Formation (LON:FRM) is a building company that has had a very hard time over the last 6 years. However it is due to pick up millions of pounds from a national housebuilder this time next year.The cash due is the proceeds of a land/part built property in London. The due cash is in the books at around £6M. The actual amount may be above this as far as I can see.
Today the stock trades at 1p with the asset value way above that amount. This means an investor can buy a pounds worth of what will soon be cash for around 38p.The same investor would also get a slice of a company that wants to grow.
Director buying last year must also be taken as a good sign.
Results for 2011 came out this time last year thus i am looking for results any day now...
Filed Under: Value Investing,
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Formation Group Plc is engaged in the construction and property development/management business. The principal activities of the Company are the provision of professional construction management services and the provision of management services to clients within sports sector. The Company’s include professional services and management services. Professional Services includes construction project management. Management Services provides career management and representation advice to entertainers and athletes within the sports and entertainment sectors. The Company generates income through project development and management of small/medium scale building projects. more »
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Formation Group also has profit due from another site :
" The Whitechapel Property Fund Limited has been repaid its initial investment plus agreed interest virtually in full. This repayment releases Formation of its guarantee to the fund and consequently has extinguished the contingent liability of GBP3.95m. The Group has an entitlement to a profit share from the remaining unsold units within this development which is anticipated to be circa GBP1.3m."
If one adds the £6m from the site in my first post and the £1.3M due from the site above we get to £7.3M of what will be assets.[the £1.3M may show up next week in the accounts if the properties have been sold as was the plan last year.
The Market valuation shown on Stockopedia is £2.1m today.If Formation is also making a profit from its build and design side then one could expect the stock to rise from its all time low today.