Totally Share Discussion Threads

[1gw] 27/4/2018 13:49

Sorry if that was too long for you to get through. Although perhaps you shouldn't be investing at all if you have difficulty reading more than a paragraph. But in case you missed it, the reason I am here is:

"But that changed markedly with the change to an aggressive buy and build strategy with a successful placing and the Vocare acquisition. When I saw the shares in the low 30's late last year I thought it was a good entry point - well below the placing price so I felt I was being offered the chance to get on board at below the ground floor. I bought some more in March after a further price fall and then again this week after the buyback announcement...
...it appears to be well-backed and to have a decent management team and board. So at this sort of discount to the placing price, given I presume some serious due diligence was done by those taking the placing shares, I am happy to invest."

Is that better? I don't like mindless or misleading ramping (or deramping for that matter, STT) and I am happy to invest on the basis of all the facts, not just the positive spin.

[grahamwales] 27/4/2018 13:35

Can I suggest you sell your shares at the earliest opportunity you seem to be very negative and not even sure why you bought in the first place that’s assuming you have

[1gw] 27/4/2018 13:26

Have a look at a few other companies' accounts and see how many have consistently reported payables significantly greater than (receivables + inventory) unless they are shrinking. The basic model of a capitalist business is that you have to build something before you can sell it, whether that's physical product or a service. There are very few exceptions to that as far as I am aware, with the obvious one being insurance companies.

But maybe Totally is an exception and the only way I can immediately think that they could be doing that is through agency funding. In that model they build a "staff" through contracting with an agency which supplies the staff. The staff are employed and paid (on time) by the agency while Totally pays the agency. Totally may be able to delay paying the agency until well after the agency has paid the staff and also until after Totally has got some funds in from its client to whom the staff are providing the service.

So if they have got a sustainable model where the client supplies them with funding then great, but personally I think it's more likely to be a temporary phenomenon and that's not why I invested here. It annoys me when people make facile arguments such as "look at the cash compared to the market cap", which are either made innocently in ignorance or are just designed to try to sucker investors in because they deliberately miss out key information.

I've followed Totally for years but only got round to investing in it fairly recently because I felt it was a bit fragile as a business and there wasn't enough liquidity in the shares if I changed my mind and wanted to get out. But that changed markedly with the change to an aggressive buy and build strategy with a successful placing and the Vocare acquisition. When I saw the shares in the low 30's late last year I thought it was a good entry point - well below the placing price so I felt I was being offered the chance to get on board at below the ground floor. I bought some more in March after a further price fall and then again this week after the buyback announcement.

I feel this is high risk because it relies on being able to create value from a business that someone else is happy to sell, but it appears to be well-backed and to have a decent management team and board. So at this sort of discount to the placing price, given I presume some serious due diligence was done by those taking the placing shares, I am happy to invest.

The Miton redemption thing is interesting and may well allow the shareprice to bounce next week because clearly some investors (and I agree probably not just PIs) are taking the other side of the Miton sells. But I've seen too many cases where a share is being hyped on a bulletin board due to some apparent technical situation in the market to invest just on that. By the time it hits a bulletin board it's probably too late to get onboard is my general philosophy.

[grahamwales] 27/4/2018 11:55

Doesn’t all companies pay bills later than expected. I have loads that don’t pay on time or it could be that they are slow at generating invoices to the NHS

[grahamwales] 27/4/2018 11:54

Doesn’t all companies pay bills later than expected. I have loads that don’t pay on time

[1gw] 27/4/2018 11:43

"It simply means they are good at getting cash in ahead of paying others. Great sign of a well run business."

Well that's the interesting point, isn't it? Is it that? Is it that they have a business model (like insurance companies) where they can get money in before paying it out, and if so, how are they doing that? Is it agency funding for example? Are they taking staff through agencies which then pay the staff promptly, and Totally manage to bill their clients for their services and pay the agencies more slowly? Because it isn't intuitive that a company whose clients are broadly NHS and related organisations should be able to collect money more quickly than it has to pay it out.

An alternative explanation is simply that with the change of management at Vocare, payment processes have been disrupted leading to late payment of some bills and that as things settle down that working capital balance will revert to a more usual position for a growing business i.e. receivables larger than payables.

Does anyone know?

[hybrasil] 27/4/2018 11:38

There is still a strong seller in the market

[grahamwales] 27/4/2018 11:34

1gw

Do you see that as a positive then

[microscope] 27/4/2018 11:27

It simply means they are good at getting cash in ahead of paying others. Great sign of a well run business. Wish more companies were so smart!

Sorted.

Right, moving on. And more relevantly, another day of strong buying going on for me to try to figure out. Well done Hybrasil with your buy.

