Share Name Share Symbol Market Type Share ISIN Share Description
Connaught LSE:CNT London Ordinary Share GB00B139BQ35 ORD 2P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 16.65p 0.00p 0.00p - - - 0 05:00:10
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Support Services 659.6 26.7 14.2 1.2 23.27

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Date Time Title Posts
30/8/201523:29Connaught plc5,229
17/9/201019:22*** WARNING *** Sell CNT while you still can !29
08/9/201011:05 Do Topps Tiles (TPT) supply to CNT?1
07/9/201009:33Connaught - director dumps yet again4
23/1/200715:05Connaught Plc - An Analysis253

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30/9/2016
09:20
Connaught Daily Update: Connaught is listed in the Support Services sector of the London Stock Exchange with ticker CNT. The last closing price for Connaught was 16.65p.
Connaught has a 4 week average price of - and a 12 week average price of -.
The 1 year high share price is - while the 1 year low share price is currently -.
There are currently 139,784,811 shares in issue and the average daily traded volume is 0 shares. The market capitalisation of Connaught is £23,274,171.03.
13/8/2010
12:28
standtall: Connaught shares plummet further as chairman tries to calm nerves Friday, August 06, 2010 by Jamie Ashcroft Connaught's (LON:CNT) shares tested new lows as the recently appointed chairman Sir Roy Gardner appealed for investor support, saying that the business is "worth fighting for". This afternoon the company gave further details of its stricken financial performance. Connaught said it intends to make further provisions against future losses from current contracts, and it will have to make "significant write-downs" on its assets. Afternoon trades saw the stock down 40% on the day at 17.40p. As a result of the company's ongoing trading review, Connaught now expects to report a material loss at an EBITA level and its adjusted financials will reach breakeven at best. Proactiveinvestors recommends Fusion IP: commercialising the next big thingWestminster Group wins contract extension for securing Juba Airport in Southern SudanRed Rock Resources in deal to acquire 60 pct of Migori gold project in KenyaLast month, the company told investors that its net debt will significantly exceed £120m by its financial year-end, 31 August 2010. Connaught said it identified an urgent requirement for additional funds, and it has entered into negotiations with its lenders to secure additional funding for its current and ongoing needs, and the discussions have "been constructive". The company's shares began 2010 at around 360p per share, and initially through the first half the company had achieved "strong growth" in each of its three divisions. However on 25 June, after a detailed analysis of its business, the lead-up to and following the new government's emergency budget, Connaught reported that 31 contracts in the Social Housing division had been deferred, negatively impacting 2010 revenues by around £80m and earnings (EBITDA) by £13m. In the wake of the announcement, Connaught's share price fell from 320p to 215p, the shares continued to slide the following week and they ended the month at just over 105p. After the most recent profit warning, on 26 July 2010, the share price closed at just over 31p after a turbulent session, with Connaught's share price giving way once again, falling a further 80% and wiping over 120m from its market value. "It is clear we face challenges in turning this group around ... This is a business worth fighting for and my new team and I ask for your continued support for our efforts to rebuild Connaught," Sir Roy Gardner commented. "My focus, and that of the new executive team, will be to continue the plans for the refinancing of the company for the benefit of all our stakeholders who have shown loyalty to Connaught over the years. The business remains committed to delivering excellent quality and service for our clients." On the 29th July, the company was granted a stay-of-execution as it secured a £15m short-term overdraft facility, and deferred payments due on its existing facilities for July and August. The company continues to negotiate options for its long-term financing. http://www.proactiveinvestors.co.uk/companies/news/19765/connaught-shares-plummet-further-as-chairman-tries-to-calm-nerves-19765.html
11/8/2010
23:26
