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I am impressed with the SP.....and tempted to forget it till 150p. Wish I had more funds to buy more but I swore never to dabble into CFDs and spreadbet again as those bankers would push SP down just to clear leveraged positions.........FCA must know that for sure.
90+ which make a perfect start t o2017. All good.
...we are back in the 90's. Onwards and upwards. Imo should relate to the 1.2 level quickly Gla, keep the faith and may the force be with us
Agree and don't we all!
first II to top up since the results landed. Shows confidence and that they expect the SP to recover further.
Will we see it today? Would make a good start to 2017. GLA.
IMHO shows their is trust in the management and what they have done to resolve the accounting issue, I think we can look to further gains in 2017, not the other way. Only my view. GLA.
Yes indeed. Given this a lot of thought today and have decided to rebuy the half I sold. The more I think about it the more 88p seems a decent entry once again with the risk skewed to the upside. Really need to stop watching this share price as it has had me captivated for best part of a month! Happy with my holding for now. Initial target from here is 115p and will review when we approach that mark.
Not sure the market agrees with your conclusions, strong momentum in the upward direction. I have taken some profits but still expect the SP to climb. That is my opinion, I could be wrong but I think the company has a solid customer base and the opportunity to grow. It would be hard to argue that it isn't in a better position now than back in 2014 when it was a new company and the SP was at 120p with a much larger mCap as there has been next to no dilution since then and many more clients. It will be interesting to see how the recovery plays out. I think I may have another opportunity to top up in the mid 80's before it pushes past the 90 mark as it is looking a little over bought now but we will have to see.
Cont.... Despite these adjustments the Group's restated net debt position as at these dates was not representative of the underlying position as although technically correct from an accounting perspective, there was significant stretching of creditor payments in particular around operating cost items. The average month end net debt position over the eight month period to 30 November 2016 was £42.0 million and better reflects the Group's underlying net debt position over the period. Dividend: Unsurprisingly, the Board has resolved not to pay a dividend. Bank support: Banks have given covenant waivers for prior periods, and are discussing future covenant levels. They are said to remain supportive! My opinion: I've managed to work my way through most of this announcement, but it's slow work. As I said, things get complicated in a situation like this! Even those on the inside will have found it very difficult. The RNS says that "a level of judgement has been applied" - in other words, there is no objective answer to fixing what has gone wrong. On valuation, I'm a bit perplexed as to why the market cap remains so high. The current share price gives it an enterprise value of £166 million, for a fairly mature business which made a multi-million pound operating loss last year, has only scraped a tiny statutory profit over the last six months, and is going to suffer a lot more short-term costs and headaches associated with these accounting mistakes. Even if the adjusted EBITDA was £9.1 million for the latest period, I'd have no interest in paying anything remotely resembling a normal earnings multiple for this. For me, the share price is still about double what I'd consider to be fair value. When the dust settles, perhaps it will make a good case study for clues or red flags for spotting accounting problems.
