Good morning!

Many thanks to Graham for really excellent & insightful reports this week.

Today I'll be covering results from;

FW Thorpe (LON:TFW)

M&C Saatchi (LON:SAA)

Seeing Machines (LON:SEE)

Also, I'm hoping to catch up on a few other things from earlier this week.

FW Thorpe (LON:TFW)

Share price: 323p (pre market open)
No. shares: 115.7m
Market cap: £373.7m

Interim results - for the 6 months to 31 Dec 2016.

This is a group of lighting companies. It's essentially a family controlled company, with a stock market listing. There's nothing wrong with that, indeed some investors (such as Lord Lee, and David Stredder) seek out such companies - appreciating their long-term thinking, and prudence.

The headline figures for H1 certainly look good;


Note that when profit rises by a smaller percentage than revenue, that's a quick way of noting that the profit margin has reduced. Dividing operating profit into revenue confirms this - the operating margin was 15.7% last year in H1, and has dropped a little to 15.2% this year in H1.

The narrative explains that this is due to overtime payments;

Whilst normally expecting a higher level of profit attainment on raised revenues the exceptionally buoyant first half at our largest entity, Thorlux Lighting, had to be met by the imposition of high levels of overtime, shift working etc. which inevitably has led to a higher cost of production than we would have liked.

These actions were necessary to satisfy spikes in customer demand but it is unlikely that the need for such levels of activity will persist.

Any problems caused by buoyant customer demand, are quite nice problems to have, in my view. Although the last sentence seems to be suggesting lower customer demand in future, which is a concern.

Thorlux is by the most profitable part of the group, as you can see from the segmental analysis in note 2 of today's interim results. It made £5.9m of the £7.8m total operating profit.

Seasonality - looking back as last year's numbers, H2 seems to be a good bit stronger than H1. If the same sort of pattern plays out this year, then it looks as if the company might deliver perhaps 12-14p EPS.

I can't…

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