Entu Plc
Decided to put my two threads yesterday (Tuesday), morning and late evening into one document.
I note that the Entu share price is still 112p - 115p (Wednesday approx. 4.p.m.) .
Good volume also seen today as well.
Completed Tuesday Morning 9:20 a.m
Entu results released yesterday coupled with the recent share price decline, encouraged me to look at their results with a view to purchasing the shares.
Couple of concerns arose however which I may have indeed misread or overestimated their actual significance.
Concern 1 The purchase of Astley Facades Ltd in March 2015 seems to have had major negative adjustments in fair value. The purchase cost of 200K has had to be paid back in full as initial estimates for fair value seem to have fallen by more than a million caused by trade receivables decline and also trade payables needing to be increased.
"The provisional fair value adjustments at the date of acquisition are provisions against recoverability of retentions, potential bad debts and recognition of income £324,000 "
"Adoption of a prudent Group accounting policy for warranty claims £1,343,000" ·
"The initial purchase consideration of £200,000 has been reduced as a result of an adjustment in the level of net assets at the date of acquisition. The initial cash consideration was repaid to the Group post period end."
Revenue and profit contribution
The acquired Astley business contributed revenues of £419,451 and operating profit of £Nil to the Group in the month from the acquisition date to 30 April 2015." It seems that there is a possibility of a multi million loss in this business and further write offs before any meaningful profits can be made.
The purchase price of 200K for a business with such large revenue could have been a clue to the minefield of potential problems.
"The total revenues and operating loss for the 6 months ended 30 April 2015 were £4,552,000 and £490,100 respectively."
On a positive note to provide balance. "The integration of Astley is proceeding well, and the forward order book has risen from £2 million to £14 million, which is in excess of one year's trading activity. "
Concern 2 Sales and Marketing team as a significant group have left either for better job prospects or poor management retention of key staff.
"Energy Generation & Saving remains a key growth area, but has had a challenging six months: due…
