Fulcrum Utility Services... Share Discussion Threads

[jl5006] 23/12/2019 10:06

Overambitious
The market for the design, installation and ownership of these types of infrastructure assets has evolved significantly in the last few years. As the values being ascribed to domestic connection assets by participants in the market have increased materially, reflecting the attractions of the predictable, stable, long-term regulated cash flows associated with them, clients such as housebuilders have increasingly demanded that the value of the completed assets is reflected in the pricing structure agreed for undertaking these design and build projects. For larger domestic asset projects, this can result in all or a significant part of the effective profit margin on contracts being accounted for by the values ascribed to the completed assets, while the short-term net cash flows associated with larger domestic projects are often marginal or negative. The Group's main competitors in the gas and electrical utility connection ownership sector (being other IGT and/or IDNO licence holders) are significantly larger businesses, which are typically owned by large, private, infrastructure investment funds, and which may not face the same funding constraints that The Group does as a quoted business.

[rimau1] 23/12/2019 09:29

I am back in at 24p, for me the bull case rests on the positive outlook statement and reverting to a capital light model. Should be a beneficiary of the infrastructure splurge in H1. One to tuck away.

[ducatiman] 23/12/2019 09:24

That's my last ave down! GLA and Merry Xmas, duc.

[ducatiman] 23/12/2019 08:45

No blue yet!!

[fruitfly2] 23/12/2019 08:31

"Will this help the share price going forwards?"

About the same as a plaster would after falling 200ft down a lift shaft.

[carpingtris] 23/12/2019 08:21

Will this help the share price going forwards?

'- The Company intends to commence a share buy-back programme anticipated to return approximately GBP4 million to shareholders over the next four years. The buy-back programme will track the expected build out and realisation profile of the balance of the Assets'..

[ducatiman] 23/12/2019 08:19

Mostly sells but low volume.

[ivancampo] 23/12/2019 08:16

Will be seen as good news by end of day in mu opinion.

[topvest] 23/12/2019 08:10

Heading down so the market is not impressed.

[topvest] 23/12/2019 07:59

A couple of notable points:
- Cash consideration to be received over 4 years and it doesn't state the book value of the assets being sold. I&C assets retained.
- This is a similar transaction, albeit on a much bigger scale, to when they needed cash about a decade ago.
- Dunamis lost £1m in H1. Could be an impairment charge in H2!

[ducatiman] 23/12/2019 07:50

Let's see how the market reacts.

[topvest] 23/12/2019 07:47

Good news on the sale. Bang-on with my predicted H1 results which were awful. Passing the dividend is sensible. May be tempted to get back on board at some point now that they have changed their broken strategy.

[18bt] 23/12/2019 07:37

Wow. Markt cap c£60m, and net cash in from sale £33m. Needs detailed analysis of what's left. Complete change of strategy and now asset lighter (still adopting assets in I&C). Return of capital seems small in relation to cash. Will look at further later this morning.

[capercaillie] 23/12/2019 07:06

A lot to take in with this announcement.

[topvest] 22/12/2019 18:13

Agreed. The original business was an asset light or even negative working capital operation. It is not a business that can finance the low risk low return utility asset ownership model to the degree that they have signed up to. That needs spinning off into a separate vehicle or selling in my view. Fortunately, these are assets that can readily be sold, if required. The underlying contractor business was, and is still, quite attractive albeit more volatile and can generate high returns on capital. They should maybe sell the pipeline assets to a separate entity, as the two businesses don’t sit well together.

[muckshifter] 22/12/2019 11:47

I can understand the attraction of the asset owning model, as it adds a stable and secure source of income to what is basically a type of contractor. But, it just looks to me like they have been in too much of a hurry to build that stable base. Buying this type of asset using bank loans is far too uncertain for my liking. Such assets would be great as a place to park cash generated from the contracting side, and at some stage the income from those assets should be sufficient to buy the next years available assets, but to get to that situation quickly, without excessive bank loans, you need more equity, imo.

[topvest] 21/12/2019 16:13

You might be correct. Time will tell. I'm on the sidelines and should have sold much earlier than I did. Tempted to get back in, if they can get rid of their asset owning model which eats cash.

[muckshifter] 21/12/2019 09:38

topvest,
IIRC, the capital commitment of £18.7m was for purchase of assets from other contractors who have no operator capability. I suspect that a large proportion of the revived order book for installation in housing schemes is also contracted on the basis of ownership after installation (this was about another £18m, iirc). Cash was £3.6m at end of year, which is when companies are tempted to window dress, and a further £3m went on asset purchases before the report was published. Loan facility as currently in place is up to £20m, but it is secured on the purchased assets, I believe, so perhaps it can be increased, but my suspicion is that more shares are about to be issued.

[topvest] 20/12/2019 20:05

I don't believe that they have been upfront about the issues. The key points:
- current year forecast slashed to 1.5p at the final results.
- accounting issues.
- CEO suddenly departed.
- capital commitments of £18.7m.
- dividend retained despite obvious stress now caused by no cashflow in H1 and enormous capital commitments.

On the bullish side:
- the capacity auction market issue is resolved which should help the order book.

A fundraise might well be on the cards.

[jl5006] 20/12/2019 18:02

No muck
No rights issue -IMO
Something untoward about the CEO - was CFO.
When we are told then we will know.

[nigeldoug1] 20/12/2019 17:27

Given the history I think they are making sure they are heavy when weighed. There is a lot of potential now we are through the election.

[muckshifter] 20/12/2019 17:03

That might have been the case years, or even a year, ago, jl5006, but I don't think so now.
We'll see, when the next results appear no doubt.

[jl5006] 20/12/2019 16:30

Muck
They have plenty of cash. have u looked at the coy over the last few years?

[muckshifter] 20/12/2019 11:35

Looking carefully at this company over the last few days with a view to buying in, I've come to the conclusion / suspicion that the reason for the sudden departure of the CEO and the delay in publishing the half year results is because they are about to have a rights issue or placing, the need for which was not realised by the CEO.