Gresham Technologies Share Discussion Threads

[schytalk] 16/5/2016 14:00

richjp I agree that I would rather have a CEO who is a 'doer' rather than simply a well paid leader. I think his profile is just a little too low key for me. Also agree that the Gresham management have been cautious which was necessary following the profits warning fiasco, trouble is that it is not always easy to break the caution cycle without suddenly appearing 'gung-ho'.

I firmly believe that Gresham would now like to see the share price rise in recognition of achievements over the past twelve months whereas previously they were happy for it to stagnate somewhat. I know with my discussion with the Chairman last year that he was somewhat uncomfortable with the level of the share price Kestrel have a large number so that affords some protection but I am sure none of us want a hostile bid at say 125p!

[richjp] 16/5/2016 11:43

schytalk, give me a "low profile" CEO anyday, rather than some of the characters that head up so many small cap companies. Want I want as a CEO is a professional who has a track record in the industry which includes dealing with multi national accounts and that is what the current CEO appears to have.

GHT seem to have a policy at the moment of not trying to create over expectation in the market and I am happy with that. I would rather the CEO concentrates on building the company rather than making a big fuss in the media.

[schytalk] 16/5/2016 10:28

I see that Kestrel are continuing to support the Gresham share price having just bought another 50,000 at £1, good news in a way but the overall market in the shares remains very thin.

[schytalk] 15/5/2016 08:49

Agree that the checkered past does not help the story but Gresham is effectively a 'Newco' albeit still living on some ancient recurring revenues from the mainframe days. It tried to reinvent itself with Real Time Nostro and expansion into the Financial Market Place but that came crashing down and very nearly saw the company do under.

However, richjp, I think you are being over cautious and I agree with Drewster, Gresham is a very good bet but of course not a certainty. The 'damage' that continues to overhang this stock is the fund raising and subsequent profits warning, back in 2014 I think. The senior management team is essentially the same save for a change in CEO albeit the operational management has seen significant change and improvement.

Numbers are always important but especially so for Gresham given its past record. I remain a little concerned as regards the new CEO because he is pretty low profile, hopefully his good work will provide the rapidly expanding business levels we all wish for and that Gresham will finally break out from its niche position.

Given the recent information flow and the extra detail provided by richjp I believe an share price break through is on the cards. I remain of the view that Gresham view their share price as being on the cheap side having become very cautious following the 2014 profits warning.

We have learnt to be patient as regards the Gresham share price but soon (yes the soon word) I think our patience will be rewarded.

[richjp] 14/5/2016 15:08

Drewster I totally agree with your post. I was simply pointing out that there has been too much expectation in the past with the share price potential of GHT.

I mentioned there was huge expectation ten years ago, however there were also some over optimistic share price predictions here in 2013 when the share price went to 130P.

With a company like GHT I think some could do with being a bit more realistic with regard to the potential.

[the drewster] 13/5/2016 09:37

There's absolutely nothing wrong with "good healthy returns".
GHT is a stock I feel has limited downside (nasty surprises permitting) but could easily double in the next few years with little more than average good luck with some bids.
Nice risk/reward ratio.

Plenty of speculative 10+ baggers, but the risk is often "total" and they more often than not need several spoonfuls of good fortune on the way up!

[richjp] 12/5/2016 17:53

I think part of the reason for the lack of progress in the share price is what investors look for in small cap tech stocks. Everyone would like a ten bagger as would I and people look for the next big thing in companies the size of GHT. Of course ten years ago there was enormous speculation in GHT which all went very sour. You only have to look at many other small cap stocks discussed on ADVFN to see many similar stories.

I feel that GHT has shown nothing to demonstrate the high growth that would encourage more PIs to pile in. I think we can get decent growth but I think we must be realistic with our expectations. I have done quite nicely in stocks such as RED, FFA and KBC where Kestrel were very much involved, however I made a good healthy returns not spectacular ones.

[schytalk] 12/5/2016 11:46

jadeticl3 what an amusing tale, if I knew precisely when the share price would rise then I would not use the word 'soon' which as you say is open to interpretation.

I think the case for a rise in the share price is increasing but will indeed be driven by real world events and sadly not by wishful thinking. Gresham have made good progress over the past year yet the share price is showing a rise of 3p/3% - so pretty much flat.

Is Gresham a better and stronger company than a year ago, I would say emphatically yes. richjp gave us an insight into the likely short term performance and an the signing of another major client, so there appears to be an improving picture over the good progress of last year.

