Member Info for Pip56

Laura: You posted this.... "The Group's network of utility assets, valued over £31 million as at 31 March 2023, generate recurring income and provide attractive and predictable long-term returns. We continued to adopt additional utility assets in the year, adding them to our income generating portfolio".

Absolutely right. There is a reliable and lucrative income stream over and above the day to day business of designing, building and commissioning utility infrastructure. And yet, it's all for naught because the business lost £25m this year. So in context of your post they actually lost much more and used the income to pull it back to -£25m. 5 years ago the company was run at a profit and the additional income stream paid shareholders a dividend.

The situation now is that the company is running at a loss. It has been loaded up with £11m of debt and it is paying 20% interest to those that loaned the money, none other than Harwood and Bayford. I suggest to you that the income stream is making a good contribution to the interest and administration charges on the loan and in actual fact are being diverted to Harwood and Bayford pockets?

Also right the network of utility assets have a asset high value(£31m), however the liabilities have pretty much gobbled them up because the reported assets of the whole company is just over £20m.

Its like living in a big expensive house that on the face of it makes you look rich but in the background there is a mortgage you can't pay and the mortgage company are slowly and steadily taking ownership of the house around you. You are asset rich on paper but the liabilities are slowly eating it away! Worse though is that the income stream has dried up and you owe more today than you did before. That's FCRM in a nutshell.

Laura: The Story you want to believe: "Believe that the opportunities for the Group and its Fulcrum, Dunamis and Maintech Power businesses are significant and reinforced by strong market fundamentals".

The reality in Facts:

Operating Profit: £6.13m (2019); -£2.1m (2020); -£11.17m (2021); -£13.69m (2022); -£24.59m (2023)

Profit after Tax: £4.92m (2019); £1.56m (2020; -£10.28m (2021); -£13.42m (2022); -£25.14m (2023)

Earnings/share: 2.25p (2019); 0.68p (2020); -4.49p (2021); -5.20p (2022); -6.30p (2023)

The company has assets of £71.97m but liabilities of £51.27m so its net worth is a bare £20.71m. Year on year it has never been lower and it is less than half of last years (£45.88m in 2022).

Conclusion: I have no doubt the opportunities for FCRM are significant and the CEO speaks in good faith. The reality is that FCRM's owners seems to be incapable of accessing them and making a profit. The reason is that Harwood and Bayford used the company for their own ends by diverting assets elsewhere (installing domestic meters at a massive discount and loss for example). Cumulative losses, sale of assets and acceptance of debt (with strings) have pushed the company over the edge. Delisting is most likely going to happen, but if it doesn't then voluntary administration is the next logical step.

My last words. As said before I have no skin in the game as I sold at 45p and higher when dividends stopped. I was always attracted to the company for what it was, not what it has become and I continue to watch the saga slowly unfold - a slow mo train crash.

This information is in the public domain:

Harwood have 28.8% of the equity

Bayford have 29.1% of the equity.

Together they have a majority shareholding of 57.9%. The BoD holdings and those previously on the board are less than 5%. The balance needed to get over the line to 75% will come from institutions who have been selling down anyway. The BoD support the decision to delist and generally that holds credibility in the market because what they are really saying between the lines is: "We recommend you take your equity at what we offer in October because if you don't you will get nothing"

Both parties are holding just under the 30% shareholding because of an agreement they signed when they failed to take the company private 2 years ago. So to get around that they have loaned the company £11m with an agreement it can be converted into equity. As stated in previous posts both Harwood and Bayford have an iron grip over the company and they can pretty much do as they wish. They have also changed the rules (Articles of Association) so they can both go over the 30% holding without having to make a formal offer.

Whatever you think is happening the reality is that this company will be delisted in October. Shareholders will be offered the then going rate. This process has been well flagged by the actions of Harwood and Bayford.

The business is not primed for recovery. You need to read between the lines. Bayford and Harwood are the majority shareholders and they loaned the company with money that took it further into debt 'with strings'. If the delist does not happen then the logical strategy is to call the loan on the basis that the company can not afford the repayments.

As a shareholder you have a choice. Take what's on offer when the business is delisted or get nothing when it is declared bankrupt. This isn't a recovery play. Bayford and Harwood are working on a strategy that was forecast way, way back.

It was always the strategy to take the company private. The first attempt failed so the shares were bought up and eventually the rules changed to allow the majority shareholders to increase the percentage holding without triggering a formal offer. The same players then loaded the company with debt but made sure the money was repatriated through interest and admin charges. Finally the open offer was a cynical move to take share ownership up to 60%, effectively removing any challenge when the decision to delist took place.

The trading report is disingenuous. The company has been set up to fail and that was obvious 2 years ago. There have been some sharp practices here and I am sure a good many decent folk will have been burned along the way.

I stand corrected. My apology.

Hello lotusseven. FCRM sold its gas pipelines and domestic connections in 2019 to ES Pipelines Ltd. The regular income they received from the gas supply was also sold without retaining royalty rights. ES Pipelines paid £33m for the pipelines over 4 years and the money from that pipeline sale was used to pay off loans, more recently it has been used to support the business. The sale RNS was released on 23 Dec 19 and subsequently confirmed 4 Mar 20. Furthermore the agreement was that if FCRM installed future gas pipes they would be offered for sale to ES Pipelines.