standtall: In The Shadow Of The Central Banks, Galvan Traders Diary 11th August 2010 By Ed Woolfitt | 11 August 2010, 22:31 BST , Head of Trading at Galvan Although the stock market has been blindly focusing on how well leading companies have been doing, (especially over in the US for Q2), a large dose of reality has been served up by the Federal Reserve in the aftermath of its August policy meeting. The Fed reduced down economic growth expectations, a move that in a worst case scenario could mean further Quantitative Easing. In the UK the Bank of England's Inflation report is likely to deliver a heady brew of rising inflation and the same lowered growth forecasts – bringing the UK closer to a stagflation position. These result of these twin macro drivers was enough to ensure a 1% plus fall in the FTSE100 by mid morning to 5,315. This naturally means that there have been few positive share price features among leading stocks, although troubled social housing group Connaught leads the FTSE 350 higher with a 12% dead cat bounce to 15p. The only leading company anywhere close such a gain is engineering group and one time M&A candidate. Smiths Group (SMIN), up 1.5% in the wake of last months pension fund deficit restructuring. Among companies reporting, and hot on the heels of yesterday's gloom from fellow tour operator Tui Travel (TT.) is Thomas Cook (TCG). Bulls of the stock were unlucky enough to be pounded yesterday in sympathy with Tui and were hit afresh by as much as 2% to 180p. What hurt the shares this time was the revelation that a weaker Euro and lower UK bookings were likely to bring in lower profits than expected for the year. Ironically, Tui was off a shade more than Thomas Cook, another 6p to 196p. However, share price losses of 2 -3% came as nothing compared to software specialist Microfocus (MCRO) off by more than a fifth, adding to the misery seen here in June. The reason for the markdown was a forecast of falling sales. Indeed, the surprise was the way that the stock collapsed on this news even though profits predictions were left unchanged – something which underlines the way that in the current climate traders are unwilling to take any prisoners. Among the blue chips reporting, Standard Life (SL.) led the way on a happier note, boasting of record inflows with investors clearly trying to seek out ways of beating current deposit returns. But even an 11% hike in H1 profits wasn't enough to prevent a 3% share price drop to 208p.
07/8/2010
10:38
trenory: Closed my short on Friday at 4.07...and bought 15k at 16.03p....Drop has been way over done, the news is bad but not so bad to value the company at a measly 21 million. Seen it before in RBS with billion pounds of losses and share price of 10p and look at them now.....With 10,000 staff on pay roll it is highly unlikely that adminstration is an option, the government will try to resolve this ASAP imho. So for me a company whos share price has fallen from £3+ to 15p things can only get better. All the bad news is now out, the road ot recovery will begin next week but will obviously take time.. It is now more riskier to be shorting this stock than being long imho...Money to be made on a short from £3 has been made and this cannot and will not keep dropping....With a loan of 15 million issued just last week and market cap only 5 million higher than the given loan this for me is going to be very very interesting. Yes we need to play this very carefully but on the same token CNT still has a good underlying core business that is worth more than the current share price suggests. BUY
06/8/2010
13:14
dnfa1975: May 5, 2009 Carluccio's shares jump 25% on bid approach Dominic Walsh Shares of Carluccio's, the Italian deli-dining operator, jumped by 25 per cent in early trading as the company confirmed that it had received a bid approach from an unnamed suitor. City sources suggested the approach had come from a private equity firm seeking to take advantage of the group's depressed share price, with analysts citing a likely bid level of 110p to 120p a share. Many of the country's best-known chains are already in private equity hands, with Blackstone's Tragus Group owning the Café Rouge and Strada brands, and Cinven's Gondola Group running the PizzaExpress and ASK chains. Both Blackstone and Cinven were last night being cited as possible suitors for Carluccio's. Richard Caring, the millionaire clothing and leisure entrepreneur who has built up a 12 per cent stake, is tipped as a possible counterbidder in the event of a firm offer. Mr Caring, who owns such London eateries as The Ivy and Le Caprice and the fledgeling Côte chain of French bistros, is known to have previously considered bidding for Carluccio's. The shares, already buoyed by speculation, initially leapt to 98.5p, up 25 per cent, valuing the business at about £57 million, later falling back to close at 92.5p, up almost 18 per cent. In a Stock Exchange statement, it said: "The board notes the recent movement in its share price and announces that it has received a preliminary bid approach. This preliminary approach may or may not lead to an offer being made for the company." Analysts said that any offer would have to be pitched closer to 150p to be considered, given that the company is cash-positive and still has huge development potential.
