Financial Objects Share Discussion Threads

[highly geared] 03/7/2008 08:52

Makes a change in these markets. Thanks to Skyship for bringing these to my attention ; bought in at 45p for my SIPP c.5 months ago so a decent 33% return. Hope other holders have done well.

[littlemadam] 03/7/2008 08:42

FIO....FLO.... so spot the next target. any guesses?

[papalpower] 03/7/2008 08:30

Nice end to the story.

[nilip] 03/7/2008 08:26

Well done to all holders ... especially if you bought / added @ 30p ish.

[techmark] 03/7/2008 08:24

While 60p is great in these market condition. I feel that 60p is still giving the company away cheap in the grand scheme of things especially when one considers the cash levels. 80-100p share would be fair value for me.

[weatherman] 03/7/2008 07:44

For once news didn't leak before hand looking at the chart.

[rivaldo] 03/7/2008 07:35

Yippee!

Looks like a bargain for Temenos to me at 60p, but still, you can't argue with a nice profit in this market.

As Skyship says, if you invest in solid stocks with cash and decent business propositions then value will out at some point.

[value viper] 03/7/2008 07:25

RESPECT - well done to all holders - what looked like a screaming takover target has become one.

[skyship] 03/7/2008 07:16

60p/share CASH bid from the £1bn Swiss company - TEMENOS



Wish it had come a little earlier - I had cut by 50%! Still, darned good news; and perhaps indicative of the true value beginning to emerge in the small caps.

[rivaldo] 27/6/2008 15:12

I still hold here (at a loss obviously!).

FIO remain interesting to me. At 34p on a £15m m/cap, Edison forecast 6p EPS this year having downgraded, and EVO still go for 6.9p EPS! There's also a 5% divi as forecast for this year.

There was £4.8m net cash at 31/12/07 against that m/cap, and Edison forecast over £6m at this year end.

The gamble is whether the banking has fallen off a cliff or simply reduced temporarily. With increased regulation (MIFID etc) the need for FIO's software is surely only increasing? And with the risk management division and everything else, an EV of around £10m for £20m of turnover and a load of IP is surely tempting to someone.

An interesting nugget re FIO in the FT today too:



"Private equity gaze likely to turn to Aim
By Martin Arnold, Private Equity Correspondent

Published: June 27 2008 03:00 | Last updated: June 27 2008 03:00

Companies listed on Aim, especially those with high levels of cash and a large strategic shareholder, could provide tempting targets for private equity, according to research published today.

Likely targets include: Panmure Gordon, the mid-market brokerage; Character Group, the maker of Dr Who toys; and WH Ireland Group, the Manchester stockbroker, according to Noble Group, the investment bank.

The research, produced by Absolute Strategy Research, a consultancy, says credit market turmoil will prompt private equity groups to seek targets with healthy cash balances and strong growth potential, as shown by some Aim companies.

To compile a "private equity watch list" for Aim, it used a filter including only companies with a market capitalisation between £15m and £100m, net cash positions, an institutional investor with a holding of at least 10 per cent and staff with at least 5 per cent.

John Llewellyn-Lloyd, chief executive of investment banking at Noble, said: "In a post-crunch world, conservative financing structures will be the norm. Aim-listed companies, which have on average the lowest net debt-to-equity ratios in the UK equity market space, will look very attractive to private equity buyers."

Other companies thrown up by the watch list included Gulf Keystone Petroleum, an oil exploration company; Financial Objects, a software developer for the financial services sector; and Arden Partners, the stockbroker.

While figures this week from the Centre for Management Buy-out Research showed a steep drop in the value of buy-outs in the first six months of this year, many of the biggest deals were public-to-private buy-outs of listed companies.

These included Emap, the publishing company; Abbot Group, the oilfield services company; and Biffa, the waste management group.

"There has been a continuing interest in private equity-backed public-to-privates but this may be set to accelerate, which is undoubtedly positive for the [Aim] market," said Mr Llewellyn-Lloyd."

[tell it as it is] 17/5/2008 17:39

Interesting Rivaldo re IBIS and the investegate article. It may be that the publication only includes new customers (i.e. if DNB or Wachovia are already customers in 10 branches they don't include the addition of an 11th branch).

[joestalin] 17/5/2008 11:34

This one is currently in danger of a TO at this price. A good time to add right now.

[diku] 16/5/2008 18:31

I have followed this in the past...the spread is just too silly now...market makers playing normal games...

[cocker] 16/5/2008 18:25

i've sold some of my holding simply because the share is likely to go no where in the short term.

[techmark] 16/5/2008 15:37

Well those people selling at 32p are selling the underlying business for about £9 million. They should be sectioned under the 1959 mental health act! ;-)

[rivaldo] 15/5/2008 20:07

Interesting post 348 - but one which might be somewhat inaccurate based upon these contract wins last year for IBIS?



FIO themselves have hopefully addressed whatever shortcomings there were in this division with the new sales teams they've repeatedly talked about recently. I also happen to believe that the risk and wealth divisions will continue to do well.

