||EPS - Basic
||Market Cap (m)
|Software & Computer Services
Real-Time news about Fin.Objects (London Stock Exchange): 0 recent articles
|rivaldo: From Small Cap Shares this week - interesting that even now they say there's still the chance of a counter-bid.
I notice that last week FIO won a major contract with Rabobank too.
FIO £25.6m 57.5p HOLD
The financial software provider Financial Objects has received a
£27.2 million, or 60p a share, cash offer from banking software
business Tenemos. The directors of the company are recommending
that the offer be accepted. So far Tenemos has received irrevocable
undertakings to accept the offer in respect of 46.7% of Financial
Objects' share capital.
Financial Objects released a profits warning in May and the share
prices has plummeted since then so it is no surprise to see this bid
come in from Tenemos. The bid is at a 90% premium to Financial
Objects' share price the day before the deal was announced. Given
forecast earnings of 6p in the current year to 31st December 2008
the bid values the company at 10 times earnings, or 8.2 times
earnings if we strip out 10.8p of cash that the company had at the
end of December 2007. In the current market, where the financial
software sector is experiencing deteriorating market conditions,
that is probably about the best price that the company will get in
our opinion. With management backing and a not insignificant
amount of irrevocable undertakings received the deal looks like it
will go through. However, there is still the chance of a counter bid
and as such we suggest that until the deal is declared unconditional
that you HOLD"|
|rivaldo: Holway's perspective on the offer - he notes that Temenos' main competitor is Misys. Let's hope Misys step in!
"Thursday, 3 July 2008
Financial Objects - Another one hits the dust
Financial Objects (FO) has become the latest in a long string of small/mid-sized UK SITS companies to succumb to a bid approach. Temenos has bid 60p (a massive 90% premium to last night's closing price) which values FO at £27.2m. FO had revenues of £21.23m and PBT of £2.75m in FY2007. FO provides software solutions and services for banking and financial services, energy companies, property asset management and document management. They have around 500 customers including Abbey, Wachovia, Aegon, BAA, Bradford and Bingley.
My involvement with FO goes back to its formation in 1995 by Roger Foster (then of ACT fame). They floated in Nov 98 with a £82m valuation and a share price of 230p so the 'takeout' price is a mere fraction of that! But that was as nothing compared with the 790p price that FO hit in those crazy days dot.com of early 2000. Although quite what FO had to do with the internet was a bit beyond me even then. Roger Foster has since stepped down and new CEO, Karim Peermohamed, who I have also got to know, has done a very good job since. Indeed, I'm sure FO's shareholders will raise a glass to him for executing this deal
Temenos' main competitor is Misys. It will be interesting to see how far consolidation in this sector goes..."|
|diku: So now we know why the Chairman and the Directors bought a handful of shares just few months ago...I think since the profits warning just few weeks ago the company was probably put up for sale...this is where the board members protecting their best interest and sell the company whilst they can make a decent profit as they were probably aware that trading would worsen in the second half and the share price would take a dive further...anybody noticed the two trades on Tuesday and wednesday...looks very suspicious and the price lately was also holding up...those in the know!!...
good luck to those private investors who held and made a bit of profit...|
|tell it as it is: 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: 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.
|skyship: Wrote to the company last week & the FD phoned me yesterday.
Q. Why not a larger dividend?
A. Much discussion amongst the Board on this issue as they wish to proceed with a "Progressive" dividend policy. However they decided that 1.5p was a serious step-up from 1.0p; and obviously makes it easier to continue at that pace.
Q. Why not make share buybacks at these low levels
A. (As always!!) - We prefer to use our cash resources to grow the business through acquisitions
Unfortunately he caught me unprepared and just leaving for our weekly market visit (v. important here in France!) so I rather missed the opportunity to quiz on other aspects of the share price decline.
However I did ask whether there had been a non-competition clause with the departing Fosters. He answered that he couldn't discuss individual contracts, but that all such arrangements are time limited in any event; and that they welcome and are not worried by competitors.
He also said that the share price was disappointing for all holders, including the Board who had made serious share purchases quite recently.
All in all a positive and helpful piece of investor relations.
As for today's continued decline; it was yet again on small volume. MMs have no option but to lower the price in the face of the consistent PI dribble. It's a problem with AIM stocks generally.|
|highly geared: A normal market should see these back above 60p with the results and a decent outlook statement. It will help the company and the share price if they can articulate how their market/prospects aren`t inextricably linked to the credit crunch (which appears to be the perception) in terms of the share price drop since July.|
|rivaldo: Just a reminder of the January trading update - the share price should start to tick up in the run-up to results in two weeks:
"The Board of Financial Objects plc, an international supplier of software
solutions to the banking, wealth management and energy sectors, (AIM: FIO), is
pleased to announce that, following the completion of its financial year ended
31 December 2007, it expects to report an operating profit ahead of market
The Company is scheduled to announce preliminary results on 10 March."
This is what SCSW had to say in their recent issue - they have FIO as a tip:
"Financial Ojects - Financial dislocation creates no problems
47p Epic code: FIO
(Sharewatch) Concerns that Financial Objects, the banking software provider, would come unstuck as a result of the financial dislocation have been unfounded with the company reporting that FY07 results will be ahead of market expectations. This is as a result of second half contract wins in the banking business and further growth in the wealth management sector.
Evolution now forecasts eps of 6.2p for the year already ended with 7.5p in the current year. The broker also expects Financial Objects will have ended 2007 with net cash of at least £4.4m (c.9p a share)."|
|glasshalfull: Response from Peter Youngs, FD, to my query regarding share price volatility.
I find it VERY REASSURING and suggests that the company share price has simply been mauled (down circa 25% in the last fortnight) by the market volatility and in particular the negative sentiment surrounding anything associated with the Banking Sector:-
"Thank you for your letter. There has been no change to the trading situation of the company since the interims which would warrant an announcement. I am in regular contact with our advisers on the issue of how to handle the issue of the drop in the share price, and would make a public statement if advised that it was the correct course of action. Meantime, please accept my assurance that myself and the team here at FO are continuing to work hard in the knowledge that, as long as we continue to deliver in line with expectations, whatever the reason for the short term fluctuations, the long term performance of the share price will reflect our trading position."
|verdley: There's a combination of stuff going on which is holding back the FIO share price.
1)It's seen as a play on the banking sector. If there is trouble there, then sales will suffer
2) Wealth Management will also suffer from these choppy markets, so I expect sales in the 2nd half to also be a bit slow
3) Roger Foster has, historically, timed his exit from companies well
4) The company is not the cash cow that it once was. I don't see them having anywhere near £4.9m of cash at the year end, unless their debtor/creditor profile changes dramatically. Therefore, so it's less attractive to the sort of investor who likes cash and it takes time to attract investors interested in the growth story.
On the other hand.
1) This is a very stable company and the P/E is less than demanding.
2) The upgrade of their risk product offering is good news
3) Energy is a good market for the medium term
4) The Fosters have formed a PE company which is aimed at consolidating the banking technology sector. FIO could easily be part of that consolidation
Overall, 90p plus is absolutely realistic in 2007, with 100/110p during 2008|
Financial Objects share price data is direct from the London Stock Exchange