Atlantic Global Share Discussion Threads

[masurenguy] 17/1/2007 15:43

Any idea when they might issue a year end trading update ?

[explorer88] 17/1/2007 14:22

The first (Atlantic Global) PPM masterclass, scheduled for January 30th, is now fully booked.

[masurenguy] 16/1/2007 20:38

Cheers - lets hope that ATL come out with a good update this month !

I'll be interested to see whether ADA is taken out with a 50p+ offer. Otherwise it could take a couple of years to develop successfully in its own right.

No view on Orca. IPTV is an interesting area but I don't know how Orca compares with its competitors. I rarely invest in blue skies or companies that are still quite a long way from attaining profitability (especially with technology or innovative products) since I have been burned in these scenarios in the past.

[explorer88] 16/1/2007 19:53

Welcome on board M

o/t nice rise in ADA today

o/t did you have any thoughts on ORCA?

[masurenguy] 16/1/2007 16:49

Cheers explorer88. I have taken a small opening position at 17p this afternoon (interestingly it has not shown up at all in todays Trades) via my broker going direct to the market.

Will monitor and look to add as and when some positive developments materialize.

[explorer88] 16/1/2007 11:52

M

Yes, you're right - it is fairly illiquid. That's why it's important to build up a position ahead of newsflow.

One reason why there is a large spread at the moment (it is usually less than this) and such a low NMS (normally more than this) is that ATL was tipped as techinvest's nap of the year last weekend (hence the rise).

This is very much a share to buy and tuck away for several years. By the time we come to sell, Eugene Blaine may have reduced his shareholding and the stock may be more liquid.

[masurenguy] 16/1/2007 10:03

Thanks explorer88.

This does look interesting but:

1. It seems to be a fairly illiquid share with an NMS of just 500 ! You cannot deal with a larger volume than that online and therefore the broker has to go directly to the market.

2. It also has an extremely wide spread, 14.5 - 17.5. This is also indicative of poor liquidity.

This could make buying and selling more difficult in the future.

[explorer88] 14/1/2007 16:04

M

Yes, your sums are correct.

I'm not expecting a large increase in S&M - ATL have learnt their lessons there. A small increase in R&D perhaps, but not great

As your sums indicate, ATL will make profit of £500k on about £3.1m-£3.2m of turnover (which was precisely what analysts forecast for FY06 twelve months ago)

So, yes i am being conservative on my profit figure. One reason for this is that i don't know how quickly ATL will develop channel / partner / consultant sales with lower margins.

We may get a trading update in the next couple of weeks (three of the last four years have yielded updates in mid January-early February), and the company may re-instate the dividend. I'm not expecting a reduction in cash over the last 7 months.

[masurenguy] 13/1/2007 16:54

Thanks for your response explorer88. I've been looking at their historical numbers and I have a problem getting my head around some of their numbers.

If we look at their 2006 Interims, they are reporting a Cost of Sales of £717K and consequently a Gross Profit of £216K. Now I assume that cost of sales includes their Sales & Marketing costs plus R & D, with all other costs being grouped under Admin and Establishment. In the financial review the Chairman quotes S & M as £561k and R & D as £184k which totals £745k. This is higher than the £717k COS in the accounts. Aside from this, the quoted GP of £216k was therefore only 23%. Whilst this is better than the 16/17% GP that was achieved last year it still remains low in comparison with the achieved GP of just under 40% in 2004.

With overheads of circa £950k (2 x interim £472k) the break even sales threshhold for 2006 would be circa £2.4m after interest income is taken into account. On this basis their projected year end for 2006 would look as follows:
Sales: 2200
COS:1434
GP:766
A & E:950
Sub:(184)
Int Inc:50
Pretax:(134)

NB: No tax credits have been factored into this BoaE calculation.

This does not seem right somehow especially since you were projecting pretax profits of £500k on sales of £3.6m in 2007. I must be misunderstanding something somewhere ! If we were to assume that S & M + R & D for 2007 was to be say 10% ahead of this year then these figures would come in at circa £2,650 (1600 + 1050) so sales of £3,600 should produce a pretax of circa £950k. For sales of £3600k to yield a pretax of £500k then COS + AE would have to come in at around £3100k, which would be a 30% increase over 2006 and raises the spectre of a rerun of 2005, if such an increase in expenditure is sanctioned and then the sales fall short of target again.

Are you able to explain the basis of your calculation and also to substantiate your £500k pretax projection on sales of £3.6m in 2007. Can you provide a brief summary of a projected P & L to support this profit projection.

In principle the company appears to have some real future potential with its software products. However I don't yet see how this would be translated into your profit projections based upon an extrapolation of their most recent interims.

[explorer88] 12/1/2007 20:59

M

Good question!

You're right that they were too far ahead of the market in 2005 and have had to educate companies about the benefits of PPM. Things are now changing as the companies that have pioneered the use of PPM solutions are delivering improved performance and sustainable competitive advantage.