27/7/2010
12:47
philanderer: FT Alphaville this morning............ ok XWAP...lets look at Connaught TT share price please Bryce Connaught Plc (CNT:LSE): Last: 34.80, up 3.34 (+10.62%), High: 38.00, Low: 31.03, Volume: 11.09m TT brokers seem to be very quiet on this morning with one exception BE Who's that? TT a very bizarre press release from Barclays Wealth Management..one of business descriptions that invites scepticism TT Barclays clients yesterday capitalised on the sharp fall in Connaught's share price. Monday saw Connaught's market value plummet by 69% in one day, exciting a flurry of investor activity. Chris Stevenson, Vice President at Barclays Stockbrokers said "Clients responded positively to yesterday's market news and invested confidently in Connaught. The social housing specialist racked up the largest number of buys yesterday. 66% of trades in Connaught were purchases and the stock accounted for 19% of all share purchases made by Barclays Stockbrokers clients." "The second most traded stock yesterday was BP, which experienced an upturn in client interest compared with previous days. 7% of purchases were in BP. Stevenson said "As the markets continued to build towards the announcement of BP's Q2 results today, the question of succession also reached its climax. Although BP has consistently been the most traded stock for a few weeks, trading interest in BP had actually dropped off in recent days. However, the anticipation of Tony Hayward's departure, together with the long-awaited second quarter results bolstered trading activity in the stock." Despite the media frenzy surrounding Ocado's listing this week, the excitement did not carry over into client trading activity. The new stock failed to attract sizeable trading volumes and it would be safe to say that Ocado is yet to capture our clients' imagination. BE Hm. Interesting stuff from Barclays' oxymoronically named Wealth Management division. TT not the most sophisictated analysis..the shares have fallen a lot – therefore they must be cheap.. TT i hope they are not recommending this stuff to widows and orphans TT even if there has been a bounce today, it is hardly a low risk stock BE "It's fallen a lot so it must be cheap." That's the muppet motto. They have that on their school crest. TT but the share bounce might reflect hopes that the a rescue cash call could be carried out BE Yes – that does seem to be the idea now. BE Sir Roy will manage to pull together an emergency rights issue. TT Alistair Gray also was reporting the banks led by RBS were expected to decide within days whether to provide the cash BE Tricky one that. Zero visibility in the business and zero faith in the accounts. TT i imagine it is hard for a government-owned bank to pull the plug on a company which has done so much public sector work BE That's a huge risk, yes. TT good point opamp... BE Collins Stewart tried to put together some numbers for putting the business into run-off BE And selling off the consultancy side, which has been relatively untarred in this scandal. BE And they reckon 55p-ish. BE Though there are too many ifs and buts to recommend that as a target BE Assuming net debt of £150M, and that Connaught raises £60M at 30p, implies a run-off valuation of c55p (see figure 1). This analysis value the equity were the Compliance business to be sold at 10x 2010 earnings and the £2.7Bn social housing order book is run-off, attracting a 5.5% margin. BE Unstable finances could have impact on order intake Balance sheet strength is one factor Housing Associations and Local Authorities evaluate when awarding new work. We are therefore concerned about the impact this will have on order intake and whether it will impact ongoing social housing tenders. BE Downgrade to SELL price target under review We are downgrading our recommendation from HOLD to SELL. We are concerned that a further lurch down in the share price today will make any rights issue highly dilutive. Moreover given uncertainty over net debt we cannot calculate an EV and thus cannot now value equity. Our target price is under review. SELL http://ftalphaville.ft.com/blog/2010/07/27/298931/markets-live/
26/7/2010
10:06
neg: Gosh, even I am amazed at how quickly this has unwound. The first warning signs were in January when Mark Davies resigned. I reckon he could see this train was going to hit the buffers and when you have some 1.3 million shares why not resign and then sell them when you are off the directors dealings radar? Then in late March/ early April we had the share price going below £3 which at the time I thought was very significant, together with the analyst putting on a sell rating and then the nonsense that the analyst didn't understand the company and would be reported to the FSA for market distortion. The classic warning signs were there namely: Management getting cross with analysts; Steep rise in the share price over the past five years and then breach of the critical £3 level; Acquisition growth with plently of goodwill on the balance sheet and not much else; Aggressive accounting policies; Poor cashflow generation; Significant selling by directors last summer.... the recent purchases in January never did compensate for the sells last summer. The gradual fall in the share price despite "good news" flowing out always a worrying sign, and then we have other management selling in June and not disclosing it. This has been exactly like Cedar Group, Amey, Jarvis et al. So where now? In my opinion I would still be a seller, I reckon at best there will be a very expensive debt for equity swap at around 5p - 10p.
