Good afternoon, it's Paul here.

I'm terribly sorry, but we've had a break down of communications. I thought Graham was writing today's report, and he thought I was. We're very sorry about that. Not to worry, I'll put something together this evening. The stocks which have caught my eye for newsflow today are: ITQ, FDL, IGE, IGR, and RGD. 

Interquest (LON:ITQ)

Share price: 41.5p (down 11.7% today)
No. shares: 38.7m
Market cap: £16.1m

Trading update - this is a recruitment company, specialising in the technology and financial services sector.

You might recall that the management of ITQ tried to buy the company on the cheap, at 42p. This was a bizarre situation, in that the one independent Director opposed the deal, as did many independent shareholders. The takeover offer is now closed, with the management's bidding vehicle (Chisbridge Ltd) holding 58.3% of the company. As it failed to reach 75%, the shares remain listed on AIM (for now).

That's the background, so what does today's trading update say then? This covers the 6 months to 30 Jun 2017. Key points;

  • Net Fee Income (NFI) down 14% to £9.5m on a like-for-like basis (i.e. excluding an acquisition, which added another £1.7m in NFI)
  • Operating profit (excluding amortisation) was down 19% to £1.3m
  • Financial services sector is challenging, experiencing margin pressure
  • Larger divisions are taking longer than expected to turnaround

Revised guidance is given;

...the Company expects that Net Fee Income will be materially affected and EBITA for the year to 31 December 2017, before taking into account approximately £0.5m of costs incurred in the failed defence of the bid by Chisbridge Limited, will be approximately £3.1m.

Unfortunately I can't find any broker updates today, so am not sure how this revised profit guidance compares with existing forecasts. So I've looked back at last year's results, to find the comparable figure, which seems to be £3.4m. So the 2017 result is expected to be about 9% lower than the prior year - not good, but hardly a disaster.

My opinion - I just don't trust management here, so for me it's uninvestable. The problem is that management tried to take it private on the cheap, but failed to secure enough acceptances. So it's now in limbo, with management in control, holding 58% of the company.…

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