Disperse Tech Share Discussion Threads

[blank frank] 07/12/2004 20:17

08:30:59 07-Dec-2004 19.25 75,000 14,437.50 Ordinary Trade

The largest buy for a while (and the only trade of the day).

The DPT company report should be sent out imminently (and there are about a thousand or so shareholders), and there may be other announcements soon re. the new Bath & Body Works product launches, and the second oral drug delivery test results which are now overdue (these were expected in the summer). In addition, people should be looking forward to the AGM and first quarter results, which could be just over a month away.

B.F.

[blank frank] 07/12/2004 20:11

BigT20 - 7 Dec'04 - 09:34 - 134 of 134
"Given the context of Reckitt & Benckiser new product launches in
recent years, you explain Disperse's pathetic performance regarding
that licence ."

Investors Chronicle" 3rd. September 2004, under Antonov:-
"Major developments in the automotive industry can take as long as 15 years to come to fruition. And that is how long it will be before Antonov, set up in 1991, begins to earn royalties on its smaller and lighter gearboxes."

Let's be realistic about product development timescales. Disperse's licencees may not take 15 years, but a few years seems quite reasonable. And if Disperse's technology can enable them to produce products more cheaply, and even make them more effective, it stands to reason that they will use that technology.

B.F.

[bigt20] 07/12/2004 09:34

I gave what I thought was a realistic view regarding the poor / non
performing licences in response to your over optimistic view regarding
the licenses. YOU raised the issue about licenses not me.

Given the context of Reckitt & Benckiser new product launches in
recent years, you explain Disperse's pathetic performance regarding
that licence .

The FACT is that a number of licenses e.g, Shisheido, Nu Skin, Nice Pak,
etc. under the old business model have produced poor or no revenues .

Its interesting to note rambutan's post :

rambutan2 - 1 Dec'04 - 14:22 - 124 of 133

would agree bigt20.
body and bath has always been mentioned by dpt whereas the others seem
to have disappeared from their listing prospectus etc.


Instead of attacking me for taking a realistic view regarding these licenses,
may I suggest you consider thinking about the contents of rambutan's post .

[blank frank] 06/12/2004 18:43

BigT20,

In my last post on this thread I was actually commenting upon your post 127, which was in response to my post 125 (which addressed DPT's income as a whole).

Your response in post 127 was selective, because you're not giving DPT credit for:-
* new licencee product launches by Estee Lauder and BBW;
* non-licence developments, i.e. VIVO and Virgin Vie.

Of course, it's your perogative to only post negatively re. DPT and to ignore all the good, just so long as readers recognise that, so they can put your posts in context.

B.F.

[bigt20] 06/12/2004 08:55

B.F,

My focus on the licence revenues such as post 117 :


BigT20 - 22 Nov'04 - 08:20 - 117 of 131 edit


B.F.

1. Growth in licence revenues (per the reported figures) has stalled.

2. There are little or no revenues from some of the licences, e.g.,
Shisheido, Reckitt & Benckiser


was in response to your post 115 which raised the
subject of licence revenues .

[blank frank] 05/12/2004 18:14

BigT20 - 2 Dec'04 - 04:47 - 127 of 130
B.F.
"It seems that you have an optimistic opinion regarding the poor / non performing licenses . I prefer to look at the facts as they are regarding these licenses ."

BigT20,

Why don't you also look at the facts re.:-
* Regular Estee Lauder licensing income of c. £1M. p.a.
* Successful launch of Elizabeth French's VIVO range, which should mean EF profits of c. £2M. in 2006.
* Launch of new BBW product range, which could double Disperse's licensing income; and new Estee Lauder product launch.
* The imminent Virgin Vie product launches.

You appear to be completely ignoring all the good things that more than justify DPT's share price, and instead are flagging up things that haven't come to fruition yet, but which are not accorded any value by the share price in any case (which means all the more value to potentially be added later).

B.F.

[blank frank] 04/12/2004 18:19

Rambutan,

It's not so much "early" days for us with Virgin Vie, as 'yet to begin' days - as regard product launches as least. Virgin Vie are only launching products using Disperse's technology early in 2005. I'm not trying to split hairs, just emphasise that VV have suffered no sales downturn in any products using Disperse's technology.

