Member Info for TerryM1

Sharehead

"Both this and Serco were circa £1.50 before Covid hit"

Some outsources took advantage of Covid to make money when the government were throwing it around like confetti but Capita in the form of JL used it as an excuse to justify abysmal performance.

Trenners

CPI has used shed loads of exceptional items for years, obviously I hope we have seen the last of these but I tend to believe based on past performance they have a least a few more at their disposal to wheel out when required to blame for loses. Pensions are an example that they did not properly fund to keep the loses down but then when they had to fund it used this as an excuse, pensions are not one off items and should have been properly funded when required. Why are pensions for CPI exceptional and not for Serco.

IMO the SP will stick around in the 16-17p range perhaps up to 20p for a time depending on general markets unless some news is announced. We would all like 60p but really, it may get there after a time if the new guy can turn this around but it will be a long hard struggle to do this and it will involve removing the JL culture so the company has some regard for shareholders. This may persuade the markets that this is not a basket case full of excuses and exceptional items, for this to move up we need a decent and regular dividends, something like all JLs promises at best still a long way off.

This does not look good, I am not very happy about the price but the sting in the tail is the time from completion to liquidation as the dividends paid in this period is knocked off the price less any interest gained from the cash which will be placed in interest bearing accounts. Given the track record of poor interest paid on the cash in this company we need to know what these accounts are and how much they will pay as it is our money tied up for a least 3 months, why can this not be paid out a lot sooner. Also interesting the date set for completion is 28 Sept so will include the Sept 29 dividend in this reduction. So probably 4 dividends taken off the 72p but with some interest added. Also what type of dividends will they be, I assume they cannot be PID, some of it will be interest but the rest will be either ordinary or capital repayment (as being taken out of the 72p), perhaps not a lot of difference but changes the tax calculations and reporting.

Europe's Shift To LNG Might Push Others Back To Coal

https://oilprice.com/Energy/Natural-Gas/Europes-Shift-To-LNG-Might-Push-Others-Back-To-Coal.html

Europe's Shift To LNG Might Push Others Back To Coal

https://oilprice.com/Energy/Natural-Gas/Europes-Shift-To-LNG-Might-Push-Others-Back-To-Coal.html

Relevant for World price of LNG

Part 6 Hindsight continued

The way I look at this is

1. The shares at the placing were great and still gave a great return given the dividends over the years but have caused some stress.

2. Money buying shares after the first bit of bad news but before the full extent of the problems were announcement was the result of lies from the old BOD and insider dealing, very few people saw this coming otherwise the shares would have collapsed in one hit not over a number of months.

3. The Rights Issue money although paid out reluctantly was based on the present board statements, they either lied about the state of the company or had no idea what they were doing and are just plan incompetent, all this Rights Issue money now gone.

4. My latest purchase at 22.7p, the jury is out on this one, is this just my mistake or is there more information that the BOD are not telling us only time will tell if I did this to myself or more lies and disinformation from the BOD.

You may say this is a once in a lifetime story from a few thousand pounds to £650,000 and all the way back down again to a significant overall loss. However this has happened 3 times before, I worked for SDL a software house and so was able to participate in the IPO via a placing, bought them with their own money as I was working abroad at the time and could not get to my funds so asked for a loan against expenses and put this money into the placing. As I understood software houses also bought Logic and CAP on their IPO. All of these went from a few thousand pounds well into 6 figures but all collapse and were all taken over. The only difference this happened in around 10 years (not 30+ for CPI) I did not add any additional funds and in all made some decent profit between double and 5 times but not in to 100s of times when they were at their peak. What is the moral of this story, I don’t know, perhaps take gains when you can but then you will miss out most of the gains and you always sell your winners leaving a loss make portfolio, no good answers. However the one thing I do know is don’t trust what companies in general tell you and especially Capita, also when a share price moves for no apparently good reason suspect inside dealing and lies.

Part 6 Hindsight

After the other parts I thought I would look back at what happened from my point of view and why it happened.

From the placing to the peak of £13 + dividends for 20+ years in was a one way bet. The initial stake had been repaid many times in dividends and all was profit. As has been mentioned here by some posters, what’s the problem you are still up, well yes this is true but it is like winning the lottery and putting your winnings in a bank that goes bust and you just get a small amount of compensation. In both you still make a small profit but the rest is paper gains then losses, however it does not feel that way when it happens to you but c’est la vie.