08/7/2010
14:56
neg: Unfortunately this has turned out just as I had feared back in April. History has repeated itself and this is just like Cedar Group was 10 years ago. neg - 1 Apr'10 - 09:47 - 371 of 730 edit This feels so like Cedar Group 10 years ago. Dodgy accounting policies, lots of acquisitions and irrate management at analysts: The Cedar house rules By Chris Hughes Rule No1: Beware of analysts bearing books of accounting regulations Rule No2: Especially if they come from fastidious stockbrokers Collins Stewart Rule No3: Because it might just, in the words of Cedar's Mike Harrison(above), "screw up" your business Wednesday, 18 October 2000 In 48 hours, Mike Harrison hopes to complete a deal which has seen his company's share price collapse and has also left egg on the face of one of the world's most prestigious investment banks, but which he believes brings Cedar Group, a small software company housed on a Surrey A-road, to a turning point. In 48 hours, Mike Harrison hopes to complete a deal which has seen his company's share price collapse and has also left egg on the face of one of the world's most prestigious investment banks, but which he believes brings Cedar Group, a small software company housed on a Surrey A-road, to a turning point. In the three years he has been Cedar's managing director, Mr Harrison has tried to transform it into the one British member of that élite group of software firms capable of upgrading a multinational's computer network without ripping out the existing system that houses all its data. It is a business known as "knowledge-based enterprise systems", and focuses on linking back-office computers with customer call centres and the Web. Mr Harrison's tenure at Cedar has been characterised by the timely use of share issues to fund earnings-enhancing acquisitions that have diversified Cedar's product range from purely financial software and brought HSBC and General Motors onto its books. As each acquisition has boosted Cedar's share price, it has been easier to repeat the trick. But on 5 October, Mr Harrison's luck ran out. Collins Stewart, the stockbroker renowned for its obsession with dodgy accounting practices, took the axe to Cedar. Two weeks earlier, Cedar had unveiled its largest deal to date, an acquisition intended to make the company capable of standing on its own two feet at last. The $72m (£48m) purchase of Enterprise Solutions Group, a computer services consultancy, would fill the geographical and product gaps in Cedar's offering and give it a foothold in the North American IT services market. ESG would take Cedar's headcount from around 300 to more than 1,500. To fund the purchase, Cedar launched a £66m rights issue at 600p per share, a 15 per cent discount to the previous closing share price. Rights issues inevitably put downward pressure on the share price of the company involved, by offering a large amount of cheap stock to shareholders. But in the wake of the technology market turmoil generated by profits warnings from Intel, Apple Computer and Dell Computer, Cedar's shares were particularly vulnerable. Enter Tim Steer, an analyst at Collins Stewart, a broker usually thought too small to be able to nudge the capital markets. Collins Stewart did not cover Cedar, but the ESG deal attracted Mr Steer's attention. He arranged to visit Cedar's Cobham offices and put questions to Michael Hosie, the finance director, one Tuesday afternoon. Nothing controversial in that, you might think. "The analyst came with a copy of SOP [a book on accounting regulations] under his arm, which is not what you expect to see," says Michael Hosie, Cedar's finance director. That Thursday, Mr Hosie found out why. While giant US investment banks, including Credit Suisse First Boston and Merrill Lynch, penned punchy research notes urging support for Cedar's rights issue, Mr Steer's note, entitled Timber!, said Cedar recognised sales too far ahead of receiving cash from customers, and faced a potential cashflow crisis. It claimed Cedar had overpaid for many acquisitions, and investors should sell the shares. This came as no surprise to many in the City. Collins Stewart's fastidiousness is well known. The firm is headed by Terry Smith, who was sacked from his role as head of research at UBS, the giant investment bank, for publishing sell notes on its clients and accusing them of massaging their accounts. Mr Smith settled with UBS out of court, and later told investors how to spot questionable accounting in his book, Accounting for Growth. Cedar hit back at Mr Steer, saying its accounting policy is exactly the same as that used by its British peers, if not as strict as US standard. Mr Steer had overlooked the value of the people and products Cedar's acquisitions had brought into the group, it said. The overall impression