Formation Share Discussion Threads

[barnetpeter] 29/4/2016 08:58

This is beginning to look like forward selling before a placing.

[barnetpeter] 29/4/2016 08:28

I still remain a buyer. The mkt cap s more realistic and why should we ignore the fact that "FRM earned a quick £2 million on this related-party deal"? I sold a load at prices up to 12p as posted on here...that was a bit much but FRM is now approx. £10 million cap and that is quite modest for a London developer with some near sold out projects.

Off subject...note hat traf is doing ok from its lows. A bit to go there to get back to placing price and I was selling that at 6p plus.....

[mylands] 29/4/2016 08:13

Classic case of a tiddler having its share price moved by small volumes, either up, or down. As usual, it's a case of 'caveat emptor'.

[barnetpeter] 28/4/2016 19:15

Well it certainly dived today....albeit on low vol. Plus the support levels did break meaning we may well see 4.5p shortly.

"FRM earned a quick £2 million on this related-party deal" does rather help....

[wexboy] 28/4/2016 15:58

2016 – The Great Irish Share Valuation Project (Part I):

Company: Formation Group (FRM:LN)

Last TGISVP Post: Here

Market Cap: GBP 14.3 M

Price: GBP 6.5p

At 2.05p per share, I tagged FRM as a ‘penny stock, which…could rally very nicely if it catches investors’ attention’. Little did I see it trading sideways for a year…only to transform, in a mere eight months, into a bloody six-bagger (hitting a 12.7p high). A typical case of small PIs losing their friggin’ minds!

Formation is: i) a governance nightmare, with the Kennedy family owning a 60% stake & activities devoted primarily to related-party deals/JVs, and ii) essentially, a construction management company (a perpetually unattractive business for most investors) that still can’t turn a profit, despite the ramp-up in revenue…and risks. Granted, the Kennedy Show works both ways, as FRM earned a quick £2 million on this related-party deal & the construction business arguably covers an otherwise substantial overhead burn for such a small company. [Though if we exclude the sweetheart profit, FRM’s actually made zero progress vs. my £6.9 million adjusted equity estimate from two years ago]. But overall, considering the improved investor sentiment & likely near-term news/profits from its Iverson Road development, a 1.0 Price/Book ratio now seems appropriate (based on adjusted equity, to reflect the post year-end write-back of non-recourse Dunbar Assets loans):

(GBP 7.6 M Equity + 1.0 M Neg Equity Reversal) * 1.0 P/B / 221 M Shares = GBP 3.9p

PIs got well ahead of themselves here…despite being sliced in half since the Jan high, FRM remains substantially over-valued. And if 6.25-7.25p support breaks, we’ll probably see another nasty shake-out. But the elevated share price may still be good news for management, as a substantial fundraising might be possible, which would help close the value gap here (as NAV would increase) – and with two well-known Irish politicians appointed since as directors, a new focus on Irish investors/projects wouldn’t be surprising, though Greater London residential also remains attractive.

Price Target: GBP 3.9p

Upside/(Downside): (40)%

For related links/graphs/files, and more TGISVP analyses/price targets: Google the Wexboy investment blog.

[barnetpeter] 25/4/2016 17:59

A few sales today with just my one buy. Any more updates??

[barnetpeter] 20/4/2016 15:45

strange really. I have been adding in the 6p level. The only concerns I have is that London is so expensive and there is so much building going on.....will the bubble burst? But they have so much cash....

[mylands] 20/4/2016 13:14

Just checked the Foxtons site for Norfolk House and it's showing only one remaining, with 40 sold.

[crescenter] 20/4/2016 10:57

There is no doubt that this will rise into the results.

What we will also need is news of at least one new site to develop.

[crescenter] 20/4/2016 10:53

That's better.

[barnetpeter] 19/4/2016 13:00

Yes indeed. Any holder looked at the latest position with sales?

[crescenter] 19/4/2016 12:30

Looks as thouh we are on the way back up into the results period.

This ought to be a good deal higher.

[crescenter] 19/4/2016 12:01

Not sure that I understand the firts four trades.

Maybe the two 70ks were a rollover but there is usually a margin between the two prices.

[crescenter] 18/4/2016 13:14

The silly thing is that on the next update people will be happy to pay higher prices.

Holding something like this needs patience not short termism.

[crescenter] 18/4/2016 13:12

It is drifting on low volumes.

Chartwise it is approaching suport.

Any substantial drop and I would consider adding a few more as I have some spare cash from other successes.

[barnetpeter] 18/4/2016 10:51

On a bit of a move downwards at the moment.

[mylands] 13/4/2016 08:56

It's been like that for some time now.

New auditors appointed. Let's hope they are cheaper than the previous lot.

[barnetpeter] 12/4/2016 23:00

Only twoleft at Norwich House

[barnetpeter] 08/4/2016 17:12

Spike on traf results I think. Added a few this afternoon myself. Well worth reading traf statement.....the other aim housebuilder.

[barnetpeter] 30/3/2016 14:59

Any updates??

[sharetips6] 24/3/2016 14:47

Totally wrong time for some to lose patience and sell. At bottom of trading channel and just before a large project sells out of all houses.

What a bargain 7.35p current to buy

[martincc] 17/3/2016 14:17

I had assumed that the flats for sale at Norwich House were a 'first phase', 40 out of the 98 planned overall.
Had a read again in the recent finals and mention of 103 and 98 in different parts of the report -

The Group have an investment and financial interest in two of the projects as follows:

Norwich House,9-11 Streatham High Road, London SW16 1DZ
Project management and profit share participation in a development site of 103 residential units, associated car parking, three commercial units and the freehold interest in an adjoining apartment block. As part of its participation in the profit share, the Group advanced a loan of GBP2.444m.

On 8 July, the Group entered into a profit share agreement with Sunbel Development Limited ('Sunbel') and Pinacle Developments Limited ('Pinacle') in relation to a development property at Cromer Court, 9-19 Streatham High Road, London, which is being converted from office space to 98 residential units.
Under the terms of the agreement, Formation has advanced to Sunbel the sum of GBP2,443,671 to continue work on the development which commenced in June 2014. The loan attracts no coupon interest but instead Formation will be entitled to receive 40 per cent of the net profit arising on the development (i.e. the profit generated from sales of units after the repayment of debt utilised to purchase the site, the cost of development, taxation and repayment of the loan advanced by the Company).


The finance income item of GBP2.421m relates to income recognised from the profit share agreement entered into by Formation Group Plc as announced on the 8 July 2015 with Sunbel Development Limited ('Sunbel') and Pinacle Developments Limited ('Pinacle') in relation to a development property at Norwich House, 9-19 Streatham High Road, London which is being converted from office space to 103 residential units.


There is also a commercial unit at Iverson Road apart from the 19 flats -
159-161 Iverson Road, London NW6
Acquisition of this development site by Formation Homes (London) Limited (Group subsidiary) in West Hampstead, London. The site has the benefit of a planning approval for 19 residential units and 1 commercial unit.


Has anyone been to the Norwich House site recently?

[crescenter] 17/3/2016 13:49

From the RNS of 8th July 2015:

As at 7 July 2015 the majority of units in the development had been reserved. It is anticipated that approximately half of the units will be completed by the end of August 2015 and the balance completed by the end of September 2015.

There are two agents handling the sales each having around 50% of the properties each.