The considerable operational improvements at Fulcrum Utility Services (FCRM), a specialist in unregulated utility connection services, have been somewhat overshadowed by tough conditions in the housing development and commercial construction markets. News of slower order flow prompted a 17 per cent markdown in the shares after the results as well as earnings downgrades.
Fulcrum's problem is that about half of its sales are generated by small enterprises, which are with-holding spending or are unable to finance projects. However, there is a compensating shift in the sales mix, with projects valued over £100,000 growing by 60 per cent, offsetting the 16 per cent fall in lower-value work. Unfortunately, that has made revenues lumpier and procurement times longer, which explains why the timetable for work is now being pushed back into next year.
On a positive note, the changing contract mix has boosted the medium-term order book to £20.7m, up from £15.3m at the March year-end. And improvements management has implemented, particularly in IT, helped increase gross profit margins from 29 per cent to 40 per cent in the half year, and meant the company posted cash profits for the first time.
House broker Cenkos Securities forecasts full-year pre-tax profits of £1.2m and EPS of 0.7p, compared with a £2.7m loss and a loss per share of 1.7p in 2012.
FULCRUM UTILITY SERVICES (FCRM) | ||||
---|---|---|---|---|
ORD PRICE: | 14.25p | MARKET VALUE: | £22m | |
TOUCH: | 13.5-15p | 12-MONTH HIGH: | 20.87p | LOW: 12.75p |
DIVIDEND YIELD: | nil | PE RATIO: | na | |
NET ASSET VALUE: | 0.1p* | NET CASH: | £4.4m |
Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2011 | 19.6 | -3.75 | -2.4 | nil |
2012 | 19.3 | -0.11 | -0.1 | nil |
% change | -2 | - | - | - |
*Includes intangible assets of £3.84m, or 2p a share |