Universal Coal Share Discussion Threads

[humphries1] 11/11/2005 14:48

from ic United Clearing (UCL.L) - Good value.

[hounddog1] 11/11/2005 11:48

From the figures I have been able to dig up I think any and all of the profit made or to be made is on this basis of an fx cut.

Furthermore it looks as though this is not transparent. It is not broken out in the company reports. Why is this given how important the profits from this side of the business seem to be - are they hiding anything?

Furthermore if the FX angle is being actively managed by the bank or the company - I suspect the company otherwise the bank would want to keep hold of most of any benefit - there is a very real danager that the FX trade could go wrong i.e. the company ends up in a loss position!

[ntv] 10/11/2005 16:46

bought a few today

[rambutan2] 10/11/2005 14:50

i havent a clue who the bidder is, but i am 100% certain that it's not gam - they are a pure fund manager.

it was really the fx angle that first attracted me in. i dont have any figs but i suspected that it could be a nice earner on the basis of just a little skim of large amounts of money passing through.

[hounddog1] 10/11/2005 14:20

hey rambutan, since you are so sure of the bidder, why did you never come back to me on the FX issue.......

[rambutan2] 10/11/2005 01:50

jeffsmith, no, gam wont be.

[tony5505] 09/11/2005 21:23

UCL described as 'good value' in this Fridays IC.

9 November 2005

UPDATE: United Clearing (UCL)




Shares in United Clearing, which provides financial support services to the mobile phone industry, have performed well since we suggested buying them (100p, 5 August 2005), rising 32 per cent to 132p.

A strong trading performance is partly to thank, with a number of high profile contract wins including O2 in the UK and Ireland. The company announced its preliminary results this week, beating forecasts by around 10 per cent. Sales rose 80 per cent to £3.2m, while pre-tax profits jumped from £261,000 to £1.17m. There was also a 2p maiden dividend.

But the shares have also been helped by a bid approach, announced on 12th October. Chief executive Atul Divani is tight lipped on the identity of the bidder, although he notes that consolidation is speeding up in the industry, with both private equity and trade buyers wanting a piece of the action. Mr Divani has his own acquisition plans, which involve expanding United Clearing's product offering into new sectors.

The bid excitement has given the shares a hefty rating; they now trade on 21 times forecast earnings. But the company is showing healthy organic growth and, with a possible bid on the table, the shares still look good value.

[jeffsmith] 09/11/2005 19:50

That's surely so, Hounddog1. Notice that another 50,000 shares bought by GAM London Limited yesterday - that brings their interest up to 11.17%. Are they the bidding approach we've heard about?
JS

[hounddog1] 09/11/2005 17:33

Well JS - the glass is either half empty or half full......

[jeffsmith] 08/11/2005 16:08

It seems to me that UCL's business simply generates money! The business model means that no stock or retailing outlets are required and as turnover increases from the new contracts acquired there is no requirement for further staff or capital investment, or at least very little extra expenses in these regards. Extra commission goes, more or less, straight through to the bottom line as profit. The payment of dividends simply confirms the directors belief that the business will prosper and the amount retained in cash after the dividends are paid is enough to sustain the progress envisaged.
JS

[hounddog1] 08/11/2005 15:36

Having read all of the above I agree with Wiganer that these results were more or less on target. Solid no doubt but nothing more.
By meeting market expectations it has simply done what it said it would do no more no less. Hence no movement in price and large selling of stock today.

Looking a little closer at the figures I was struck but just how opaque the operating figures are.....

We have no real idea as to how the split between fee income (main earning mechanism) and non-fee income makes up the total operating (turnover & profit) figures. As far as I am aware this company only has a single product producing serious revenue.

I have been able to dig up one of the very rare, if not only, occurence of a value of a large contract won by the company.

August 2004 - Press release on O2 Germany.
Value of the contract was stated at Euro 300,000 for 24 months for new and existing services for its 2G & 3G networks.
Assuming an average price of Euro 6250 per month GBP4250 per network.

Obviously these figures are ball park but the excersise is an interesting one nevertheless. Let us assume that the above figures are consistent for a large operator:

I have taken the liberty of breaking out the above figures as an example. The number of operators serviced by United Clearing has been mentioned at around 50 from the press releases and other sources in the public domain.

