Member Info for Hexam

"Anyone top slicing this at around the 22p level is making a huge mistake".

Like you I'm optimistic about CPI but I don't think it's a mistake to bank something on a decent rise as it's simply about managing risk and knowing that shares rarely go up or down in anything like a straight line.

My last buy was in the 15's and I've recently sold that for a 40% profit. Yes, if it keeps going up I've lost out on some more growth but will still enjoy the rise on the majority of the holding I still have. On the other hand if the price drops back I can buy those shares back cheaper (provided I maintain my longer term confidence).

So I don't think trading within a stock is unusual regardless of the level of long term confidence one has. I wouldn't sell all my holding though unless I really no longer believed that the stock had value. The bigger risk I think is not in missing out because of banking rises too early but in getting greedy and hanging on too long. But we all think differently and perhaps I'm just overcautious.

Indeed GoCPI. Once again Nofear ramped to the moon but settled for pennies (if that) - and he had the cheek to call us 'turncoats'!? Actions speak much louder than words.

Hopefully you're wrong and he won't be back to troll this share now like he usually does but instead will disappear to another board - preferably one where I'm not invested.

Mind you where else are we going to find out the UT at the end of each day??? If only LSE had a page on trades...

Nope. No use of working capital or buying of shares - just a very small dilution (0.3% not .003%).

“You believe I’m ramping in context to the TU”

No I believe you’re ramping all the time full stop just more so today following the TU with over 30 posts and not a bad word to say despite how mediocre it was and the unsurprisingly lukewarm market reaction to it.

But if that’s the way you truly feel about your investment then good luck with that - if you actually are invested ;-)

I think AIM was the only poster calling 14p. Certainly not me as I'm not silly enough to make short term sp predictions either way. I don't see how your posts today off the back of a mixed bag, largely tepid TU cannot be described as ramping which by definition is the overt exaggeration towards the positive just as trolling is the overt exaggeration towards the negative. Not one mention for example of the very disappointing cash flow forecast for this year or the likely increase again it causes it net debt?

I can't remember if you were calling 20p by Christmas. If you did then that was a very modest prediction by your standards and has to be judged together with all your other, more outrageous ones that haven't turned out quite so well.

"debts are dropping not increasing"

Depends on you time frame. True if talking last 5 years. False if just talking about this year.

Sharehead - I did top up at 15p (well, 15.4p to be precise) and am pleased that's turned out well and I'm not too far off my average thankfully but can't see any immediate signs of the next 'leg up'.

I must admit your blanket ramping today, polishing what was (according to most posters it seems) at best a mediocre RNS has been impressive but I think even if they said they were possibly about to go into administration you'd still be pushing the stock for all your worth.

It's good they are still confident of their targets although 'mid-single digit revenue growth' is hardly something to get excited about in a time of mid-single digit inflation. The doubling of operating margin and delivering positive free-cash flow is much more appealing but they are not exactly progressing at speed towards these. The accelerated cost reductions are certainly a good step in the right direction (news of which I think caused the last 'leg up') but they really need more actions like that (not just words) and proof in the results to convince more investors to get on board. All the ramping in the world doesn't make a blind bit of difference to that.

"It’s good today’s TU has confirmed the ongoing progress"

I must have missed that bit?

Culley - it's a mix of things. Yes, the operating profit should be around £100m at year-end but you've then got to adjust for changes in working capital (which don't affect profit but do affect cash - which can move either way) and depreciation (which does reduce profit but not cash). These actually cancelled each other out broadly in H1. Instead the difference between operation PROFIT of +£56.5m and Free Cash OUTFLOW (excluding business exits) of -£53.4m was due to all the things that are not included in the operating profit line namely interest, tax, one-offs not related to business exits, capital expenditure and lease payments.

In H1 only £24m of the £110m difference was related to one-offs so less than a quarter. Will probably be similar in H2.

So the the bulk of the £190m you mention won't be due to one-offs with instead leases, interest and capital expenditure definitely all playing a big part. The actual free cash outflow is likely to be even higher as at H1 it was £83m rather than £53m because of one-offs related to business exits. Note the redundancies will NOT affect cash flow in 2023.

But the ‘fact’ is that net debt went up at half year and is likely to be up again at the end of the year. It’s just a lot better still than it was before the disposals started.

"Does this debt figure include the bonds issued a few months back, these need to go as paying over 10% in an environment where interest rates are falling."

