Small Cap Value Report (Wed 3 Jan 2018) - STAF, CLLN, NXT,

Wednesday, Jan 03 2018 by

Good morning, and happy new year! It's Paul here.

It's another quiet day for results/trading updates.

Many thanks for the continued input from readers, in the comments sections after these articles. It's very useful & worthwhile, often adding information that Graham & I may not be aware of. I'm keen to see this develop more, as feedback I'm getting places a lot of importance on the quality of reader comments here. I think that here at Stockopedia we've already got a reputation for having the highest quality reader comments of any mainstream UK investing site. So it would be great to see that lead grow in 2018 to become unassailable!

On to today's news.

Staffline (LON:STAF)

Share price: 989p (down 2.1% today, at 08:30)
No. shares: 27.8m
Market cap: £274.9m

Trading update

Staffline, the Staffing and Employability organisation, today issues a trading update for its financial year ended 31 December 2017.

It's an in line result for the year;

The Board is pleased to report that the Group expects to deliver full year results in line with market expectations.

Other points;

Revenue of c.£962m for 2017, up 9% on 2016 (slightly short of £1bn long-term target, which doesn't really matter). Note that much revenue is pass-through - i.e. wages of contractors.

Staffing division is doing well.

Other activities sounds a bit mixed;

PeoplePlus, the Employability, Skills and Justice Division, has also made good progress, continuing to win new contracts as well as benefiting from its focus on improved margins, helping to offset reduced activity from the run off of the Work Programme.

I'm a bit concerned about the last point - I thought that the Work Programme (A govt scheme to get unemployed people back to work) was going to be extended with new contracts. So there's a question mark over that.

Results for 2017 are due out on 24 Jan 2018 - that's a superbly quick reporting schedule - why can't all companies produce their preliminary results this quickly? In my experience, rapid reporting is nearly always a sign of a well-managed business, with strong financial controls. The opposite is also usually true - slow reporting means that a company probably isn't very well managed.

Private investor presentation - Staffline also impresses for treating its private shareholders with equal…

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Staffline Group plc is a holding company, which is engaged in the provision of recruitment and outsourced human resource services to industry and services in the welfare to work arena and skills training. The Company has two segments: Staffing Services, which includes the provision of temporary staff to customers, and PeoplePlus, which includes the provision of welfare to work and other training services. Its Staffing Services focuses on providing complete labor solutions in agriculture, food processing, manufacturing, e-retail, driving and the logistics sectors. Its recruitment business operates from well over 300 locations in the United Kingdom, Eire and Poland. The Staffing brands include Staffline OnSite, based on clients' premises providing both blue and white collar, out-sourced, temporary workforces. Its Employability includes work program, prime contractor in over nine regions and sub-contracts in approximately five regions in England. more »

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NEXT plc is a United Kingdom-based retailer offering clothing, footwear, accessories and home products. The Company's segments include NEXT Retail, a chain of over 500 stores in the United Kingdom and Eire; NEXT Directory, an online and catalogue shopping business with over four million active customers and international Websites serving approximately 70 countries; NEXT International Retail, with approximately 200 mainly franchised stores; NEXT Sourcing, which designs and sources NEXT branded products; Lipsy, which designs and sells Lipsy branded younger women's fashion products, and Property Management, which holds properties and property leases which are sub-let to other segments and external parties. Lipsy also sells directly through its own stores and Website, to wholesale customers and to franchise partners. The Company's franchise partners operate approximately 180 stores in over 30 countries. more »

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Carillion plc is an integrated support services company. The Company operates through four business segments: Support services, Public Private Partnership projects, Middle East construction services and Construction services (excluding the Middle East). The Support Services segment includes its facilities management, facilities services, energy services, rail services, road maintenance services, utilities services, remote site accommodation services and consultancy businesses in the United Kingdom, Canada and the Middle East. The Public Private Partnership projects segment invests in Public Private Partnership projects in the United Kingdom and Canada. The Middle East construction services segment includes its building and civil engineering activities in the Middle East and North Africa. The Construction services segment includes its the United Kingdom building, civil engineering and developments businesses, together with those of its construction activities in Canada. more »

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  Is LON:STAF fundamentally strong or weak? Find out More »

31 Comments on this Article show/hide all

matylda 3rd Jan '18 1 of 31

Morning Paul - You got the date wrong - Happy New Year to you!

Blog: Briefed Up
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Paul Scott 3rd Jan '18 2 of 31

In reply to post #291778

Morning Matylda!

Thanks for flagging my error. Am using smallish laptop & can't see the screen very clearly. So have increased font size lol! (and corrected error now).

