Member Info for 42trader

Regarding finance, posters have been saying that the company does not have any problems with the finances. How do they know that especially considering the bod have not exactly been competant at best.

Read this note from their own broker “We increase FY net debt from £52m to £85m (net debt /EBITDA of 3.0x) for FY 2019 and from £32m to £70m for FY (net debt /EBITDA of 1.6x for 2020). The covenant is 2.5x net debt / EBITDA and is tested four times p.a. on a LTM rolling basis. The covenant is more generous than our headline since it includes the annualised impact of acquisitions. However, we expect management to seek and get a waiver from the banks. There is some comfort that the leverage ratio should reduce significantly in FY 2020.”

So, clearly there may yet be problems with the finance.

As Angela has posted, do not listen to the rampers. Wait, let it settle down and see what happens in the next rns.

Ok, let me articulate the position of Staffline.
First off, the chart. Very basic, but unless your trading the indices, basics is what you want and everyone should use charts you find yourself a good entry point.
The most basics of charting and probably the most useful for deciding entry points is Support and Resistance lines. I won’t go into details on this as others on google will e plain it better.
You say that charts are no use in a share like this that is falling, yet the charts showed me the share price was continuing to fall. It has also showed me where support levels are, which are the a good place for a bounce.
Using a chart is like using wing mirrows on a car. You can manage without them, but they make driving easier.
Like driving, it can be complicated at first, but over time it becomes quite natural and you start to see patterns from one share to another for the price movement.

I noted a comment a couple of days ago regarding trades being shown and in particular was a comment about why would there be a A trade for 2 shares? The 2 trade will simply be an automated stop loss being taken out on a spreadbet account for a trade of £2 per point.

Regarding the constant mentions of shorts, this is rubbish. There was no shorts registered 3 days ago and there still is no registered shorts. You can check this out quite easily via https://shorttracker.co.uk
The reason for the share price drop is nothing to do with shorts, its all about funds selling out.

I have also seen posters talking about just holding out because STAF pay a big dividend and its due soon.
This is not entirely correct. In the past STAF has paid a divi around end of May/June time but no dividend has yet been announced due to waiting on the audit reports. A dividend will likely be made then, but due to the fall in profits and the rise in debt it is likely to be cut back or possible dropped though i’d go with just cut back.

On a more alarming note, on 30th April the company said “The independent legal report has now been delivered in full and there are no further matters to report beyond those in the key findings interim report”.
On 17th April the bod, out of the blue, give a profits warning.
This either implies that the bod are incompetant or have been deceiving by with holding info.
Bearing in mind the suspension due to tax they are probably both.

AA, yes hindsight is a wonderful thing, shame no one has it.
Whenever you do not make money on an investment you should always gain in wisdom. If you do not, stay away from shares. There is a reason why 85% of investors loose money.

Make of this chart whatever you will.

http://www.chartupload.com/viewer.php?file=95606066477007973178.png

Nice update today.

Ex-dividend day tomorrow will be pushing the price up today.
P/E of just 8.72 vs industry average of 12.7.
NAV 56.5p.
20% operating margins.
Steady profit making.
£17m cash.
No debt.
Brexit safe.
Broker target of 100p.

Trying to find negatives here.
Chart wise is the biggest negative I see where it shows it could drop into low 30's but it is really hard to tell at the moment which way it will go.
Other negative is the £100k drop in revenues from previous year. Not much and this is offset by increased margins resulting in higher profits.

The fundamentals of this company are very strong and imo out weigh the charts. Certainly seems good value. Infact, I wouldn't mind it dropping to low 30's as it would create a fantastic buying opportunity.

.... and yet, sadly the sp is down.
I research a lot of companies. If they tick the right boxes, I extend my research into them. Most I then discard but a few that pip my interest I add to a watch list and follow. Some I set alerts to buy at a price I deem value but also based on support levels using charts.

I'm not like most investors as I try to post the negatives as well as the positives. Feel free to go through my history and I think it would become quite clear that I am certainly not paid to post on boards like this.
On some boards, other investors thank me for sharing research, but on others, where it may disagree with some, I am told to go away.

I posted on this BB my research because the share pipped my interest and I had spent some time researching it.
If my research has offended you though, my apologies.

gla

Foxy, as in “over there, dead body”?