Fez has commented on Unquoted:-
"3) Virgin Vie is good news - for VV too - I know a couple of people who thought their products looked excellent but when they used them they could be quite nasty to the skin (in particular)"


So while I would hestitate to take pleasure in this sales downturn for Virgin Vie, that downturn may underline just how much they need Disperse's technology. And if the products using that technology reverse the decline in VV's sales, then what a feather in DPT's cap that would be.

B.F.

[rambutan2] 02/12/2004 14:40

yes, just noticed their trading statement fez, they got it a bit horribly wrong. still, early days for us there...

[fez] 02/12/2004 13:03

Ouch - very bad statement out from VRY (Victory Corp) who include Virgin Vie....guess they need some decent products QUICK!!!





02 December 2004




VICTORY CORPORATION PLC

TRADING ANNOUCEMENT

After reasonable sales growth of 11% in the six months ending 30th September
2004, sales in October were poor and contrary to our considered expectations,
the trend continued into November, our most important trading month.


Having achieved high levels of sales growth for a number of years, the shortfall
in sales has been within Cosmetics Direct where Consultant recruitment and
activity has been slower than anticipated. Consumer spending in both Direct and
Retail has been very tight, and in line with the current poor sales performance
being experienced by many major retailers in the lead up to Christmas 2004.


As a consequence, the Board announces that it anticipates that net profits for
this financial year will be considerably below market expectations and lower
than last year.


The Board has reacted to the slow down in sales and have decided to bring
forward a number of strategic options that have been under consideration, and to
grow the business through new product development. These initiatives will be
fully disclosed when the interim results of the Company for the six months
ending 30th September 2004 will be announced on 16th December 2004.


John Jackson
Chairman

[bigt20] 02/12/2004 04:47

B.F.

It seems that you have an optimistic opinion regarding the poor / non
performing licenses . I prefer to look at the facts as they are regarding
these licenses .

[blank frank] 01/12/2004 18:34

"body and bath has always been mentioned by dpt whereas the others seem to have disappeared from their listing prospectus etc."

Rambutan2,

Surely this simply underlines the fact that no value is being afforded to those latter initiatives at the current DPT valuation? = All the bigger bonus if / when they do come to fruition.

B.F.

[blank frank] 01/12/2004 18:10

"I dont think you can assume that a time lag relating to one company (BBW) and its circumstances automaticaly apply to the other licences ."

BigT20, I'm not assuming that the time lag does automatically apply. The words I've used are:- "rule-of-thumb, "may", and "if". I.e. I'm not claiming any degree of certainty.

I'm simply trying to point out that to develop and launch products using DPT's technology may take a few years from the signing of the licence, according to the BBW example. So just because a few years have elasped, it doesn't necessarily mean that anything has been abandoned; and that on the contrary, it may mean that something MAY be drawing close.

You can see the DPT glass as half full or half empty. I prefer to see it as half full, which means that in addition to the regular Estee Lauder licensing income of c. £1M. p.a., I look at:-
* Successful launch of Elizabeth French's VIVO range, which should mean EF profits of c. £2M. in 2006.
* Launch of new BBW product range, which could double Disperse's licensing income; and new Estee Lauder product launch.
* The imminent Virgin Vie product launches.

This being the case, it's unnecessary to focus on what HAVEN'T actually come to fruition yet. If and when they do, they could provide yet further huge upside. And in the meantime, a profitable DPT can grow perfectly well without them.

What other company can provide this much blue sky (ish) upside, but with the downside protected by existing profitable business? If this isn't good enough for you then maybe you're better off simply selling your shares and leaving. I personally am happy to stick with a company that could easily provide good year-on-year growth for another 20 years.

B.F.

P.S. BigT20 - nothing wrong with a negative viewpoint, but I can't help wondering why you are staying in if you are so unhappy. In addition, if you went to the results presentation, is it so much to ask for a few words of feedback?

[rambutan2] 01/12/2004 14:22

would agree bigt20.
body and bath has always been mentioned by dpt whereas the others seem to have disappeared from their listing prospectus etc.

[bigt20] 01/12/2004 07:12

I dont think you can assume that a time lag relating to one
company (BBW) and its circumstances automaticaly apply to the
other licences . Each relationship has its own circumstances
and as we have seen to date some have produced little or nil
in terms of revenues .

