Oleeo

23 December 2019
By Maynard Paton

Results summary for Oleeo (OLEE):

• A bombshell tender offer and delisting proposal overshadowed details of the 2019 results.

• I have tendered my full holding and recorded a 30% loss after owning the shares for four years.

• The tender offer was not exactly generous, given OLEE’s net cash represented 93% of the tender valuation.

• A delisting was always a risk when the executive chairman (and related parties) owned 84% of the business.

• Full-year revenue climbed 7% to reach a new high, although the significant development expenditure seen since 2015 is set to depress profit for at least another year. 

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07 May 2019
By Maynard Paton

Results verdict on Oleeo (OLEE):

• A terse 155-word statement revealed an unsurprising 50% profit plunge as OLEE extends its “capacity to suffer” to four years.

• At least revenue continues to inch ahead and might even be growing at a reasonable pace if the largest customer is excluded.

• Recent client installations include all four Welsh police forces — cementing OLEE’s 50%-plus share of supplying UK police recruitment IT.

• A lack of guidance for the full-year could strangely mark the low point for earnings. 

• A £13m market cap is almost entirely supported by the £11m net cash position. I continue to hold.

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07 November 2018
By Maynard Paton

Update on Oleeo (OLEE).

Event: Preliminary results for the twelve months to 31 July 2018 published 02 November 2018.

Summary: Publishing results at 4:28pm on a Friday is never a good sign. And sure enough, the recruitment software outfit warned of yet another profit slump. Still, at least revenue inched to a new record as the firm enjoyed greater subscription income. Meanwhile, an anonymous tip-off has set me straight about OLEE’s contract with HMRC — the deal appears not to have been lost after all. All I can do now with this illiquid share is hope for an earnings rebound. I continue to hold.

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01 May 2018
By Maynard Paton

Update on World Careers Network (WOR).

Event: Interim results for the six months to 31 January 2018 published 30 April 2018

Summary: Yet again the recruitment software developer delivered results that warned of greater costs and lower client fees. However, this statement was also accompanied by details of a company rebranding — which seems a complete joke project to me. Instead, management really should be addressing why the firm looks to have lost its largest customer. I have sat on a 35% loss here for three years now, and have been taught a tough lesson about illiquidity. Sadly I continue to hold.

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03 November 2017
By Maynard Paton

Update on World Careers Network (WOR).

Event: Preliminary results for the twelve months to 31 July 2017 published 02 November 2017

Summary: These figures from the recruitment software developer were never going to be great. The overriding theme of the last three years — greater marketing and product investment — once again hit earnings and will continue to do so throughout 2018. The statement talked of some client-fee reductions, too. Still, at least overall revenue and the hefty cash position have both advanced to new all-time highs. Exactly when a profit revival will occur remains anyone’s guess — but I am hopeful the chief exec/71% shareholder will one day oversee a recovery. I continue to hold.

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19 May 2017
By Maynard Paton

Quick update on World Careers Network (WOR).

Event: Interim results for the six months to 31 January 2017 published 28 April 2017

Summary: These first-half results were not too bad, not least because they included a record £5.1m revenue figure. However, the software developer did warn that rising costs would hurt earnings significantly during the second half of 2017 and throughout 2018. WOR recovered very well from its previous investment phase of 2009 and 2010, and I am left trusting the firm can repeat the trick once again. At least the accounts remain simple and flush with cash, and you could argue the underlying P/E is just 5. I continue to hold.

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09 November 2016
By Maynard Paton

Quick update on World Careers Network (WOR).

Event: Preliminary results for the year to 31 July 2016 published 08 November 2016

Summary: These figures were better than I had expected, not least because WOR enjoyed the benefits of the weaker post-Brexit pound. However, the software developer did warn that costs would continue to rise — which in turn would keep a lid on earnings for the “foreseeable future”. At least revenue is marching higher while the weaker pound ought to help the group’s progress in the States. The accounts remain simple and flush with cash, and you could argue the underlying P/E is just 5. I continue to hold.

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27 April 2016
By Maynard Paton

Quick update on World Careers Network (WOR).

Event: Interim results for the six months to 31 January 2016 published 26 April

Summary: These figures were not as bad as I had feared, given WOR’s previous results had confessed to higher costs and lower profit. The outcome for the current year looks set to be better than I had anticipated, too. Notably, revenue moved higher despite one of the software group’s largest customers significantly reducing its payments. Meanwhile, the accounts remain cash-rich and the underlying P/E is less than 7. I continue to hold.

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04 November 2015
By Maynard Paton

Quick update on World Careers Network (WOR).

Event: Preliminary results published 03 November

Summary: Oh dear — my portfolio suffers yet another profit warning! WOR had already owned up to lower earnings this year, but now it has admitted to further cost increases for 2016. Nonetheless, these annual results revealed an improved second half while net cash currently equates to half of the present market cap. Bear in mind, too, that the last time this software developer invested at the expense of near-term earnings, profit eventually quadrupled. I continue to hold.

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04 June 2015
By Maynard Paton

Today I’m owning up to the second of two new investments I’ve made during the last few months.

I say ‘owning up’ because this second share has so far been a complete disaster. Indeed, what I thought could have been a ‘perfect stock’ has instead rewarded me with a 37% paper loss :-(

The company in question is World Careers Network (WOR), an obscure AIM-quoted business that develops and sells recruitment software for major employers.

I purchased the shares during February and March 2015 at an average price of 320p including all costs. The bid price now is 200p and the holding currently represents about 3% of my portfolio.

When I bought, I was convinced this £24m firm offered all the hallmarks of a successful investment. Alongside claims of supplying “world-class technology”, other attractions included a blue-chip client list, generous margins, a cash-flush balance sheet, respectable sales growth and a long-time founder/entrepreneur at the helm. Furthermore, a possible P/E of just 7 suggested the shares were a bargain.

However, events have since not gone my way as I will explain in a moment. And I dare say some investors would have never touched WOR in the first place due to its humungous bid-offer spread and dominant 80%-plus family ownership.

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