Mediasurface Share Discussion Threads

[bloodhound] 02/5/2007 15:55

Big volumes today......

[bloodhound] 02/5/2007 15:10

I know I'm probably sounding like a broken record on this point, but the Chairman's statement where he states:

"Morello continues to attract significant interest and major new sale opportunities exist for the second half of the financial year."

Is of great significance to me. Obviously he has to be very mindful of what he says. Yump, I'd be interested on your take on this comment and how it could impact on the full year figures when MSR deliver (no if's about it for me).

[yump] 02/5/2007 11:12

I've got a fair bit riding on what I think (from the evidence) is a business where the sales and marketing expense is more at the start, than a continuing cost.

Because a lot of sales take place through partners, just like with Sage I think its realistic to expect a fair sized drop off in those expenses. If revenues continue rising at this rate (or even accelerating), the 2p forecast for 2008 seems well within reach.

With any luck it won't spike at all this year but will all come to fruition over the next 1-2 years, which would fit with the cgt taper timing nicely.

[donaferentes] 02/5/2007 10:58

I see from the CEO's statement that, excluding the 400k spend on Pepperio launch, underlying PBT would have been 750k against 350k last time - 114% increase YOY, not a bad improvement on turnover up 37% - for an operating margin (for H107) of 12% and an ROCE (for H206/H107) of about 60% (up from 8.3% and 43.4% for FY2006 respectively).

On the same basis EPS would be about 1.49p for a PE of 16 and a PEG of .33.

All fantasy, because they did spend the £400k on promoting Pepperio and we cannot predict how fast this one off cost will be amortised over future revenues. But gives an idea of how Morello is doing. Hopefully, we'll see the fruits starting to bear on Pepperio in the finals and beyond.

[yump] 02/5/2007 10:27

Some fair old volumes knocking about yesterday and today compared to 'normal'.
What it means I have no idea, but nice to have the activity.

[anupama] 01/5/2007 12:49

Good set of results - more than happy to hold, possibly even buy on the figures and chairman's statement. The key for me is revenue (as yump has, imv, rightly pointed out) and the outlook for sales is looking good - that's what I've been hoping for, so for now the results are good enough for me.

[bloodhound] 01/5/2007 09:57

Guys, you can trend analyse all you like, but don't overlook what the top man is trying to tell us:

"Morello continues to attract significant interest and major new sale opportunities exist for the second half of the financial year."

[wjccghcc] 01/5/2007 09:44

Thanks yump. Be interested to see that.

[yump] 01/5/2007 09:41

If I get time in the next few days, will try to post some trends to see where they get to at year end.

[yump] 01/5/2007 09:40

WJCCGHCC
Yes, there's bound to be a few bargains around in the summer lull, if the money needs to be spread around a bit. 12p was a good price to be in at !

Quite surprised this has headed up this morning - may well be people looking at the headline revenue figures. I think the clarity helps - you can see where the 0.4mln has gone, you can see 'what we would have won' and its gone in the right place for the future, plus there's evidence that Pepperio is selling well at this early stage.

fwiw I think that 1.35p forecast had already been moved down - USA would have been in the plans for some time.

They will of course need sales to grow well, but the evidence all seems to be there. Can't really expect more than that.

[yump] 01/5/2007 09:24

Bloodhound
Thanks - actually the cr's could have taken half the day to take out as the lines always end up merging suddenly - perhaps not the most sensible request I've made !

[bloodhound] 01/5/2007 08:59

I've removed the results post I made earlier and replaced them with this link (I'm far to busy to take out carriage returns as requested).



A busy day for me so I'll leave you with Jackson's statement comment:

"Morello continues to attract significant interest and major new sale opportunities exist for the second half of the financial year."

[wjccghcc] 01/5/2007 08:49

Fair point yump, but they imply they're pushing into the USA with Pepperio and that won't be cheap. Also, those Morello contracts are large and lumpy, and as such, relatively unpredictable - as they're enhanced by the smaller Pepperio repeat business, quality of earnings will rise which would make me more comfortable.

I don't expect a warning, just a gentle massaging down of forecasts towards say 1.2p which puts them on a PE of about 22 for this year, a fair price IMHO. On a normalised tax basis, that's equivalent to about 30, though tax won't kick in for a while yet so perhaps that's unfair.

Add in the fact that we're entering the summer doldrums and I've held these since 12p, then I'm happy to take some profit and leave some for the next man.

Believe me, I'd be very happy to see them push on to 30p as I still have my other half.

[bloodhound] 01/5/2007 08:37

"However, not a lot going on now until year end I think."

Yump, how do you square your above comment with Jackson stating in the results: "Morello continues to attract significant interest and major new sale opportunities exist for the second half of the financial year."

