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Personally, I don't see why the June update is make or break for CPI. It's AH's first opportunity to lay down what the cost cuts will look like. He should be in a position to quantify the volume of savings and indicative EBITDA margins from 2024 onwards assuming a flat revenue profile this year.
The first actual set of profitability numbers will come from the H1 results in August and that will the first of many data points to show progress or otherwise for CPI - that is key for the market, not next month's update.
For all those who focused on the fact that they didn't expect a revenue decline in the stated first 4 months of 2024 - I really don't know what you smoke when you read up financial reports. Here's a snippet from the March earnings results release with the stars indicating their statement about revenues accruing later in the year.
"For 2024, as a whole, on an adjusted basis, we currently expect that revenue will be broadly in line with 2023, and that operating profit margin and free cash flow will show modest improvement year on year.
We expect the ***** Public Service division to deliver revenue growth in 2024 reflecting the significant contracts won in 2023 moving into their operational phase later this year ***** whereas we expect the Experience division to show a reduction in revenue reflecting the non-recurrence of 2023’s closed book Life & Pensions commercial settlement coupled with ongoing revenue attrition in the rest of the Life & Pensions business.
Notwithstanding our revenue expectations, the cost reduction programmes being implemented in 2024 are expected to result in a modest improvement in adjusted operating profit margins and free cash flow, albeit in the latter case, the cash flow benefit in the year will be reduced as a result of the redundancy and other costs required to deliver the cost reduction programmes.
We will be setting out our vision, strategy and associated medium-term targets in detail at a Capital Markets Day in June 2024."
None of what was announced today was different from what was stated in March - additional clarity was provided and the upswing in revenue will accrue in H2. This is still transition year, but I'd expect the market to pay attention and start to slowly rerate the share over the course of the remainder of the year, post the update.
The stock market is a great mechanism to transfer wealth from the impatient to the patient....
Thanks Trisor much appreciated. I think the June update will be the make or break.
Hopefully it will be positive & realistic with positive cash flow forecast for 2025 but if this is delayed past 2025 I think many will bail out
Lol makes me laugh when people say predicting a finish. its all pointless. yea tomorrow i predict it could go up 2 p, next day i predict its down 2p etc. none of it mattres. its a pretty worthless company
I was expecting reported revenue to drop after all the disposals but to see adjust revenue drop was a shocker. Adjusted revenue I expected to hold flat or atleast be higher to show that underlying business is growing but its declined. With cost cutting in January suppose to help margin but drop in revenue likely to impact profits negatively for this period sadly imho
I was expecting reported revenue to drop
I attended the AGM. There were a number of concerned shareholders making comments. The board accepted that performance wasnt good enough but there would be a big efficiency drive and costs cutting and looking at all contracts with a view to make low margin contracts work. More to follow on AI and other tie-ups. Acknowledgment that other similar companies were making money. Generally upbeat on contract wins
Quite frankly I think they accepted things werent great but I felt a determination to turn things around . Many asked about dividends/complained there wasnt one. And it was noted by the board. Despite getting a metaphorical punch in the nose, board approached shareholders and had a chat. They weren't given an easy ride at all. And if they didnt know before the disappointment and frustration of average Joes like us they certainly understood it by the end
Did anyone attend the AGM & if so is there any info apart from the official statement that gives more details of current/future situation
At the AGM this was discussed-the official reason was transparency and getting this out before capital markets day
They should start calling their updates ‘downdates’.
Same old crapita after an update, down, oh well another 6 months to wait
Lovely theory CraigJD... However, it's complete and utter nonsense. I've repeatedly declared my interest. I had been observing CPI with a view of making an investment, I also considered buying more BT (I already had holdings) and I considered a few other stocks but... in the end I purchased more BT tranches (I'm still buying more). I'm still considering CPI, I've not 100% ruled it out but I must say it's not currently looking promising.
Another Buy reiteration by Shore Capital. They're still bullish on this.
I'm sceptical about why they even bothered with this RNS. It wasn't necessary, nor did we have one at this point in previous years. No compelling event. So why bother? Still kitchen sinking? Keeping the door open for a few more buy-ins? Seriously, why bother?
