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Friday, October 10, 2008

The Spin says Centaur is Up. But its really Down

Centaurs results presentation is a curious thing. The spin is profits are stable, lots of development in the pipe and the business is well placed to manage through the cycle. Oddly though, the management has allowed head count to grow since 2005 from 695 t0 785. That must mean that in the next year 50 to 100 jobs will go, to right size the business. (Note to recession managers - keep a lid on your headcount)

Once all the adjustments are stripped away the profit left to be distributed to shareholders has dropped from 12.3m to 9.7m or put another way, a 21% drop. The managements preferred measure of profit (adjusted PBT) is slightly up. Bean counters will argue about this kind of thing but lets stick to the facts.

From the charts in their presentation we can see that revenues were around £74m in 2001. Doing nothing but increasing prices by inflation at 4% a year should mean revenue in 2008 of 97m. It isn't. Its less than that. So the mangagment have bought and sold and launched and closed, but in real terms cut the revenue. Profits over the same period are slightly higher than inflation, but only just, and not after exceptional costs have been removed.
Cash on the balance sheet has fallen this year by more than 25%.

The City understands all this and in part this expains the poor share price performance. Its not all because of the crunch. It won't get any better for Centaur shareholders any time soon without some visionary actions and a robust cost cutting agenda.

We have noted this before in other results presentations. The replacement of believable strategy with spin. Nobody believes that stuff in a downturn. At least you and I don't.



At 2:12 pm, Anonymous Anonymous said...

Its carnage at Centaur right now. Expect serious downsizing in the near future.


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