Best wishes, Paul.

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MrContrarian 3rd Jan '18 3 of 31

My morning smallcap tweet:

Corero Network Security (LON:CNS), WANdisco (LON:WAND), Staffline (LON:STAF), BNN Technology (LON:BNN)

Corero Network Security (CNS) wins two orders from N America worth total >$400k for 100Gbps SmartWall products and related one-year support services. "These customer wins mark an important milestone for our SmartWall product."
Wandisco (WAND) wins order worth $4.3m for WANdisco Fusion ("Fusion"), rebranded as IBM Big Replicate.
Staffline Group (STAF) FY trading 'in line with market expectations' even though rev 'slightly below our £1billion target', up 9% cf F/C 10.5% (£976m). So F/C is 2.5% below STAFF's target? Is that clear? I hold.
BNN Technology (BNN) (suspended) Nomad resigns with effect from end 9 Jan. Another China shiner in the eye for AIM chief Marcus Stuttard.

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clarea 3rd Jan '18 4 of 31

Views on BNN statement would be interesting Paul seems to again back up your avoid overseas companies mantra.


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kalkanite 3rd Jan '18 5 of 31

Good morning Paul and happy new year, looks like the new years resolutions are going well :-). My news years resolution is to put in more effort in to investing despite the fact that I am circa 90% in cash (been a bit lazy recently as a result).

Re BNN, I don't really know much about the company and the Stockopedia page has no current data, but looking at the Sept 2nd data (see the print drop down menu) Stockopedia were bang on describing the company as Highly speculative, Small cap, Sucker stock giving a Stockrank of 1 despite it allegedly having £10m in cash.

Best wishes to all for a healthy and prosperous new year.

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Paul Scott 3rd Jan '18 6 of 31

In reply to post #291853

Hi clarea,

I don't want to waste any time looking at BNN Technology (LON:BNN) - just looks like yet another dodgy Chinese AIM stock.

Several years ago, when publications like IC were promoting Naibu & Camkids as great value stocks, I came to the conclusion (published here at the time) that the figures didn't look real, and therefore it was safest to avoid ALL Chinese AIM stocks, and pretty much all overseas-based AIM companies (with a few honourable exceptions, such as Somero Enterprises Inc (LON:SOM) ). That approach saved me & readers, plenty of money.

Sadly, plenty of overseas companies export their fraud to London, because they can get away with it here.

Regards, Paul.

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Trident 3rd Jan '18 7 of 31

The 'collusion' of certain City based promotors, Nomads etc in supporting many of the China based companies should be a warning for any of their future efforts to bring companies to AIM.

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Reacher 3rd Jan '18 8 of 31

Paul - absolutely agree with your point on more companies making investor presentations accessible to private investors. Investor presentations are useful in providing an overview of the company and also the integrity of management. In addition, access to IPO admission documents should be made available prior to trading commencing to allow private investors the same access to information as institutions.

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tjl 3rd Jan '18 9 of 31

Why has £LON:BON gone down while other retailers have went up in sympathy with £LON:NXT ?

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vik2001 3rd Jan '18 10 of 31

In reply to post #291893

be great to see BMUS hit 4million.

do you think the selling has been finished on Cloudcall (LON:CALL) by that seller you mentioned was cashing out. I have no way of checking this information... im thinking the price now could provide a good entry point back into this.


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pj8 3rd Jan '18 11 of 31

Paul, re Staffline, you say:
"A possible reason for STAF seeing its PER reduced could be worries about E.European workers going back home. Weaker sterling is likely to cause a bit of that effect. I suspect that any hurt feelings are Brexit are probably wearing off by now. Indeed, like so many Brexit-related scare stories, there seems little to no truth in predictions of a mass exodus of foreign workers. I saw some statistics recently which showed that there had not been any exodus of EU workers at all from the UK."

What seems to be happening is more subtle. Some E, Europeans worked in the UK for much of the year and then went back to their home countries for a few months before returning - with the lower pound and also the sense of not being wanted, it seems that some/many are looking for other countries to go to. Of those here for a few years, some are returning (and would have done, Brexit or no Brexit); but others who might have come are tending to favour other Northern European countries. (Those hurt feelings about Brexit? Ask those subject to racist abuse from Little Englanders aroused by Brexit.)

So I agree with you - there does not seem to be a mass exodus of EU workers. But Britain is in the process of exporting about 1% of economic growth to the EU (according a recent FT article: cost of Brexit to the UK in lost economic activity: about £350 million a week) - and workers, migrant to otherwise, follow the money.

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About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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