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Bilby – reckons “pleased to announce” interims… I don’t reckon the recent institutional shareholders will be as pleased!

By Steve Moore | Tuesday 11 December 2018

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Gas heating, electrical and building services provider Bilby (BILB) reckons it “is pleased to announce its interim results for the six months ended 30 September 2018”. So why then are the shares currently circa 20% lower on the back of them, to below 75p?

The results show an adjusted pre-tax profit of £2.4 million on revenue of £36.4 million, generating adjusted earnings per share of 5.4p. However, the earnings compare to 6.2p for the corresponding 2017 period and, after particularly a £3.6 million net working capital outflow, net debt increased to £7.9 million. Current assets, of £25.1 million, still outweighed total liabilities (£22.8 million) – though included £20.5 million of “receivables” and a dividend per share was maintained at 0.5p.

Additionally, “post the period end the company advanced its buy and build strategy with the acquisition of Dunham, a provider of electrical installation services and maintenance services, for a maximum cash consideration of £1.4 million and 250,000 new Bilby shares. The company continues to appraise a number of exciting acquisition opportunities”. Hmmm.

It notes a “decision to cease its building services work for the Ministry of Defence to focus on more profitable contracts and a delay in a gas installation programmes”, though that “we remain confident of a strong second half of the year which will materialise in an improved year on year underlying EBITDA”. Of course though EBITDA is meaningless without cash flow following and in its previous results the company was emphasising “we have a clear growth strategy with a dedicated and focused management team to build on the progress we have made in the last financial year and to that end, we look to the future with confidence”.

I note there has been no further update since that in July – hence the share price reaction today, though that on 4th September it was announced that “founder and Deputy Chairman, Phil Copolo, aged 65, has decided to retire from the business and has resigned from the board… Concurrently Phil Copolo and Leigh Copolo have sold their entire holdings in the group comprising of 12,596,896 ordinary shares… at a price of 100p to a number of new institutional shareholders”.

I bet they’re “pleased” indeed with the interim results announcement! We’ll now see on the “strong second half”, but currently certainly not one I’d be risking; an avoid.

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