A couple of mentions FYI:



""We continue to believe Financial Objects is undervalued due to the strong balance sheet, defensive business model structure, and market-leading software products," said Roger Phillips, an analyst at house broker Evolution Securities."

And this is interesting in terms of the wealth management market available to FIO:



"14 May 2008 - Tara Loader Wilkinson

Many wealth managers yet to automate systems, survey

Currently only half of tier two and tier three wealth managers in the UK have automated systems which allow them to compile client reports at the touch of a button, according to a report from Financial Objects, the UK-based software supplier.

The study shows that the electronic systems of many wealth managers are woefully inadequate to handle the increasingly sophisticated demands of clients.

Brent Randall, managing director of Financial Objects said: "The benefits of automated systems have already been proven in investment banks where the return on investment in technology such as algorithmic trading is clearly understood.

"We believe that wealth managers and private banks should not be wasting valuable man hours on menial tasks when they could triple their number of clients, spend more time on analysis and less time on gathering information."

He added that by implementing the latest software, wealth managers would also attract the top talent to their ranks."

[tell it as it is] 10/5/2008 12:18

Has anyone seen the March 2008 IBS Sales League Table from www.ibspublishing.com ? It looks at new business sales by banking system vendors. The top vendor recorded 44 new deals in 2007 and there were 13 vendors with 10 or more new deals. The same report showed Financial Object's Activebank with zero new deals (1,2,2,3,4,2 respectively in previous years) and 10 existing customers, and IBIS also with zero new deals (2,2,0,1,0,1,3,2,3,1,4,7,7,9,13 in previous years)and with 48 existing customers. The trouble is that although banking systems are sticky, a period of winning no new business tends to be an advance indicator of a period of losing existing customers to replacement systems, and it can be anticipated that IBIS's cash cow status will erode over time as banks merge and/or upgrade their systems. I don't know exactly what IBIS's revenues are - which would allow one to guesstimate the extent of earnings drag that this likely attrition will have. Clearly we don't have access to the same info that Edison do, but I wonder if the erosion of IBIS isn't the real reason depressing the earnings/share price - this could remain the case for some time unless Energy Credit and Wealth Mgmt do exceptionally well.

[techmark] 09/5/2008 13:46

Thanks for that. I think that would equate to a pre tax profit of around £2.5 million. Stripping out cash at the current share price you would be paying about £11 million. So at these levels and even if profits only remained flat at £2.5 million the profit generated from the business could buy the whole business in less than 4.5 years. That's looks mightily attractive to me. Throw in some growth and that number could easily fall below 4 years, not to mention stripping out costs for a bidder.

Those sort of discounts have to put this business on the watch list for a potential buyer.

Regards.

[glasshalfull] 09/5/2008 13:15

New Edison research note produced for those interested.

EPS forecast reduced by 22% to 6.0p.
Downside would seem to be limited by cash generative qualities and forecasts of £6m net cash at year end.

Good luck!



Regards,
GHF

[rivaldo] 08/5/2008 20:35

Just read the May issue of Small Cap Shares. They had a Buy rec at 42.5p on forecast EPS of 7.4p this year.

More importantly, they stress that 75% of FIO's revenue is recurring.

Even if EPS were to halve to 3.7p, with £4.8m or more net cash on a £17m m/cap FIO is hardly expensive.

There are of course risks of further warnings. It'll be interesting to see if the directors dip in again.

Equally there's the possibility that those contracts will come in and the extra staff will deliver. And the banking side is getting smaller and smaller anyway.

Since FIO is positioned as a defensive stock with that high recurring income I'd hope that it won't take too long for FIO to recover.

[techmark] 08/5/2008 19:44

Exactly. Can you believe that somebody sold at 31p. That meant they saw no value in the underlying business at £8.5 million, assuming they had considered the matter. Laughable really.

[masurenguy] 08/5/2008 17:43

"Fullager buys 100k of shares on the 2/4/08."

He paid 40p so he is only 4% down from there at the close.

[cocker] 08/5/2008 17:37

At the start of the year we had a welcome boost that full year earnings for 07 will be ahead of market expectations. Then two months ago we were informed that the economic slowdown may have little if no effect on current years earnings.Fullager buys 100k of shares on the 2/4/08. Then today we have the BOMBSHELL.How & why has even our ceo been caught out.Perhaps the worlds economy is in far worst condition than first thought. I for one have had my fingers burnt today & only hope that a knight in shining armour comes along with a offer.

[techmark] 08/5/2008 13:59

Worth pointing out that around half the banking revenues are contracted maintenance revenues. Also the bank division accounts for about half of the company's' revenues.

Sorry but I can't see revenues falling off a cliff here. Stripping out cash from the balance sheet I'd paid £9 million for the underlying, Gosh if they get to £3 million of profit in the next year or two that really is staggeringly cheap.

This looks very similar to FLO who had a profit warning a few months back, with an almost identical problem in fact. I was able to buy up plenty of stock there in 40's and looked what happen when Mentor Graphics spotted how cheap the stock was!

If the management team aren't already sniffing about, then I suspect it won't be long before other businesses are.