7:59 cut – STAF, LTHM

Staffline (STAF) – Results and fund raising

I sold out of my speculative position earlier in the week because I took the lack of an announcement as a bad sign. I felt that if they had an offer document / placing price then that would be so material that an RNS would be immediately required. And if they hadn’t then they were taking up to the line and so risks were increasing.

They certainly kept us waiting, with the 100p placing RNS not available on London Stock Exchange website until 7:08 and not on investegate until about 7:25 (although backdated). Reminiscent of a bad film, the results went straight-to-website, and evoking the horror genre include the magic words Material uncertainty related to going concern. Note: At the time of writing the results RNS has made it to Investegate but not to the London Stock Exchange website.

I doubt it is a co-incidence that it was their RNSes that were late this morning and so there appears to be a level of ongoing chaos in the group. It is inconceivable that the events of the past 5 months have not affected management focus.

I will be avoiding the shares at least until the results of the accelerated book-build are known, which, if all goes well should be this afternoon / evening. I will post in more detail after this announcement.

Note that the shares are now ex-open offer rights and so (all other things being equal) would be expected to fall this morning. Additionally, based on experience from previous fund raisings, the price is likely to fall to between 95p and 120p over the next few weeks. Given that institutions are now / will shortly be able to trade again, anything much below 95p would be cause for concern.

James Latham (LTHM) – FY Results

Revenue is up 9.4% to £235.1m and ahead of the £228m consensus shown on Stockopedia. As is often the case, it is difficult to tell from broker consensus whether the profit is ahead or behind, but in percentage terms it looks to be ahead. A recent report is available on Research Tree.

They mention Brexit stockbuilding. Other companies have reported that due to increased preparedness from logistics etc. companies that this should not need to be repeated. An additional depot is running 24-hours which should improve margins. A downturn in the UK economy / construction is clearly a risk, but judging by the commentary, not an immediate one.

With only 6 weeks contribution from their recent Irish acquisition in these results, and trading modestly up in the first two months, significant H1 growth is baked in.

This is a solid family company. The valuation is perhaps quite full given the point in the cycle, but this is the sort of company that strategically I would like to hold more of in future.