Some Answers...

1. The significant growth phase in the PPM market is only just beginning (two of ATL's main competitors were bought out last year at 4.5 and 5 times revenue in anticipation of this phase of growth in this software subsector)

2. Gartner research has established ATL as the only UK company,and one of only two European companies, in their Magic Quadrant for PPM.

3. Before investing in a business i like to get really close. In the case of ATL for example, i was the only (potential) investor who attended the company's annual user event. This enabled me to meet existing clients like Virgin (Jim Robinson), Norwich Union etc. - to talk about their initial installations of CV and, most importantly, to find out how quickly they were planning to roll out CV through their businesses. In addition, i was able to talk to several companies (e.g. Applied Materials) who were planning to buy CV. There were ten prospective new clients at the event.

4. Whilst it has not been reported, a little while ago ATL split their research team into two, with one team focussing on fine tuning the existing CV and the second team developing a new CV with totally new IP. This will launch later this year and forms part of the basis for my growth forecasts for FY08 and FY09

5. Eugene Blaine's strengths are that he is a good people person / excellent software visionary. I particularly like his views on working in partnership with clients - the results can already be seen by long term client relationships with companies who are now set to roll out CV across their different business divisions. EB's weakness is that he's not a sales and marketing guy - he lacks that certain killer instinct / drive - he's a bit too conservative - which is where Steve Allen comes in...

6. Had lunch with Steve Allen several months ago (check out his biog. on the ATL site) - he has the experience to drive the sales and profit growth i'm forecasting. He has been incentivised to do this with 500,000 options at 19p.

Does that answer your question? (i realise that the answers are somewhat subjective, but at the end of the day - after you've met the management, crunched the numbers, met the clients and prospective clients, looked at the product, and researched the market ... it often just comes down to gut instinct!)

[masurenguy] 12/1/2007 18:51

Thanks for your response explorer88.

I've looked at the old thread and I've also looked at their website. Thanks also for establishing your own position as a recent investor who is not hyping the company in a desperate attempt to try and recover existing paper losses.

My main question remains "I'm expecting average annual revenue growth of about 50% per annum for each of the next three years as CV is rolled out to existing and new ".
Your post #1188, dated 29/12, old thread.

They expected to gain traction for a major lift off in sales and profit during 2005 and it didn't happen. So what is different about 2007 ? What is the rationale to support your ambitious forecast ?

[explorer88] 12/1/2007 15:53

M

"if this company could get its act together and rapidly expand future sales, with only an incremental increase in expenses, then profits could rise and there could be the potential for the share price to return to its previous levels (which would be 2.7 times the current sp) and maybe go even higher"

...yes, that's what i believe will happen over the next 12 months or so.

[explorer88] 12/1/2007 15:22

Hello M

Welcome to the ATL BB

Good questions!

Answers...

Whilst i've been tracking this business for five years, i only invested for the first time over the last 3 months, when the share price reach 13p / 13.5p - after i attended their annual user group event (see previous posts e.g. post 1170 on previous thread)

To correct you on one point - i did not say that i'm the largest private shareholder...just one of the largest private shareholders (you'll find a breakdown of shareholdings by number and volume on the ATL website)

To answer your other questions - check out posts 1170, 1172, 1175, 1178, 1179 etc. on previous thread.

If you need any further info., let me know

[masurenguy] 12/1/2007 15:00

explorer88 - you are obviously 'championing' this share and you have already disclosed the fact that you believe that you are the largest private shareholder in the company. Since the share price has come down from the low 40's two years ago to the mid teens today, are you not therefore sitting on a substantial paper loss and don't you have plenty of incentive to hype the potential in order to try and recover these losses ? This is not an allegation, just an inevitable and obvious question when one first looks at the facts, so please don't take offence.

I've just taken a quick look at their history. 2004 was a good year and they then went to town with their forward expenditure to ramp up sales in 2005, which never happened, and they went from a £200k profit to circa a £500k loss in 12 months. Last Septembers interims suggest that they will get back to break even in full year 2006, largely from cost cutting since sales would appear to be only marginally ahead of 2005.

I can see that they have an impressive portfolio of clients but they already had that in 2004 and that did not provide them with their expected springboard in 2005. So what will be the catalyst for a quadrupling of sales over the next 3 years, which you have forecasted in a prior post ?

At 16p the company has a market cap of £3.7m. With net cash of £1.9m at the end of June (has this decreased in the subsequent 7 months ?) that gives an EV of £1.8m for a company that is around break even with flat sales for the past 3 years. Frankly that does not make it particularly cheap on current performance !

However if this company could get its act together and rapidly expand future sales, with only an incremental increase in expenses, then profits could rise and there could be the potential for the share price to return to its previous levels (which would be 2.7 times the current sp) and maybe go even higher.