created was misleading. Many in the City agreed. "[Collins Stewart's] criticisms would be valid only if there's a question about customer acceptance of Cedar's software," says Beeson Gregory's Ian Mitchell. "The company has grown quickly creating demand for additional working capital, but that's the same with all companies. The position looks worse than it seems." But a nervous stock market sided with Mr Steer, and Cedar shares fell below the price of rights issue. That left Merrill Lynch and a host of other underwriting institutions obliged to mop up the shares at a 30 per cent premium to the market price on Friday last week. Ironically, Merrill Lynch used to employ Mr Steer as a smaller-companies analyst. Cedar's share price may now be two-thirds off its high, but, thanks to the rights issue's underwriters, the firm has its £65m and is ready to complete the purchase of ESG. "The only thing we have learnt is that some people in the City can screw things up," says Mr Harrison. "What offends is the implication that we are doing something improper." Mr Steer is unrepentant. He says he would not change a thing in his note. "The stock is where it is for a reason. Cedar is building a product and it's a bit like building a house. That's why US software firms account for sales in the same way as long-term construction projects. Cedar needs to issue a statement clarifying its revenue recognition policy." The weakness of the stock price makes Mr Harrison unhappy for his shareholders, but he insists it does not make the company vulnerable. Cedar may be cheap, but he can't envisage a takeover - the business is lost without its present management, he says. And Cedar will find it much easier to raise debt to make acquisitions - ESG is cash-generative - and is less reliant on share-based fund raisings. ESG marks the beginning of the second phase of Cedar's expansion. Cedar can supply a global offering for the first time. "I've always wanted to build a British company that plays well in the enterprise systems market place," says Mr Harrison. "We've crossed a threshold now. We expect this to be a FTSE company one day." Three years ago, when Mr Harrison arrived at Cedar's offices, then in New Malden, he was alone in imagining it would be able one day to make such a claim. Cedar was run by a technologist who, in Mr Harrison's opinion, paid too much attention to the product and not enough to marketing. "The sales force didn't dare bring clients to the office because it was so grubby," he says. But the product was good. In 1982, CedarData, as it was called, had gambled that Oracle financial software was going to be big-time. By 1997, that gamble had paid off and Cedar was profitable. But the management realised it needed a more experienced leader to take it further. Mr Harrison, a 52-year-old former managing director of Oracle's UK operation who had 22 years' experience of the US software industry, was a friend of Cedar's board. He accepted the challenge. After all, he had long believed UK software companies were uniquely positioned to become world-beaters in enterprise systems, an area dominated by the likes of multibillion dollar firms such as Oracle and J D Edwards. US technology firms were handicapped by being obliged to report quarterly, a requirement forcing them to focus narrowly. "Business processes are complex, and doing things over time is not easy for US companies," he says. Cedar benefited from English-speaking staff between the US and Europe. But Mr Harrison felt alone in seeing the opportunity. "When I arrived, there was £1m in the bank, which shouldn't be the case in a fast-growing company. I rounded everyone up and forced them to brainstorm possible ways to grow the business. I tried to get them to look beyond the day-to-day. When they worked it through, they were surprised by what they could achieve." Mr Harrison defines enterprise systems as everything a business needs to make the latest software and internet applications compatible with the ageing back-office computer systems that store com- pany data. "If you are in the e-world, you are only one click from oblivion," he says. Three years and 13 acquisitions later, Mr Harrison reckons Cedar can now do this for multinational companies. The next phase of growth will be about proving it, by winning big contracts with big companies. But the work is just beginning. While Collins Stewart agonises over accounting minutiae, others in the City are more concerned that Cedar will not harness the opportunity before it. "Software companies are moving into services, and services companies are moving into software," says Beeson Gregory's Ian Mitchell. "Cedar has got a great deal in ESG. The challenge will be bedding everything down. They've got so many opportunities that it could be hard to manage. They