Member Info for Savage_KeyboardR

Capitalizer - "Performance is in line with guidance. No surprises. No turds under the carpet. No weasel words."

Actually the TU this morning did contain subtle rolling back on forward guidance if you're careful to read what it actually says (rather than what you want it to say).

Heatseeker77 - Full of conspiracy theories, as many like you are so frequently! - Alternatively, and back in the read world... I was just busy with other things this morning.

I think someone is accumulating with a view to mount a takeover IMO - The question is when might they go for it? Also what price? - I previously considered a takeover bidding price could come in ~28p in old monies (x15 for new money conversion, so ~£4.20p). A bidder accumulating on the dip this morning could make a great deal of sense, especially if they may have already been accumulating in recent months when SP has been low.

Might there be a player accumulating to mount a bid here?

"The way o look it is that if the guidance stayed the same we should be able to be there or thereabouts"

That is untrue, there's several subtle climb downs in that trading update if you read it with care and directly compare to the language used at the FY24 results.

DYOR - IMO

"The only bright side he has got everything else wrong"

Categorically untrue:

I've made repeatedly sound analysis of CPI's financials and the predictions on revenues I made for the FY24 were correct. I also explained what I thought were likely for this trading update and broadly I've been correct yet again!

"2026 was always the year"

Yes, and in late 2025 they shall say it'll be 2027 which is going to be the year!

By time FY2025 results are published (in March 2026) I think CPI will fast be running out of road. £2bn revenues will have just been announced and morale will amongst LTH's will be lower than ever before. By then CPI will have grown it's debts significantly, and will have further shrunk its capacity for making sales... more inflation will have accumulated meaning the business will be a mere minnow by that point (about 15-20% of the size it was back in the peak reached in 2015)...

A bid will probably roll in shortly after the FY2025 results and LTH'S still in will reluctantly accept their tuppence ha'penny.

All IMO - DYOR

TerryM1 - "as always it is jam tomorrow and underwhelming."

Very true and that's because AH was brought in to sell off the good bits and leave LTH's holding the stripped carcass which will remain by the end of the journey.

There will be no 'Jam tomorrow' for tomorrow never comes.

Taxpayer would never bail out CPI and go in on the kind of 60/40 ownership model you're suggesting there.

Far more likely would be a bid by another big player like Serco for the carcus/leftovers of CPI (once the few good parts have been sold off via the CPI asset fire sales AH has been conducting.

"costs are front loaded into half year. Revenue expected to be broadly like last year"

Cost are ongoing IMO, I dont think its the case they'll be fully front loaded in just H1, they look highly likely to cross into H2 as well IMO.

As for CPI continuing on with the 'broadly flat revenues for 2025 narrative' i reckon those buying into that prose may end up deeply regretting doing so. I just cannot see how on earth CPI will meet that guidance without further asset sales to prop up the coffers. So I expect further shrinkage of the business to take place to again keep the wheels turning.

And down she goes... 🌊 🚢 ⚓️

Market clearly not liking the trading update. I still expect FY2025 revenue to drop a smidge below the £2bn level because I think CPI likely has some painful + costly months ahead yet to come.

4.5% revenue decline - ouch! That's gotta hurt! Yet CPI are maintaining their 'broadly flat revenues for FY2025' outlook... I just cannot see how they'll achieve this.

Notably I observe the Total Contract Value (TCV) has landed in better than I'd prior anticipated... which makes me wonder if CPI got one or two very lucky large win(s) into the bag, one(s) they may struggle to repeat in H2? 🤷 - they've stated "up over 70% in Capita Public Service which more than offset the 49% reduction in TCV won in the Contact Centre business" - to me this suggests significant statistical turbulence. Now I know sales can be more volatile but that's quite something; to have one dept up 70%, the other dept down by 49%. Normal variance is much much lower... such turbulence suggests CPI is not operating with stability or in a properly controlled state (well run companies have considerably less volatility, as they're always maximising their sales potential - CPI is up & down like a kid on skittles one minute, then a convulsing sugar crash the next)! IMO there's probably a couple of shining star employees propping things up, if they depart the rest of the team left behind isn't capable of maintaining contingency/continuity... its a classic & concerning signal.

This update shows only a £45m improvement in cost savings (was £140m at FY24 results, now £185m). Target was set at £250m by Dec 2025 - question i have is: will they be able to hit this £250m target in time? As currently they look to be tracking a little short.

