Fountains Share Discussion Threads

[9degrees] 23/3/2006 16:45

Its slipping away ! presumably the contract problems have got worse than orignally forecast and the market makers know it ?

[mdchand] 31/1/2006 12:10

incase anyone holds these.........CS's latest note on them today

fountains - Trading Update


· fountains has announced that its full year result to 30 September 2006 is anticipated to be substantially below market expectations



The new management team has taken steps to improve the business. These changes, along with increased levels of activity being experienced, should allow the group to return to profitable trading in the second half and recoup most, if not all, of the losses incurred in the first half.


Following the win of a major utilities contract (worth £25m over 8 years), fountains forward order book has increased from £65m to £90m.


Analysis


There are three principal reasons for an expected shortfall in the first half of the 2006 year.



Firstly, the company is expected to make material losses on a large fixed price rail contract that ends on 31 March 2006. This contract was bid for and mobilised in July 2005, prior to introduction of new procedures put in place following the October management re-organisation. Secondly, the company incurred further costs in relation to a major electrical utility vegetation contract. This is the same contract that caused an increase in costs in 2005, but again, the particular contract expires at the end of March. Thirdly, costs related to the management re-organisation which occurred in October are expected to exceed the original estimate by £50k. Because of the above management expect the company to make a loss of £1.0m in the six months to 31 March 2006.



On the positive side the company has won a major utilities contract worth £25m over eight years. This is a big win which in our opinion re-affirms fountains status as the leading provider of vegetation and environmental management services in the UK. Because the above-mentioned problems are restricted to the first half, management expect fountains to return to profitable trading in the second half and recoup most, if not all, of the losses incurred in the first half.



The management re-organisation has been successful and the board believes the new structure of the group will add value, and in particular has confidence in the direction provided by the restructured management team. New procedures were introduced in the second half of 2005 to control contract bidding and mobilization.



Action


· We are changing our forecasts for the full year to September 2006. We now forecast a Loss before Tax of £0.2m (v Profit before Tax of £1.4m). Although disappointing, our forecasts are for PBT of £0.8m in the second half of the year, which is in line with our original forecasts. A Loss before Tax of £1.0m is forecast in H1.



· Our forecasts for the 2007 financial year remain unchanged: Turnover of £40m, PBT of 1.9m, and EPS of 8.7p. A cash adjusted PE for 2007F is 11x (at a price of 112p), and we forecast a yield of 3%.



fountains management are well aware of the importance shareholders in the company ascribe to regular dividends. As a result, and reflecting management confidence in the long-term prospects of the business, we would expect the company to maintain the dividend.


fountains has around £4m of cash, and no debt. This is after payment of £0.5m to reduce the pension deficit, and after the £0.5m investment in the Spatial business, which is performing well.


The company is actively continuing its search for suitable acquisitions which will enhance shareholder value.

[wiganer] 31/1/2006 10:23

Another profit warning...

[arianette] 27/1/2006 08:35

I see that this company has recently issued a profit warning - if it was me I would wait and see and ask your contact for more specifics like what are they going to pay!

[the expert] 27/1/2006 00:19

Buy on rumour, sell on fact!

However, the last two posts smell of BS.

[garyspring] 26/1/2006 23:23

I have had it on good authority that Fountain are in discussions with a company that operates across souther England providing grounds maintenance services to local authorities and has contracts up to 15 years long with a very strong blue chip order book. It is highly profitable with margins well over 5% and excluding the high Directors emoluments an even higher profit percentage. It will result in an increase in turnover for Fountain by 20% and be earnings enhancing straight away. I have heard this from someone who works for this company.

I believe that now would be the time to buy what with the shares going ex divi in early Feb. However I would appreciate other views as there seems to be negetative news surrounding this company and will it be able to pull off the deal becase if others get to hear the price paid could start to rise. The big question is do I buy now or after the deal???

[arianette] 26/1/2006 23:07

Buying now could be a good move if the purchase is as good as you say this could be the start of a sharp rise in shares. However, if they overpay you could be doomed. The shares appear quite illiquid so perhaps sit back and watch a little - is there any time frame on when the deal will be completed

[garyspring] 26/1/2006 12:30

I have had it on good authority that Fountain are in discussions with a company that operates across souther England providing grounds maintenance services to local authorities and has contracts up to 15 years long with a very strong blue chip order book. It is highly profitable with margins well over 5% and excluding the high Directors emoluments an even higher profit percentage. It will result in an increase in turnover for Fountain by 20% and be earnings enhancing straight away. I have heard this from someone who works for this company.

I believe that now would be the time to buy what with the shares going ex divi in early Feb. However I would appreciate other views as there seems to be negetative news surrounding this company and will it be able to pull off the deal becase if others get to hear the price paid could start to rise. The big question is do I buy now or after the deal???

[getscenic] 27/10/2005 08:16

not sure, but has'nt done the share price any harm!

[9degrees] 27/10/2005 07:46

peter neighbour
Di he go or was he pushed ?anyone know

[tday] 07/9/2005 18:26

hosede

IMHO there is much better value elsewhere. However, I agree with you that FNT is a very non cyclical business.

[hosede] 05/9/2005 16:45

Slap
Order book up from 55 to 70m looks pretty good growth to me. I'll top up again if it falls to 120. TDay also VERY non cyclical - vegetation doesn't respond to economic data:-)

[its the oxman] 01/9/2005 10:59

looks like we will test c.120p now - best to wait a bit more.

[slapdash] 26/8/2005 13:22

hmm... yes low barriers to entry too.... not so sure on growth prospects..

Slap

[tday] 26/8/2005 12:50

Low margin work, labour intensive. Not a good mix.

[slapdash] 25/8/2005 22:32

Still doesn't look cheap to me even with cash stripped out....

Slap

[mw8156] 25/8/2005 19:17

The rail work is delayed but the electric utility contract appears to have gone wrong and the potential impact is uncertain.

[hampster] 25/8/2005 16:22

Treeshake?

[hosede] 25/8/2005 11:30

Back in at 134 - As you say DRW looks like an overreaction to deferred revenue

[its the oxman] 25/8/2005 10:11

if it falls below 130p i'll consider buying - can't see it falling below 120-130p area myself and on a 12 month view it should recover.

[getscenic] 25/8/2005 10:06

If the divi is held or raised this is compelling on yield basis. But still no news on cash pile.

[drw1] 25/8/2005 07:49

One to watch if the market re-acts too strongly to what looks like an issue of delayed revenue rather revenue thats not going to arrive at all.Note strong forward order book.

[getscenic] 23/3/2005 23:02

my only blue share today, in a sea of red.
good to see it testing new highs. and would be nice to see it through 160.
all we need now is rain to get them weeds growing, i'd like to shake the hand of the man who brought japanese knotweed over here!