Member Info for bear17

Share Sale Failure @ 1.5p

BUC still trying to find some cash by any means.

BUC offered shares at 1.5p, but they were not all picked up - and that looks pretty nasty.

The share price has plummeted back too 1.5p - so somewhat of an own goal for BUC.

Diluting shareholder value.

Large Debt + Little Cash + Loss in 2026 + Uncertain Convertible Loan Note Holder outcome + Share Sale Failure @ 1.5p = Strong Sell for me.

UK economy faces continued stagnation, slow productivity gains, a challenging environment for household disposable incomes and for businesses. The outlook is very poor. 2026-27 total construction output continues to be revised down.

BUC Cash Generation will be under ongoing stress in 2026 and 2027, due to the ongoing loss position.

• For BUC, the remedy for cash generation in the short term is calling on the Convertible Loan Notes to be increased to £2m @ 12% repayable end 2027. BUC will not have the cash to repay the Notes in 2027, so the higher probability is that the Convertible Loan Note Holders might only accept converting the Loan into Ordinary Shares at 1p a share, significantly decreasing the BUC shareholder value. 200m new shares would destroy the BUC share price, but the Note Holders will have BUC over a barrel.

• Selling Parts of the Business – but who would buy any of the assets for cash? A sale significantly decreases the BUC shareholder value.

• Cost Cutting will take time, due to the staff redundancy processes, and will not provide an immediate improvement.

Veretec is the only profitable part of BUC. The added risk to BUC is that the main fee earning Veretec Directors resign, and take their client base with them, and their £500k profit position, into a new company and share that profit between the main fee earners rather than the BUC shareholders. I am not sure why those Veretec Directors have not done so already?

Large Debt + Little Cash + Loss in 2026 + Uncertain Convertible Loan Note Holder outcome = Strong Sell for me.

BUC have £1.1m of debt raised through the issue of 12% Convertible Loan Notes repayable on 31 December 2027, with total borrowings at £1.5m.

How BUC repays £1.1m in 18-months time, considering they are not making any profit is a major risk.

BUC is propped up by these 12% Convertible Loan Notes and they need repaying.

BUC is stumbling along on a large debt that needs to be repaid shortly, has little cash, and is currently in 2026 still running on a loss. There is no means to repay the debt, so BUC are totally exposed to the whims of the Convertible Loan Notes Holders.

Final Results: BUC

1. Scraping through with next to a zero profit;

2. Hardly any spare cash - a weeks worth at best;

3. Any economic downturn will see losses accelerate quickly, as staffing costs will be hard to immediately cull.

Lots of lame commentary in the announcement, but not supported by profitability & lack of cash to provide a buffer to any potential downturn.

BUC just plodding along.......

BUC Convertible Loan Notes of up to £2m Debt at a 12% interest rate raises the potential debt levels. The BUC Warrant Exercise of £140k of Debt earlier in the year was the start of the process.

BUC has no further assets to sell, and relies upon c.£2m a month of cash from earnings to arrive to feed the cost base.

Borrowings continue at £730k, increasing from the Sept 24 position. Net Debt stands @ £500k.

The earning per staff is significantly weak @ £100k, whilst design contemporaries are triple that amount at £300k.

Extracting a profit out of this poor earning per staff base will always be the challenge.

BUC are coming off a £1.8m loss. [ye 9/24]

BUC ye2025 looks to have added to that loss, stemming the rate of decline.

Any down turn of revenue, will very quickly compound the debt levels, due to the high wages component of the cost base.

Exerting caution - until Net Debt rolls positive.

BUC Warrant Exercise

£140k of cash just tipped into the till by the Board - are there cash problems?

Diluted the shareholding granting themselves shares at 1p.

Raised this matter two weeks ago:

"Borrowings in excess of 520k continues to plague BUC, and until profits are made, these debts will continue to grow, and BUC will live from hand to mouth, requiring 1.7m of cash receipts each month to balance the books. A few poor quarters driven by a UK GDP turn down might become a nightmare for BUC, very quickly. BUC has no assets to turn to – so it is all about cash."

I see no benefit in BUC maintaining a Public Listing.

The ongoing 300k+ costs to maintain the Listing, is just adding to the loss each year, and draining cash.