have to make sure potential customers understand what they have on offer, because it seems so disparate." Indeed, there are few areas in which Cedar is not involved. It recently launched ASP (application service provider) products, renting software online instead of providing one-off installations. Already, Shell is one of Cedar's ASP clients. But this has led to the charge that Mike Harrison is no more than a canny spotter of investment trends who pitches Cedar as a B2B software company one day and an ASP another, depending on stock market fashion. Mr Harrison protests. "We've always said we're a B2B company. In fact, some people criticise us for being too open about what we want to do." neg - 1 Apr'10 - 09:48 - 372 of 730 edit And then what happened? The share price crashed and............. Change of accounting puts Cedar in the red By Philip Aldrick Published: 12:01AM BST 20 Jun 2001 CEDAR Group yesterday reported a £24m loss for the year as a result of the software and services group's new accounting policy, revised after a barrage of criticism last year. Until a fortnight ago, profits were forecast at £11.5m-£13m, but the group decided to adopt US GAAP accounting rules to settle market concerns. The result was to defer until 2002 licence revenues worth £46m, the profit margins for which are over 90pc.
07/4/2010
14:19
neg: Pbracken, It won't be transformed from a dog to a star, but it will look better. Share prices tend to anticipate future trends, long before analysts do. Take for example Topps Tiles, which I bought early last year. It went upto around 95p and then trended between 80-90p. Analysts had buy targets north of £1 and indeed the company did a placing around 90p. I thought 80p was a key level and I sold when it went below it. It then went back up to around 83p before falling. Then carpetright came out with a profits warning and Topps Tiles said trading was tough. By then the share was below 60p, and guess what the analysts changed their targets based on the news, they rarely anticipate it. So now the analysts have targets of 57p, when the share price is already there. Great lot of use that is, but if you had been watching the shareprice this was warning you alot earlier. Do i always get it right? Of course not, but I have learned from experience to trade cautiously if the shareprice trend is not inline with your thoughts. With CNT the share price has been falling and most of the analysts have targets of 475p, which made me very interested in Charles Stanley's research because it was outside of the box and was inline with the trend of the share. Anyway we shall see, I am happy to admit if I'm wrong and it hits 350p, but at the moment the longer it stays below 300p the more I would be concerned.
07/4/2010
11:19
neg: Volvo, I have done my research and I'm afraid I don't like it. There are very few facts but here are some: Despite the strong trading the share price has declined over the past 12 months by some 10% but the FTSE 100 has increased by nearly 50%. Over the past 6 months the share price has fallen by some 33%, but the FTSE 100 has risen by 13%. Can't see that the directors have been buying millions (perhaps you can show me?). Tincknell (the major share buyer) has bought some 300,000 shares this year, but he sold 650,000 shares last May. Overall he owns fewer shares in the company now than he did this time last year. I don't believe in share manipulation and neither do I believe that Charles Stanley will be investigated by the FSA. This share price peaked in October and was falling before the director resigned. It is merely continuing its downtrend, although over the past week that trend accelerated considerably. As I said last week and yesterday, the share price was due a good rebound which is what we have seen, but the trend is still bearish. I am happy to be proved wrong, but i would be very surprised to see this sustain a move above 300p, but please don't be arrogrant and state that this is going to 350 fact at the results. You don't know and neither does anyone else. Yes, you have rung the director and he has given you a very positive outlook, but I've never spoken to one that hasn't, and I have never spoken to one who has told me his company was rubbish and that I should be selling! ( I am not inferring anything with CNT with that comment by the way) I am excited to see what happens, because it has a number of characteristics of other shares I have seen in the past. I much prefer shares in uptrends rather than gambling each time that i have got in at the bottom (remember a month or so ago you were convinced that it would not go below 290p). By the way Volvo do you have an exit strategy if this share does say fall to £2, do you keep buying more or do you have a stop loss? Equally when would you sell on the upside?