Hydrodec has released full year 2018 results following the pre-close trading update at the end of March. Revenue increased to $14.9m at the Canton facility in the US with an overall Group Adjusted EBITDA loss of $1.2m, driven by costs of business reorganisation. The results commentary reinforces Hydrodec’s key strategic objective to deliver
substantial increases in feedstock levels available to the Canton facility to support the US focused utility strategy. The recent management changes and newly appointed marketing personnel should support this objective to drive increasing utilisation and, in our view, the Group is increasingly well positioned in this market which lends credibility to our buy thesis.

The Group ended 2018 with $2.2m of cash and net debt of $9.3m. The slower than expected disposal process in Australia (expected to complete in June) and related cash burn are impacting cash flow but support from Andrew Black and potential to re-finance the lease arrangements in the US should continue to fund the Group’s strategic
ambitions so we see the Group’s cash position and overall funding as lower risk at this time.

It appears to us that the Group is benefiting from some of the changes already made, including the realigned relationship with G&S, new management and marketing personnel and in their relationships with feedstock suppliers. While it is early days, we see significant positives in how the Group has navigated some challenging issues and are
encouraged by the strategic progress with the Board confident of meeting current market expectations for 2019.

We make no change to 2019 forecasts. Hydrodec trades on 3.7x EV/EBITDA, 8.8x P/E, 6.0% dividend yield and a 14% FCF yield (all 2020E). Although we acknowledge execution is required through 2019, and is being demonstrated in our view, we believe the existing assets and potential for high cash returns are extremely attractive to equity investors and reiterate our buy rating and 100p price target.

National Grid (NG.), Drax (DRX) and Equinor (EQNR), have announced a new “zero-carbon UK partnership” exploring how a large-scale carbon capture, usage and storage network and hydrogen production facility could be constructed in the Humber region in the mid-2020s. A pilot project at the Drax power station in North Yorkshire already captures a tonne of carbon dioxide a day – scaled up it could become the world’s first “carbon-negative” power station, potentially capturing millions of tonnes of carbon each year from nearby industrial emitters. The project could also serve as a launch pad for wider decarbonisation in the UK as it targets a “net-zero carbon economy”.

Talking it up to make a decent profit is also not a good trait as investors could well end up at a big lose.
I do not really think a few posts here will make a difference. I have tried to give a balance view but I have also not said to buy, hold or sell. I have no opinion what others do here. What I don't like, tbh, is people ramping a share and not showing the full picture. I'll bet that the sensible investors/traders buy at the support level of 250p, why wouldn't you? there is still no sign that the share price has turned.
As for trying to drive the price down, I do not have the capability for that. What will be will be. Currently, I have no intention to buy, but if it does go to 250p, and it may well not, I will certainly revalue the share and decided then, whether to buy or not.

gl

Broken out of the downward trend and retraced today back to a support line. If the support can hold, it looks like it could take the next step up to next resistance at approx. 48p, which is the approx NAV.

Just tried again selling and still able to sell full £12k but I am able to buy without going to NT.

Good and bad news here but i'm guessing it was what was expected.
The obvious negative was the increase in loss due to the length of time it has taken to sell the Australian plant and maintaining the costs. I'm guessing it was these costs that have delayed the sell.
The good news here is it looks like the Australian plant will go soon (by 20th June). This should then allow for extra finance to fund Canton and push for more feedstock.
The Carbon Credits will likely be used to bribe companies that are heavy polluters to reduce their carbon offset while selling their feedstock to HYR.
Here's the link that JetSetWilly mentioned.
https://www.hydrodec.com/media-centre/news/2019

Trade wise, I am able to sell my full holding of £12k which is the first I have seen as prevoiusly was only able to sell about £1-3k at a time. Buying wise, I am able to buy £4k worth before it goes to NT.