IMHO DYOR
Doing nothing always seems to work for me on bad news days which it appears were priced in :)
Well, the market has shrugged off this 'terrible' RNS, for now at least. Just popped above the 15p mark
Predicting a finish in the blue today here......
The more I look at Savage Keyboard's posts, I am increasingly convinced that they are a doing this as a higher education dissertation. ie. going on to a discussion board, winding up investors in a beaten up stock in a broken market, testing responses and to some extent, it would be genius. This would undoubtedly make great research for psychology or business studies, Most of Savage's opinions are either macro-economic, academic or comparitive ie BT. Think about it, it is also that time of year for students. - just a thought.
Savage_KeyboardR why are you here on a board for a company you clearly have no interest of investing in? why not spend you time on the BT board and not spend it telling everyone what a good purchase you made on the CPI board.
I investigate many shares but if I decide not for me I move on and don't go on their chat board flooding it with negative messages.
I am a long suffering shareholder of CPI and a very long time critic of JL even when it meant I got a lot of flake for my comments but I have skin in the game and I am now happy that CPI is being run as it should have been for the last 6+ years. CPI is at the start of a turn around, as the Eagles say "We may lose we may win but we’ll never be here again", only time will tell.
I have many other investments like BT but would not put any more cash into it as my investments are targeted at Uranium (Including CCJ), Gold (which I trade a bit), Glencore and a number of O&G companies that are doing very well (much better than BT) but I do not go on the BT, CPI boards telling everyone they are making mistakes and telling them how well my other investments are doing.
Please give it a rest.
I was at the AGM and the directors were given a rough ride with one brave shareholder directly asking AH whether he was confident appointing the same directors (including Lowden) was right for the business given the performance over the last 3 years .
They are aware of the plight of SH’s and seem determined to improve on things .
Thanks Aubery for sharing that and yep, I agree with your assessment there. I remain giving consideration to adding CPI to my stocks at some point and yes, the turnaround will not happen overnight. Best of luck
The absolute focus is a return to FCF asap but will need the loss of up to 900 roles plus some natural attrition. The company is being reshaped to operate profitably… this will be a painful but necessary transition. One I am hopeful of but equally not naive enough it will happen over night. No doubt bumps in the road and minor set backs. Let’s wait and see in the summer.
Not a stable safe stock for the cautious but does look a compelling and speculative turn around stock imo.
New CEO and CFO with skin in the game.
Good luck.
Hi Aubrey,
Thanks for confirming that in line is neutral. At least someone here has remained aligned to rational thought processes.
I don't know if you're aware but a little back in time... on May 21st 2019 Capita's Market Cap was £2.586 Billion
Source: https://ycharts.com/companies/CTAGY/market_cap (note graph hasn't yet updated to the current Market cap of ~£248million.
You also say "In context this is a £250m market cap business." - which as per above I agree with.
However, another Quarter of declines at the current rate look set to further reduce the Market Cap because the business is still losing money, overseeing falling sales volumes and falling sales values. All confirmed in today's RNS.
With that in mind... where do you see Market Cap in 6 months time?
Savage
Ordinarily your are correct… in line is neutral.
But you are aware of the last few years??
In context, for CPI, if the CEO gets anywhere near ‘in line’ it will be bonanza time.
In context this is a £250m market cap business.
Of course it’s been a sh it show these past few years and you are correct to be circumspect but c’mon…review your language…
I see HHH81 - I see when rational evidence based debate fails to back your views then you descend to shouting insults, throwing all logic out the window and towards peddling conspiracy theories.
Trying to understand your POV but I can't determine your rationale for investing here - Please feel free to clarify why you think CPI makes for a good investment right now. If you have some evidence I've missed then please do share it.
that, savage, is called gaslighting.
you went nuts deep in ****ging off capita this morning thinking you could gloat to others about bt etc. this is a discussion board on capita, which you use constantly for talking about bt and trying to place a negative spin on things to prove yourself right for "not investing." based upon that rationale, you should be on all the other chat boards as well, talking about why you're not investing in those shares. but you're not, you're an attention seeking little weasal, who i have stupidly given more attention to...
Hi kularatnam, you said and I quote: "the update was positive with the message " trading in line with expectations""
Can you point to or share the positive bit please? I ask because "trading in line with expectations" is not a positive statement - it's neutral. So can you share why you think the update was positive?