The shares dropped fairly slowly from £13 to £4.40 with a number of dead cat bounces, this was caused by a less than stellar report which Capita said was some type of glitch, nothing to see here and business as usual would soon be resumed. As Capita had come through for over 20+ years no reason to doubt this statement and after discussing this with my broker who agreed bought more at £7 and then £5.16 in my ISA from profits from ARM and other money. It then drifted down to £4.40 although I had some concerns not too worried as I thought it would pick up over the next few years. Then the news was released the company is in serious trouble the shares dropped to £2.20, the penny dropped, I had been had. Capita lied and I had been sucked into buying shares that looked cheap at the time even given the news that was released but the price drop was due to insider dealing by those who knew the true extent of the problems, my broker also had not idea. Now I not only I am losing paper profits but real money and the loses are in my ISA so can’t offset against CGT, also my tax free investments have been significantly reduced. Until the news finally broke about the state of the company they were still paying dividends to give the impression everything was fine so I paid tax on these dividends to then put the rest of this money back after tax into rights issue.

The management were replaced and then the Rights Issue, perhaps a new start but then faced with what to do with the rights. If I let my rights lapse I get 70p which gives me a large gain and CGT to pay even thought I am losing when the ISA is taken into account. So took up rights for around £40,000 and the lapse rights paid me back around £10,000 so no CGT. Recently bought more a few more at 22.7p

Well with Nofear and Aimaster now on board how can we fail, all plain sailing from now on.

Part 4 my story

Not sure what the total gain was at the peak but around 250+ times + dividends. After I first got the shares did not take too much notice as I only got these on recommendation from my broker and the fact that they were very good and their placing always profitable. As time went on and the SP went up took more interest, as already said they were a very well run company in a growing market. When the SP went from £12 to £7 and then to £5 added in my ISA from the profits I had from the ARM after the takeover and also another purchase later, at the time the BOD said they it was a temporary glitch and normal service would be resumed as soon as possible. In those days I believed the BOD as they had always come through before, what a mistake.

There was the big warning sign when Paul Pindar left but I decided to wait and see what happens as CPI had always come through.

Then came the news the company was in serious trouble the slow drop to £5 was just the first step and then SP went off a cliff. The rights issue came but I if I sold my rights I still had a large CGT bill so I decided to sell up to my CGT limit but still had to add £30,000 just to avoid CGT, of course had loses in my ISA but no use to help with CGT. After the RI the shares go to around £1.50 and since then down to £0.16 with a few dead cat bounces on the way. Added a few more at 22.7p in my SIPP in the hope of making a quick profit to offset a small amount of my loses, again good money after bad.

The only consistent factor was the board saying we are doing well, going to plan but not our fault, Brexit/Covid/Hack /Rain /Floods/Plague of Locus (chooses you own excuse) have set us back, sometimes good interim reports only to be taken down in year end accounts when the true figures are released.

So I am now loathed to believe anything I hear for the board as I have heard this all before upped my hopes so many times only to let down once again when the figures released. The real sign of a recovery will be if/when the dividend is reinstated for me a company without dividends is like “a boy without a winkle” (from Nursie in Blackadder), OK in the early part of a company’s life.

I have mentally given up, as I say at least I can use the capital loss if no recovery. There is no point getting excited (as I used to) about promises for the future only to be let down again. IMO our best hope is a completely new BOD who realises that shareholders are import not just there to fund mess created by a dis-functioning BOD and company.

Part 3 the current lot

So after the first disaster we get JL, the new BOD and the rights issue, this came after a large dividend, could not help but think that I paid tax on this dividend and now Capita wanted it back and more for the RI. Would have made a lot more sense to stop the dividends earlier (at least then save the dividend tax) but I guess this would have stopped the directors bonuses.

It is difficult to know whether CPI was beyond hope at this point and should have been sold off in parts to pay off the debt and perhaps give shareholders a little something back. The one that is certain that the RI was a disaster for anyone who took this up and we would be far better off if CPI was put into administration at the time so we would not have been putting good money after bad, also for any shareholder who bought post RI, with the exception of those who traded out after a short time at a profit. It even helped bring down Neil Woodford. However JL said it would all be turned around by 2020, but I think we all know what has happened, a lot of the company sold off with no tangible results but did however keep JL and the BOD in a lifestyle way beyond what they deserved. If only they were half as good at running the company as they are with excuses and promises of jam tomorrow we would all be rich instead the only thing they are good at is fooling the shareholders but they are now failing in even in that. JL and the BOD either lied to the shareholders at RI or are totally incompetent in not seeing the full mess or perhaps just run the company badly ever since.

