Fix underway

With plans in place to review the Middle East and APAC regions, the trading update suggests that management were taken by surprise. The rationalisation process is likely to be more severe than originally anticipated, potentially including an overhaul of reporting procedures. We expect the focus to turn to gross margins, cash collection and higher utilisation levels – involving headcount reductions, office closures, and a focus on higher quality customers.

The likely scale of the required actions increases short-term uncertainty to the business. We anticipate positive news will emerge in due course, commencing with the appointment of a new CFO. Until then we have suspended any financial estimates. Following the trading update we have reduced our fair value / share to 49p, based on a heavily discounted peer group comparison valuation model.