[blank frank] 30/11/2004 19:02

I would have thought that supports my view expressed in post 100 of this thread:-

Blank Frank - 14 Nov'04 - 15:39 - 100 of 121 edit
" ... If Bath & Body Works have just launched products using DPT's technology, then that timelag suggests three and a half years from licence signing to product launch, as a rule-of-thumb. This is clearly longer than the 12-18 months timelag that has been anticipated in the past ... and this delay is part of the reason why the Disperse share price fell about 90% from its high on Ofex.
However, we may now have come through this longer waiting stage, and revenues from other licences may start to come on-stream in the first half of 2005, if this 3.5 year period applies.
Shiseido America ( ) and Nu Skin ( ) both have the potential to deliver huge licensing revenues to Disperse. Shiseido America is the USA subsidiary of the Shiseido Company of Japan, the world's fourth largest cosmetics company, with annual world-wide group sales of about US$5billion. Nu Skin has annual sales of about US$1billion. Both these licences were signed about three years ago. ... "

[rambutan2] 30/11/2004 13:48

the Shiseido America, Nu Skin, Reckit and ? (forgot name!) licences were all supposed to be rev producing for dpt by end 2003. that according to 2002 fund raising prospectus which i chanced upon last night.

[blank frank] 29/11/2004 19:43

The 19/11/04 "Investors Chronicle", which tipped DPT as a buy, also contained an interesting article entitled "Exceptional Returns" which is also relevant to DPT.

The IC's research suggests that firms with exceptional losses tend to beat the market:-
" ... investing in shares of the 10 companies with the biggest negative one-off items [relative to their adjusted earnings] would also have made good returns. Overall, this strategy beat the market by an average of 7.5 per cent in the following 12-month period ...
Hanging on to either group of shares for longer produces even better results. [Actually, average of 10.2% total outperformance over 3 years (i.e. not 10.2% p.a.).] ...
The lessons here seem clear enough. While investors focus on the earnings figure and ignore the exceptionals, out findings suggest it would be better to concentrate on the exceptionals and ignore the earnings."

High exceptional costs have reduced DPT's 2004 results. These should not recur, but I don't think that fact is yet being reflected in the share price.

B.F.

[blank frank] 22/11/2004 19:41

Historic license revenues have clearly stalled over the last few years. But that doesn't necessarily reflect badly upon Disperse's technology: it's my observation that such licence revenue delays in general are the norm, rather than the exception - look at virtually any stockmarket company that licences its technology, and there are typically delays accompanied by a falling share price. Large corporates just can seem to take a long time in their decision-making and development. But I don't think that Shiseido America, Nu Skin, etc. signed those licences just for the fun of it.

Disperse is below a tenth of its Ofex high to reflect the delays, and the current valuation isn't dependent upon any new licence revenue - that's not why the IC tipped it, as there's plenty of upside without that. So if and when new licence revenues do start do come on stream (which they may already have done with new Bath & Body Works product launches), that should be a bonus to the share price.

B.F.

[rambutan2] 22/11/2004 15:57

bigt20, re your point 2, do you know why?

[bigt20] 22/11/2004 08:20

B.F.

1. Growth in licence revenues (per the reported figures) has stalled.

2. There are little or no revenues from some of the licences, e.g.,
Shisheido, Reckitt & Benckiser

[tanaz] 21/11/2004 18:36

agreed Blank Frank, excellent post!

[blank frank] 21/11/2004 18:29

I.C.: "BEAR POINTS
* Tech licensing business is low-margin"

Low-margin?

EDELIN - 14 Jan'03 - 15:11 - 50 of 74
"AGM Feedback
... Chairman quoted he forsees £M15 profit at £M25 turnover. ..."


What the IC means, but has rather misleadingly put, is that DPT's slice (or margin) of the LICENCEE'S revenues is comparatively low. But these licencee revenues that come in to DPT are very HIGH margin for DPT - it may have to do little more than sit back and receive the money. And because the licencees can be such huge companies with sales in the hundreds of millions of dollars +, even a small cut can be quite a lot: i.e. c. £1M. p.a. income to DPT from Estee Lauder. In addition, Disperse is revising its licence agreement with Bath & Body Works: in broad terms, this will give Disperse a four-fold increase in revenues. I believe that this is the plan for other licencees too.

Arguably therefore an IC bull point should be "tech licensing business is HIGH-margin" ... = 3 bull points, no bear points! That would certainly be the view that I would lean to.