Based on 50 large operators at an average of GBP4250 this would generate fee income of GBP2550000.
Subtract total stated turnover of GBP3223000 from the above fee income figure GBP2550000 produces a turnover short fall of GBP673000.

Assuming another scenario:

1. Large GBP4250
2. Medium GBP3000
3. Small GBP 1750

An even split between large, medium and small operators:

17 Large
17 Medium
17 Small

The above generates fee income of GBP1836000. When substracted from the stated total turnover of £3223000 this produces a shortfall of £1387000.

It is well documented, by the management, that market condititions are tough and have been getting tougher. We should therefore assume that prices have been under pressure owing to tougher competition rather than the opposite.

It is clear that there is little transparency with regard to the exact split between fee income and other revenue sources. Where could this fee income be coming from assuming the above scenario is even close to the mark. It has been stated on this site that there is an FX angle here.
The above is based on simple deduction and nothing more....but nevertheless I would be very wary of investing money in a company that does not split out its earning fees from its total turnover.

United has also paid out a dividend - is this a sign of ex-growth?

Furthermore looking at the figures the directors of the company - 7 people (5 full time) paid themselves nearly £500000 - Almost a third of the total wage bill........plus they have been selling stock the moment an opportunity presents itself.......

[diogenesj] 07/11/2005 14:57

Well, W, all I can say is they stonked a good deal more vigorously than I was expecting. I've just helped myself to 8k before the market wakes up and notices.
:-)

[shaft] 07/11/2005 14:45

With most of the new contract agreements probably not affecting end of september figures, I think the next forcasts will be huge. A definate candidate for a rerating soon. Having said that if they do retract I will top up, it certainly won't feel like catching a falling knife.

Someone mentioned a while back "we don't know the value of these contracts, are they working on no margins just to win the business?" Obviously not, just a very sound and now proven business model.

[wiganer] 07/11/2005 13:58

Dio
Noone is disputing that they are good results, just highlighting that they might not be quite as stonking as some had hoped for, and that therefore in the short term there might be a bit of weakness on profit-taking.

[diogenesj] 07/11/2005 13:57

Hey guys and Boadicea, aren't you being a bit churlish here? These are outstanding results. Earnings per share are about 10% ahead of Seymour Pierce's very bullish forecasts. That suggests to me that next year's forecasts will now be substantially upgraded. The company is considering an earnings enhancing acquisition. What more could you ask for? :-)

[wiganer] 07/11/2005 13:21

Agreed. Good results, but not the awesome figures some punters might have hoped for. Still watching, but reluctant to pay more than 130p to get back in.

[boadicea] 07/11/2005 13:18

Shaft - ...and weakness you may well get.
Good results expected, good results produced.
Some who bought pre-results with expectation of making a profit will now want to sell, profit or no. A case of greed and impatience displacing rational logic.
Worth watching and waiting for a week or two to give boredom time to work for you imho. Anyway, that's what I'm doing.

[rambutan2] 07/11/2005 10:37

look fine to me.

[shaft] 07/11/2005 07:09

Great set of results, will certainly be looking to add on any weakness. A lovely share to be putting away for my retirement!

[hounddog1] 02/11/2005 18:46

rambutan do want to add anything more?

As JeffSmith says - next Monday should be an interesting, very interesting!

[jeffsmith] 02/11/2005 08:13

Deal announced with O2. Quote "All of the O2 group will now use UCL for financial clearing." This must mean that earlier services with other parts of O2 were very efficient. Results to be published on Monday, 7th. Should be worth reading.
JS

[rambutan2] 28/10/2005 02:04

yes, the fx.

[hounddog1] 27/10/2005 12:42

news on the wire is that UCL will announce one major deal in the very near term. UK based operator - competition was savage on this one so the story goes - and they had to give it away as they make their money on the FX and not on the fees even though this is not transparent to either investors or customers....

[rambutan2] 24/10/2005 11:17

note that they've just done rather well out of the easynet takeover. so their analyst might think that he's on a hot streak...