Good morning! It's a very quiet day for news today, indeed the whole week looks as if it will be quiet. I published another webcast last night, of me telephone interviewing renowned investor David Stredder, so for anyone interested in our ramblings (reviewing the previous week's company results, and previewing this week's), the link is here.
Investor webcasts are great fun to do, so it will be a regular Sunday evening feature - not for any commercial reason, I just enjoy doing them. This Sunday coming I will be interviewing ISA millionaire Leon Boros, who in my view published the best ever post on Stockopedia - here.
Management Consulting (LON:MMC)
Share price: 20p
No. shares: 496.0m
Market Cap: £99.2m
This is the biggest faller of the day, down 21.6%, so there must be a profit warning out.
Profit warning - the key paragraphs in today's trading update is this;
The outlook for the business for the year as a whole has deteriorated from the position set out in our Interim Results statement on 31 July 2014, principally as a result of weakness in Alexander Proudfoot, and as a result the Board has materially reduced its profit expectations for 2014.
It's interesting to note that Stockopedia's "broker consensus trend" was flagging up risk here, with a steadily declining reading over the last year.
I'm not gong to drill in any deeper, as I don't like this share - it fails my Balance Sheet testing in particular, with negative net tangible assets, and too much debt. Usual thing - a firm of advisers that tells other people how to run their companies whilst not doing a very good job of running their own! This type of firm always seems to take on far too much debt - remember the two Listed firms of auditors that went bust? (RSM Tenon and Vantis).
I'm not suggesting that MMC is likely to go bust, but it certainly has too much debt, and tacitly admits that in today's announcement, when it says;
Reported net debt at the half year stage was £48.0m. Whilst levels of indebtedness are currently higher than the half year position as a result of the slower summer trading period and weakness in Alexander Proudfoot, the Group continues to focus on operational cash generation to further reduce net indebtedness over the course of the…