01/4/2010
09:47
neg: This feels so like Cedar Group 10 years ago. Dodgy accounting policies, lots of acquisitions and irrate management at analysts: The Cedar house rules By Chris Hughes Rule No1: Beware of analysts bearing books of accounting regulations Rule No2: Especially if they come from fastidious stockbrokers Collins Stewart Rule No3: Because it might just, in the words of Cedar's Mike Harrison(above), "screw up" your business Wednesday, 18 October 2000 In 48 hours, Mike Harrison hopes to complete a deal which has seen his company's share price collapse and has also left egg on the face of one of the world's most prestigious investment banks, but which he believes brings Cedar Group, a small software company housed on a Surrey A-road, to a turning point. In 48 hours, Mike Harrison hopes to complete a deal which has seen his company's share price collapse and has also left egg on the face of one of the world's most prestigious investment banks, but which he believes brings Cedar Group, a small software company housed on a Surrey A-road, to a turning point. In the three years he has been Cedar's managing director, Mr Harrison has tried to transform it into the one British member of that élite group of software firms capable of upgrading a multinational's computer network without ripping out the existing system that houses all its data. It is a business known as "knowledge-based enterprise systems", and focuses on linking back-office computers with customer call centres and the Web. Mr Harrison's tenure at Cedar has been characterised by the timely use of share issues to fund earnings-enhancing acquisitions that have diversified Cedar's product range from purely financial software and brought HSBC and General Motors onto its books. As each acquisition has boosted Cedar's share price, it has been easier to repeat the trick. But on 5 October, Mr Harrison's luck ran out. Collins Stewart, the stockbroker renowned for its obsession with dodgy accounting practices, took the axe to Cedar. Two weeks earlier, Cedar had unveiled its largest deal to date, an acquisition intended to make the company capable of standing on its own two feet at last. The $72m (£48m) purchase of Enterprise Solutions Group, a computer services consultancy, would fill the geographical and product gaps in Cedar's offering and give it a foothold in the North American IT services market. ESG would take Cedar's headcount from around 300 to more than 1,500. To fund the purchase, Cedar launched a £66m rights issue at 600p per share, a 15 per cent discount to the previous closing share price. Rights issues inevitably put downward pressure on the share price of the company involved, by offering a large amount of cheap stock to shareholders. But in the wake of the technology market turmoil generated by profits warnings from Intel, Apple Computer and Dell Computer, Cedar's shares were particularly vulnerable. Enter Tim Steer, an analyst at Collins Stewart, a broker usually thought too small to be able to nudge the capital markets. Collins Stewart did not cover Cedar, but the ESG deal attracted Mr Steer's attention. He arranged to visit Cedar's Cobham offices and put questions to Michael Hosie, the finance director, one Tuesday afternoon. Nothing controversial in that, you might think. "The analyst came with a copy of SOP [a book on accounting regulations] under his arm, which is not what you expect to see," says Michael Hosie, Cedar's finance director. That Thursday, Mr Hosie found out why. While giant US investment banks, including Credit Suisse First Boston and Merrill Lynch, penned punchy research notes urging support for Cedar's rights issue, Mr Steer's note, entitled Timber!, said Cedar recognised sales too far ahead of receiving cash from customers, and faced a potential cashflow crisis. It claimed Cedar had overpaid for many acquisitions, and investors should sell the shares. This came as no surprise to many in the City. Collins Stewart's fastidiousness is well known. The firm is headed by Terry Smith, who was sacked from his role as head of research at UBS, the giant investment bank, for publishing sell notes on its clients and accusing them of massaging their accounts. Mr Smith settled with UBS out of court, and later told investors how to spot questionable accounting in his book, Accounting for Growth. Cedar hit back at Mr Steer, saying its accounting policy is exactly the same as that used by its British peers, if not as strict as US standard. Mr Steer had overlooked the value of the people and products Cedar's acquisitions had brought into the group, it said. The overall impression created was misleading. Many in the City agreed. "[Collins Stewart's] criticisms would be valid only if there's a question about customer acceptance of Cedar's software," says Beeson Gregory's Ian Mitchell. "The company has grown quickly creating demand for additional working capital, but that's the same with all companies. The position looks worse than it seems." But a nervous stock market sided with Mr Steer, and Cedar shares fell below the price of rights