Investors who sent Fulcrum Utility 's (FCRM) share price down 3 per cent following the half-year results announcement were, perhaps, overly focused on the top line. Ignore the relatively flat revenue performance and this is another impressive set of numbers. The gross margin widened by 8 percentage points, helping to double pre-tax profit and providing £3.8m of net cash from operations (£0.1m in FY2016). Given the strong cash generation, management has taken the decision to adopt a formal dividend policy that aims to pay out approximately half of net profits to shareholders.
Having enhanced the operational capacity of the business, management is focused on growing the top line. The period-end order book stood at £24.4m - up 12 per cent on that booked by the end of March.
The increase reflected a string of contracts, including a £4m deal to install a new gas pipeline to a large food manufacturing plant in the south-west. "We have the capacity to deliver 12 of these large contracts at one time," says chief executive Martin Donnachie. But the company is not relying on this headroom for growth: rather, it is expanding its offering by applying for a licence to own and operate electrical assets in a similar way to its gas network. Annualised gas transportation income also grew to £1.5m.
Broker Cenkos expects pre-tax profits of £6.4m for the year to March 2017, giving EPS of 3.4p (from £4.6m and 2.6p in FY2016).
FULCRUM (FCRM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 49.5p | MARKET VALUE: | £80m | |
| TOUCH: | 49-50p | 12-MONTHHIGH: | 53p | LOW: 23p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 5.5p | NET CASH: | £12.5m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 17.1 | 1.6 | 1.0 | 0.3 |
| 2016 | 17.2 | 3.1 | 1.6 | 0.6 |
| % change | - | +98 | +60 | +100 |
Ex-div: 29 Dec Payment: 27 Jan *Includes intangible assets of £2.5m, or 2p a share | ||||