So you are either 3 years behind the curve or you know of some other gas pipeline income on the books?

QuantumStar - I am pretty sure you have posted something similar before. My understanding of what you have written is that you believe FCRM, as a producer of renewable energy, should aim to sell directly to the public. You preface this assessment with a hope that you do not lose money.

There is an irritating and much overused phrase throughout the market chat boards. Do Your Own Research. Never in all my days has it been more appropriate to suggest an individual take this somewhat patronising advice. Let me give you a clue.... FCRM do not produce renewable energy! They are not engaged in the production of any energy, nor do they manage energy or distribute energy let alone sell energy.

It might be a good time for you to reassess your investment strategy as it is founded on a false premise.

Turner & Harwood both fought over the company in an attempt to take it private. Their attempt failed because the company is domiciled offshore. Turner & Harwood then built up their shareholding to the extent that the Articles of Association were changed to allow them greater control without being forced to make a takeover, as per the usual rules. They have continued to consolidate their positions ever since and any future conversion will enhance their benefit to the point that the company is increasingly in their complete ownership. They are not only the majority share owners but increasingly the shareholders with an iron grip over its future - no one else can stand against them.

The decision of the company to withdraw from installing digital domestic meters is hardly a surprise. The original contract was to install meters for a utility company owned by Turner. Before this Fulcrum had no involvement in domestic meters at all. The contract was heavily biased in Turners favour and Fulcrum was taken to the cleaners. it stands as an example of how a majority shareholder holds sway and it was disastrous.

I have no axe to grind because I jumped ship when the dividend was cut and the sp was falling from 40p. The roles of Turner and Bayford were just beginning to come into play, and it coincided with less transparency over how the company were performing. I understand a contrarian position and why at 1p this is inviting. I wrote a year or so ago that the company needed to focus on what it does best - designing, building & installing power grids - if it does then it could certainly bounce back. However with the current set up as it is I can only see a Machiavellian plot to take it into voluntary administration and then buy it back for £1, with the debt wiped clean.

All you need to know about this company is looking right back at you. A 'Trading Statement' that is a rehash of an earlier RNS and which contains absolutely nothing about the performance of the company other than 'in line with expectations'. No statements about newly won contracts, money in the bank, income or turnover. Compare it with previous trading statements. Blink and you might miss the loan (from shareholders at a whopping 20% interest + 20% arrangement fee) has been extended.

So in context a company struggling has been loaded up with debt that it will not be able to pay off and the terms of which will send it into greater debt. Meanwhile the main shareholders are skimming 40% of the loan back into their pockets through preload arrangement fees and interest. The promise of conversion is a mirage.... the company is worthless.

Not a Bot then. Max 111 also posts these futures, lifted directly off Twitter verbatim, on Rio and BHP. Max 111 also happily chats away on Alien Metals (UFO) which suggests a brain is behind this activity. It is strange behaviour.

Not causing any harm so each to their own.

Its it a bot?

Not wishing to appear rude.... but why is this remotely of interest? AAL does not just mine iron ore and even if it did the spot market price is irrelevant in context of currency fluctuations, quality and quantity of product and the myriad of factors contributing to the operational expenditure. Every quarter AAL release data covering every mines output and the value it has released. I appreciate a discussion about upward or downward trends associated with economic activity but reporting movements of 14cents/tonne on a daily basis is a bit like counting the flies on the bonnet of a car and extrapolating how many there are in the country.

Of course you are entirely at liberty to do as you wish and perhaps there is something I am missing? How about posting daily copper prices, palladium, nickel, uranium or diamonds... don't they get a shout? In for a penny in for a pound right?

Echo. A brave move. If the SP goes sub 1p then I would not be surprised to see a re-rate. Say 10 for 1. It would bring the SP back into a trading range of 10p, reduce volatility and reduce the dilution if they issue more stock. Doesn't improve the performance though and it will open the door for more losses. I have seen it happen several times & been caught once (with Rare Earth Metals that became KDNC).

Bankrupty. I do not fully understand your strategy. My interpretation is that you propose to buy now at say .01p so you can qualify for the fundraise later at .05p. Bringing your average down. However that assumes the conversion rate will be .05p when the RNS states it could be "the lower of the volume weighted average market value of the Company's Ordinary Shares in the 5 trading days immediately preceding the date of the conversion". The RNS paragraph excludes the term "whichever is the higher/lower amount". FCRM shares were issued at a nominal value of .001p (one tenth of a penny) so existing shares could fall sub 1p. My interpretation of your strategy is resting on the assumption the company shares will be worth .05p in 1 year and if they are not your investment, (money down for a whole year!) will be underwater - there are easier ways of making money with much less risk?

