Member Info for GoCPI

@Wednesday - yes, I'm with you on that. What JL should do and I'm sure he is, is to keep a eye firm eye on increasing cash flows and delivering dividends. He comes good on that, then the market will give CPI a lot of credence as a real turn around story and work the price higher. 2022 results should be the grand first step, IMO, and JL can then take credit for turning around another business after his Amec Foster success story and retire with his head held high - he's said as much in an interview. And we can make quite a few quid on the back of this - that's what I intend to do. Lol...

"But as sp rises and we re-enter FTSE 250 all the tracker funds become forced BUYers thus adding rocket fuel to our momentum" - this is definitely desirable and we should get there soon.

Any CEO's prediction of share prices should be taken with a handful of salt - he/she doesn't determine SPs. The best that JL can do, and I believe he's doing this, is by executing on their business strategy and delivering the requisite profit margins across their lines of business. I believe that CPI can get up to 40s from here without much stress, but it's the next level breakout to new post March 2020 highs that needs CPI delivering on profit margins, driving higher cash flows that can support dividends restarting in 2023. And hence the next update in December is key. And of course, additional portfolio sales in the interim are highly desirable.

Mr.Imho, hope that didn't hurt too much? Know your sector well and know where a company sits financially before opening shorts - they'll come back to bite if you don't even know the basics!! Guaranteed.

Ignoring Aim for a minute - If the sale closes before the Year End, we should be Net Debt free on the balance sheet - i.e cash balances + net working capital should be greater than the gross debt on the balance sheet. 2023 dividends are then firmly back in the picture and we should break out to new highs above 55p. Keeping my fingers and toes crossed.

We only need to look back at 2008 and the great recession to see how CPI performed around that timeframe - pretty well is the short answer. Timing, as they say, is everything and it's heartening that they managed to close Pay360 deal this quickly and at such a fabulous price. 14 times EBITDA in this highly uncertain business environment is a great achievement. 60 million incoming this month for REI and I do hope we get this 150 mill before the end of the year - they did say in the RNS that they expect government OK late in Q4 - they're doing their best to get this closed in Q4, I suspect.
All in all, a great outcome, for a business that's non-core to their BPO strategy

Added more this morning - this is still in bargain territory and a great recession hedge.

This is what I wrote on 15th August - ""It will make a sizeable dent in CPIs profits (pay £360 has £12m profit)" - @Culley - not really. CPI had a pre-IFRS 16 profit before tax of £104 million in 2021. Out of this, Pay 360's PBT contribution was £7 million in 2021. If Pay360 can be sold for £150 million for a PBT reduction of circa 7 to 10%, I'd take that everyday."

Here are the numbers from the RNS release today - "The gross assets of Pay360 at 30 June 2022 were £63.6m, and for the year to 31 December 2021 it generated revenue of £45.8m, EBITDA of £10.5m and profit before tax of £7.1m. For H1 2022, Pay360 generated revenue of £27.3m, EBITDA of £5.7m and profit before tax of £3.1m. The Pay360 senior management team will be transferring with the business." With gross assets of £63 million (not to speak of net assets), and an EBITDA around £11 to £12 million annualised for 2022, the £150 million sale is a stupendous outcome. Don't let 'No-clue Aim' rain on our parade!! :-)

Another nice one in the bag with Barnet council. £42 million with a possible revenue generation of £57 million with indexation. Nice!!!

https://polaris.brighterir.com/public/capita/news/rns/story/x87k2jw

@Aim - the best your mental faculty can comprehend is imho. You're best served by going back to imho and losing money sniffing your shorts. All the best, imvvho!!!!

£150 million sale is a fabulous outcome and right around where I was expecting the sale price to come in at. I've already said anything around £150 million is a bonus and CPI expects to receive £156 million on a cash free, debt free basis - a 14.4X multiple of PBT is great. At this rate, and assuming that the proceeds are received before the end of December, we could be 'net' debt free. There is a clear pathway to the 50s in the coming months - the market just needs to hear what the profitability trends are looking like in the H2 trading update. Dividends incoming in 2023, IMO.

