Riverfort Global Opportu... Share Discussion Threads

[haystack] 18/5/2005 17:10

And back down again today. That's more like it. It was over-valued anyway.

[badday] 18/5/2005 17:02

The other part of citywire report: I think it was on free section. At least, i didn't have to login.

2ergo looks like a sane investment

Published: 07:00 Sunday 15 May 2005
By Joanne Wallen, Associate Editor

Five years ago people thought 2ergo was mad, but the company has doubled revenues every year since then, is profitable and its technology is bringing some amazing applications to schools, estate agents and McDonalds.

The company provides a technology platform that enables customers to access data from an organisation's database from any type of device, across any network, and have it delivered to that device automatically in the right format.

For example, the company has an estate agent customer using the system to enable a consumer to see a For Sale sign on a property, dial the telephone number on the board from a mobile phone or send a text message asking for details of the property. These details can then be read out to the caller, who, if still interested, gets transferred to an operator. Details of the property including photographs can then be sent to the caller's phone. The agent can then log on via the internet to access the caller details and contact them about arranging a property viewing.

2ergo joint managing director Barry Sharples told Citywire that the platform, known as Multiserve, caters for every form of communication including mobile, fixed line, wireless internet, voice and text. Most competitors, he reckons, offer one bit of the jigsaw, say text messaging applications, where 2ergo has gone big and caters for every possible form of communication. 'Five years ago, people thought we were mad', said Sharples. However today, he reckons it is this breadth of cover that provides the company's main differentiation.

The company provides consultancy to enable an organisation to design its applications and it will also build the application if required. It then provides access to Multiserve as a service, hosted in its own data centres, and receives a fee per transaction.

Another customer is fast food giant McDonalds, which uses the system for internal communications. The company uses a lot of staff on shift work or part time. To get a message to all staff, it now has a system using 2ergo whereby someone can use an ordinary phone, record a message to be broadcast, and then everyone on the list receives the message in the most appropriate way for the individual, either by text message, voice or email.

The applications for the system are so diverse, that they are probably limited only by the imagination. However, judging by interim results out earlier this week, there are clearly plenty of organisations out there that have already been able to dream up applications for the technology.

The company's turnover for the six months to 28 February grew by 100% to £8.9 million. Operating profit was up 137% to £518,000 and pr-tax profits rose 155% to £540,000. Earnings per share were up 155% to 1.53p. The company is generating cash and had £4.3 million of cash at the end of February.

2ergo's three data centres currently have the capacity to handle up to 100 million transactions a month, and joint managing director Neale Graham reckons it is 'nowhere near' that capacity, giving it plenty of headroom with the existing resources. 2ergo is also able to sell individual modules to a customer – text, or email for example – so it has plenty of opportunity to get people in and then sell them further modules.

So far, clients have been extremely loyal, with more than 96% renewal rates. The company has also recently launched in the US, and has started to see the first revenues from there.

As well as organic growth, the company has also identified a number of potential acquisitions in both Europe and the US.

House broker Numis said the results had again beaten expectations, and the outlook for the rest of the year 'looks extremely positive with significant earnings potential likely. The broker upgraded its forecasts, lifting earnings per share by 8% this year and 4% next year. It said 'Conservatively, our price target [188p] remains unchanged for now implying 50% upside, leaving the shares as a buy'.

Shares closed unchanged on Friday at 126.5p, valuing the business at £35.7 million

[pomp circumstance] 18/5/2005 15:11

2ergo will be exhibiting at the following events:

World Telemedia
20th - 22nd April 2005
Corinthia Towers Hotel
Prague


Internet World
14th - 16th June 2005
Earls Court Exhibition Centre
London

[smelleroo] 17/5/2005 13:44

a constant thread of news (Acq,Multiserve Platform development) will help the company through the stormy times ahead as well as persuade institutions to increase their holdings!

[pomp circumstance] 17/5/2005 12:23

I understand there is a fair amount of news in the pipeline too!!

[the prophet] 17/5/2005 12:21

-PC, thanks for posting that, very pleasant reading it makes
-particulary liked this bit:

'The outlook for the rest of the year looks extremely positive with significant earnings potential likely as new opportunities arise, as well as corporate activity, which is also on the agenda. We are upgrading our forecasts again,...'

-sounds like the boys could have a few things planned....
-given that the start of the new financial year is only just over three months away, RGO are very close to substantial and increasing profitability.
-look forward to a few more 'upgrade' notes to come this year from Numis.

[pomp circumstance] 17/5/2005 11:54

Re the latest Numis update research!

11 May 2005
2 ergo* (RGO.L) Buy 123p

Interim Results Target Price: 188p

Interim results delivered by 2 ergo once again exceeded expectations across the
board highlighting the growing consistency in its operations. The outlook for the
rest of the year looks extremely positive with significant earnings potential likely as
new opportunities arise, as well as corporate activity, which is also on the
agenda. We are upgrading our forecasts again, which enhances EPS by 8% in
2005 and 4% in 2006 as we expect the scalable benefits of its model to come
through after a period of significant investment. Conservatively, our price target
remains unchanged for now implying 50% upside, leaving the shares as a BUY.

Interim Results. 2 ergo has delivered another solid set of
results, with adjusted PBT (pre amortisation) coming in at
£0.7m vs. our initial forecast of £0.5m. This is the fifth
consecutive year 2 ergo has delivered triple-digit growth in
revenues and profits reflected by strong transactional
activity across the Multiserve Platform (+82% y-o-y).
Operating expenses were lower than expected following a
period of significant investment leaving plenty of capacity
for additional growth. As a consequence of this, we would
expect to see this operational gearing effect have a
continued dramatic impact on the bottom line during the
course of the year.