There is little synergy to allow cross selling. If BUC was presenting the matter realistically, I am sure that they could not put any worthwhile contribution to any cross sell actually occurring.

Veretec clients are the UK Main Contractors building the major UK projects – they are not the owners of buildings. Veretec’s business is always going to be a minimum profitable position, as fees are significantly constrained and staff committments high. ASL are now an extremely small design business, with few clients to ‘upsell’ any of Smart Building products. Unfortunately, the combined business is only delivering KPI of 100k pa, whilst the main architectural business in the industry - Foster & Partners is at 300k pa. BUC is never going to get above 100k pa – and that is the reality.

Spreading the 'Group Costs' of 680k [loss] across both Smart Building revenues & Architecture revenues, brings both entities to sizeable losses for both sides of the business.

Smart Buildings is running at a 1.4m loss, whilst Architecture at a 0.4m loss.

Borrowings in excess of 520k continues to plague BUC, and until profits are made, these debts will continue to grow, and BUC will live from hand to mouth, requiring 1.7m of cash receipts each month to balance the books. A few poor quarters driven by a UK GDP turn down might become a nightmare for BUC, very quickly. BUC has no assets to turn to – so it is all about cash.

Smart Buildings, 1.4m loss is extremely poor - if that is where BUC believe their future is, it looks to be a very poorly run business!

More party political broadcasts from BUC'ed!

Odd that the outlook on GDP is plummeting worldwide, and there are individuals that can only see upside.

BUC's KPI on earnings per staff is woeful - that is why there is a massive loss, and running on fumes.

The first order of business for BUC, is to make a 10% profit, and have 10% of turnover as free cash. Once they get to that position, then they are partially stable. BUC'ed has no meaningful assets - so it is all about the cash.

Let's have a Quick Look at what a properly focused design led business delivers:

FOSTER & PARTNERS

ye 300424

442m turnover

55m cash

46% Gross Profit

12% Parent Company Profit

1,894 staff

223k per staff

1500 tech staff @ 295k per staff

Fosters @ $300k per technical staff member v BUC'ed $100k

MASSIVE LOSS + NO CASH + NEXT TO ZERO LIQUIDITY

MASSIVE LOSS:

1700k!

Torpedo leading the charge down!

NEGATIVE CASH:

Still to repay 417k CBILS loan

Still surviving on an Overdraft

KPI

Earnings per FTE still woefully poor.

SERVICE SECTOR GROWTH

Bumping along at just above zero

BOE GDP Forecast

Cut from 1.5% to 0.75%

REVENUE

Propped Up by Acquistions

Interim results

For the six months ended 31 March 2024

Total loss before tax of £1.5m – here we go again! Torpedo getting smashed.

Cash £0.165m – really hand to mouth at the moment.

Borrowings £2.4m - awaiting the property sale

Net Assets £2.5m - but propped up by unlikely values of Goodwill & Right of Use Assets @ £4m

If you are 'selling' professional services within a 'very small company structure', then the CEO & the Directors who are 'selling' that service are expected by 'Clients' to know what that service is all about.

When you have no skill within the company within the Building Services Engineering (MEP), and that is your only strategy to expand, then that sounds alarm signals to me.

In a small professional company everyone needs to be delivering fee income, otherwise they are simply just adding to the cost base, with little shareholder value.

I always undertake a detailed consideration of the prospects of a company that I wish to invest in.

I raise concerns when I see them.

I do not offer investment advice, with warnings to investors when I see an obvious problem.

AUK believe – somehow – they are ‘Master Systems Integrator in the Smart Buildings Arena.’

AUK do not have any such skill base.

These skills are already provided by Building Services Engineering (MEP) in the UK – there are multiple highly skilled practices with decades of experience.

Building Services Engineering (MEP) is carried out by specialist engineers, in the early design phases of any major building project.

The traditional MEP Engineers that AUK has worked with for decades, already deploy the skill set that the new AUK CEO now seem to want to deliver. Unfortunately, the CEO that has dreamt up this strategy, has never designed a building, nor will he. The AUK CEO has never partaken in any part of the MEP process however he now suggests the market will flood to him?