What should provide a prospective investor with the confidence that there is a strong chance that they will deliver in the future and finally make this happen ?

[madasafishman] 08/1/2007 22:43

exp88
yeah good rise
wish i had bought more over christmas now
never mind
will see how my other holdings pan out
really need srf to be bought out to take
pressure off me will add more then

[explorer88] 08/1/2007 20:26

mad - nice rise today.

[explorer88] 08/1/2007 16:23

50,000 buy at 16p today. T trade

(For those unfamiliar with T trades ...a T trade is a protected transaction. A protected transaction occurs when a large order is going through the market. The buyer (or seller) may wish to keep the order anonymous from the rest of the market as the size of the order could greatly alter the price of the stock. With a protected transaction the dealer will put the trade through in small quantities rather than knock the whole order out in one hit. The entire transaction is reported once the deal is completed. The LSE is notified at the start and at the end of the transaction, however, the market as a whole isn't told until the end, thus the order is protected.)

[explorer88] 08/1/2007 09:08

sandback - i made a very small top up (10,000 at 14.75) first thing this morning (tried to buy more, but there weren't any available).

I think you'll find there has been quite a bit of buying this morning and there will be a lot more buying when the mm's sort themselves out and are able to make some shares available to purchase...

I also think that you'll be pleasantly surprised about the value of your ATL shares if you hold them for another three years, during which ATL will at last start to deliver substantial revenue growth. (My three year share price target is 120-140p, based on FY09 revenue of around £8m and profit of £2m+)

[sandbank] 08/1/2007 08:56

EXPLORER88: Like you, I have been a long-term watcher - and rather longer-term investor in ATL. I've lost thousands on this share and seen many false-dawns. I cannot believe that this morning's single purchase of a mere 2500 shares is sufficient to account for the percentage rise today.

[madasafishman] 08/1/2007 07:59

exp88
as you say trading statement should be soon
hopefully will start moving up today :-)

[explorer88] 08/1/2007 07:37

I'm expecting share price to rise to the 19p-24p range if there is a FY06 trading statement shortly.

Last year ATL issued their trading update in the third week of January.

My three year share price target remains 120p-140p (see earlier posts)

[explorer88] 06/1/2007 21:17

ATLANTIC GLOBAL COMPETITION

To start 2007 with a little fun ...

... i'm so confident that ATL's share price will rise at least five fold over the next three years that if it doesn't i'll buy a bottle of champagne for each of the first 12 new investors in ATL who post that they'd like to take part in the competition.

Madasafishman, a new investor in ATL, is the first person to enter the competition, and has offered to buy me TWO bottles of champagne if ATL's share price DOES rise fivefold in the next three years.

So, if ATL's share price doesn't increase to at least 67.5p by end 2009 i'll buy each competition entrant a bottle of champagne; and if it does increase at least five fold, each competition entrant buys me two bottles of champagne ...

...either way, we could all meet up and drink lots of champagne ...

Who would like to be part of the competition ...? (...KatyLied, JohnRoger, Shiny...?)

[explorer88] 05/1/2007 12:55

shiny - yes quite a few reasons. (I should declare that i am a recent investor in the company, having tracked it for five years. I am now one of the largest private shareholders in the business)

market cap. of £3m with £2m cash = EV of just £1m.

has nearly £1m of recurring revenues from long term clients

Only UK software company in Gartner's Magic Quadrant for PPM, and one of only two European companies

Market for PPM is likely to grow significantly over the next three years and ATL is well placed to benefit from this growth

Estimate the following turnover:

FY06 £2.2m
FY07 £3.6m (roll out of CV at existing and new clients; March launch of PPM book; launch of totally new CV later in the year)
FY08 £5m-£5.5m
FY09 around £8m

Leading to profit next year of about £0.5m, rising to £2m+ for FY09 and fair value market cap of about £24m based on forecasts for FY09 (i.e. about 8 times current market cap.)

Plus the obvious tax benefits (Business Asset Taper Relief is available to investors when disposing of qualifying AIM shares like ATL which effectively reduces the rate of capital gains tax to only 20% for AIM investments held for a period of one year, and to only 10% for AIM investments held for a period of two or more years.

Furthermore, unlimited exemption from Inheritance Tax is available to private individuals provided that the investor has held shares in a qualifying company such as ATL for at least two years. After the two year holding period, the shares should be retained throughout life by the investor and will no longer be considered part of the investor's estate for IHT purposes. This represents an inheritance tax saving of 40% under current legislation).

The bottom line is that i expect ATL's share price to rise at least 8 fold over the next three years (i.e. to at least 110p)

[shiny1000] 05/1/2007 12:12

why ATL ??? any good reason???

[explorer88] 05/1/2007 12:07

thanks shiny, don't forget to add that explorer88 recommends Atlantic Global (ATL) as his nap for 2007 ! ...:-)