Fulcrum Utility Services... Share Discussion Threads

[gopher] 12/6/2019 21:26

Its all in Yorkshire so difficult to assess

Who owns Fulcrum, I cant find out but there can be little loyalty in these situations and the smaller shareholder is often last in the queue

[topvest] 12/6/2019 18:37

Yes, very interesting- either a speculative holding, or a takeover opportunity. Maybe a route to market for his eclectic Bayford Group?

[ducatiman] 12/6/2019 17:57

I will be watching with interest to see if they continue to add. Have they made an investment or do they have other intentions?

[68sjb7g] 12/6/2019 15:24

MagicIn relation to your post spotting opportunities and having the guts to act on them. Yes he saw the opportunity and bought near the bottom while the herd were selling.

[magic] 12/6/2019 15:14

yorkshire post 2017, jonathan turner, ceo bayford group

He’s now looking at diversifying into gas and electricity supply while continuing to boost his classic car collection.

The entrepreneur and head of the Bayford Group has built his fortune on acting fast or as he puts it “spotting opportunities and having the guts to grab them” while others tarry with sums, spreadsheets and consultations before making a move.

hxxps://www.yorkshirepost.co.uk/news/analysis/real-home-the-yorkshire-laird-1-8600690

[solarno lopez] 12/6/2019 14:04

This looks ever more interesting when you view the Bayford accounts to find that after the year end they sold their interest in a fuel card company for £48m

YES ………;£48m

[solarno lopez] 12/6/2019 13:41

must have been rapid buying as they crossed 3% through to circa 6% or did they not know their obligations

[turbocharge] 12/6/2019 12:48

Looks like they have been busy buying recently, no previous notifications at 3% and 4% thresholds...

[solarno lopez] 12/6/2019 12:09

VERY .....you only have to look at the Bayford website

[carpingtris] 12/6/2019 12:00

Interesting! :)

[solarno lopez] 12/6/2019 11:50

I have added a wedge

[solarno lopez] 12/6/2019 11:45

Bayford are a very interesting company hxxps://bayford.co.uk/

[ducatiman] 12/6/2019 11:34

So what do we make of that RNS?

[iceman82] 12/6/2019 07:28

my fair value would be 50 p so there is potential for upside

[jl5006] 11/6/2019 19:54

Maybe the assumption that the issue is just the IRFS 15 issue - someone has been given the nod that is so.
Not in public domain sowe can but guess.
Encouraging though?

[scubadiverr] 11/6/2019 18:11

To have to call it eventually. Some big buys/transactions showing today. Does someone know something we wish we did?

[pictureframe] 07/6/2019 10:46

That might have been the bottom.

[jl5006] 06/6/2019 23:32

Just my take
The gas market - whatever the supply - needs connection.
Dunamis stumbling block because of EU dogma - soon to go I hope
Could do with more assistance from their advisers. I phoned and said why on earth have u not issued a positive comment Camarco PR advisors - but no follow up after the 21 march statement. No use then ditch them

[topvest] 06/6/2019 20:40

Its gone down due to three things in my view:
- Dunamis acquisition has not gone very well due to the headwind of contract delays. Forecasts have therefore been reducing, not increasing.
- Negativity around the gas market.
- Dislike & misunderstanding of the high capex / cash flow implications on the asset owner side of the business.
& then, obviously, the accounting problems.
With a share price going down significantly, momentum then takes over and everyone else starts selling the chart.
My view - 70p overvalued. 30p undervalued. Probably 50pish before the accounting issues.
20p is obviously way undervalued, but factors in the risk of something much more nasty.
Share prices often over-react on the downside and upside.
I'm a holder, but won't be adding until the results are out.

[pictureframe] 06/6/2019 18:56

Buy and sit back. Agreed!

[jl5006] 06/6/2019 18:51

TV
Then why the melt down. Just the herd basis?
The guesswork is more the probability.
Reality will dawn again - EU restrictions not a permanent inconvenience.
Buy and sit back!