In effect yes as the £200-250m I estimated is a net debt figure. Any new debt in the first instance just raises both the cash figure and the debt figure so leaves net debt unchanged (apart from the impact of charges). So debt itself would have increased but so would have the bank balance.

Yes, the net debt will increase but probably a bit more than slightly. They've already indicated the FCF for H2 will be similar to H1 (so around £50m outflow) so the increase is likely to be more than that as this figure doesn't include one-offs. This is also consistent with them saying the financial net debt will be around 1.1 x adjusted EBITDA which was £115m just for H1.

So perhaps financial net debt of £200-250m? One of the most frustrating things about Capita (apart from just the share price) is that they love presenting results in the form of riddles rather than giving straight numbers. So we've always got to piece together the clues to try and figure out what is really going on which of course leaves them so open to interpretation - meaning that both rampers and trolls can bend them to fit their own messages and agendas. Hopefully the 'nearly there, just around the next corner' this time really does turn out to be the 'next corner' and they will start to present clear, impressive numbers that don't suggest they've still got something to hide.

Look like a pretty mixed bag to me with no really big surprises either way.

On the good side:

Good contract wins

(Modest) growth in like-for-like revenues

They retain optimism for future margin improvements and positive FCF underpinned by action already taken on cost base plus non-recurrence of Cyber cost plus confirmation that additional pension contributions will soon cease

Not so welcome news:

FCF will again be poor for H2 with FY23 outflow around £100m

Net Financial Debt to rise again to probably to well over £200m

Drop in renewal rate (though at least in part due to focus on margins)

So all a bit jam tomorrow but with some definite actions that support their optimism. No real fireworks though but then again there wasn't expected to be.

"Hang on. We’ve sold a lot of businesses- so having higher revenue despite losing that revenue is a good thing….no?"

But Trisor the 'adjusted' revenue that they are talking about already allows for exactly that. The overall, reported revenue will indeed be down because of the businesses sold.

MM - I think it may be a distress call as it's just an annoying noise that keeps getting repeated.

"If BTC as a product is ok for that person who is invested in other BTC companies then how can BTC the same product not be ok here?"

It's called having doubts. Anybody who is 100% certain of their investment shouldn't be investing. I'm invested in five miners and am in healthy profits on all of them (apart from ARB) even though I think most miners can't survive long term or maybe even medium term. Neither am I an advocate for BTC as a panacea for all the world's financial woes nor, like Chopsing, take much notice of the $100k+ crowd as there have been many failed predictions of that kind in the past. I'm invested in QBT not because I believe they have a viable product (I don't) but because I think the potential rewards more than outweigh the chances that I'm wrong.

Like everybody I invest to try and make money. You don't have to believe in a company or an industry to do that and certainly shouldn't fall in love with a share as then all rational thinking goes out of the window. Instead research, objectivity, timing and luck are all far more important.

In my view the recent results have been very disappointing including the last interims and the cyber incident was just one part of that. They reported a loss at half-year which would have simply been a smaller loss had the cyber incident not happened. Once they can show the numbers have turned around (or are at least very likely to) and the profit doesn't rely on removing yet more 'one-offs' then I'm sure the sp will flourish.

The accelerated cost reductions that were recently announced is a good sign but there is still plenty of uncertainty for now.

I agree that the US market is faring better than the UK but it's not all doom and gloom here. There are plenty of major names in the FTSE350 and beyond that are surging at the moment and/or are at (or close to) one year highs on the back of good results or other factors - it's just that CPI isn't one of them following their disappointing performance over the least twelve months. That could all change next year and if their results do pick up then I'm sure they'll follow in the footsteps of the current 'winners' like RR, M&S, CCL, NXT, 3i, SGE, TUI etc. etc.

It's all very well pointing the finger at the market but most of the blame for Capita's sp performance is surely closer to home?

Yes, it did go up a bit after the poor first half but is a lot lower than it used to be. They need positive, business-as-usual cash flows to get the net debt down now that the disposals are coming to an end.

Lordy - I'm not sure why City AM are getting in such a lather about debt. I wouldn't say it's the healthiest of balance sheets but equally I don't think it's ringing alarm bells either (and is certainly better than it was).

The net debt is £544.6m but of this £378.4m is in respect of lease liabilities. These are not loans that need to be paid back in one go but just represent the value of future lease payments which should simply be paid out of future cash flows. No-one is going to come knocking of Capita's door for these so long as they can keep up with the lease payments and provided they can generate positive cash flow this won't be a problem. Of course what is key is that they get back to decent positive cash flow and profitability as soon as possible but we knew that anyway!