They've guided for an "free cash outflow across the Group to be weighted to the first half of the year, with an increase in net financial debt accordingly." - So basically they are, as I'd suspected, taking on more debt to help fund the cost cutting - of course they are though! Because he revenues are falling short into the coffers, also as I'd said they would do so!

And yet... they "continue to expect the Group to be free cash flow positive from the end of 2025." - which IMO will be propped up yet again by more asset sales and debt issuance - a near certainty IMO because revenue into the coffers is falling short!

Lots about AI and margins targets, as I said there would be.

This update is broadly what I expected, the TCV being slightly better than I'd thought may buy slightly more time for CPI. I'd like to revise my SP figure (which I said to AimMaster2018 I thought would be £2.10p - I think Aim will be closer with their £2.20p prediction and it might settle around £2.25-£2.27p) - make no mistake though. This IMO is a very poor update.

DYOR - All IMO

Downsides:

Some sort of vague Revenue downgrade when compared to the prior 'flat revenues' messaging shared at FY2024 results... Costs higher than anticipated, for the 'cost cutting' -which we know has been front loaded within H1... Sales 'a little lower than forecast'...

Upsides? i.e. strong PR doing much of the heavy lifting:

Much talk about 'contract wins' (when really we all suspect they're not selling enough)... some kind of prose about winning the battle for solid margins... increased investment spend into AI which is expected to bring profits out of this world (aka the best jam tomorrow you've ever tasted?!)... announcement of another asset fire sale (meaning LTH's will own many shares in an even smaller business than ever before)... bringing up the rear might be a small buyback or divi sweetener (aka throwing the kitchen sink at desperately trying to prevent LTH's from descending into a full blown rout - which would otherwise be the case if there were no divi/buybacks).

£2.10p (i.e. back down into the ~14p range in old monies).

Macy - You getting margin calls for your open short position yet?

HHH81 - if you're so desperate to prove to us all just how clever you are then why not give us your explanation and show off your intellectual superiority for all on here to see?

Macy - Cheers for sharing this and FWIW I agree the Trumper has put a downer on the USA tourist sector - many Canadian + Europeans in particular are being put off from travelling to USA by his politics.

HHH81 - The hilarious thing is how you profess to be an expert because you understand the difference between turnover and profit.

What's also hilarious is you seem to believe that I do not understand the difference between them. LOL

Macy - the thing with Avocet123 is their posting history, have a browse for yourself - No credible evidence to ever back up what they say, and just posts nonsense. At least you post articles + sources of insightful info, to foster healthy debate -which is the reason I never filter out those with opposing views to mine(unless they repeatedly spout nonsense, and insults, with zero evidence ever being provided). Avocet123 has won the accolade of being the only person I have ever filtered.

HHH81 - has no valid counter narrative nor any evidence to counter my comments... so resorts to just listing things to define... very strange indeed.

"Aim, you're looking at it through the eyes of a trader. Very short term movements in the SP"

🤣 - um... CPI has had falling revenues for 9x consecutive yrs, and throughout that period the SP's relative value has plummeted too.

That downwards trend has been long term and is still ongoing IMO - DYOR.

AimMaster2018- tbf I think you've summed up the critical factors in play nicely. There's a downwards trend on CPI revenues -which I don’t see calming pace during H1. Also because there's now less income landing e.g. from CapitaOne (as it was sold off) - remember CapitaOne was previously a good part of the business helping to contribute positively to the coffers annually- Going forwards this won't be the case 😬

Lack of sales is where I think the strategy by AH and the board is going to come off of the rails...

Sure, they're setting & broadly achieving the margins they've been targeting but it's clear other competitors have set their margins a shy lower, and as a result competition is bagging healthy sales -whereas CPI is losing out IMO. Renewals appeared much less of a problem at the FY24 results but... there is still a little bit of drop off, and for those reasons I dont reckon CPI will achieve its ambition this year to see flat revenues. I think they'll fall a little below the £2bn total revenues for FY25, perhaps £1.95bn, with H1 being especially painful, due to cost cutting overspend.

Points 3. And 6. which you mentioned are nailed on certainties and they will definitely hurt CPI's results.

All IMO - DYOR

I can't read Avocet123' post - they're the only person I have on filter, just examine their posting history- nonsense prose with no evidence ever to back up their comments.

Revenues have been soaring, profits healthy albeit a few one off costs, which the board opted to make, as they spent cash upgrading some IT systems (which completely makes sense, for greater efficiencies)!