Vanco Share Discussion Threads

[2cooperd] 14/2/2008 21:00

got knows what is happening

[02bursar] 13/2/2008 14:02

richardbonny M699

The debt is servicing the working capital needs of a growing business operating in a highly competitive market. Contracted order book went up 32% at the half year. Look at the balance sheet at the half year. £160m booked as receivables* [£67m of which is due in more than 1 year]. Net debt was how much? £35m.

Those contracts have two phases: 1. The network gets planned, the hardware procured and installed. The revenue gets booked [recognised regardless of payment terms] when that phase is completed. The cash profile of this phase is significantly skewed to the front end as any initial fees paid only go towards the hardware. I suspect a big chunk of the cash out profile is sales commission. If so, its an internal cost which may give room to manoever. Clearly the terms of payment by the client for the balance of phase 1 work booked and completed, are over the term of the contract - as evidenced by the debtor position in the balance sheet *.

Bear in mind that it doesn;t stop there as there are moves, adds and changes to the contract which average out over all contracts to 30% odd of the TCV annually.

Phase 2 of the contract is operational service once the system goes live for which the client pays a quarterly fee in advance which is credited initially to deferred income in the balance sheet and then recognised monthly in the P&L. More cash generative, less margin than phase 1 work.

The more mature the total contract order book becomes [they still retain their very first client] the more cash generative the business becomes.... quarterly in advance billings for service. The trick is to retain the client portfolio. Do they do that? The evidence is that customer care is a speciality as they have won industry awards for it. The evidence has been the low [2%] churn rate [98% retention].

[davius] 13/2/2008 13:50

Doesn't Timpany still hold 45% or so of Vanco?

Chances of a takeover without his approval, ZERO.
Chances of his approval at this kind of price, ZERO.

[taffee] 13/2/2008 13:37

richardbonny

Its like buying a mobile phone or having sky installed.

They pay for instalation and equipment and you pay for usage on a monthly basis.

If they have enough clients they begin to make a profit after a certain timeline

[02bursar] 13/2/2008 12:11

If anyone wants to consider the future direction of Vanco [speculate], ponder whether or not this chap's CV demonstates that he has the capability to make the right changes.

[richardbonny] 13/2/2008 12:08

O2Bursar - re your post 660, thanks for your response. Yes I accept your point that there is a wholesale market for telecoms capacity and it is growing. It does seem to be very fashionable nowadays to try and package something up in tranches to make it look more attractive...a bit like CDOs perhaps?

But if Vanco's business model is simply to buy wholesale, construct end-to-end solutions and sell retail I don't understand how it has got itself in so much debt. I would have thought that you find your customers first and get their commitment to pay you before purchasing anything. Have they spent a lot of money up front? Or are they not getting paid? It is not as if this is a startup, it has been going for some time now.

[masurenguy] 13/2/2008 11:02

Yeah but this should not be used as a forum to post rumours that you have just made up in order to try and tempt some naive punter to buy !

[02bursar] 13/2/2008 11:00

Yes, that chap in France who worked for Societe Generale was very good at speculating. Rumour is there they'll bring out another yellow book soon: 'Speculating for Dummies'

[taffee] 13/2/2008 10:50

stockmarket is partly about speculation and this is also a discussion board

[02bursar] 13/2/2008 10:41

Rumour will abound but look for the evidence. If there is none, then dismiss it.

[kemche] 13/2/2008 10:39

I am an independent drinker and the rumours are doing the rounds in my pub - there could well be something in this! Or not maybe.

[jonwig] 13/2/2008 10:33

If there's a rumour doing the City rounds, would the share price be where it is now?
And if it's only a rumour (as most are) don't forget, "Where there's a tip there's a tap".

"taffee" is an anagram of "fat fee".

[masurenguy] 13/2/2008 10:31

In what - creating rumours in the vain hope of ramping the share price ?

[taffee] 13/2/2008 10:28

could be something in this

[masurenguy] 13/2/2008 10:21

This is all just pure speculation !

[taffee] 13/2/2008 10:20

I think it is more opportunist approach to the bank

[02bursar] 13/2/2008 10:17

M686

What would be the rationale for a sale? Only if the business was in desperate need of finance to service its contracts and could not consider raising distress capital; in other words, if the directors doubted that it remained a 'going concern'. The directors would be duty bound to advise the bank before then and the market would have learned of that. Has anyone learned of that lately, either from the directors or from the bank?

[taffee] 13/2/2008 09:38

no I'm serious..I work in the city in an independent trading floor and it was just doing the rounds.

Would not be a surprise,however, at what price?

[masurenguy] 13/2/2008 09:20

"taffee - 13 Feb'08 - 683:oh dear nasty rumour if short.....has vanco been approached? trying to find substance to this2

Hmmm.....like who started the rumour - could that possibly have been you ?

[02bursar] 13/2/2008 09:17

It's the source of mortgage lending that has been the problem to banks. Personal lending criteria have, at last, been tightened up to avoid write offs due to irresponsible unsecured lending.

All banks lend money; that is their raison d'etre. UK plc will be in big trouble if that should be otherwise.

As with all commercial lending, the bank would have both fixed and floating charges. The security is in its recognised debtors and its intagibles.

There is no evidence that the business won't be able to secure its borrowing requirements.

[taffee] 13/2/2008 09:04

oh dear nasty rumour if short.....has vanco been approached?

trying to find substance to this

well capitalised group like bt perhaps...would make sense

[evalongoria] 13/2/2008 08:59

from my experience my bank manager is worried and has had his lending criteria tightened and is being whipped by head office. With no room to manoevre , anyone know when VANs facility will need to be renewed? That will be D-day.

[taffee] 13/2/2008 08:54

thats always been the case though

[evalongoria] 13/2/2008 08:46

they are also pulling the plug in some cases