See-through gearing just above target

U+I’s financial gearing remained within its long-term target range, but its see-through gearing rose just above target through FY19.
U+I aims to maximise returns for its shareholders, hence excess capital is largely returned as it is created (through supplemental dividends) and the balance sheet is maintained to maximise efficiency. Inevitably this also
increases the group’s risk profile.
Financial gearing (net debt/net assets) is managed to a long-term target of 40- 50% on-balance sheet and 50-60% on a proportionate basis (including JVs).
However, gearing levels can vary around these targets subject to the cycle and the level of activity.
FY19 gearing remained just below target from an on-balance sheet perspective, but increased just above target on a see-through basis. We would expect management to seek to bring this back below target.
U+I's weighted average interest rate decreased -10bps to 4.6%. The weighted average maturity fell to 6.2 years (from 7 years). We believe there remains further opportunity within the group to lower cost of debt over time.

Low valuation
Despite lowering our forecasts, we still expect ~6% p.a. total returns, which are above the sector average, and are attractive when considered against the group's significant NAV discount (which is also prudently stated with development at cost). If U+I can hit its targeted development gains the shares are too cheap.

U+I also returns surplus capital back to shareholders in order to maintain the group’s size and the return potential of its pipeline.
Returns are delivered through an ordinary dividend with an additional more variable supplemental dividend dependent on the net free cash flow generated during each year. Five consecutive supplemental dividends have
now been declared / paid and we expect these to continue.
We model a 4.1p supplemental divided for the next three years of our forecast period (within 40-50% of free cash flow) which, together with a stable 5.9p base ordinary payment. This equates to a 3.7% ordinary dividend yield and
6.2% total yield including the supplemental dividend.

Improving investment returns

While the investment portfolio witnessed some value erosion through FY19 due to pressure on retail asset valuations, U+I is still confident in its ability to deliver value-added gains and management will continue to
reposition the portfolio to sustain returns and provide development potential.
U+I’s investment portfolio saw valuation weakness through FY19 with values - 4.9% on a LFL basis and total returns of -1%, below the group’s targeted 10%. Despite valuation pressure, assets acquired in the year positively held or
increased their value. The operational performance was also more resilient.
CVAs and administrations had a net 0.6% impact on rents. Voids were down from 7.9% to 7.3%.
U+I continue to target 10% total returns from the investment portfolio, albeit this may prove challenging in the near-term should retail weakness continue.
Returns remain supported by a 6.6% net initial yield focussed upon discount and convenience retailers, with significant reversionary potential to a 7.9% equivalent yield.
We would also expect U+I to continue to reposition the portfolio to sustain higher returns and provide development potential. The growing development portfolio aids this repositioning over the medium-term; allowing U+I to retain
assets which have the potential to deliver further value creation through maturation or asset management initiatives. Management has identified assets worth ~£250m from the development pipeline which would meet the investment portfolio criteria and could be transferred over the next five years.

U+I will also continue to acquire retail-led assets where they see potential for asset management gains to enhance values. In FY19, U+I acquired a mixeduse scheme in Bournemouth, Waterglade Retail Park in Clacton-on-Sea and a
Pure Gym unit in Finchley for a total consideration of £27.4m. This was partially balanced with £7.5m of non-core disposals. The portfolio also delivered £4.6m through asset management initiatives.
The group has removed targets for acquisitions and disposals in FY20, but we would still expect investment activity if the right opportunities arise. We forecast £20m of net additions in FY20.

Strong pipeline momentum
Strong progress was nevertheless made in FY19 growing the development pipeline, which now stands at £11bn and provides longterm profit potential.
The development pipeline now stands at >£11bn up from >£7bn at FY18. In FY19 U+I was confirmed as the partner of choice for a major PPP scheme at Cambridge Northern Fringe East.

The >£11bn development pipeline currently contains nine identified major PPP projects, with a total £6.7bn GDV, and six identified major trading projects with a total £0.5bn GDV. This leaves a further ~£4bn of undisclosed
schemes.
The principal win in the period was a £3.5bn GDV regeneration scheme in North Cambridge, which is expected to generate ~£20m-30m of development and trading gains to the business over 10-15 years. This involves the transformation of a water recycling centre in North Cambridge, over 120 acres, into a large mixed-use urban area with 5,200 homes, ~1m sqft of office space and a mix of retail, community and leisure space.
As well as additional longer term PPP projects U+I has also increased its focus on sourcing short term trading opportunities as investment market liquidity has reduced. U+I purchased three trading schemes through the year
(White Heather Industrial Estate in Dublin, the Arts Building in London and Newtown Works in Ashford), which helped restock its shorter term pipeline with asset management and planning initiatives. These are expected to £20-
30m of gains over the one to three years.
As the pipeline grows it also brings opportunity for U+I to secure a lower cost of capital, as the group extends its strategic platforms and capital partner relationships. In this respect, U+I has appointed advisors to identify partners
to help fund three major pipeline PPP projects and is now in the detailed stages of this process.

