Johandesilva
31 Jan 2018
Dont rub in in Some of us are invested here!There are some good cash generating parts to this company and restructuring before the bulk of contracts run out is the right direction.
numberbiter
31 Jan 2018
Re: Looks very very bad Pyueck,I agree with you entirely; this should be avoided like the plague. In my post re Carillion on 19 January, I said there are three reasons why you should never buy a share and sell it immediately if you have the share. One of the reasons is when if you take Intangible Assets out of the Balance Sheet and it goes negative (liabilities exceeds assets). On this basis, Capita goes heavily negative. The problem is that Intangible Assets are mainly made up of Goodwiil, which is simply the difference between what the company paid for a company taken over and the net asset value of that company at the time of takeover. It often means that the price of the acquisition was too high.The statement made by Capita today is a carbon copy of the statement made by Carillion in July 2017 - heavily indebted, no more dividends, need to raise more capital. With the Balance Sheet so weak, it is doubtful whether investors would want to chase bad money with good money or if bankers would be willing to lend more. I cannot see much upside at today's price and with the probability of Capita going bust about 0.5, this has to be a 'strong sell'.
Dictum de dicto
31 Jan 2018
Re: Looks very very bad Alas, I am still partly invested here. I bought it as a possible recovery play last year but clearly misread the rune stones. The problem I have is whether to believe in the plan given that national politics are now firmly against public sector outsourcing. Automation is inevitable but more offshoring will go down with clients like a lead balloon. Selling companies will raise money but will they get full value given that they may appear as distress sales? 80,000 or so employees which provides some scope for cost cutting but a sizeable chunk are already offshored at low rates anyway. It no longer pays dividends which for many make it pretty useless. I did a piece of work for a Capita subsidiary four years ago so got a bit of an insight into the management processes as they were. The previous year they had bought 14 companies and seemed to expect them all to produce higher growth than they had beforehand to justify the acquisitions. It was 'hands-off', which can work but not much good if its simply a case of draining cash out of each one and not investing. There was also little attempt at full integration and the strategies about how subsidiaries worked with each other was not at all coherent. It also struck me that they had people inside the company who could help improve matters but seemed to want to put them in fee earning roles vs. getting your own shop in order. It made little sense. The first rule of outsourcing is not to outsource a problem; sort it first. Capita were always happy to work on other organisations issues but seemed to ignore its own dysfunction.And yet I still made a small investment in 2017. In hindsight I put too much faith in a new management approach and have to say I did expect them to protect the dividend, albeit at a lower rate. It's a struggle to see how they will get to even the lowest recent broker forecast of 391p. I've got to agree with a previous comment that even the so called experts appear clueless in this particular market.
Lupo di mare
31 Jan 2018
Re: Looks very very bad Hasten to add that I'm not invested here.What a rubbish update! Rights Issue at some stage, but don't know when and don't know at what price, etc. That must rate as one on the worst kitchen sinkers I've ever read. 'Jon' says you're going to have a "great" business - pass me the bucket.Serious dilemma for investors with such a questionable announcement. Good luck!
pyueck
31 Jan 2018
Looks very very bad Well that update was about as bad as it get. Reminds me a lot of Carillion last year, basically the CEO thinks the business sucks in many areas, is over leveraged, is operationally poor and has lost control of costs.The biggest thing that worries me is a) they are highly leveraged, b) they are burning through cash and c) from the sound of it a lot of the projects are poorly run.The plan is to sell off assets, have a transformation plan and launch a rights issue. Well the first two carillion tried and failed, selling off assets for a good price is hard especially when you have just admitted that your business is not well run and that you need cash quickly. Transformation plans take years to succeed and Capita is a complex beast, i.e. it will do next to nothing to help any short term problems. The rights issue is a necessary evil, but they need to get on with it, the market has no time for basket cases that want to rely on a handout to make up for the fact that they are burning through cash. As Carillion proved, it's not just the long term balance sheet strategy that matters, every company needs to have enough to pay it's bills when due and if you are highly leveraged and burning through cash then things can go down hill before you can even think about a rights issue. Banks are not charities to help failing businesses. The message didn't mention covenants or access to short term funding but this must be a concern.Overall avoid this one in my opinion.
old_punter
31 Jan 2018
Rights Issue I would guess this could only have been underwritten, what does standby mean I wonder, on a deeply discounted basis, so perhaps at a price even lower than the current 196p. If a rights issue is deeply discounted the usual question arises why pay for underwriting? After this price fall perhaps it is no longer deeply discounted, the underwritten price is bound to leak IMO.Not seeking to defend Woodford but I see this month's broker forecasts, five of them on the HL website, have price targets in the £4-5.50 price range. And Questor as pointed out another who said hold. I took a look when Questor wrote about it but was insufficiently tempted, thank goodness, partly because of the political risk if the Marx brothers were to be the next government.There is likely to be some broker comment post this morning's statement on Markets Live which runs for an hour from 11am on the FT Alphaville website (which is free but you may have to register) for those interested.
Mikeclayton2
31 Jan 2018
Re: Could it get worse? Not invested here, but the RSN mentions 700m and there are circa 668m shares in issue do the sums.
cooperboy
31 Jan 2018
Re: Could it get worse? I agree there are parts of the business that must be profitable-until we know what price the rights issue is going to be though its impossible to forecast what the bottom of this is
WhoSparticus
31 Jan 2018
Re: Telegraph- Questor Well done Questor. Precisely wrong again. Suggest you stop getting from Woodford - they seem to be wrong about most things these days.
shugg1e
31 Jan 2018
Re: Could it get worse? That being said after the rights issue and we have seen a period of consolidation i would be tempted for a long term recovery playhopefully this will be around the 50p mark
shugg1e
31 Jan 2018
Re: Could it get worse? I believe he has been trying to talk it up of late as well people really need to stop following these so called experts as everyone has their own agenda.DYOR
Retec
31 Jan 2018
Re: Could it get worse? I agree..If a share can decrease by over 80% in a time when our economy has supposed to be doing well... speaks volumes... Common sense.. that's all
cooperboy
31 Jan 2018
Re: Could it get worse? woodford is a heavy investor in this. Enough of a red flag to make anyone avoid it like the plague
shugg1e
31 Jan 2018
Could it get worse? Dividend suspension Rights issueProfit warning And its only down 112p!!!!I was thinking it had bottomed as well phew what a lucky escape
Doomsayer
28 Jan 2018
Re: next Carillion Didn't they just adopt the same management that bankrupted AMEC last year.....or at least the ones that WOOD group were smart enough not to hire?
