Red Squared Share Discussion Threads

[talltalk] 03/10/2007 16:47

egoi - sorry for delay responding. No I did not read it all. Only about one paragraph gave any reason for the sale .

Will look some more at Plus:FID . However this type of business is not always easy to understand.

[the analyst] 28/9/2007 12:24

Well that's it then. I'd have been pretty happy with 12p, but I guess I'll still make a small profit from the trade, so can't complain too much.

[topvest] 28/9/2007 12:20

Yes, recommended offer.

[the analyst] 28/9/2007 11:53

Have the board recommended the offer to shareholders? If not, then that's something to cling on to in that they may be hoping for a better offer.

[topvest] 28/9/2007 11:32

Given that the have over 50% on an irrevocable basis I can't see any other company entering the fray, but you never know. If a higher offer came in then the offer would lapse and they are back in play. Not totally over. ANS don't seem to have accepted yet!

[egoi] 28/9/2007 09:57

Did you read it all talltalk? -:) Given they have 54% acceptances looks a done deal.

I did mention Plus:FID as similar in valuation. Their interims today make spectacular reading:

Should have seen it coming given suspension of its only direct rival and increase in business, so was expecting improvement but far better than I thought.
Turnover increased by 37.17% to GBP 815,591 (2006 GBP 594,582) with a 294.48%
increase in profit to GBP 189,970 (2006 GBP 48,156)!!

market cap 2.1 million includes a property not revalued for seven years, cash and no debt.

Similarly illiquid, but perhaps a place to consider parking your RED gains?

[talltalk] 27/9/2007 16:42

Offer document - all 115 pages crashed through the letterbox today.

topvest - agree with your last point but worth waiting a little while before accepting .

tt

[topvest] 25/9/2007 08:19

That was quick. Can't help thinking this is all a bit of a stitch-up at this price. Oh well, a profit is a profit I suppose however small!
No possibility of a competing bid as they have over 50%.

[antonio palocci] 25/9/2007 07:09

looks like they sold out.

[topvest] 24/9/2007 21:33

Fletcher added that ANS "may or may not" make a full bid for the firm in the future.

I don't think ANS is going to be happy with 10p. Will they enter the fray?

[lgpixels] 24/9/2007 16:00

New from "Channel Web"......................

Xploite set for Red Squared move

VAR Xploite is expected to unveil a bid for IBM managed services partner Red Squared this week as it ploughs on with its shopping spree.

The reseller, which is headed by industry veteran Ian Smith, earlier this year declared plans to build a £100m storage and managed service outfit (CRN, 19 February) and has since snapped up resellers Posetiv and Anix.

CRN understands that Alternative Investment Market (AIM)-listed Red Squared will be Xploite's next conquest and that an agreement is close to being signed.

The VAR, which is backed by HSBC, is also close to announcing two further acquisitions, both of which are believed to be in the managed services sector.

Scott Fletcher, chief executive of reseller ANS, which recently took a four per cent stake in Red Squared (CRN Online 3 August), said: "I am not aware of anything that is happening [with Xploite] at this stage."

Fletcher added that ANS "may or may not" make a full bid for the firm in the future.

Jason Rabbetts, managing director of VAR Union Solutions, said: "Buying Red Squared would make sense. Ian seems to be developing a strategy led by managed services and built on a foundation of systems integration, with IBM at the core."

Red Squared posted a £64,000 pre-tax profit on turnover of £1.62m for the six months to March 31. The VAR said last month it expected full-year results to come in ahead of expectations.

Xploite and Red Squared refused to comment as CRN went to press.

[egoi] 21/9/2007 09:36

Suspect ANS have been caught on the hop here or we'd have heard from them by now.

Bid looks opportunistic and slightly on the low side to me, think it depends on ANS joining the fray. Can't see Fidelity joining in though they are rated even cheaper than RED when cash etc discounted - they could receive a bid themselves.

This sector beginning to look interesting. TTS is another very cheap stock trading just above cash, but with a property on its books too and no debt, though it is small loss making.

All these (TTS FID RED ANS) have different product areas, but all look cheap in a similar segment. TCC went up 75% after a bid recently.

[topvest] 20/9/2007 21:36

Well, we will have to see whether this flushes out other bidders. 10p too low, but it might be all we get~!

[lgpixels] 20/9/2007 16:00

Just having a look over the interim results for Red Squared and the business looks in good shape. The new contracts means there is already significant additional revenues contracted for next year.

June Interim Results
* Notably the Cegedim contract won during the period did not contribute to this revenue line during the period as the hosting agreement only started effective 1 April 2007

* With a strong pipeline of potential new business from both existing and new customers we are optimistic of a successful outcome for the current financial year

July Trading Statement
* The Board is pleased to announce that the Company has received orders valued at #1.2m under a hardware and software supply agreement with an existing customer. The orders include the supply of hardware, software, consultancy and implementation services.

As a result the Board expects the results for the year to be ahead of expectations.

[delaton] 20/9/2007 15:18

Three years ago the shares fell from 18/19p I'd say initial investors would be disappointed with 10p. £5m seems reasonable on £400k profit (8%) with the expectation of better returns.

[lgpixels] 20/9/2007 14:04

Possible valuation for Red Squared

Profits for 2008 are forecast in the region of £400,000 (although this could be revised upwards after the resutls are issued).

Companies in the sector will normally be on a forward multiple of around 12, so that would give an enterprise value of £4,800,000.

If you add in the cash, which could be around £1,200.000 you could come to a value of £5,000,0000 or 18p per share.

Any thoughts...................

[topvest] 20/9/2007 08:53

I'd forgotten about the cash. That means they are selling the business for less than £2m. That's not enough!

[lgpixels] 20/9/2007 08:35

"Red Squared sees FY results ahead of expectations", would be interested to know how well the business is currently doing. We are at the end of the financial year so managment could put out the financial results very soon. I would say this is the first move in a takeover sitution and would expect other parties to be interested in the business, possibly includng Nexus Managment, ANS Group etc.

Red Squared has around £1 million cash on the balance sheet and is expecting signficant profit growth over the coming years. Profits could be around £200k this year amd increase to over £500k next year.

I think fair value of these shares is 16-20p!

Will await further developments with interest.

[topvest] 19/9/2007 21:49

LOL - you may be right!
Management's position may well have changed - i.e. they've got the business to break-even after a long hard slog and they are offered a nice pay-off or a better job and their share of the £2.8m. I'm sure it's not what any of them had in mind, but things have been slower than original expectation on float and so maybe this is a way of getting out at an acceptable, albeit low price. Not impressed though as I rate the management team and I thought they were going to stick with it for us!

[antonio palocci] 19/9/2007 20:57

It was always going to happen but 10p seems too low.
The fact that the management seem happy and the bidder is called xploit speaks volumes.
I imagine the management want a nice payday and a break. They never really looked likely to create any shareholder value.

[topvest] 19/9/2007 19:53

Yes, seems a tad low. Not a great return on my 7-7.75p purchase cost. Disappointing really, as I was hoping for so much more after holding for 2 years already. Be interesting to see if ANS enter the fray!

[smarkmmm] 19/9/2007 19:45

Can't see ANS Group accepting 10p - tho' might spur them to make a counter-bid.

At 10p where's the bid premium?