• Distributing excess returns – Excess returns are typically returned to shareholders through supplemental dividends to maintain returns relative to the company’s size. The group paid a 5.9p DPS in FY19 with an
additional 4.1p supplemental DPS.

CHALLENGING BACKDROP LIMITS GAINS

U+I’s full year results were below our forecast, with £42.8m of development and trading gains just below the group's £45-50m target. A valuation decline in the investment portfolio further weighed on returns with NAV -4% to 289p and 4% below our forecast. Guidance for FY20 has been lowered to reflect economic and political uncertainty. We lower our NAV forecasts by ~7%.
Key points from the figures:
• NAV -4%to 289p – This was 4% below our 301p forecast with the YoY reduction driven by the payment of the supplemental dividend, lower than expected development and trading gains and valuation weakness in the
investment portfolio.
• 10.0p total dividend – The group paid a 5.9p DPS in FY19 with an additional 4.1p supplemental DPS. This represents the fifth successive year of supplemental dividends.
• £42.8m of development & trading gains – Development and trading gains were £42.8m, just below the group's £45m-£50m target and below our £47.5m forecast. Despite missing guidance, we still think this was a creditable outturn, given the group experienced a higher level of planning delays, due to economic and political uncertainty. Development and trading gains are inherently lumpy but, over 5 years the group has
delivered an average £49m of gains p.a. in line with its long-term target.
• Investment portfolio -4.9% – The investment portfolio saw weakness from pressure on retail valuations with values down -4.9%. Positively assets acquired in the year held or increased their value. The operational performance was also more resilient. CVAs and administrations had a small net 0.6% impact on rents. Voids were down from 7.9% to 7.3%.
• Disciplined acquisition activity – U+I continued to reposition its investment portfolio with £27.4m of acquisitions and £7.5m of disposals. This was below U+I’s target of £50m of acquisitions and £25m disposals reflecting greater caution and discipline in respect of asset selection.
• Greater focus on short term trading opportunities – As a result of lower liquidity in the investment portfolio, U+I placed a greater focus on acquiring short term trading opportunities. Three new opportunities were acquired from which gains are expected to materialise from FY20.
• Increased debt and gearing – Reflecting net acquisition activity, net debt increased from £119m to £139m. Balance sheet gearing increased from 31.4% to 38.6% but remained below the group’s 40% to 50% target range. See-through gearing (inc. JVs) increased from 50.5% to 62.8% just above the group’s 50% to 60% target range.

REGENERATING LAND THROUGH PARTNERSHIP
U+I has a substantial pipeline of regeneration projects which could generate significant long-term development profits, as it transforms parts of towns and cities through a mix of commercial and residential real estate uses. U+I's partnership approach, in which its partners typically seed land into joint ventures, as well as the complex nature of
its projects provides the basis for high returns on capital and aligned incentives as planning and development are progressed.
• Regenerating land and adding value – U+I is a specialist regeneration developer and investor, that seeks to transform parts of towns and cities through a mix of commercial and residential real estate uses, revitalising
communities. The group creates value as it unlocks the potential of land and assets. Projects are targeted in the densely populated areas around the London City Region (within one hour's commute from Central London),
Manchester and Dublin.
• Growing long-term demand – Market growth is underpinned by increasing economic, political and social demand to better utilise the UK’s scarce space, of which a large proportion is owned by public bodies. U+I's
substantial development pipeline, partnership approach and the complex nature of its projects provides the basis for limited competition and a high level of future returns.
• Differentiated delivery – U+I serves a market with high barriers to entry and where it further differentiates its delivery with a focus on design and vision over value. U+I frequently utilises partnerships with public and
private bodies to leverage its equity and intellectual capital. For example, partners often seed land for U+I to apply its planning and development expertise. Partnerships also help to spread group risks. The majority of
projects are secured with limited competition or off-market and U+I has a high success rate in planning of over 90%.
• Significant visible growth potential – U+I has exposure to an £11bn gross development value (GDV) pipeline of schemes which underpins significant future return prospects. Projects are spread across large longterm schemes and short-term trading opportunities. While development activity is inherently higher risk and value creation lumpy, gains have averaged £49m p.a. over the past five years. The group targets 12% p.a.
total returns, albeit these are unlikely to be achieved in the near-term.
• Focused capital recycling – A portfolio of income-producing real estate assets and fee income from developments provides a recurring contribution to group overheads, before the delivery of capital gains.
However, U+I’s focus is on using its intellectual capital and relationships to generate superior returns through development. The investment portfolio is weighted towards retail, but the group is repositioning assets towards sites
where value can be driven through regeneration. The portfolio has good occupancy (~93%) and is valued off a high 7.9% equivalent

