I'm with you 8th Wonder. Accounting trickery is not a good sign. Top line revenue would be materially down otherwise.
PEH is exposed to the mining industry for a good chunk of their business. Whilst a lot of this revolves around operations and monitoring, new project environmental reports/ regulatory work will drop away. In addition competition will be increasingly aggressive as less work is available.
On the flip side the software development opportunity looks interesting and their ability to bolt on niche/ regional consultancies at 3x EBITDA - even if their revenue/ profits are falling - is very attractive. Cashflows may be a limiting factor here to aggressively pursue this M&A activity.
Liquidity is a big issue for me in that it is difficult to build a position and then, if something goes bad, very difficult to exit. Thus you need to be extremely confident that you've done effective research and that the management team are capable.
Cheers
John
EVS Price at posting:
6.1¢ Sentiment: None Disclosure: Not Held
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