Vanco Share Discussion Threads

[taffee] 03/2/2008 13:06

err yes.....£1 seems like a 10 year low....The problem here is simple....it is unclear whether the contracts (though worthwhile for the clients.).are profitable and therefore the business model appears possibly flawed.

Vanco believe if they sign enough contracts,the monthly revenue will be higher than their costs eventually.

At the moment,they seem to show the revenue for the whole several year contract in the accounts yet only receive the money in dribs and drabs.

[yanny2] 03/2/2008 12:47

Does anyone thinkthere has been a slight over reacation in the share price,at the end of the day things have to be paid for.

comments please

[davius] 02/2/2008 19:04

For anyone who thinks Vanco has it's rampers on this site, take a look at LSE, one poster there is down a huge amount and talking about a £20 valuation...

[davius] 02/2/2008 18:27

Dreadful capitulation by England in the second half. Wales deserved to win.

[davius] 02/2/2008 18:26

I see from the interim accounts that for the first 6 months average net debt was £66m, a figure that has increased to £79m during the second half. The period end (31st January) figure is £63m. Higher for sure, but the expansion has to be funded. If they had announced static sales or lower margins along with higher net debt I'd be running for the hills. But these figures don't appear to be anything like as bad as the markets have made out.

From the interims:


8. Borrowings

On 24 April 2007 the Company successfully renegotiated the Group revolving bank facilities on new terms. Lloyds TSB Bank PLC is now the Group's main lender. The total facilities now available to the Group under this facility are £100 million, £4 million of which is allocated to hedging facilities and £5 million of which is available as overdraft. As a result of the change in principal lender from Barclays Bank plc to Lloyds TSB Bank PLC, bank loans of £62 million were repaid under the old revolving credit facility.

Average net debt for the six months ended 31 July 2007 was £66 million compared to £53 million for the six month period ended 31 July 2006 and £61 million for the six month period ended 31 January 2007.

[moob] 02/2/2008 18:06

Dan Gardiner, a Bridgewell analyst, said: "Over the last four and a half years Vanco has reported £20m of profit, but they have consumed nearly £30m of cash."

He claims Vanco flatters results by recognising installation revenues upfront that are paid over the life of a contract. This results in a mismatch between reported profitability and cashflow.

Vanco directed queries to the house broker Dresdner Kleinwort, which said: "We remain confident about Vanco's long-term cash generation capabilities and the profitability indicated by accrual accounting."



Fridays staement indeed appears to concur that the companysthe accounts were a load of



lol

[safman] 02/2/2008 17:57

lol..

saffy..

[skiski] 02/2/2008 17:53

Too much much booze mate!

[masurenguy] 02/2/2008 17:35

What contradictions - you're obviously an idiot !

[davius] 02/2/2008 17:34

Lol, contradictions abound.

Back to the second half.

[masurenguy] 02/2/2008 17:11

"I find that a slightly odd statement. If they rise to 200p on Monday and the market cap is therebore double their dect then does that make them a buy?"

There is absolutely no logic to underscore the reasoning behind that conjectural assumption since debt level is not the only factor that influences a share price. If the share price doubled next week it would not alter the leverage/undercapitalized issue in any way and consequently it would not make them a buy. In fact the downside risk factor would have doubled and if I was a shareholder I would probably take the opportunity to sell at that price.

The relationship between the market cap and current debt is both indicative of how undercapitalised they are and the risk/reward ratio of buying or holding the share. It increases the negative risk of dilution and/or insolvency and potentially the positive risk of becoming a vulnerable acquisition target which could add a premium to the current share price. Personally I still would not buy until the working capital issue has been addressed since I believe that there is a considerable risk of dilution based upon the need to raise further capital in the future. That's just my view and it does not constitute any form of investment advice - you should try and do your own analysis and form your own conclusions.

[davius] 02/2/2008 16:25

> This has been on my watch list for a while but I'm still not tempted to buy,
> even at this low price, while outstanding debt exceeds their current market
> cap of £63.5m.

I find that a slightly odd statement.

If they rise to 200p on Monday and the market cap is therebore double their dect then does that make them a buy?

[shafaq] 02/2/2008 10:58

i think i will wait until tuesday or wednesday for a quick punt,as you know the weekend press will put fear in peoples minds.
imho, this has further to go in these markets and if stocks start in red on monday due to macro issues then will delay buying in for the moment.
good luck to all who have already taken a plunge.

[masurenguy] 02/2/2008 09:24

IMO this company is undercapitalized to support its business model. As a 'wholesaler' of Telecom services they will continue to remain behind the cashflow curve as long as they are achieving growth from new contract acquisition. When interest rates are low and markets are awash with liquidity you can get away with highly leveraged debt financing but not when interest rates have risen (as over the past 2 years even if they've now peaked) and liquidity tightens (as in current crunch !).

The business model is clearly viable on a P & L basis but not on a Balance Sheet basis. They need to raise more capital via dilution or they could become vulnerable to a predator. It is always a source of concern when a company feels necessary to state publicly that they haven't breached their banking covenants. The fact that their share price has dropped by more than 80% over the past 9 months, despite significant growth in sales and operating profits, should be cause for concern. IMO this represents a clear signal that their working capital recquirements really do need to be addressed !
This has been on my watch list for a while but I'm still not tempted to buy, even at this low price, while outstanding debt exceeds their current market cap of £63.5m.

[jonwig] 02/2/2008 08:44

He claims Vanco flatters results by recognising installation revenues upfront that are paid over the life of a contract.

That's perfectly legal accounting practice (accruals principle): once invoiced, it's revenue, with debtors adjusted on the balance sheet.
On the other hand, it seems they aren't booking costs until they are incurred.
More prudent accounting would match the two timescales better.

[nimrah] 02/2/2008 00:09

this is going to go burst dodgy account

[soundfsilence] 01/2/2008 17:37

Bursar:

What is your current view now?

[jailbird] 01/2/2008 16:25

at all time support

if 100p psychogical goes..help is needed

[linney3] 01/2/2008 16:01

He is a big boy Jailbird.If he cannot afford to lose he should not be investing.Likewise we would all be waiting for him to share his winnings

[sdt7618] 01/2/2008 15:59

Have we hit bottom? looks like it