While the short-term planning backdrop has toughened, U+I made good progress expanding its regeneration pipeline and adding to its potential through FY19. We expect this to continue in FY20, with two large opportunities
pending. However, lower short-term trading gains and valuation pressure on the investment portfolio prompts a
7% NAV downgrade. We lower our target price from 280p to 250p. The shares trade on a CY19E P/NAV of 0.55x with a DPS yield of 6.2%.

FY19 gains just below target
• £42.8m of development gains just below £45-50m guidance
• NAV -4% to 289p
• 10p DPS inc. a 4.1p supplemental
• NAV forecasts reduced 7%

Improving investment returns
• Rebuilding investment portfolio to deliver double-digit returns
• Focus on cost efficiency
• Detailed stages of selecting capital partner funding Strong pipeline momentum
• Pipeline GDV >£7bn to >£11bn
• Future wins underpinned by GLA panel and £2bn of prospective partnership projects
• Three additional trading schemes secured in FY19

Low valuation
• ~6% forecast total returns p.a. from existing schemes
• 45% discount to CY19E NAV
• 10.6x P/E and 3.7% ord. dividend yield (6.2% inc. supplemental)

Strong pipeline momentum
• Pipeline GDV >£7bn to >£11bn
• Future wins underpinned by GLA panel and £2bn of prospective partnership projects
• Three additional trading schemes secured in FY19

Bull case
Significant £11bn GDV development pipeline
Growing long-term demand for regeneration
High barriers to entry given complexity
Partnership approach aids returns and spreads risk
Development assets held at cost
Notable valuation discount
Supplemental dividends from free cash flow

Bear case
Development returns geared to property values
Risk of slowdown in property market
Execution & planning risk on developments
Rising competition for large scale land

Two issues have negatively impacted Recruitment

At Recruitment there are two key issues. 1) Customers have insourced temporary workers to become permanent employees, due to the perception of a tightening labour market and customer concerns over the impact of Brexit on low skilled labour. This has happened mostly in higher margin areas like driving, resulting also in an adverse mix shift. As demand for temporary labour has reduced, industry margins have compressed. This has happened before and the trend has always reversed, but the reversal can take several months. 2) There has not been the expected momentum in new business wins, which may be due to the negative press that Staffline has received relating to the nonpublication of its FY 2018 accounts.

At People Plus (PP), the Apprenticeship Levy is impacting 2019 but the outlook for 2020 is unchanged

PP has undergone a significant change shifting from a work programme business to a skills and training provider. However, the Apprenticeship scheme is not being taken up as fast as management had expected due to the slower national take-up and economic uncertainty, which drives the downgrade for 2019. There is no change to guidance for 2020, as 60% of revenues are already contracted and other elements of PP are expected to contribute 85% of divisional revenues. The apprenticeship business is a small part of budgets and the rest of the business has exceeded expectations. There is particular progress in prison education, Adult Education Budget funded training, locally run employability programmes, Fair Start Scotland and Independent Living Services (ILS).

Revised CY 19 P/E of 12.8x, TP 800p from 1320p, based on SoTP, U/R from BUY

We have reduced our TP to 800p from 1320p to reflect the reduction in 2019 FD EPS and worse financial position, noting that outer year estimates should be less affected.