PS&C boss looks to overcome missteps and missed opportunities
Link copied to
He has been a big hitter in the space for years, working in the formative years of software outfits such as SMS, DWS and UXC.
Now Glenn Fielding has been lured back from gardening leave to turn around the struggling information technology outfit PS&C (ASX:PSZ).
Never heard of it? There’s really no reason why you should have. It went public in 2013, raising $25 million which valued the company at $50 million.
Now, you could buy the entire company for a third of that.
Broker Bell Potter took the company public, but after eventually cutting a long standing ‘buy’ call on PS&C shares a year or two back, one earnings downgrade too many prompted the broker to abandon the company altogether earlier this year.
As a result, no analysts follow the stock which has scant institutional investor backing.
Profit warnings, missteps and missed opportunities has left PS&C in need of an overhaul, with Fielding pushing to instil more rigor into the group as he pulls a series of seemingly disparate units into a more cohesive unit.
“The company had been scratching around for a few years and missed targets,” Fielding said of the challenge in front of him.
Since his appointment in February, there have been a couple of acquisitions as well as a move into Queensland as it lays the groundwork for growth.
“The mindset is changing in the group: second best is not good enough,” Fielding says of the tougher approach he is instilling.
“More cohesion and less of the cottage industry mindset. Our client base is very much behind us. We do need to move into tier one clients as well.
“Making budget is fundamental and achieving growth would be a good thing … It will take a number of halves” to move the group onto a more stable footing, he says.
Roll-ups have a poor reputation since management often fails to generate the returns promised to the original backers. And PS&C is no exception.
Formed from the roll-up of a series of private companies into a sharemarket traded outfit with three arms — people, security and communications — PS&C has yet to fire on all cylinders, which has raised questions about its structure.
The board has recently signalled it would be willing to consider moving its IT security and communications arms closer together, eyeing a possible separate sharemarket listing, for example.
“Given the synergy of security and communications, it makes sense to bring these two business units closer together,” Fielding says. “And if it makes sense we will spin them off at some time in the future — depending on where value lies.”
Even though the ‘people’ arm of the group (which undertakes consulting, contractor management and recruitment solutions) generates the most revenue, it is the security arm (which carries out security consulting, education and systems penetration testing) which is experiencing the strongest growth.
“It is very robust right now, especially with the legislative demand that security breaches be reported,” Fielding says of the division. “There is a general concern about [IT] security.
“We have an issue finding enough resources. It is a nice position to be in. We are increasing staff numbers.”
As Fielding seeks to boost the operational side of the business, winning the back of investors may take time.
Even so, the backers of the businesses originally merged to form PS&C still dominate the share register.
And the recent sellers of businesses bought by PS&C have also opted for shares for the balance of what they are owed.
For Fielding, weaving the disparate operations of the group into a more unified whole, to help lift both revenues and earnings, is fundamental if he is to have any hope of giving the shares a lift which will ensure the company’s backers get a return on their investment.
PS&C shares closed yesterday at 25c, near the bottom of its 52-week range of 22c to 39c. The business has a market cap of about $21.1 million.