Financial Objects Share Discussion Threads

[liquid assets] 11/3/2008 15:33

imho, staggering price down on day like this after those results. no real buyers it seems and we await a director buy or two ?!

[aquilla] 11/3/2008 15:25

Nice find, Verdley. Is Third Financial Ventures then a competitor of FIO and why did those former board members and managers leave the company to set up this new venture?

[verdley] 11/3/2008 13:03

More likely that Roger will buy it back at cheap price..

[highly geared] 11/3/2008 09:30

Skyship; probably right but it won`t stop someone making an opportunistic bid. This will be posiitve , even if rejected, as it demonstrates the value in the company,

Tole; Times posts article about "in line" results. Looked better than that to me.

Bottom line for me; FIO desperately needs broker/market coverage to wake up the masses to the hidden value. Don`t expect it to happen and will continue to hold.

All the best.

[skyship] 11/3/2008 08:44

HG - I can't see Paul Fullagar accepting anything less than 90p - especially considering the stock he bought from Foster last summer at a price up in the 70s.

I too believe this will lose its independence; but it will be at a price negotiated by PG; and 90p is easily justified on valuation grounds.

[highly geared] 10/3/2008 22:34

Broker valuation seems sensible; assuming any bidder will need to drive value in the bid; looks like a potential bid price range of 60-70p (enough to be attractive but with some room left for bidding co. to demonstrate good value).

Why talk about a potential bid? Well, it`s typically in markets like this where good companies are acquired on the cheap. So , providing you have faith in FIO going forward re; EPS/DIVI, then the best thing to do is sit back and wait. I reckon we`ll see a bid in the next 6 months on the back of;

- 3 years of increasing profits
- PE of c. 6.5 (incl` cash), sub 5 excluding cash
- c.11p per share in cash (and growing)
- good management team
- cheap market cap` for a big player

As I`ve said before , value will "out" in the end.

All the best.

[liquid assets] 10/3/2008 20:37

good work glass and thanks for your efforts - look fwd to any update of course.

[glasshalfull] 10/3/2008 20:23

liquid assets

I've contacted the FD and will update with any response regarding Note 6.

FYI Edison have produced an updated 8 page research note which confirms my earlier points and forecasts 7.7p EPS this year and suggest a DCF valuation of 80p per share.



Kind regards,
GHF

[liquid assets] 10/3/2008 18:49

good spot glass - in these mkts, very difficult to make headway. always tucked away these snippets. hhmm - would be nice to get a handle on the possible size of this issue.

[glasshalfull] 10/3/2008 16:58

Only getting round to adding my tuppence worth now.
Excellent set of results IMHO

Bullet Points

* EPS 7p (I had factored in 6.8p following the ahead trading update in Jan, so pleasantly surprised)

* D/V increased by 50%. Shows that management are bullish and signaling such to the market.

* Net cash £4.8m - £400k above forecasts, demonstrating excellent cash generation

* Op Margin now increased to 14%. V pleasing

* £6m still available to offset against future profits. Little tax for next 18 months.

* Growth in Energy and Wealth Mgmt Divisions, more than helping to offset weakness in Banking Division.

* Note 6 in the accompanying Accounts:-

6. Contingent liability

In early 2008, the Company received notification of the termination of one of
its contracts. The directors believe that this termination may lead to a claim
for damages, however no formal claim has been received. Any claim will be
vigorously resisted by the Company and its insurers, and therefore no provision
has been made in these accounts."

Would like to clarify this with the company. Doesn't sound good to me.

Irrespective, results way ahead of expectations and I see they've dropped slightly which is unsurprising in this market (can hardly have been profit taking :-).
I reckon they are a very tasty morsel for the likes of Misys and would be surprised to see them remain independent given the low valuation attributed by the market.

Regards,
GHF

[techmark] 10/3/2008 13:30

It always amazes me how people really don't seem to understand share buybacks.

[aquilla] 10/3/2008 13:08

Clogue, Highly Geared, I would agree that share buy-backs are not the way forward in this case. Given that their policy is one of expansion: "having successfully integrated two major acquisitions, the Group continues to monitor opportunities for further growth through complementary acquisitions,"
the cash pile could come in very useful in a depressed market for other acquisitions with the need to come back to shareholders diminished.

[techmark] 10/3/2008 12:14

If you take the view that company is worth £40 million then why wouldn't you buy back your stock when the company trades at half that valuation. I wouldn't dig into the cash pile, but some of the free cash generated by the business could be used for a buyback. To be honest it would probably be a better route than raising the dividend. With dividends of 8-9% available on certain blue chips FTSE 100 stock, I very much doubt that income investors will be looking here.

[clogue] 10/3/2008 11:49

I would be very disappointed if this company stated to buy back its own shares
as this is usually an ex growth policy. As far as dividends are concerned 1.5p now and a further 1p at the interim stage is a yield of 5.5% on current share price.
This company is growing and generating cash at the same time as paying a substantial dividend.
Given the proven expertise of the management I expect them to take the cash generated, expand the business, and generate even more profit in the future.

[highly geared] 10/3/2008 11:38

Share buy backs rarely achieve what the theory suggests so pushing this route isn`t in my view a good idea. Cash is an important commodity when there`s a bear market so sitting on a good cash pile isn`t a bad thing and will be attractive to a bidder. It may also help in the event FIO`s market turns down but what I see is a tightly run ship that has intrinsic value well above the current share price Patience will be rewarded but I`d like to see FIO ramp up their PR a bit in terms of more market updates. Hopefully some more director purchases and some new contract wins will see us moving back up to reasonable levels with mimimum downside risk from here.

[cocker] 10/3/2008 11:27

techmark. I agree with share buy back. However, markets always take this as a negative way of giving shareholders value. Don't ask me why though.

[skyship] 10/3/2008 11:21

techmark - totally agree with you regarding share buybacks - I'll write to the Company on that point & also my "progressive" dividend suggestion.

[mirandaj] 10/3/2008 11:09

Just re-write of bullet points

[skyship] 10/3/2008 09:41

Jonathan Lee was appointed an NED on 30th November. I expect (hope) that we will soon be seeing an RNS stating his first investment in FIO. He should certainly be taking a few on board before the AGM.

[techmark] 10/3/2008 09:38

Why doesn't the company do a share buyback rather than looking for an acquisition? We all know a company that you can buy at a very good price, it's called Financial Objects. Therefore, why not buy back your own company with the free cash when it's trading at huge discount to real value. It makes perfect sense and drives the EPS and dividend per share higher.

Regards

[papalpower] 10/3/2008 09:12

Nice set of results.

[liquid assets] 10/3/2008 09:10

a few short termers binning; agreed HG , bid target - keeping hold of the cash assists in the valuation for such activity imo - dont cloud the picture with acquisitions - wonder if this is just mgments way of justifying why not paying a higher divi. one to lock away now.