[magic] 06/6/2019 18:50

Thanks topvest, useful to have the relative size of Dunamis' business.

The company stated in the Annual Report they were moving to more credit terms.


PAGE 28
"A changing mix of new contract sales, moving away from payments in advance toward credit terms, may place a strain on working capital as the volume of credit sales increases.

The Group needs to ensure that it has the funding required to deliver on its strategy and future growth plans and that it manages its debt and cash balances effectively."

[topvest] 06/6/2019 18:16

IFRS 15 could be the issue around contributed assets, as this is a complex area. No material impact on the business or profitability though is my expected outcome.

Dunamis, I looked at last year’s stats. The gross profit margin is over £2m from the growing maintenance business (confirmed to be doing very well in the last trading update) and below £2m from the larger low margin big contract connections business that is suffering from the capacity market uncertainty and referred to as a headwind in the trading update. I think this could be removing c£1m (annually) or so of gross margin until things get back to normal. This could result in a partial impairment of goodwill on Dunamis. Impact on the balance sheet is irrelevant, as it an intangible asset anyway, so everyone ignores.

The capacity market suspension is hitting the whole power sector in the UK after the EU deemed it illegal. It will have to be sorted in the next year or so or the power sector will fall over along with the likes of many generators. Once it is sorted all the activity will come back again, but looks like a circa. £1m P&L hit to Dunamis currently per annum ( my gut feel number based on last year’s stats). That’s quite a big hit on a c£20m acquisition, and reducing Dunamis profitability by up to 50%. But it’s probably only a temporary issue, so it may not necessarily cause an impairment. Depends on when you assume the revenue comes back. Unless I’m missing something Fulcrum has no capacity income at all. It’s just that some of its customers are impacted and have temporarily pulled investment until it gets resolved, which means significantly delayed projects rather than cancelled work.

As I’ve said before deferred income is cash received in advance on jobs started. This is a really attractive business feature, and nothing to be scared of, meaning that the contracting business can run with a negative balance sheet as customers pay something like 30% up front in cash. No working capital is needed which is wonderful. This is part of the reason why they are so cash generative and can pay chunky dividends, whilst also investing in being an asset owner as well. As I say again, the definition of a wonderful business is one that can operate profitably without any assets or working capital.

I think the likely issues are IFRS15 and Dunamis carrying values, maybe with a consolidation or reconciliation issue thrown in. All guesswork based on what has been said.

This is the problem. Everyone is just left in limbo trying to guess what the problem might be. Patience needed.

[jl5006] 06/6/2019 17:57

Goodwill value subject to 3rd party confirmation.
No noted comment subsequently.
RNS words are "financial reporting framework compared to PY
Only changes to IRSFS -IRFS 9 - relating to financial instruments - mostly Banks and IRSF 15 relating to contracts - FCRM has plenty of those - the only 2 disclosed changes relating to FCRM 2019 year end.

[magic] 06/6/2019 17:37

Additionally, on page 46 of the ANNUAL REPORT
BALANCE SHEET NOTE 16

"Of the £26.5 million accruals and deferred income, £20.0 million (2017: £14.5 million) relates to deferred income. Deferred income represents contracted sales for which services to customers will be provided in future periods."

hxxps://www.fulcrumutilityserviceslimited.co.uk/~/media/Files/F/Fulcrum/documents/fulcrum-utility-services-limited-annual-report-and-accounts-2018.pdf


I imagine if some of Dunamis' income has been classified as deferred income, and this is not now available, due to the EU ruling, then this may further affect the Balance Sheet.

----------------------------------------------------------------------------------------------------------

The Annual Report stated that FULCRUM had a £20 million debt facility recently with Lloyds, although this had not been utilised at the time the Report was published.

There must be a question, with a restated Balance Sheet, if any financial covenants might be affected.

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PAGE 27 OF THE ANNUAL REPORT, SOME IRONY THERE

"Our increasingly diversified position, including the addition of Dunamis and CDS, has reduced our
exposure to volatility in individual competitive markets. These risks are managed through the
corporate planning and review processes."