Growth Drivers. A key part of the investment case is that
significant growth could come in a number of different
areas. Firstly, on an organic basis further development of
the Multiserve Platform should enhance the performance
and scalability of its model allowing 2 ergo to continue to
make the significant progress made to date. At the same
time this should enhance loyalty and visibility of revenues
with 96% of its clients already renewing and expanding its
services with the group. Significant growth could also
come from m-commerce opportunities, whilst corporate
activity is now very much on the agenda, which could of
course lead to significant EPS enhancement.

US Operations. Expansion into the US market remains
another lucrative growth opportunity for the group, and has
so far exceeded internal expectations. Not only has
acceptance levels of content grown as anticipated, but the
company has also started to receive interest from US
parties about its wider services offered in the UK.
Forecasts. On the back of these strong results, we have
increased our forecasts in 2005 from an adjusted PBT of
£1.3m to £1.5m increasing EPS by 8% to 4.1p factoring in
a slightly higher tax charge of 22% (from 20%). The key
driver behind this is lower operating expenses given the
significant investment in headcount that has already taken
place. For 2006 we have assumed that costs continue to
fall against rising revenues, which produces a more
conservative 4% EPS upgrade. Clearly these forecasts
could prove to be conservative if additional contracts or
acquisitions are made during the year.

Valuation. We are leaving our target price unchanged for
now, which implies a 2006 EV/Revenue multiple of 1.8x
and a P/E of 31.8x with EPS growth of 45%. At current
levels this implies 50% upside leaving the shares clearly in
BUY territory.


Year.to.August........................Previous.Revised..Previous..Revised..
......................................Aug.05F..Aug.05F..Aug.06F...Aug.06F..
Market.Cap..........£33.3m...PBT(£m)..£1.3m....£1.5m.....£2.1m....£2.3m..
Net.Assets.(08/05F)..£4.8m...EPS.(p)...3.8p.....4.1p......5.7p.....5.9p..
Net.Cash.(08/05F)....£3.0m...DPS.(p)...0.0p.....0.0p......0.0p.....0.0p..
Gearing..............N/A.....PE.(x)...37.1x....30.8x.....24.7x....21.2x...

[the prophet] 17/5/2005 09:36

-thats for posting that, Smelleroo

-interesting to note that Numis appear to have upped their profit forecasts for RGO after the interims....
-REFS is showing pre-tax of £1.3m for this financial year, with £2.1m pencilled in for the financial year commencing this September, forecast by Numis
-Sharescope is now showing £1.5m and £2.3m respectively for one analyst, which must be house brokers Numis.

-I think we are likely to get several profit forecast increases as the business model continues to build out momentum.
-They look a good buy at current levels, imo.Suprised they've come back so far, but then most small cap techs have been wacked back severely over the last couple of months.

[smelleroo] 17/5/2005 09:25

City wire commented on the ergo over the weekend. I have posted the concluding verdict below. It is bullish long-term but implies short-term will be effected by the imminent decline in aim.

CITYWIRE VERDICT
The company has spent several years developing this technology and is now beginning to see the real operational gearing effect. It is profitable, cash generative and in an area of technology convergence of IT and telecoms that is about to get very hot.

Sharples and Graham are both industry veterans with their head screwed tightly in place. They were bombarded by venture capitalists in 1999/2000, wanting them to raise money and float the business, but they resisted the lure of the dotcom, and have no doubt come out stronger for it.

There are no guarantees about how big this could get, but so far the signs are very promising. Its technology and therefore it is high risk. And the AIM market looks like it is going through a bit of a downturn at this time. However with that in mind, risk-takers might want to build a small stake for the medium term.

[haystack] 16/5/2005 12:53

Another intelligent analysis by powwow!

[powwow] 16/5/2005 12:51

cannot hear you



Haystack - 16 May'05 - 12:49 - 389 of 389 (Filtered)


suck eggs.

[haystack] 16/5/2005 12:49

powow is just one alias he uses to ramp stock. He doesn't like it when I post anything negative about his pets. He likes it even less whn I am right and the stocks go down as this one will.

[pomp circumstance] 16/5/2005 12:28

go ahead, im off to the sun bed to top up my 2 week cyprus tan!!

[2lb] 16/5/2005 12:19

Pow - do you want to "educate" the RGO board about Haystack or shall I do it ?

[pomp circumstance] 16/5/2005 12:16

i think your confusing the shareprice with the company!

The company is far from im terminal decline, they are doing very well thank you very much! They can do nothing about how the market values their success, but sooner or later someone will come along and pay considerably more that 130p a share for some or all or the company!

[ltinvestor] 16/5/2005 12:15

Haystack
this business is MOST certainly not in decline withrevenues and profits growing rapidly.If you are thinking of shorting then I wish you luck!!

[haystack] 16/5/2005 12:05

Another telecom in terminal decline.

[haystack] 15/5/2005 18:24

Nice downtrend!

[powwow] 15/5/2005 14:47

pomp... yeah I think your right. Think I need to look at their accounts, see their cost based and take it from there.. They do look like a good buy at these levels so will take a punt, just not sure when.

[powwow] 12/5/2005 12:45

sharebuy back, good results, reckon this will be in for a good run over the next 8 months... any views on this?