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| Share Name | Share Symbol | Market | Stock Type |
|---|---|---|---|
| Detica Grp. | DCA | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
|
|
|---|---|---|---|---|
| 0.00 | 0.00% | 441.50 | 01:00:00 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
|---|---|---|---|---|
| 441.50 | 441.50 |
| Top Posts |
|---|
Posted at 28/12/2007 22:53 by cerrito From today's FTquote KKR's £600m takeover last week of Northgate Information Solutions was proof that the UK technology sector remains fertile territory for dealmakers. November was a turbulent month as fears began to bite that the credit crunch would force the financial services industry to curb discretionary technology spending, such as on consultants. A profit warning from Detica, one of the sector's largest players, contributed to the FTSE Software and Information Technology sector's worst month since the dotcom bubble burst in March 2000. Mild cautionary statements were treated like heavy profit warnings and the long distrust the City has held for technology resurfaced, culminating in early December with the pulled initial public offering of Sophos, the IT security group, despite solid recurring revenues and a 25-year track record. The coming year is likely to prove a tough one for many, especially those with exposure to financial services. After five years of sequential growth, Gartner, the consultancy, is predicting global growth of 5.5 per cent, down from about 8 per cent in 2007. Possible targets Civica, local government software (£120m market value) Coda, accounting software (£135m) Axon, IT services, (£321m) Innovation Group, insurance outsourcing, (£215m) Anite, telecoms equipment testing, travel and public sector software (£181m) Dicom, document scanning software, (£150m) Yet beneath the headline fears, investors, bankers and analysts remain optimistic that corporate earnings and activity will not dry up. The Northgate deal capped a flurry of bid activity in December as predators emerged to sniff out undervalued assets. They appeared willing to pay chunky premiums. Northgate was taken out at 40 per cent more than its prevailing share price, while NSB Retail Systems agreed a £160m deal with US-based Epicor at a 60 per cent premium. Other recent deals include Pace Micro Technology's purchase of the set-top box and connectivity business of Dutch group Philips for £68m. Xploite, the IT managed services group, is in talks with several bidders. Investors have grown more comfortable with technology stocks as many companies in the sector have matured and proved far more efficient at converting their cash into operating profit. Furthermore, IT operations are embedded into corporate life as never before. "In a tougher market, there will be more focus on outsourcing tech activity," said Mike Tobin, chief executive of Telecity, the data centre hosting company. FDM, the IT staffing company, actually forecast results would be materially ahead of previous expectations as a shortage of specialist IT skills meant banks could not rely solely on in-house teams. "Product cycles are typically stronger than the economic cycle so we are relaxed about the prospects for well-placed product companies like Autonomy, Aveva, Fidessa, Micro Focus and Innovation," said George O'Connor, an analyst at Panmure Gordon. Will Wallis, an analyst at Numis Securities, said Northgate's takeover could boost the share prices of companies that have been subject to takeover rumour or talks with private equity, such as Misys, Intec Telecom and Coda. He pointed out that Northgate was sold on a prospective multiple of 18 times enterprise value/net operating profit after tax. "It's in line with multiples paid by private equity in the UK software sector prior to the credit crunch," he said. He also predicted it would boost other local government software companies, such as Civica and Anite. "This deal opens up the possibility of consolidation in the public sector, led by private equity," he added. "Both Civica and IBS ... are valued at just half the multiple that KKR is paying for Northgate." Yet Northgate could still be the largest deal for some time. Graham Bird, fund manager at SVG, which invested in Northgate, said: "I wouldn't be surprised if there was a pick-up in merger and acquisitions activity as many valuations are extreme." "Many of these companies are run far better. In the sell-off, there was no distinction between good and bad companies and I think private equity will spot this." But he added: "There's unlikely to be mega-deals while the banks are not open properly." Deals concluded are likely to be "without the need to syndicate with other banks," he said. Trade buyers flush with cash are also likely to remain interested. Datatec, one of the largest IT services companies on Aim, has a long standing plan for further acquisitions and Jens Montanana, chief executive, remains bullish. "It will play into the hands of operators and not the private equity players as we have assets to make synergies," he said. "We think there is going to be an opportunity for us," he said. "But it will take time to work its way through. Some sellers still have silly ideas for valuations." Nevertheless if the UK and US economies fall into recession, valuations could yet fall further. Copyright The Financial Times Limited 2007 |