@NoFear, don't be paranoid FFS. I'm not shooting the messenger and it's good that you made us aware of this sale. Deadwood sale is still a sale and I'm glad Optima's off our books. We save on £7 million annual wages and I take that as a positive.

TBH, I couldn't care less about getting on with you. We're all here to share opinions, news, analysis and make money. I'm here to pick up on useful tidbits that get posted here and if the occasional one comes from you, that's gratefully received too.

if you look up Optima Legal's accounts for Year Ending 2021, they actually made a small net loss (£25k) prior to a tax credit of £800k. Net assets on the balance sheet was £12 million. Maybe they get £15 to 20 million on this - tiny enough for them not to go around beating the drum I suggest. Good riddance to a non-core company within Capita.

@Culley01, I'm not sure where you are getting £13 million profit figure for Optima Legal from, as that wasn't quoted anywhere. There's a reference to AUD $21.9 million profit that Pexa group made, but that doesn't become Optima's PAT does it?

This is likely a small valued sale and hence not worthwhile to report in a hurry? The important sale is Pay360 and that's what the management team's focus is on undoubtedly.

Not bad - about 6 million shares traded today - best in a while yet, including a 1.7 million UT trade. 26p close - every little helps.

I'd like to see better trading volumes - it's still pretty tepid, but we'll take what we get for now. Hopefully more traders will be back after the summer break, next week?

It's not hedge funds - I'm sure Sharehead meant to say Private Equity (PE) funds. Hedge funds are a different set of beasts compared to PE - they're investment focused and won't go about buying business with a view to running them and selling them, or even stripping assets and selling them.

CPI looked good yesterday (decent volume) and is certainly looking good today - possible news leak on sale progress? There won't be buyback or dividend announcements until 2022 results are out and the markets sees clear progress on Net Debt reduction, which should happen, IMO.

We'll need to look beyond sale of businesses and focus on the direction JL is moving this company towards - as a business process outsourcing (BPO) company. If you look at some of the recent hires in the Financial Services division of the Customer Experience unit, there have been hires from Genpact, which is a NYSE listed BPO company. I'd be thrilled beyond my wildest dreams if we get a PE multiple anywhere close to them, but that seems to be where JL is going with the CE division as a whole.

Structuring profitable deals in the BPO space is key and should Capita pull this off with all the new hires they're bringing on board, the days of loss making contracts in both the private and public sectors will be history. It is this exact strategy that I believed has moved JL to commence the sale of Pay360 - it just doesn't sensibly fit in the new-look CE division.

Get rid of these non-core companies, build up a cash cushion to pay down debt and be in a position to start dividends in 2023 - cash from operations will be plenty to easily pull off a sustained dividend. I can't predict when it would break out, but I do look forward to 2023 with a multi-bagger ahead of me.

Sharehead - I'm not here to preach, but I'm sure you realise that these daily back and forths with Aim are pointless and are just this MB space-fillers? Personally, I can't be bothered with the daily up and down movements - it'll be range bound until there's news (or a leak) and a volume pickup will be the sign there. Right now, it's just retail buying and selling bits and bobs, and hence the anaemic volume. Even the selling from 29p down to here was on pretty low volume - there's no real selling pressure from institutions and no large-scale buying either to this up meaningfully.

The market is waiting on divestment news along with the incoming cash flow generation from business operations news. £60 million should be in the bank next month from WSP and we're hoping for a north of £150 million figure from Pay360 by the end of the year? Capita is by far the largest holding in my portfolio and I'll be patient and keep adding tiny chunks on any move below 25p - the market sure is under-appreciative of the cash generation potential of the business.

Bonne chance

"It will make a sizeable dent in CPIs profits (pay £360 has £12m profit)" - @Culley - not really. CPI had a pre-IFRS 16 profit before tax of £104 million in 2021. Out of this, Pay 360's PBT contribution was £7 million in 2021. If Pay360 can be sold for £150 million for a PBT reduction of circa 7 to 10%, I'd take that everyday.

Could debt be called early? that depends on the early redemption clauses the various bonds in question have - note that this debt consists of GBP, USD and EUR debt - presumably each with their own early redemption clauses. Its hard for me to state with any degree of conviction that they can or can't be redeemed early. However, this question is one for 2023 AGM really by which time cash on hand builds up substantially.