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Tuffnells' second half performance is expected to be worse than H1 2018.
Historic underpayment in relation to a misapplication of national minimum wage legislation in Tuffnells with HMRC therefore provision amounting to between £1.0m and £1.5m will be made in the FY2018 accounts.
Closure of Pass My Parcel continues with 95% ceased by August 2018, however, provision of IT services to one client are expected to continue throughout FY2019.
With the new CEO in place a provision has been made for the completion of further organisation restructure.
On 11 September 2018, Tuffnells was fined £1.5m in relation to a fatality at its Brierley Hill depot that occurred in January 2016.
Full year trading performance to be below expectations therefore fall in share price today.
Took a bit of time but I suppose good things come to those who wait :)
See my posts below!!!!!!!!!
What's happening here?
Northern trust purchased in excess of another 3/4 million shares taking their holding to in excess of 13% 21st August
Northern trust will be offering a take over, but at what price. Now own 12.5% through Aberforth Partners LLP and are buying. Might be wrong but would not be surprised if it materialised. In my opinion of course.
good news hope he kicks a few asses and get this company back on the rails.the trouble is those overpaid lemons are moving on to pastures new.
Yes, I didn't know about that first thibg. I then spent a lot of today looking into it and I think you have to give him the benefit of the doubt and not jump to instinctive conclusions. Charges were dropped, he cooperated fully and is now suing for defamation. There seems to have been more to the accusation than meets the eye. His experience is excellent and I think he will guide the group back on track.
masdsimoj, Great news,I'm not so sure. Try googling his full name. .
Great news that new CEO appointed with exactly the right experience
I didn't forget the debt, I was just illustrating how even at a absurdly low multiples, the group as a whole (including Tuffnells) is ridiculously undervalued. The debt is perectly servicebale at the moment given the group's cash performance. Further, the debt will be targeted for dramatic reduction under the revised capital allocation strategy. Smiths News throws off £40m+ of cash per year, meaning that the net debt figure can and will come down very quickly.
massimoJ:- Your valuation v menzies misses one small detail, net debt [£88.5m or £83.3 [depending on who you believe] which when added to the market cap becomes £160.3m [or £155.1m].
As for the valuation of Tuffnels, which has seen full year profits of 4.3m in year ended 2017, and those down on the profits made as an independent company. Well, connects re-organisation would seem to be to get rid of those who made it a company worth buying and putting in new managers who have turned it into a company not worth 10% of the price paid to acquire it in the first place. [Read number 1 of my post below dated 19th July, which, in it self is contradictory:- Market leaders Tuffnels, yet requires "robust recovery plan".
The value of connect group, taking the above into account and adding in the fact that we have no CEO and a CFO who has "chucked it in" is probably on the high side at around 30p.
Why do I still hold?? well with 25000 shares I am so far under water I might as well hang on in the hope that "something will turn up", as some famous Dickens character once said.
So Menzies Distribution (the second place by some way news distributor) is worth £75m... Smiths News earns twice as much as Menzies and is the market leader, even applying the same multiple (which given it is Endless, a PE house who historically get very cheap deals), that gives Smiths News an estimated valuation of £150m. That is twice the current market cap of the whole group, and you get DMD and Tuffnells along with it. This represents outstanding value IMHO.
Good one maid
Copy of email sent to CNCT yesterday and reply received.:-
Dear Sir
I note that the trading update scheduled for 18/07 has not appeared.
Where as I appreciate that you issued an unscheduled trading update in June, I felt that you would still update your investors after the world cup came to completion.
Should I assume that, as there was no update issued, it was a disaster and i should dispose of my holding before we go the way of Woolworth's and Debenhams or do you still intend to update the market.??
Yours sincerely
Thank you for your email and continued interest in Connect Group PLC.
I can confirm that the trading update released on 13 June 2018 has superseded the one originally scheduled for 18 July.
At this time, we are unable to provide further information to you, or the market as a whole, beyond the contents of the update. I would however like to reassure you that (i) the Group's competencies as market leaders in Smiths News and Tuffnells remain equally relevant today as it has previously and (ii) the Board's immediate priorities continue to mirror the June announcement, namely:
1. Improving Tuffnells’ profitability with a robust recovery plan;
2. Maintaining the continued resilient performance of Smiths News;
3. The orderly closure of Pass My Parcel, cognisant of all stakeholders' interests; and
4. Clarifying the Group's capital allocation and dividend strategy.
We will continue to update the market as required and our next scheduled market update will be in November on the release of our prelims.
What’s the current value of tufnells
Yes... but ... Tufnells was once a well run company, Connect's future value is not being well looked after so it trades at a discount to your sums. IF the management can be seen to be sorting things out (and maintain some sort of high dividfend) then it should bounce up to reflect a more predictable long term
According to Dr Arnold,
Present value of future cash flows for Smiths News is £144m, and for Dawson Media Direct is £20m. Taking into account a potential loss of £10m for the close-down of Pass My Parcel, that leaves a total value of £154m - around 62p per share.
Chances are that things will start turning around at some point, cannot say whe though.
unfortunately hold 10k shrs here for many years, always thought cnct was a well managed company and took up rights to buy tuffnels, what a disaster,
They would not be selling if there was a profit being made, especially when one of their competitors is making such a pig's ear of it!
Oops - I just see from a recent IC article that Menzies would like to sell their distribution division to pay down their high debt level. Who would be perfect to buy that...or Connect would have been if they hadn't cods everything else up! As you say emil there is value here - but it is just how long before it can be realised with Pass parcel half yr losses of £3.5m and growing + close down costs, contractual obligation losses, Tufnells now losing money, non cash asset write downs - it's big kitchen sink time, (whilst you can't blame the new boss) and I think these will go down further, before a possible rise after the results and or signs of actual progress. For that reason I think I am now getting out with 1/2 an eye to possibly come back again one day!
They still have delivery service with 740 mil rev and 15 mil profit in 1H. You can have successful turnaround hire with right people in charge.Changes are made little late but are very much needed.
Dead cat bounce ?! As stated before the latest debacle - best to hope for is to try and stabilise Tufnells and sell it, then the value, albeit declining, will show on a clean newspaper distributor that can be bought by Menzies. Easy to be hard on yourself with hindsight - but I must admit I should have taken notice of all the bad signals re inability to make a success of bought businesses - then selling your supposed 'growth' business the education side - concentrate on a really tough carrier sector with your main customer the ruthless Amazon. Have to admit got some concentrated future learning points done here!
close in the 30s.....Fingers crossed this doesn't fall further 2mr aswell ;-((
.........with this one.