Section Items

Clarification
The comments on this page are some of the thoughts that I had when considering this company and not a recommendation to take an action or to refrain from taking an action.

As you know we have no information about your circumstances, understanding of your investment goals or the level of risk that is acceptable to you. So it would be completely unreasonable to read these commentaries as recommendations.
Is This Just Pump And Dump?
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Commentaries tend to be created when I look at a share and decide if it is one that I want to buy either now or when I next have an unallocated pot.
Financials
As companies often report numbers in slightly different ways there are a number of entries to cover this and as these are rough notes there will usually be empty items.

The debt columns are shown as positive values if there is any debt, all other negative values are shown within parenthesis and without a sign.

Commentary On Staffline Group

Title: Staffline – Expected Share Placing, But Unexpected Rises Earlier.
Company: STAF - Staffline Group
Share Price Then: 126p
Author: Ian Smith
Date: Thu 27 Jun 2019
Comments: As expected Staffline have just announced a share issue at 100p, although at £41m it is a bit higher than the £37m proposed about 10 days ago.

After the disastrous announcement on the 17th of June that the company had a £15m bill for unwaged wages due to underpaying the minimum wage, a poor trading year and a proposed £37m share issue the share price dropped from about 250p to 100p.

I expected it to stay at around this level or drop even further yet it rallied to nearly 150p dropping to only 120p when the share issue was announced.

I was really surprised to see retail investors buying in to a company that had such a difficult future and knowing that a share issue was about to be announced.

I get that there may be a long term price growth as for most of the last 5 years the price was around 1000p but a doubling or trippling of the number of shares was clearly on the cards. So post share issue price growth is pretty unclear

Much of the net debt increase was due to £50m being spent on acquisitions, and reducing this debt along with the unexpected £15m wage bill is the reason for the proposed share dilution.

I am not at all sure that I like to notion of incurring debt and then doing a share issue to raise funds to pay it off.

With no 2018 final dividend and none proposed for 2019 and 2020 a lot is being asked of existing and new shareholders, C Pullen’s salary has risen from £295K to £325K and M Watts’s from £180K to £220K but at least they waived a 40% of salary bonus and there is some commitment to the share offer.

Director Intended Participation
John Crabtree, Chairman £25,000
Chris Pullen, CEO £100,000
Mike Watts, CFO £18,000
Ed Barker, Non-Exec £10,000
Tracy Lewis, Non-Exec £100,000
Total £253,000

Clearly the top level management has lost control, but there is still a profitable business so I would be surprised if the share issue is not approved and taken up.
Financials:
ItemCurrent PeriodPrevious Period
Year20182017
Period
Revenue£1127m£957m
Earnings
Adjusted Earnings£36m£36m
EBITDA
Adjusted EBITDA
Statutory Profit(£10m)£24m
Adjusted Profit
Total Debt
Net Debt£63m£16m
Read Count: 315