The CEO has been in place a year now and yet his options are under water, a little strange given the company performance. I also get the feeling from what the company has said that they are now comfortable - confident of progress - the share price should start to rise reflecting the improved position.

For the above reasons I think the share price will improve soon and if Gresham were a larger more established company I believe this would already have happened.

[jadeticl3] 12/5/2016 10:44

Schytalk, by "soon" do you mean that the next thing to happen will be a rise in SP, even if the next thing is many months away, or do you mean "soon" as in, in the very near future? I am told that "soon" can have both of these meanings.

The former is, I think, more likely. Once the substance is there for all to see the share price will rise, which I hope is the next move.

[schytalk] 01/5/2016 08:32

richjp thanks for the update, I am becoming more upbeat that the share price will rise soon. Just need to convince a new institution or two to invest.

[thebullyboy] 30/4/2016 21:21

Thanks richjp, much appreciated.

[richjp] 30/4/2016 19:00

jadeticl3, I got the impression that there will be one major order in Q2 but that may not be the only new business. I think you have to read between the lines sometimes as any company will be a bit careful about how much information they will divulge in an informal meeting. I am guessing but I would expect that that particular deal is very close to being finalised, perhaps at the contractual stage, or it would not have been mentioned. Remember they also mentioned they expect further progress later in the year.

Upselling appears to be very much on the agenda for the future. They pointed out that they are unlikely to knock out a major existing supplier straight away, but once they establish themselves with a client, it is often possible to gain more business with the quality they have to offer.

I came away not exactly feeling “high” but more comfortable about the progress that is being made than when I went in.

schytalk, I think the slow growth in recurring revenue may be down to the fact that as most customers pay on a usage basis, the revenue per customer will build over a period of time as clients integrate more of their existing systems with CTC. That is my guess. The directors seemed to me a bit surprised that a couple of us thought the recurring revenue growth was slow. They gave me the impression that they thought it was on target and that there is more to come.

It was also comforting to hear them give strong messages about margins. It was mentioned by more than one director.

Finally for what it’s worth I find out after, that the April edition of Techinvest rates them as a buy at current price levels, following the 2015 results announcement.

[4-10] 30/4/2016 09:39

Thanks Rich great job!

[schytalk] 30/4/2016 08:19

Thanks richjp for the AGM update, good positive stuff which should in theory support an share price rise which at the moment seems stubbornly stuck. I agree that CTC recurring revenues have not grown as strongly as expected and which I suspect was down to some pricing pressure, good that GHT think margins are firming despite competition, I still think that GHT would like the share price to move northwards since that will drive demand and even further movement, I get the feeling we are on the verge of an share price surge. I also agree that CTC (or rather the underlying technology) has many applications and potentially very wide appeal.

[jadeticl3] 30/4/2016 07:52

Thanks richjp, this is very helpful and informative. The general "feel" is similar to last year but progress has been made so confidence has some tangible aspects. Does your comment about "new accounts" suggest only one new account in Q2, or simply that it will announce one major account? Is up selling now the norm?

This is a very solid report back which suggests to me an underlying and justifiable confidence of significant palpable progress. Did you come away feeling high, or was it slightly underwhelming for you?

[amt] 29/4/2016 19:38

richjp thanks very much for the report from the AGM Very informative. Encourages my view that this is one to lock away for 5 years and then have a look and by then hopefully the share price will be a multiple or two of where it is now. I wondered if the EU referendum was having any effect.

[richjp] 29/4/2016 19:07

Here are my thoughts from yesterday’s AGM for anyone who might be interested.

There were five of us PIs present plus a couple of other people who were there apparently on behalf of a fund manager.

As you might expect the messages were positive in the discussion that followed the formal AGM. Their institutional investors including Kestrel were keen that GHT further develop the opportunities which were arising, hence the reason for continuing spend on software development and increasing the sales resource. The intention at this stage is to put cash back into developing the business. As CTC has developed they are finding new business areas which can be targeted, although they are careful to test the potential before putting too much investment into those new areas.

I asked about a recent statement in the annual report that CTC was being becoming the “go to” solution. This actually relates to one specific business area. During the last year they signed eleven new CTC customers but also upsold nine existing CTC clients which is a trend they expect to continue. They are expecting to announce another major account sale in Q2 this year and more business later in the year including the USA and Asia. The chairman said that the prospect pipeline was stronger than it has ever been.