Of course, DPT has now broadened its types of income stream to include selling final packaged products to retailers (Elizabeth French products at present), and providing finished products to other companies to package (Virgin Vie initially). These will give DPT a higher share of the final product revenues, but lower average margins on its actual income, though still quite good.

Having said all this, the IC buy tip is clearly fantastic news, as it will help to put DPT onto more radar screens - important, as it's still comparatively little known. DPT's only been on AIM for about four months, and with the flood of AIM floats this year it's easy to get widely overlooked. 'Copycat' tipping may follow in due course, as the IC is so influential ... in previous years Disperse has been tipped on Ofex (at far higher prices) by the Independent and the Telegraph, so they may now see it as legitimate to revisit it. Watch out for DPT nap tips at New Year. [Health tiddler Zi Medical (ZIM) was picked by the Mail on Sunday as a tip for 2004, and the shares immediately went through the roof - DPT looks far superior to ZIM in terms of both results and licensing.] And the IC itself follows its tips, and repeat tips them as appropriate. DPT certainly looks a good bet for this if existing progress is maintained. All of which is clearly good news for the long term, as a healthy share price will make it easier to make an additional acquisition with less dilution - e.g. a cash-'rich' pharmaceutical company, as was suggested at Disperse's 13/7/04 presentation.

B.F.

P.S. DPT should rise further tomorrow (Monday). IC tips usually do, because lots of people don't see it until Friday evening. And as a recent AIM new issue DPT will be newer to more people ... and, I believe, attractive to lots of people.

[blank frank] 19/11/2004 19:26

The full "Investors Chronicle" article:-

TIPS SMALLER COMPANIES
cosmetics
DISPERSE TECHNOLOGIES (DPT) ^BUY

Disperse was originally formed in 1995 by Derek Wheeler to exploit technological advances made in the cosmetics industry that enabled more efficient production and a lower concentration of additives and preservatives. Since then, the company has signed up several high-profile licensees, including Estee Lauder and US personal-care retailer Bath & Body Works.
But with margins for licensing the technology low, Disperse decided to move into the retail end of the market with the acquisition of cosmetics brand owner Elizabeth French in July 2004 for a maximum consideration of £9m. That deal was combined with a move from Ofex to Aim and a £4.7m fund-raising.
It's still early days for that acquisition, but the signs are already encouraging. Full-year figures for the year to 31 August 2004 include only one month's trading from Elizabeth French but, in that period, it accounted for more than two-thirds of total sales. Broker JM Finn forecasts that Disperse's sales should jump to £16m in 2005 and nearly £18m in 2006.
Much of the growth will be achieved through rationalisation. Disperse's management already has experience in implementing cost savings, having cut nearly £1m out of the technology business. Once it gets to work on Elizabeth French, the improvements should be marked. At the same time, extension and development of the existing Elizabeth French range is planned. The 2005 PE ratio of 10 falls to just 6 for the following year - that's cheap for a company with such huge growth potential. Buy.

BULL POINTS
* Recent acquisition has generated significant potential for growth.
* Costs have been cut.
BEAR POINTS
* Tech licensing business is low-margin.

DISPERSE TECHNOLOGIES
Aim
ORD PRICE:19p MARKET VALUE:£11M
TOUCH:17-20.5 12-MONTH HIGH:20P LOW:16P
DIVIDEND YIELD:nil PE RATIO:10*
NET ASSET VALUE:12P NET DEBT:6%
YEAR TO TURNOVER PRE-TAX EARNINGS PER DIVIDEND PER
31 AUGUST (£M) PROFIT(£M) SHARE (P) SHARE (P)
2004 2.81 -0.57 -2.62 nil
2005* 15.99 0.74 1.95 nil
% change +469
Market makers:4 Normal market size:10,000
*JM Finn's estimates Last IC view: 13 Feb 2004, page 69

[rambutan2] 19/11/2004 12:44

producing some healthy volume.
just what was needed for folks to get in and out.

[tanaz] 19/11/2004 11:45

I've been with disperse since the ofex flotation and have noticed that this company likes to concentrate on the real technological aspects of their business model which I can say is coming on nicely. Were hit by the US$ and Technology dot com crash but the fundamentals are still the same. This co. hit a high of of £2.60ish at one point so has a long way to go.
However, there are real technologists involved who are carrying the business forward and as revenue stream will be taken care of by EF this will take the time of fundraising away to make available to concentrate on core business issues. This co. will be one for 2005 - without a doubt!