CLLN issued a Trading Statement today, sending shares down 34.6% to 126p. An extract is as follows:
Deterioration in cash flows on construction contracts, combined with a working capital outflow due to a higher than normal number of construction contracts completing and not being replaced by new contract starts
It gets worse, as it looks like a fund-raising is on the cards:
The Board announces today that it is undertaking a comprehensive review of the business and the capital structure, with all options to optimise value for the benefit of shareholders under consideration.
The chart looks appalling, and this is a clear case where the market was signalling disappointment:
Stockopedia gives it a value score of 95, and a momentum score of 27. Curiously, it does not classify it as a value trap. The algorithm missed a trick. It happens.
A data source that I used showed PBT of £146m, and net debt of £218m. That is within my limits of 3X, so I would not have been concerned based on those numbers. So it was me who missed a trick this time, as the mention of “capital structure” suggests that something is wrong with those numbers.
The cashflows reported by Stockopedia perhaps tells a more truthful story:
We see that the cash from operating activities is significantly below net income for the last 5 years.
Also worth mentioning is that the dividend yield is reported as 9.7%: a strong sign that the Market thinks performance will worsen, and that the dividend will be cut.
I had invested in CLLN a few years ago, but got bored with it. This company reminds me of IRV (Interserve); a company that is sluggish and has a hard time going anywhere.
My commiserations to any holders out there.
Update 10-Jul-2017: Now that I have had a chance to look at the bulletin boards, it is apparent that many investors and analysts saw this coming. I rate this company as “avoid”. Let me follow up in 6 months time and see how good my prediction is. I just don’t see the shares going anywhere. The prospect of a rights issue will squash all expectations. As ever, we shall see.