The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
" I brought back all of what in high teens and low 20s " I meant to write 'I sold a major chunk of my holdings and then brought back all I sold in high teens to low 20s' from October last onwards - all with a view that the new CEO will be able to turn this around.
Chaps - TerryM1 sussed out the uselessness of JL earlier than I did and I remember having debates with him earlier last year about how well he was turning this around (this was after the hack), whilst TM1 stood firm. And he was right, and the H1 results last year only brought JL's ineffectiveness into the light. I brought back all of what in high teens and low 20s with an expectation that AH would be one to turn this around, and I think he will.
To paraphrase with the RBC sell-side analyst wrote in January - AH came in, looked under the hood, found so much shiite and muck tucked away that he couldn't make any difference with the time he had before the update last week. He put out what he and Xenia thought they could/should cut, cost-wise, but that obviously wasn't enough for the market. No complains there and the market did exactly what it should've. I'm now in a similar boat as many others , neck deep in this and sitting on a circa 30% loss on my large holdings. If there's one thing I've learnt about the market, it's just that you never try and predict the bottom, and given the uncertainty over when we'll be CF positive, we're at the mercy of the macro and the June update. How know how low we can go from here - 10p isn't in the realms of fantasy, TBH.
@dbuk2000 - thanks for your post. From my 'research' early in the new year, I can think of Mark Billingham and Kathy Quashie as the 2 senior execs who were let go in November. I won't even be tempted to ask if you were either as it doesn't matter, but your observation of cost being cut in the wrong places, i.e. not in chunky middle-management tier but in the lower end offshoreable end of the business is very telling about JL's approach to running Capita. Running Amec Wheeler Foster's oil services business and 'turning that around' is a different proposition to turning CPI around - he just needed the oil market to bounce back and capex spend for oil services will inevitably follow. Not so here.
And on this much heralded 'transformation' of the business to focus on the Public sector and the 'Experience' sector, the reality is that the experience side of business on the consulting side of things certainly is highly cyclical. Maybe JL didn't have much luck going for him, but a real visionary CEO, backed by his CFO and the board should've anticipated that CPI is now a cyclical business since half the business is private sector and will be slammed during economic downturns. Et voila!!
Unlike the IR team, I saw the writing was on the wall when I saw the financial health of CPI in the FY 2023 results. And that was after 2 bad misses in a row. I didn't really sell up this time unlike in August last year and I've taken a hit like many others on here, but I'm 'hoping' that AH pulls off a real turnaround and helps the shareholder lot!!
@JG68 - thanks for reaching out to IR. It was a pretty useless reply, but I can't expect anything more from IR - FY results came out in line with guidance? Jesus H Christ - what are they smoking in the IR office? The spin, the obfuscation and the level of incompetence in their responses is emblematic of the clueless way in which the company was run by JL. They should take out one of the 2 IR team - probably Helen as she's likely the higher cost resource. I can't see the point of 2 IR team members for a company with an absurd market cap that no one really seems to give a shiite about, and why would they with the continuous misses on profitability/FCF numbers for years on now.
I think that AH can pull this off and with the help of his old mate, Xenia, has shown he's got the balls to at least shake things up a bit and focus on shareholder value creation - something that was absent from JL's lexicon.
I don't think so and I can't see any point of doing a share consolidation - I'm sure neither will AH. He needs to get his head down and focus on cutting costs to ensure that we generate sustainable cash flows from 2025 onwards.
I did say to Sharehead and the other uber bulls not to get caught up in their self-spun story around AI doing wonders for CPI and generating millions for them - if that wasn't the biggest BS posted on this board, I don't what else is!! All that matters for CPI's share price is solid CF generation something they've repeatedly now proved incapable of delivering.
I made a wrong judgement call after the November layoffs announcements that CPI has done its bit to cut costs and that more may not be needed, but the reality was that once AH looked under the hood, he and Xenia quickly determined that there was so much more to be done to ensure a sustainable business and hence these additional £100m cuts were identified.
I don't know what you think, but for me they need to fire the current CFO, Tim Weller. As a steward of all things finance at CPI, he's been nothing short of a disaster. Xenia was a CFO and she should step up and take on that role as well - I'd think they would wait until after the June strategic update before they make any move with TW.
RBC was spot on in their research note in January about FCF being difficult to come by and they were proven correct. Let's hope, for all our investments' sake, that AH and Xenia can pull what the previous overpaid management team couldn't do - actually turn this beast around!!
I know this is not related to the ad sector, but nonetheless sectors in deep recession are on the cusp of turning around and taking the share prices up with them. I have a very small holding in Synthomer (SYNT) and their sector (chemicals manufacturing) was in the doldrums from H2 2022 onwards with an ugly 2023, but they're now seeing green shoots per their update today and the SP is jumping 25% as a result. No solid revenue growth based recovery yet, but just commentary that sales declines have bottomed and they have better control on costs and cash flows was all that was needed.