The CEO said that their sales conversion was around eighty percent, which I think is excellent and suggests that they are qualifying their opportunities very well. Some sales cycles are still long, but for organisations like hedge funds which they see as a significant opportunity, decision making is a lot quicker. They also believe that although there is plenty of competition in the market, GHT has superior product characteristics and will be able to hold its margins.

Another PI stated that they thought the recurring revenue was rather small however the chairman responded by saying that it was increasing and was expected to continue to do so. They believe now that they have the necessary sales and support infrastructure in place. The chairman said that the “heavy lifting” had now been done and they were ready to move forward, although I think he may have used the same words last year. Gross margins which have been gradually increasing anyway, will flow through to the bottom line.

The legacy revenue is holding up better than I had expected. It is high margin and requires no development effort on the part of GHT. They could not put a time estimate on how long that will last, but seemed relaxed that it will continue for a while yet.

If there are any questions I will try and answer them.

[schytalk] 28/4/2016 10:34

Yes a good statement and clearly there is 'confidence' in the management but:-

Confidence can turn out to be a curse since it is a much over used word

The financials being better than last year is a given for a company in growth

Still seems to be jaw-jaw when I think what is needed is significant financial performance, dare I say some real positive numbers.

On the positive side this seems to be a further attempt to support the share price and it would seem that the company believe the share price is undervalued. On the negative side it is disappointing that they feel they have to take such action.

[amt] 28/4/2016 07:55

Good AGM statement, ahead of last year, which got off to a strong start if I recall due to timing of contracts.

[richjp] 15/4/2016 10:42

Hindsight is a wonderful thing jadeticl3. you could have said the same thing about the Grand National last week. I think your words in commas sum up the situation precisely.

schytalk, I am not diving back into the financials again, but I think the CEO has a fairly generous share option scheme and that is where he will make his money. I know the share price is below his current exercise price, but he should be taking at least a five year view and he has not even been in his post for one year yet.

[jadeticl3] 13/4/2016 18:13

The euphoria has departed from this company's investors. The actual numbers are better than they have ever been, with the company reporting confidently but not extravagantly, and the market generally moving upwards. So why has the share price stalled at a level well below its highest level?
Probably the previous optimism was overdone, not recognising the issues richjp highlights, and now reluctant to give management the benefit of doubt. The attitude now appears to be "demonstrate to me with hard numbers and I will pay a fair price for your shares, but no more gambling on high hopes and optimistic expectations".

So, as schytalk says, the wait goes on.

Way back when I first bought some GHT at 33p I would have done better to buy ASOS at 5p!!!

[schytalk] 13/4/2016 08:14

Agree we are still awaiting the break through and the key is of course volume sales, if CTC (or the CTC family) is now seen as a 'go to' solution then we certainly should see some increased momentum in the share price which appears to be stuck.

The new CEO was brought in to solve the sales issue of taking Gresham from a niche supplier to a main stream one. He is paid a decent salary (£250k) and I have no problem with that especially as I have been extremely critical of the previous CEO who was the weak link in my view. He is also on a potential 100% bonus for over achievement, again something we should applaud. However, I am confused by the chart (page 29) in the remuneration report which seems to show that Gresham do not expect to pay any bonus (expected bonus payment of zero), I am sure the CEO does not see it this way, thoughts anyone.

[richjp] 12/4/2016 19:15

I am so flattered jadeticl3!

[jadeticl3] 12/4/2016 16:35

richjp, Why don't I propose you as the new Public Relations officer for the company at the next results meeting?

[richjp] 12/4/2016 14:36

On reflection I think it probably better that they do not give figures for new orders. When in the past they have referred to a deal being worth £X million over say three years, with a usage based model that revenue stream will depend on the rate at which the customer rolls the service out and customer requirements may change during that period. So when they made those sort of announcements previously perhaps they should have said an anticipated revenue stream of £x million.

As much as I always like to know cash balances, cash flow can be distorted by companies who may pay up front so I am prepared to wait for six monthly updates as long as they make positive statements about future cash flow, which they did with the 2015 results.

Depending on which website you look at the PE is around 31, which is high for a company which is growing slowly and whose revenue growth has an anchor in the form of the diminishing revenues from the legacy business. I think the recent RNS supports the share price at the current price, rather than giving reason for it to move higher.

The interesting comment was that Gresham is becoming the "go to" solution for certain types of business which I think is a very bold statement. I have said before from my own IT sales experience that it can be difficult for new suppliers to break into accounts where there are incumbent suppliers. If their product is that good that they are indeed the go to solution, that suggests that it is becoming easier to win new customers and maybe we can get some faster growth.