Interesting article from SCVR on Stockopedia from Dec 23rd... This technology services provider has been at the centre of an accounting misstatement issue, as discussed by Paul here. I also recommend this article by Mark Bentley at ShareSoc. Today's H1 2017 results are quite positive on the operational side The financials are a lot more mixed, however.... Accounting problems tend to affect public valuations in a dramatic way. This is largely to do with questions around integrity but also because they make the act of valuation itself far more complicated. For example, today's announcement includes restated H1 2016 figures, which need to be compared with the original figures as published here. Here's a selection from today's results: Revenue up 2.0% to £53.0m (H1 FY16 restated: £51.9m) Adjusted EBITDA* up 16.6% to £9.1m (H1 FY16 restated: £7.8m) Statutory profit before tax £0.3m (H1 FY16 restated: £2.5m loss) Net debt £34.4m (31 March 2016 restated: £37.8m) And here are the effects of the restatements for the year ended March 2016: Revenue restated at £103.3m vs £109.5m (reduction of £6.2m) Adjusted EBITDA* restated at £13.0m vs £25.8m (reduction of £12.8m) Statutory operating loss restated at £4.4m vs a profit of £8.4m (reduction of £12.8m) Statutory loss after tax restated at £5.2m vs a profit of £5.2m (reduction of £10.4m) For me, these changes make it impossible to value the company in a sensible way. We can think about applying an earnings multiple to a £5.2 million profit, but we can't do the same for a £5.2 million loss! To give credit where credit is due: despite the disastrous nature of recent events here, the company seems to have dealt with it in a very professional way. A forensic review is underway, a new CFO has been appointed, and the latest interim results have been produced, along with restated numbers, in a reasonable timeframe. An explanation of what happened: A number of accounting policies and practices, specifically those in respect of cost accrual, cost deferment and revenue recognition had been incorrectly applied and other accounting errors and misstatements had been made. To date there has been no evidence of theft and the misstatements are attributable to profit overstatement over a number of years with revenues being overstated and costs understated in broadly equal proportions. It looks as if the debt position has been manipulated: Following restatement of cash, trade creditor and trade debtor balances at 31 March 2016, net debt was £37.8 million. Net debt at 30 September 2016 was £34.4 million. Despite these adjustments the Group's restated net debt position as at these dates was not representative of the underlying position as
I suspect 1)profit taking 2)the familiar phenomenon of buy on rumour, sell on news. But: sp is still up on the day. Good prospects for the New Year.
Maybe a last minute rush today. Also those unaware of RCN history might be seeing the misstatement story for the first time. If so, they will need time to understand it.
Volumes peaked at 10.00am. Analysts are now out to lunch .
I can think of 2 possible reasons for selling - 1. Company profits are lower than previously expected. 2. The expected surge hasn't materialised, so sell and move on elsewhere. No I don't think it's time to sell, I'm holding. Just trying to find an explanation. If anyone has better ideas then please post here.
No surge because 3 times the amount of sells than buys today !! If everythings so great why are they selling ?
Looks like issues are sorted and business as usual in the new year. It will take time for brokers to analyse this, not least because most of them are currently on vacation .
hope you are right, once people who about it and the IIs come back in big style then, we can expect leaps in sp.
What da? Seriously......made profit....more business in pipeline, reduced debt and still below 100p. What a joke.....don't have more money....could have loaded up.
Is what is required, I suspect at the.review in Jan the company will be looking to set the record straight and get market sentiment back on side.
Yes fair comment. Just seems a lot of ifs. All the brokers have 'under review' status on RCN as they have been waiting for today's results. Be interesting to hear their considered thoughts. In my eyes all things considered and with one eye on the debt pile, the price seems about up with events for now. Need to see some evidence of an improvement in cash conversion adding further.
Good results given circumstances, profit, new systems, processes and management all add up to solid company going places which in return should lead to SP increase and return of dividend a bit longer term...all good imo. GLA and a happy & merry.Christmas.
Is that 5.3 million loss taking into account the dividend payment though? Take that out if the equation and loss is a lot less. If the company can clean up there payment collection processes hopefully the profit will increase substantially. They should get rid of the dividend for foreseeable future.
Fair enough, Frisby. It does strike me that the admin costs are pretty high too, a focus on this together with increasing revenues should help
When you see that in fact the company made a loss for the 12 months of 5.3 million it's quite incredible to think that MXC Capital etc got away with selling their entire holding at 180p only a few months ago. Encouraging that we are now in profit this year but it looks like a profit before tax of less than 1 million, possibly £600,000 for the 12 months to March 17.. I've decided to sell half my holding at 83.8 and book some profits. Clearly an issue converting cash into cash on the bottom line. Be very interested to see what SCSW has to say in his January newsletter. Will review remainder of my holding in new year.and the hunt begins for a new home for these profits.