It seems far more likely that there will be quite a lot going on in the second half to me.

[yump] 01/5/2007 08:29

WJCCGHCC

It depends entirely on what proportion of the 0.4mln is initial setup costs of the sales and marketing channels doesn't it ?

Forecasts have already been reduced from 1.5p down to 1.35p quite some time ago.
The brokers note posted earlier gave the reason as the set up costs for Pepperio

imo there's no reason for any further reductions as this reduction looks like it was expected - there was a bit of puzzling over it at the time.

I think the key thing is the underlying growth and also how much of the 0.4mln is likely to be recurring. Its not a complicated business - I wouldn't expect anywhere near the same expense in H2. Bear in mind that without the 0.4mln expense, eps for the first half would have come in at 1p. That's due to the very healthy growth in sales.

I think the forecast has pencilled in that 0.4mln for the first half and significantly less (say 0.2mln) for the second half for the Pepperio expenses to get the forecast of 1.35p, combined with increased sales at the same rate as at present.

The very good growth in sales will offset that expense more as we progress.

Might be 'sleepy' over the summer though - I guess other opportunities depend on how sleepy other share prices get.

It doesn't surprise me now that the forecast for 2008 is 2p. 1.35p still seems reasonable for this year. Its almost possible just to draw a graph to get it - the figures are all there to use. Extrapolate sales, expenses etc.

Got any target homes for your sold half ?

[wjccghcc] 01/5/2007 08:11

I've taken profits on half of mine at 23.5p. Morello goes from strength to strength but it's clear the investment in Pepperio will continue to impact profitability for a while yet. H1 profits were down vs H2 last year despite them being a non-seasonal business. Nothing wrong with that since they're investing for the future but I suspect FY forecasts will get revised down as well now.

Happy to hold the other half.

[bloodhound] 01/5/2007 07:38

So loking good then.......

"Prospects for the Company remain positive. Morello continues to attract significant interest and major new sale opportunities exist for the second half of the financial year. Pepperio, with a growing sales channel, is also expected to contribute further revenues in the second half. The Board remains committed to enhancing shareholder value and believe the Company is well placed to grow profitably.

Michael Jackson Chairman 1st May 2007"

[yump] 01/5/2007 07:35

>Bloodhound
Any chance of knocking some carriage returns out of the results post please ?

[yump] 01/5/2007 07:34

What's nice about MSR is that its relatively simple to see what's going on in the figures. The following part shows how profits are going to drop through in a big way imo, not yet but in second half and next year:

Group revenues for the first six months increased by 37% to #6.06 million (2006:
#4.43 million). The Group achieved a pre-tax profit of #0.40 million (2006:
#0.35 million).

During the period #0.4m was invested in Pepperio marketing and sales channel
development to establish a base from which the company can grow a robust and
recurring revenue stream, in the future this will complement our Morello product
revenues. Excluding the effect of planned investment in Pepperio, underlying
profits of the Morello business improved by #0.4m compared with the same period
a year ago.

If you take out the 0.4m invested in Pepperio setup, you get almost the same eps for the first half as MSR made in the whole year last year. Probably unrealistic to take the whole of the 0.4mln out, but gives a good idea of what to expect.

This is why Sage did so well. Once you're set up its not a huge expense year after year - you can watch sales revenues increasingly drop to the profit line.

However, not a lot going on now until year end I think.

[thepopeofchillitown] 30/4/2007 20:10

Hope it keeps this up.

[yump] 27/4/2007 09:12

Excitement building ? Well - sort of.
Will certainly be very interesting to see interims. Having seen that note that was posted earlier it does look as if Pepperio is the reason for the reduction to 1.35 eps forecast. Because of that I think we might get a middling set of interims where it won't be apparent what the full year is likely to give and it wouldn't surprise me if the price traded sideways until later in the year.

I guess it depends on whether that 1.35p was conservative and whether the Pepperio 'hit' is happening now, or is spread over the year.

When I say 'hit' it makes it seem like a warning, so must emphasise that the forecast is in fact for a 35% rise in eps. (For the benefit of anyone new looking !).

[thepopeofchillitown] 26/4/2007 12:54

Email from them today.

'Thanks for your email. We are just finalising the results now and hope to issue a statement in the next few days/week. We will of course then print up bound copies for our shareholders and mail them out to you (or your nominee broker). We will put details on our website as soon as they are available too.'

[thepopeofchillitown] 25/4/2007 13:36

Creeping up

[thepopeofchillitown] 21/4/2007 10:11

Nice to see some positive movement for once. Hopefully will continue next week in run up to interim results.