Part 2 the downfall the early years

It is difficult to know when the change really happened but probably somewhere between 2010 and 2015, there was a big warning sign when Paul Pindar resigned with what looked like a flimsy excuse. What seemed to have happen is that the outsourcing market had become far more competitive with lots of new entrants. At first the government were very happy to make saving by outsourcing but as time when on they wanted even more saving to the point where the prices were being driven down to uncompetitive levels. By this stage I believe that Capita had become less efficient with higher costs. The BOD (not the current one) were addicted to their bonuses so they decided to in effect cook the books, take on low profit contacts (with the risk these will lose money as costs rise) and buy anything they could with borrowed money to stuff the balance sheet with goodwill. This made it seem like to company was doing well so they could carry on with high salaries and bonus until the ticking time bomb went off. Also by this stage the dividends were high which the company could ill afford. It did not matter to the BOD they banked the cash and worst that could happen to them was golden goodbyes.

Capitalizer

“TerryM1, you must have a helluva perspective on CPI given that you've been a shareholder from the beginning. Perhaps you have a view on why Capita was successful as a growth company back in the day versus why it is struggling now? They started as a public sector outsourcer, which the core business still is. In your opinion, why are they failing now where they succeeded back then? I'd be genuinely interested to hear your thoughts on this?”

Part 1, the golden years

I may well be the longest shareholder in Capita as I got my shares in the placing when they came to the market in the late 1980s. They were a very well run company in a new and growing market of government and private outsourcing and for many years (almost 25 years) a one way bet, at the beginning they stuck to what they knew best and the company kept growing, they could not put a foot wrong. Paul Pindar was the man who seem to be the driving force behind the company and he was with CPI for 23 years. In the top 10 of FTSE100 for 10 years and gave good returns capital and dividends for 20 years.

New Primary Bid offer closes tonight at 8pm or perhaps before.

Jumped back in again, or at least I will have if I get an allocation.

I am in with 168,250

"If anyone is interested in grouping together to call a General Meeting"

I will certainly vote for this, this has to change.

Would this not be an EGM

Https://www.lse.co.uk/news/primary-health-properties-plans-secondary-listing-in-johannesburg-xtsqkozl8qs9z3j.html

Any ideas why they are doing this, is this in preparation to raising funds via some sort of shares issue however it is not part of the initial secondary listing, I hope there are no fund raises given the current SP.

I think a rights issue is out of the question and I really hope CPI do not need more cash as it would be good money after bad.

There would be very few takes even after it collapsed the share price further and who would under right it.

It is getting to the point with the SP in freefall now there is much less to lose if it goes bust which I really doubt it will.

Where is JL and the BOD, the scarlet pimpernel of directors.

It i now time for the IIs to do their job in protecting their investor's funds and get rid of the useless blood suckers running this shambles. What we need is an activist shareholder to shake up this complacent bunch who are happy just to take the cash while running this company into the ground (bit like our government).

"Someone is clearly selling"

Unfortunately it is also one of the BOD that has been selling, with the SP this low and with no buys and some selling from the BOD this give a clear signal to the markets that even the BOD have no confidence in the way they are running this company. The whole lot of them should go and be replaced by some people with competence, it is the job of the IIs to make this happen (to protect their investors money) but they just seem to sit on their hands and bit by bit pull out of CPI, we need a shareholders action group!

"If the market is in for a major crash, then the sale of non-core business units by JL was timely if not prescient."

This may or may not be the case but does not detract from the very poor running of the remaining parts of CPI which are barely making anything (if not in losses) or not taking up the opportunities during Covid like a lot of its rivals did when the government were throwing money about like confetti.

Capita was a "once in a lifetime stock", it went from the placing (when I go my first lot of shares) price in or around 1989 up over 250 times, yes seems hard to believe, was in the top 10 best performing stocks in the FTSE for 10 years.

This was days of Paul Pindar, I did have reservations when left but obviously he knew what was coming.

I very much doubt it will ever be again but if managed well we could see a good recovery.