sector. Professional services firms are also struggling, with the number facing significant or critical problems up 61%.

However, sectors less reliant on consumer confidence appear more robust, with signs of distress down 44% in food and beverage manufacturing.

"The figures show the number of U.K. companies facing 'critical' problems has risen year on year with significant increases across the leisure sector in particular. Compared with our figures for food retail which show little change, it seems likely that a fall in consumer confidence and spending power driven by anticipated job losses lies at the core of the leisure sector's troubles," said Begbies Executive Chairman Ric Traynor.

[0rb1t] 13/4/2011 07:12

8000000 shares were dumped yesterday at 32p. Maybe that was the seller gone.