Posted at 02/12/2007 14:37 by simon gordon This article sums up why it is worth closely following DCA.'Every now and then a fresh investment book comes along that says something new. The latest is by Jason Zweig, called Your Money and Your Brain. What's new about it? As John Heinzl noted in a recent Market Moves column, it says that, in effect, your brain often makes you physically (or rather emotionally) disabled exactly when you should act. Is there a way to counteract your brain's sabotage? Yes, but although it's easy, and is practised by the likes of Warren Buffett, Charlie Munger, Ben Graham and other long-term value investors, it doesn't come naturally. In fact, in Mr. Buffett's lecture to an MBA class he touches on the topic of emotions and investing - just go to youtube.com and search out Mr. Buffett's lecture. There, he gives the simple secret: Know your investment really well, so you can fight your brain's insidious tendency to work against you. And work against you it surely will. Mr. Zweig found via an MRI brain scan of a gambler who had just won that the brain region that lights up is the same that reacts when a drug addict gets a drug-high. So selling a peaking winner is just as hard for an investor as it is for an addict to give up his fix. On the other hand, the physical response to losing money induces a brain reaction similar to seeing a hissing snake, or to smelling a bad odour. So the urge to sell a plunging stock is similar to the urge to escape a hissing, smelling snake - at the very moment when the stock is cheap, your brain tells you to flee it. To overcome this urge you must provide a counterforce just as strong, and this one can only be based on deep knowledge. Here is an example from Mr. Buffett's purchases, and right after (ahem), from Giraffe Capital Corp.'s recent buys. Warren Buffett always admired Anheuser-Busch - an excellent beer maker. So every quarter he religiously read its financials and corporate releases, and talked to management. He became familiar with the business, yet he didn't buy - the stock was too expensive. Why then did he study the company? Because he admired it, and because he speculated that one day he might be handed a cheap price - which he eventually was. One day the company's stock tanked because of some temporary problems. The moment the stock plunged, Mr. Buffett bought heavily. He knew what he was buying more than those who sold to him; so of course he made a bundle. Now, from the above you may think it is easy to study companies you admire and keep yourself up to date on them without an immediate purchase in mind. But it's not easy. The stock may never sink on a temporary problem, and you'll have studied the company for nothing. Most investors would consider such study a waste of time. But of course, it is better to lose time than money. Here is an example from Giraffe's recent experience - it involved a U.S. publisher I have long admired - McGraw-Hill. Its franchise is awesome, with business-media properties difficult to duplicate. I have always followed the company with interest, but recently a book of mine was published by them, and I had the opportunity to see the company from the inside. It soon dawned on me that not only is the business superb, but the company has much of its R&D (product development) done for it at a relatively low cost by outside suppliers (authors) who are paid royalties only if they produce, so much of the product cost is variable. I liked that. So I read the latest financials and other info, even though I didn't think it would be of any immediate benefit. I was wrong. In August, when the market swooned, McGraw-Hill tanked also, because a subsidiary, Standard & Poor's, was criticized along with other ratings agencies after issuing reports on subprime assets. The stock fell to about $60 (U.S.), at which point a company director, Kurt Schmoke, bought some. A few days later the stock fell further, to $50. I couldn't resist and bought some for Giraffe's non-tech fund. Did I buy it with a song in my heart? Hardly. I was as jittery as everyone else - my own brain is just as primitive as the next guy's. But the research and the familiarity I now had with the company helped. Since then the stock has recovered somewhat (like most other stocks), but I think there's still room to go. What can all this mean to you? Just pick a few companies you admire and study them without any intention of buying any time soon. (Matter of fact, if the companies are truly admirable, chances are their stocks already reflect this and are not cheap.) If you pick your corporate gems well and study them deeply, and if one day their stocks plunge because of non-critical issues, you could then buy them cheap - without your brain standing emotionally in your way.' Avner Mandelman is president and chief investment officer of Giraffe Capital Corp. and the author of The Sleuth Investor. |
Posted at 01/12/2007 20:28 by simon gordon From the FT - 20/11/07:Detica declines as consultancy arm goes quiet By Philip Stafford Shares in Detica lost a quarter of their value after the IT services group shocked investors by warning that its commercial division would be hit by a sharp decline in demand from investment banks. The share price slumped 77¾p to 234½p, its lowest level since July 2006, after Tom Black, chief executive, said the consultancy business, in which employees advise on operations such as fixed income and foreign exchange, "had quite significantly slowed down since September". As a result, Mr Black said the group was "not expecting growth here [in commercial] in the second half". Kevin Ashton, analyst at Landsbanki Securities, said: "They're the first UK software company out of the blocks saying that financial services is impacting their business. "Their business is at the sharp end of it and they're very much a lead indicator for everyone else." Figures for the six months to September 30 at the commercial division had risen 52 per cent to £41.6m following the acquisitions of MA Partners and Evolution. Group revenues for the period rose 45 per cent to £98.8m, largely ahead of analysts' expectations. The interim dividend rose 92 per cent to 1.2p (0.625p). Earnings per share increased to 4.5p (3.9p) and the pre-tax profit rose to £7.7m (£5.9m). Cash outflow for the period was £3.1m compared with an inflow of £3m a year earlier. Detica blamed the unwinding of unusually strong cash flow in the second half and the number of fixed-price projects. FT Comment *The headwinds Detica is facing are causing concern. Visibility in financial services is just two months. Meanwhile, winning the e-borders contract shows the strength of its core UK security business but it will mean further costs, such as headcount, being accrued in the short term before the revenues drop through. As the group struggles with diversification through acquisition, it is in danger of losing its halo as one of the UK's favoured IT plays. The shares trade on a prospective price-earnings ratio of about 17 times, far enough for now. ----- Worth a read: |