If we can pull off a revenue growth this year, even if it's small, we could then see a solid + sustained recovery over the course of the rest of the year. The optimist in me thinks that this isn't a far-fetched notion at all with the US avoiding a recession!!
6 mill repurchased as of yesterday and if we assume an average price of circa 41p, we may have 600k to go and this round should all be done and dusted by the end of this week. You'd think that additional repurchases will be agreed to by the board and announced alongside the results in a couple of weeks and the only missing piece then for us is to know how the digital ad market has been trending in the US in Q1 thus far. Fingers crossed!!
@JG68 - apologies, I didn't mean for my response to come out as strongly as saying 'it was a pointless question', but it is nonetheless true that when insiders buying doesn't help the share price (Adolfo's purchase did nothing to the market's perception really), why would what either an ex-insider or a current insider says about what the market reaction as reflected in the SP, matter?
The reality is none of us know what the bottom is and what we now know is that all talk from JL about turnaround complete and FCF ready was just complete and utter tripe. I'm glad that AH is focused on cutting costs substantially and that's absolutely needed, but that'll take a while yet to be reflected in the SP - IMO.
"do you think the the current reaction by the market is a fair reflection on how things really are as a going concern?" - JG68, that is a pointless question, IMO, to ask an ex-insider. How can an ex-insider or even a current insider really 'know' if the market reaction is a fair reflection or not of recent goings-on?
He/she could probably give you a view on operational improvements or otherwise, and how much more fat there is that could be cut. The market does what it does - it did this back in August 2023 and its doing this marking down again big time. And until there's clarity on final cost cuts OR FCF projections in the June update, it will continue doing what it will - act unpredictably. Just my opinion though.
And this is exactly why I said I won't yet be an additional buyer for a some more time yet. GL..
On the US macro side of things, NFPs aren't really as hot as the January report - employment numbers from January were revised a lot lower and wage growth in February also wound down along with hours worked rising. All in all, June rate cuts should be shoo-in, but if the news turns a bit more dire, we could get a May cut? That should be a net positive for us lot.
And in under 3 weeks, we'll get more clarity on how the US ad market was trending in Q1 and how that's been impacting SFOR. No buyers here unfortunately and we're still sitting at near all-time lows.
That's spot on, Trisor. Revenues can go up not by hiking prices on an adhoc basis (most LT contracts just won't allow that), and when the economy is in a downturn and the consulting business is struggling, you can't bid higher prices on competitive RFP/RFIs. AH acknowledged that the cost base is still too high and he's looking to cut more - an additional £100m by mid-2025. I can bet my bottom quid that AH will push to get most, if not all, of these cuts into the business by the end of 2024. I know it's still jam tomorrow and the strategy update in June will get a better steer on what his thinking is at to deliver tangible shareholder value - a word that didn't fit anywhere inJL's dictionary at all.
"Watch the brain-drain start now as people leave the company...." -
where are they going to go when the UK is in the middle of a recession and its not like jobs are dime a dozen? Good job, AH!!!
"My reading of the link below is no new debt will be required as Capita will be drawing on existing facilities . Can someone with an accountants brain comment?"
Trisor - existing facilities aren't drawn and hence won't be debt on the balance sheet. When/if CPI draws money out of these facilities to pay for the cash outflows this year, it'll be additional debt on the balance sheet.
Dear PR lady (Crafty) - please stop gaslighting us on here. Personally I support and I'm many on here would too, cancer charities and have nothing against giving money to such charities. What I find distasteful is a holier than thou attitude that you seemingly espouse. Anyway, this is an investment thread and not a PR forum and I'll leave it at this unless this thread drags on.
Come on Crafty, you shouldn't be as thin-skinned as light-weight Mouldy, or are you his PR orientated dopple-ganger? ROFL...
No problem - let's keep giving the PR team plenty of 0p stock options for posting here. And it looks like your team member 'YesIamaBeliever' just does what you ask them to do. Ask for a new thread, and you get a new 'Great white hope' thread. ROFL again...
Oh dear, if only madders puts a quarter of his focus on doing what needs to be done for THG to realise full value for its shareholders, we'd all be better off won't we?
Near term - I can't predict where this is going and I'm not a buyer at these levels on the back of today's news and the selloff. I have too many on my plate and I'm nursing a big loss today, although it's about half of what Lordy is looking at. Sellers are in control and if history is anything to go by, I won't be surprised to see another 20% draw-down over time from these levels. I look AH's purchase as a statement of intent + positive outlook, irrespective of what happens today or in the next few days.
Maybe he can turn out this beast eventually, but it sure is painful for holders who've been in this from ages and with a higher average than today's near all-time lows.