Fulcrum Utility Services... Share Discussion Threads

[serratia] 27/11/2012 15:32

A quick look -
I was expecting better figures but they're being hit by the general slow down.I tend to look first at operating cash flow which was -112k.The order book has improved and they say the second half will be better.So,maybe £0.4m OCF (?) at year end.That would put the price to cash flow at just over 50 which is high.
Below OCF they had a big increase in stocks which consumed cash and money owed dropped by a large number as well.Cash fell from £8m to £5m burning £3m for the half year.I expect H2 to have a lower cash burn as money owed/stocks shouldn't deteriorate further.
All in all a delay until they generate significant cash flows so I'm waiting for the end of year results.
It didn't stop them awarding themselves £515k of shares though which can't be right.

[zeppo] 27/11/2012 08:11

"....Since our trading update in early October we have seen a marked delay in converting sales as customers wait before committing to capital spend, with the result that revenue from larger projects that we expected to achieve in the current year will be delayed into future periods and as a result our financial results for the full year will be below market expectations. Our order book at 31 October 2012 stands at £20.7 million compared to £15.3 million at 31 March 2012.
The key factors for winning new business in the current market are price and customer service and these continue to be the focus of our business. The first half of the year has seen a number of important successes in developing our service offering and in opening new channels to market, evidenced at the start of the second half by our landmark contract win with Speyside distilleries. This is one of a number of large and highly complex contracts that we have recently secured which is testament to Fulcrum's engineering design and construction expertise.



The performance in the current year will mean that there will be a delay in building Fulcrum to the scale that we targeted at the original acquisition of the business in 2010. The work we have completed over the past two years has placed Fulcrum in a very strong position to exploit opportunities in the energy sector. Whilst revenue growth is likely to remain muted in the short term we have a strong new business pipeline and are very well placed to deliver growth from increased market activity in the coming years."

z

[zeppo] 23/11/2012 17:25

Interims Tuesday 27th?


z

[greatwhitefunkmaster] 17/10/2012 13:52

Rather nice that every buy sees another tick upwards.

[zeppo] 15/10/2012 10:59

serratia

Thank you for the info.

z

[serratia] 14/10/2012 22:23

zeppo,

A look through the reports -

Management were given 1.145m shares at the start plus those in FCRM Investments.JS got 625k of these.They made a mistake in the investments shares set up so have been given an extra 5m shares as compensation!JS gets 2m of these extra shares.
As far as I can see the start point is a share price of 15.75p,they pay nothing for these options.They can cash in the options if the share price rises 12.5%/yr over the 3 years to July 2013,if it doesn't make the target it can be extended for a further 2 yrs.
This means they can cash in in 2013 if the share price is 22.4p or 28.4p in 2015.The relevant section below states the terms.If I read this correctly if the share price rises to 22.4p they can cash in their shares for 10% of the increase ie 6.65p/share.In JS's case this is 2.625m at 6.65p = £174.6k,add this to his salary of £811k over 3 years (191+310+310)this is £985.6k or he will have earned 4.6% of the M.Cap today.
Marwyn capital also have options and fees which I haven't quantified here.



Subject to the growth and vesting conditions detailed above, the management participation shares can be sold for a value
equal to 10% of the increase in "Shareholder value" in the company. Shareholder value is broadly defined as the increase
in market capitalisation of all ordinary shares of the Company issued up to the date of sale, allowing for any dividends and
other capital movements.

[zeppo] 14/10/2012 10:45

sarratia


I am not good at analysing/understanding current shares/options for directors of this company.

Have Fulcrum directors got any significant incentive to get the share price up before they exercise any options?
At what level can they exercise options and sell their shares?

I remember years ago , Archie Norman, taking over at Asda when the share price was less than 50p. His options only kicked in when he got the share price back to £1 (if my memory serves me correctly). Walmart too out Asda at £1.85 (if my memory serves me correctly).

Will we see such rises at Fulcrum driven by directors' incentives?


z

[serratia] 13/10/2012 21:53

Thought I'd check out S.Gutteridge as he's the main player in giving out shares/renumeration here.
He became chairman of Nighthawk Energy Sept 11 2011.He's also chairman of their renumeration committee.During the year the committee awarded 6m options to Gutteridge,1 other director had his options increased from 1m to 6m,2 others 2m to 6m and 1 other 0.5 to 1m.The options kick in at 5p when oil production reaches a set target.Present share price 5.8p.
Seems he is a generous person in awarding himself and the directors shares in the company!

[zeppo] 09/10/2012 18:39

Presumed same seller.

Did anyone take up the first 2 million?

If we believe the brokers' forcasts then we should stick with it.


z

[greatwhitefunkmaster] 09/10/2012 17:39

Assume this is another 2m reducing the holding down further from 6m

[ygor705] 03/10/2012 07:15

Serratia - Thanks, it sounds like its some kind of incentive scheme rather than an outright share dilution. The recent RNS confirms unchanged terms and conditions but there seem to be a lot more shares in issue now. Not sure how that is going to work. All a bit over-complicated for my taste but interesting for the way that it shows how the minds of these particular Directors work. On what you've said and given the current trading pattern, the floor price should be around 14.2p! Looking at the long term chart, the share price does tend to bottom at around this level and advance to a higher point every time confidence revives. This pattern may well continue.

[serratia] 02/10/2012 23:08

Found it,it's in the admission doc.A company was set up - Fulcrum investments registered in the Cayman Islands I presume to allow the directors tax advantages.If the share price rises by 12.5% / year they can sell their shares in the investment company to Fulcrum energy for 10% of the increase in the Market Cap after 3 years min.So start price 10p,if after 3 years the share price is 14.2p they can cash in.That's £650k.After 5 years if the price is 18p they get £1.2m.If the price rises by more than 12.5% they make more.
They made some error in setting it up so they've been given shares + bonus now.Doesn't appear to be anything to do with investments.