But I still don't get where all the buying is coming from, millions upon millions of shares. PIs suddenly recognizing value? Accounts for a few, for sure. But nothing remotely along the lines of what we've seen over the past week and a half.

Institutions buying? Might account for some of the larger trades, but hardly for the remorseless run of 10-25k buys that we've seen.

So, a tip somewhere? Or a broker recommendation? The effect of these is far more dubious these days, and the impact, while it might last for a day or two, doesn't get maintained anywhere near this long.

So I come back to a stake builder, buying all they can get in the open market. Can't get myself away from it.
Had to almost physically stop myself adding yesterday... Might not be so strong willed today, or if I am, certainly won't be next week when Miton have become yesterday's story.

[1gw] 27/4/2018 10:54

Let's have another go round the cash position, then, because I would like to understand it if I've got it wrong.

As I read the interim accounts they had £11.3m cash & equivalents, but had £17.2m of "trade and other payables" against only £9.7m of "trade and other receivables".

So they have a balance of -£7.5m on receivables less payables, and that is what I meant by most of the headline cash balance being owed to other people. Note that there is a separate liability of "Deferred acquisition consideration" (a current one of £1.7m and a long-term one of £7.4m) so I don't think that the payables included contingent acquisition payments.

If you go with total current assets less total current liabilities (so you include the near-term deferred consideration but exclude the larger long-term deferred consideration) then the total net current assets are only £1.7m

So that's fine, for a company that has a market cap of only £14m and has just made a transformative acquisition and I've been happy to invest on that basis, given the recent buyback announcement. But in my opinion it is misleading in the extreme to draw attention to the size of the cash balance compared to the market cap without mentioning the rather strange working capital position which takes net current assets down so materially compared to the cash balance.

However, if I've misunderstood the position then I'm very happy to be corrected.

[someuwin] 27/4/2018 10:53

Bought a few more of these today.

[grahamwales] 27/4/2018 10:28

Nice find Sikh.

[sikhthetech] 27/4/2018 10:03

Cornwall's out-of-hours GP service rated amongst top

[dave4545] 27/4/2018 09:24

Funny how they show that 100k straight away but delay other trades for a day.

23.6-24.74p online so clearly I think Miton are selling the lot

[hybrasil] 27/4/2018 09:19

bought another 100k this am. Thats me done. I 'll look again after the gm.

[grahamwales] 27/4/2018 09:11

Posted some info on lse regarding the sell off of Care uk. No doubt Totally are looking at parts of the business, also means a major competitor will be out of the market.

[nobbygnome] 27/4/2018 08:44

Encouraging rise this morning. Yes I know it's only 0.4p but shows perhaps the MMs are running out of stock.

Nobby

[microscope] 27/4/2018 08:33

Ah Hovis is here again i see... And brought a friend lol. I think regulars on this board have long known why... People invested here are not going to be swayed by your imho insincere posts. The cash position is fine and the contracts carefully selected to produce best possible margins. If only rhythm with their massive market cap could say the same :)

[grahamwales] 27/4/2018 08:29

Not sure most of it is owed, part of the payments for the acquisitions are to be made in shares. Also they only get the cash if they are performing to what was agreed. That could mean unless they are profitable they don't get the cash/shares and if they are profitable then let them have the cash/shares.

[1gw] 27/4/2018 08:13

The problem with that cash number though is that most of it is owed to someone else because of the working capital position.

I think that's the point loaf is trying to make.

But the question is whether that's a structural position of this business (i.e. it can sustainably fund itself through its customers because payables are always going to be significantly higher than receivables) or whether it's a one-off caused by the Vocare acquisition and the working capital position will revert to a more normal balance in due course.

[cottoner] 27/4/2018 08:08

From Half-year results end Dec 2017

Cash at Bank £11,307,000 (31 December 2016: £998,000)

[loafofbread] 27/4/2018 07:57

sikh,

Thanks for the answer. I assume it's not as much as everyone talks about otherwise you might have been more helpful.

1GW,

Do you have a cash figure?

[grahamwales] 27/4/2018 07:41

Bob Holt retweeted this company on his page. I wonder if they are the one's buying?

hxxpS://senecapartners.co.uk/about/

[dave4545] 26/4/2018 22:40

Oh interesting microscope.

Well the only clue to that happening is the price rising and size dropping but all week it's been easy to buy as many as you like. Lets see if that changes tomorrow.

[microscope] 26/4/2018 22:09

Dave, because it's an 'annual redemption date' anything unsold ceases to be an overhang from tomorrow night, at least until next April. They have nothing to gain from selling the rest. The same applies at VRS where they still have over 3%, WEY and all their remaining holdings. So the 1.9 million will no longer be relevant, nor need to be covered.