issue. That left Merrill Lynch and a host of other underwriting institutions obliged to mop up the shares at a 30 per cent premium to the market price on Friday last week. Ironically, Merrill Lynch used to employ Mr Steer as a smaller-companies analyst. Cedar's share price may now be two-thirds off its high, but, thanks to the rights issue's underwriters, the firm has its £65m and is ready to complete the purchase of ESG. "The only thing we have learnt is that some people in the City can screw things up," says Mr Harrison. "What offends is the implication that we are doing something improper." Mr Steer is unrepentant. He says he would not change a thing in his note. "The stock is where it is for a reason. Cedar is building a product and it's a bit like building a house. That's why US software firms account for sales in the same way as long-term construction projects. Cedar needs to issue a statement clarifying its revenue recognition policy." The weakness of the stock price makes Mr Harrison unhappy for his shareholders, but he insists it does not make the company vulnerable. Cedar may be cheap, but he can't envisage a takeover - the business is lost without its present management, he says. And Cedar will find it much easier to raise debt to make acquisitions - ESG is cash-generative - and is less reliant on share-based fund raisings. ESG marks the beginning of the second phase of Cedar's expansion. Cedar can supply a global offering for the first time. "I've always wanted to build a British company that plays well in the enterprise systems market place," says Mr Harrison. "We've crossed a threshold now. We expect this to be a FTSE company one day." Three years ago, when Mr Harrison arrived at Cedar's offices, then in New Malden, he was alone in imagining it would be able one day to make such a claim. Cedar was run by a technologist who, in Mr Harrison's opinion, paid too much attention to the product and not enough to marketing. "The sales force didn't dare bring clients to the office because it was so grubby," he says. But the product was good. In 1982, CedarData, as it was called, had gambled that Oracle financial software was going to be big-time. By 1997, that gamble had paid off and Cedar was profitable. But the management realised it needed a more experienced leader to take it further. Mr Harrison, a 52-year-old former managing director of Oracle's UK operation who had 22 years' experience of the US software industry, was a friend of Cedar's board. He accepted the challenge. After all, he had long believed UK software companies were uniquely positioned to become world-beaters in enterprise systems, an area dominated by the likes of multibillion dollar firms such as Oracle and J D Edwards. US technology firms were handicapped by being obliged to report quarterly, a requirement forcing them to focus narrowly. "Business processes are complex, and doing things over time is not easy for US companies," he says. Cedar benefited from English-speaking staff between the US and Europe. But Mr Harrison felt alone in seeing the opportunity. "When I arrived, there was £1m in the bank, which shouldn't be the case in a fast-growing company. I rounded everyone up and forced them to brainstorm possible ways to grow the business. I tried to get them to look beyond the day-to-day. When they worked it through, they were surprised by what they could achieve." Mr Harrison defines enterprise systems as everything a business needs to make the latest software and internet applications compatible with the ageing back-office computer systems that store com- pany data. "If you are in the e-world, you are only one click from oblivion," he says. Three years and 13 acquisitions later, Mr Harrison reckons Cedar can now do this for multinational companies. The next phase of growth will be about proving it, by winning big contracts with big companies. But the work is just beginning. While Collins Stewart agonises over accounting minutiae, others in the City are more concerned that Cedar will not harness the opportunity before it. "Software companies are moving into services, and services companies are moving into software," says Beeson Gregory's Ian Mitchell. "Cedar has got a great deal in ESG. The challenge will be bedding everything down. They've got so many opportunities that it could be hard to manage. They have to make sure potential customers understand what they have on offer, because it seems so disparate." Indeed, there are few areas in which Cedar is not involved. It recently launched ASP (application service provider) products, renting software online instead of providing one-off installations. Already, Shell is one of Cedar's ASP clients. But this has led to the charge that Mike Harrison is no more than a canny spotter of investment trends who pitches Cedar as a B2B software company one day and an ASP another, depending on stock market fashion. Mr Harrison protests. "We've always said we're a B2B company. In fact, some people criticise us for being too open about what we want to do."
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