[ygor705] 02/10/2012 14:22

Thanks Serratia................this kind of isssue is all to familiar with AIM companies I'm afraid. The only thing that I would say in mitigation is that there are a lot of investment funds involved here who may not be too pleased if the Directors spend too much time messing about with Cayman Island investment vehicles. Indeed that could be the reason for the recent weakness ie one or more of them has become disenchanted. Why didn't they form this subsidiary as a completely separate operation? It wouldn't pass scrutiny in the Dragons Den! Will be interested to hear any further comments that you have to make.

[serratia] 02/10/2012 12:59

ygor,

I'm going to look and see what I can find.These are just thoughts and should NOT be taken as what is happening,I need to do more research.
First up why own an investment company? If FCRM saw an opportunity to expand why not do it themselves? Let's say that there was an opportunity to buy a pipe connecting company and say it was bought through the investment company,would we know what price was paid?At a later stage this could be transferred to FCRM but at what price?A profit for the investment company?I don't know but the directors had hopes of making money from it somehow that's why they were compensated.
FCRM are out of the Marwyn stable.When FCRM are profitable could they use their profits to buy into(help finance) other Marwyn companies through their investment company?
I'm wary as about 4 years ago I was following a company that used their money to buy(invest) in start up companies owned by the directors.
Who knows what the game plan is/was,clarity from FCRM would help.

[ygor705] 02/10/2012 09:10

Serratia.........do you know if this subsidiary does anything of value for the wider parent-company shareholding membership? I really don't understand why a company like Fulrum needs a subsidiary like this. Also, if it's a subsidiary already why would Fulcrum need to buy it? Is there an outstanding minority or will one be created by the new A shares which the RNS suggests have been isssued in the name of the subsidiary and are therefore unlikely to be quoted? If this is something material, it sounds like something that should be subject to a Class 4 type circular to shareholders and a vote. Am I missing something here?

[zeppo] 01/10/2012 20:36

serratia

Thank you!


z

[serratia] 01/10/2012 19:02

It looks as if FCRM owned a subsidiary company in which directors held the shares.I assume that at some time in the future FCRM would have bought out the subsidiary transferring FCRM profits to the Fulcrum investments directors.
The reason this seems likely is that the FCRM directors have been 'compensated' with another load of free shares so the investment company must have been worth something to the FCRM directors.They even have the cheek to give themselves a bonus based on the investment company holding.
How do they get away with it ? A pity as they could make something of Fulcrum,the model looks good to me but they're just taking too much out for their own gains.
I'll have a look into the non exec's background,he's the one sitting on the compensation committee.
The drop in share price is due to the dilution of existing holders by the issue of new shares.

[zeppo] 01/10/2012 18:09

ygor705

Opinion on today's news which has resulted in a further drop?

z

[ygor705] 26/9/2012 15:12

This is the report I received this morning from a contact who was at the meeting :-

Fulcrum was an interesting meeting. They are happy that they have built
the base; perhaps taking a little longer than they expected to get the
company moving quickly, but are quite happy with progress nevertheless.
Analysts expect earnings for this year at 1.8p per share & 3.2p for next
& the finance director confirmed he was happy with these numbers. He
also confirmed that they still had £4M cash in the balance sheet at half
year -- this Friday--.John Spellman says that not only can they do the
gas connections but can add electricity onto the equation so as to
provide the total package. He reiterated that they are the only truly
national coverage company & is really very happy with progress so far.
All in all, an optimistic feel was in the air. Turriff was not a
problem. Share weakness was because someone major was reducing their
stake apparently. So certainly a strong hold in my opinion & maybe a buy
if you feel you haven't enough in your portfolios."

[zeppo] 26/9/2012 10:39

'Fulcrum Utility Services Consensus - Shares - Telegraph



shares.telegraph.co.uk/fundamentals/?section=broker&epic... '

IMHO the lower mean earnings figure for the 2013 year of 1.8p could be achievable.


z

[zeppo] 25/9/2012 22:48

Most who attended the AGM left feeling positive.

The 2 million share late trade yesterday (4.40 pm Monday ) seems to be a venture capital trust who, possibly because of their own reinvestment rules, disposed of 25% of their holding retaining 6 million shares. The 2 million were taken up apparently by another institution who are very supportive of the Fulcrum. RNS's may be due.


The company have improved many aspects including the sales set-up and getting rid of unprofitable contracts that they inherited.

z

[ygor705] 25/9/2012 19:04

In due course, I will also be getting a report back from somebody who attended today's AGM but I am feeling reasonably happy because the issued RNS reported nothing negative. If a profit warning was on the cards surely the AGM would be the correct forum to adjust people's expectations for 2012/13? Afterall, the half year end is now only a week away.

[edale] 25/9/2012 16:48

Results of Annual General Meeting

The Annual General Meeting of Fulcrum Utility Services Limited was held at 2.00 p.m. on Tuesday 25 September 2012 at the offices of Mayer Brown International LLP, 201 Bishopsgate, London, EC2M 3AF.

All resolutions proposed at the meeting were duly passed by shareholders.


It would have been good to have an update on the business performance. Any feedback from the AGM appreciated.

[zeppo] 25/9/2012 10:27

'
08:15:36 25-Sep-2012

14.30

6,871

982.55

Ordinary trade

07:58:26 25-Sep-2012

14.00

100,000

14,000.00

Ordinary Trade - delayed publication request'

There have been other trades with 'delayed publication request' as the price has gone down over the last month.

I am now sweating on the AGM announcements and any RNS to be published later today.


z

[edale] 25/9/2012 07:45

Zeppo, No RNS so far this morning so will appreciate your comments after the AGM