Posted at 20/11/2007 08:49 by sheik yerbouti I don't hold, just monitoring. The Independent also says 20x and a price of 380p but has a buy recommendation! I think these papers just make it up.Detica Our view: Buy Share price: 380p (-3p) Detica is a star performer in the UK IT services sector. Many of the company's competitors have struggled to cope with the changing dynamics of the IT market and investors have become frustrated with earnings volatility. However, it has been smooth sailing at Detica, headed up by Tom Black. No surprise then that the results for the year to March again beat forecasts with revenue up 28 per cent on an organic basis to £156m and pretax profit up 47 per cent to more than £17m. The company made two significant acquisitions during the year, buying MA Partners to give it access to the capital markets sector for £35m last September and DFI International in March, a £22.5m deal that bulked up its US national security business. Nevertheless, its debt of just £8m beat expectations, adding further shine to the results. The one unknown quantity in Detica's model has been the Streamshield internet filtering product, a loss-making division developed on the side. The company decided to fold the technology into its core business after failing to develop its sales strategy as planned. This will reduce losses, although Streamshield is a missed opportunity. With further double-digit growth pencilled in for next year and the US operation starting to kick on after the acquisition of DFI, there is little to suggest that Detica is likely to lose its reputation amid the sector's continuing volatility. The stock has had an exceptionally strong run and is trading at about 20 times upgraded forecasts for next year's earnings. But this is an undemanding rating that this company can comfortably justify. |
Posted at 20/11/2007 08:16 by simon gordon From the Telegraph:Detica shares plunged 67¼ to 245p following analyst downgrades. Kevin Ashton, analyst at Landsbanki, who cut his rating on the stock from buy to hold, said: "Detica's problem is it is the first [IT company] to say the issue with the banks has already impacted on it. The real worry is it is not realising the gravity of the situation. In the past, downturns have tended to be far deeper than anyone expects." ----- Detica Group 245p -67¼ Questor says Sell Ripples from the credit crunch continue to spread, with security software company Detica the latest stock to be pummelled. This time, it was the fears that banks are reining in their IT spending following this summer's financial turmoil that pushed the company's share price down sharply. Detica warned that it had already seen a sharp drop in demand from investment banks and said that it looks like full-year revenues from that unit, which represents 10pc-15pc of revenues, will come in lower than last year. The warning came alongside what was otherwise a healthy set of half-year results. Increasing paranoia over terrorism and growing budgets for homeland security drove revenues in the government division 40pc higher. Detica recently won a key contract to help the Home Office boost data intelligence and biometrics at border controls. It is also confident about the outlook for its US government business. Integration of the recently acquired DFI which provides data analytics to the government and intelligence agencies is almost complete. Performance has also improved after a rocky start to the first half when the integration took longer and cost more than Detica had forecast. Questor sold Detica last November when the shares were trading at 315p. The market has given the company some respite since then, pushing the shares over 400p in March. But yesterday's downgrades spooked investors, prompting a sell-off and driving the shares down to an 18-month low of 245p. The fear is that this is just the tip of the iceberg. Detica's services are exactly the kind of thing banks will cut back on in a downturn. The company has said it is shifting resources from that division to its booming government unit, but it may not be able to react fast enough. The shares are trading on around 20 times next year's earnings, which looks costly in view of what lies ahead. This stock remains a sell. |
Posted at 01/2/2006 11:03 by judge jury Possibly the most interesting part of the note is what they say about StreamShield Networks (SSN). Here are some extracts:"We expect the company will sell its controlling stake in SSN during 2006, freeing up capital to invest in growth in the US and in managed services" "Although the company has invested in the internet content security business SSN, we believe the business is non-core and that bringing in an external investor, one of the options considered by management, is the most likely outcome. Cash realised from a sale or a partial sale may be reinvested in the core business." "In our view SSN is not core to the business; sales cycles, sales partners and end customers are diverse and different to the core Detica business model. Whilst we believe in the technology, in our view, Detica is not the right partner to fully commercialise the business. Longer-term investment here could further reduce group margins." Conceivably, DCA are in talks with potential buyers of/investors in SSN. Any leaks could get reflected in the share price. All guesswork on my part though, obviously |
Posted at 19/2/2003 08:14 by barleymow Why is there so little interest in Detica? There seem to be hardly any trades. Is it all held by a few investors? The P/E ratio seems remarkably high compared to others who are directly comparable - anyone know why? |
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