Good morning, it's Paul here with the SCVR for Tuesday.

Timings - I'm running late today, so finish time about 3pm. To avoid getting side-tracked & stressed out, I won't look at any reader comments until I've got my main work done.
Today's report is now finished.

Agenda - this is what has caught my eye in today's small cap results & trading updates;

French Connection (LON:FCCN) (I hold) - Interim results, 6m to 31 July 2020

Scapa (LON:SCPA) - Period end trading update

Onthemarket (LON:OTMP) (I hold) - Interim results, 6m to 31 July 2020

Marshall Motor Holdings (LON:MMH) - Trading update


French Connection (LON:FCCN)

Share price: 7.8p (down 12%, at 11:11)
No. shares: 96.6m
Market cap: £7.5m

(I hold)

Interim Results

"Majority of Trading Period Impacted by COVID-19 Pandemic"

French Connection Group PLC ("French Connection" or "the Group") today announces results for the six month period ending 31 July 2020.

NB. This is a special situation. i.e. it should not be seen as a normal investment, but instead the loss-making retail stores are being wound down, which eventually should leave a profitable wholesale, and licensing business. The question is whether the balance sheet is strong enough to enable the company to get to that position without going bust. Obviously covid has made things orders of magnitude worse, which has been reflected in the bombed out share price. Therefore equity should really be seen as akin to a call option on the business surviving. Most investors will find this too risky to contemplate, which is a perfectly valid opinion!

The reason I still cover it here, and indeed have a reasonable size position in my personal portfolio (I've bought more since covid), is because I reckon the core (brand licensing & wholesale) business could ultimately be sold for about £50m, once the retail division has been reduced to breakeven, or closed altogether. This compares very favourably with the £7.5m market cap, and no threat of dilution to shareholders. So if I'm right, then this could be a fairly serious multibagger. That's why it's interesting. It's not as risky as people might imagine, because there's no immediate threat of insolvency;

Going concern - the last Annual Report contained a "material uncertainty" over going concern. However, this has now…

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