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 – Almost Certainly Safe Now.
Company: STAF - Staffline Group
Share Price Then: 107p
Author: Ian Smith
Date: Mon 15 Jul 2019
Comments: On Monday (15th) there is a vote to approve a massive share issue, the share issue itself appears to be fully subscribed if it is approved and will be admitted on the 16th.

The placing will raise £34 million by placing approximately 122% of the Company's existing issued share capital at 100p per share.

On Friday the market closed at 107p per share, down from the 800p to 1200p range that it has been trading at over the last couple of years but up from the low of 85p.

Post issue this gives an adjusted range of 360p-504p.

The reason for the issue was three fold, not paying wages during “change for work hours”, about £15m wiping out the genuine profits for the year, costs associated with changing part of the training division and borrowing to buy other agencies.

2019-2020 is predicted to be a difficult year and I find reasons to believe that the profits could be similar to 2016, and the “change for work hours” really is a one off exceptional cost.

So the real question is the demand for temporary staff, especially from the better payers such as the car industry, still there or does the group have too many branches?

I mentioned in an earlier commentary that I was surprised by the market taking the price up to 140p after announcing that a share issue would be needed by without a price.

Those who bought in at 85p will have done well but had the shares been priced at 50p it would of course been a different matter.

I waited until the circumstances were very clear and have bought in at a bit over 100p, so my gains (hopefully) will be less than those who bought at 85p but I may not be tied in for so long as someone who bought at 140p.

If I am right and the price creeps back to 200p well under the adjusted 360p value then the returns will be good and the risk of loss relatively low.
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
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