Building Services Engineering (MEP) includes Holistic design process, Passive Systems, Active Systems, ‘Total view’ sustainability assessments, Energy savings calculations, Environmental Regulation Compliance, ‘Whole life’ costing report of systems and utilities, ‘Future flexibility’ planning and projection, Alternative systems assessments for comparison and design, & Existing building assessments. Building Services Engineering (MEP) carry out a ‘whole life’ costing to assess ongoing and initial costs of maintenance, repair, servicing and operation, as well as social and environmental costs. This process can help the design team and the client choose between alternative designs, systems and strategies and to achieve cost control and certainty right from the start.

That is how it is done.

The AUK CEO or Board has none of those skills, nor are there any senior staff qualified in that skill set!

‘Designing, Installing & Maintaining Integrated Audio-Visual Systems’ is the CEO’s past experience!

Somehow, the AUK Board feel that this is their new strategy, with zero experience and zero track record?

I simply offer this slice of information, so those that are investing in AUK are fully aware.

AUK ye 30 September 2023 [provisional]

o £14m – no growth

o Break-Even

o Property Sale yet to be realised required to clear substantial Debts - c£3m.

o Cash: Uncertain – previously had 10 working days of cash coverage.

Revenue Breakdown from previous recent statement:

o Veretec [Drafting] 30%

o ASL [Architecture] 25%

o Intelligent [?] Environments 25%

o Stage Technology 20%

Strategy: ‘Master Systems Integrator in the Smart Buildings Arena.’

I do not see how a company like Torpedo, as a company ‘Designing, Installing & Maintaining Integrated Audio-Visual Systems’, can pass themselves off as a Smart Building company?

They are not profitable at £14m turnover, as the revenue per FTE is exceptionally small.

o AUK 150 FTE @ 95k/FTE [Fosters + Partners double the performance @ 190k/FTE]

The £/FTE is the real impediment. All four entities simply cannot extract windfall gains from their respective businesses. This has been going on now for many, many years....they obviously are running off contracts with fee bids that are at break even. The skill base has been eroded, and they cannot compete at the top end.

I cannot see any real growth potential, and the risk is that the four separate entities take their eye off delivering their base fee income, by diverting resources to the Smart Building concept that is 'fantasy-land' at best!

I cannot see any path to growth. AS Architectural is a c.3m pa business. The fee earners are not major shareholders, so have little incentive to outperform. Veretec at c.3m pa are a drafting company, on low profit services. Remember - this lot made 3m in losses over the past 5 years - so have survived, I would imagine, offering low fees! If any of these fee earners had any 'drive', they would have left years ago. [The good ones did leave!] Why would you want to work in an architectural business when your hard earned profits are simply carved off to others - and, disturbingly, to Directors that have long left? Professional Businesses should not be listed. How do you attract the very best new recruits - you can't. The new crowd - Torpedo - sell projectors and gear for stage tech. It is like marrying a lama and hope it works! Each of the parts of the group will have better years, and sometime worse years - they will just bump along.

All-Time Low!! A Very, Very Small Architectural Business + A Very, Very Small Drafting Business + A Very, Very Small Stage Technology Business trying to suggest they are a 'Smart Building Company' ???.....with ZERO chance of cross selling anything.....EQUALS.....Less than a Penny!

The strategy for the combined four entities is to see whether the market believes a very small architectural practice will attract greater turnover joining with a stage technology company. It really is bonkers. The concept that a 15m turnover group, consisting of four small companies, that are not interconnected, can somehow create a larger turnover and profit being combined rather than stand alone seems bizarre. I do not see a client being remotely convinced that they would use one part of the business because they are linked to another part of the business. If Aukett Architectural/Veretec went ‘multi-disciplinary’ buying structural engineering and services engineering – I could see a reason for clients engaging more. A ‘one-stop shop’ like BDP. But this….!? Share price reflects my thoughts.

AUKETT 'ARCHITECTURAL' IS A TINY ARCHITECTURAL BUSINESS @

Turnover: 15m pa [after full merger]

Half Year Loss: 0.5m – yes another one!

Net Debt: 2.3m

Cash: Two Weeks Supply

The Group consists of AUK: Architecture [25%] 3.6m pa; Veretec: Back End Services [30%] 4.6m pa; Torpedo Meetings Environment [25%] 3.8m pa & Torpedo Stage Technology [20%] 2.8m pa + small dividends from German investments

AUK: Architecture

aukett s****e: architecture