Will FCRM be worth .05p in 1 year? Look at the facts:
Operating profit: 2018: £6.89m, 2019: £6.13m, 2020: -£2.10m, 2021: £-11.17m, 2022: -£13.69m
Earnings/share: 2018: 3.61p, 2019: 2.25p, 2020: 0.68p, 2021: -4.49p, 2022: -5.52p

According to the RNS the £6m loan comes with a 20% 'arrangement fee', 6% interest if not taken and 20% interest if taken. So £1.2m arrangement fee for a company already £13.69m in debt and a further £360,000 on top just to look at it on the balance sheet. Furthermore the advance is not being used to pay down debt, it is to allow the company to stop and think a way out of the mess... As soon as they touch it the 20% interest kicks in. FCRM have been given a superficial loan of £6m but £2.4m of that will be lost to arrangement & interest. So really £3.6m loaded onto the growing debt pile with no material benefit.... that is some seriously expensive navel gazing?

Taking in all of this suggests FCRM achieving .05p/share is going to require some pretty imaginative, and very lucrative, activity.

Obviously just my own views. I don't have FCRM in my portfolio - I sold in 2019 not long after the dividend was cut and the downturn in profits became consolidated. I stay engaged because I want to see where this is all going and who picks up the infrastructure pieces.

Sorry but I think you have read this wrong. Bayford and Harwood bought in when the SP was 30p plus and was returning a dividend. They then used the company for their own benefit by moving it into domestic meters in support of their own energy business. That venture failed and the SP has plummeted. To support losses they took bank loans. The 12p fund raise for acquisitions was verging on fraudulent as it was used to pay off debt - they now say this could not have been predicted. All income from the gas business has gone into paying debt and now it looks as though the fixed rate bank loans have been called in - the creditors have had enough.

So Bayford and Harwood have pulled a flanker.... they have loaned FCRM £6m from their own pockets at 6% interest if not taken and a whopping 20% if it is! This keeps FCRM under water and it ensures they get 20% income on their £6m. For their part the non-exec directors are turning a blind eye to previous agreements that neither Harwood or Bayford would break the 30% share threshold. So to be clear. FCRM is now £6m under and all income will be used to service that debt, directly into the pockets of Bayford & Harwood. It's a very clever cash cow - where else will they get 20% for doing nothing. If the debt is not paid off both parties will receive more shares so yet more dilution in share value and they increase ownership over the assets.

Currently 2p heading south rapidly and soon to be sub 1p. Utter madness to even contemplate getting involved.

I agree. It was the right mix and included everything a 'modern' investor would be looking for. Green credentials (check), Infrastructure (check), Electric Vehicle (check). But as you say, they became distracted and greedy. WTF was the diversion into domestic meters all about? Utter garbage and downhill from that moment on.

Said it before and maintain the view. There is a massive write down here but if the new CEO can get the bickering parties to agree a common purpose there is great potential here.

This in the local paper in September...."Numerous residents have lodged objections this week with the North York Moors National Park Authority to Anglo American’s application for consent to use the nearby Ladycross Caravan Park as an “accommodation park” for the duration of the shaft sinking stages of the mine, which is forecast to take five years".

I do not recall the need for an accommodation park appearing in the Sirius Minerals original planning application and I am astonished the company is still some 5 years (according to this news report) from completing the shaft sink. Wasn't the original plan to have the mine partially open next year?

"Here for the takeover".....Wishful thinking is not a strategy! There are 4 realistic options on the table.
1) The company will recover, pay off debts and the sp will grow back.
2) Debts will drag the company down and receivership beckons.
3) A white knight will ride in and rescue the company. Shareholders receive a premium to the sp.
4) Turner & Harwood do a handshake and take the company into private ownership as previously intended. Shareholders get the current sp value with a take it or leave it offer.

Of these 2 and 4 are the most likely. Given the relative positions of the major shareholders and the company debt, option 3 is less likely. Option 1 is possible but a combination of winter (not good for groundworks) and a recession make the next 6 months challenging - a recovery is unlikely.

There are options other than a company takeover. In the unlikely event that were to happen it would likely be at the current sp given the poor company performance and debt.

Cut/paste from the RNS: "Neither Harwood nor Bayford will be permitted to make a general offer for the Company's shares unless the offer is recommended by the independent directors and neither must take any action which would trigger an obligation to make a mandatory offer (whether under the Company's Articles of Association or under the Code and whether or not the Code applies)."

So the three main bodies with defining interests - Harwood & Bayford are limited in their actions for so long as they both have greater than 10% value of the shares. They not only cancel each other out but they hold nigh on 60% of the equity. The balance is held by Killik - a stockbroker - and by all other parties such as the BoD and the private shareholders who see something positive in this debt riddled mess.

So your regular & shrill declarations of an imminent takeover require the agreement and complicit actions of either Turner/Bayford and/or Harwood in breaking their legal agreement. It also requires one or other to give up their holdings some of which were accumulated when the sp was around 40p+ and in the 12p fundraise. If you see a third party lurking in the shadows they will still have to buy up a sufficient holding to make an offer - in the absence of a threshold declaration RNS that clearly is neither happening or possible.

Finally the 'management coming good' .... repeated losses, repeated profit warnings, increasing debt. Never mind what the share price is doing, just look at the balance sheet and the words they are using in the RNS. This company is a slow motion train crash heading for administration or a break up. But to use your own words "In My Honest Opinion"