Chelford Share Discussion Threads

[wjccghcc] 20/9/2005 10:04

Fair enough CR, wasn't trying to slag off Chelford - have looked at them several times in the past but never quite convinced myself to buy. Would say that CGR also has market leading positions in its two wings - no.1 oracle implementer and no.1 IT rental company in the UK.

[cockneyrebel] 20/9/2005 10:04

thanks ynotna :-)

CR

[this_is_me] 20/9/2005 09:59

Bouncing back already.

[cockneyrebel] 20/9/2005 09:43

largeman - I agree - seems that on a lot of stocks the traders are there for a much better than expected statement to sell out on. When it doesn't materialise they sell out anyway imo.

Get the traders out of the way and wait for 'investors' to look at the results.

WJCC - difficult to compare like for like between two stocks which have some similarites. It may be visibility of earnings, it may be CHR's leading position in the sector, it may be how investors perceive management capabilities or past performance.

I just like CHR's two different wings to the business and the sector it is in.

3 brokers cover CHR, Strong buy, Hold and a Buy - that might be to do with it too.

CR

[ynotna] 20/9/2005 09:42

just out from Charles Stanley following results ......

Chelford has reported interim results in line with our expectations for the full year as the business continues its strong growth, with revenues up 16% to £6.5m, profit before tax up 40% to £0.7m and earnings per share up 4% to 7.85p per share. This growth was all organic and the increase in earnings per share has been achieved despite the introduction of a tax charge of 26% this year – eps growth on a normalised tax basis was 40%. Both the SSI and SAP divisions contributed to the growth and since the year end Chelford has added a further two divisions as a result of the recent acquisition of Agility Systems. We continue to see significant growth potential across the business and consider that Chelford remains undervalued compared to its peers despite outperforming them and having arguably greater organic growth potential. We retain our Strong Buy recommendation and 400p price target.

concluding with ...........

We reiterate our strong buy recommendation and twelve month target price of 400p. With its strong growth record, together with a combination of high recurring revenue in Chelford's SSI division and the good growth potential of its SAP division, driven by a strong competitive position, we consider Chelford should trade at a premium to the sector, rather than its current discount. Chelford is currently trading on 11.8x year to December 2006 projected earnings, compared with the sector average of 14.6x (source: Datastream).

[silverfern] 20/9/2005 09:27

great results shame about the market. This is a great footing for the company to build on and guess what they now it too. WHen any fall is over I shall buy more it's something of a no brainer - anyway I guess most of us are up n the year

[largeman] 20/9/2005 09:12

Thanks guys

Having been in this for a while I too expected it, just never understood why!!!Well I'm in for the long term. Like BernieBoy I'm holding for at least £4 and possibly more later!

[aspex] 20/9/2005 08:44

largeman,
What's new?
There have always been, those with higher expectations, those who are short termers but CHR is on a growth path which is now quite ateady it seems.
That is not enough for some and they will sell now, expecting to come back later. With the large spread, that is an extra hurdle to overcome.
For me it seems CHR management has mapped out a path which will offer secure long term growth and I do see some fall back but not nearly as much as after previous results.
The MMs have plenty of room to mark it down on quite small volumes however.

I see the price seems to be holding or better now

[largeman] 20/9/2005 08:31

"Continued growth" "progress" "aquisitions to increase profitability" All very positive stuff.

Why oh why then are folk selling and the price falling?

Its something I've never understood. Tesco's is the same - record profits for a 24 week period announced and the share falls!!!

I've never understood this shares stuff but got in to CHR at 1.52 so covered my outlay a while back and am now well in profit. I intend to hold and maybe top up. Any views, advice all welcome!

[wjccghcc] 20/9/2005 08:28

Ok, I'm being a bit mischievous here, but I was comparing Chelford's interims with Compel's finals this morning. If you strip out the cash, Chelford's enterprise value is 17.5mm vs 28mm for Compel.

Chelford turnover up 16% vs 25% for compel
Chelford Op profit up 37% vs 89% for compel
Chelford operating cashflow of 1.4mm (annualised) vs 10.6mm for compel.

Okay, that last one's a bit naughty since Compel have a higher capex bill. However, three quarters of their business is business and systems design/implementation including warehouse systems (which is why I was comparing them with CHR). In fact if you, compare just that part, Compelsove, with CHR and throw in their IT rentals business (the largest in the UK) for nothing, compelsolve has 5 times the annualised turnover of CHR.

CHR is on a rolling PE of 15.3 (taking the average of the 05/06 forecasts as y/e is Dec) vs Compel on a PE of 10.5, and that's ignoring the 20% of their mkt cap in cash. Compel's forecast growth rate is 43% vs 18% for CHR.

Clearly, I think compel is good value (and it's ISAble). Someone please convince me CHR is as well.

[aspex] 20/9/2005 07:38

30 June 30 June 31 Dec
2005 2004 2004
£'000 £'000 £'000
Profit before Taxation

Profit before Taxation under IFRS 702 501 1,008
Capitalisation of R & D (354) - -
Amortisation of Goodwill (366) (366) (726)
----------- ----------- -----------

Profit/ (Loss) before Taxation under UK (18) 135 282
GAAP =========== =========== ===========

They have amortised the usual 366k of goodwill and capitalised 354k of R & D which gives an overall book loss but this is expected if the company future is to be a solid one

[cockneyrebel] 20/9/2005 07:16

Very good results - pre-tax up 40% and sales up well too.

Tax kicks in this year so the headline eps growth is affected by that but great pre-tax growth and strong order book.

I see charles stanley now have their new forecast on HemScot with over 20p forecast for 2006 and a Strong Buy.

That seems cheap for this growth and the extra the acquisition should bring imo.

CR

[aspex] 20/9/2005 07:03

Chelford Group PLC
20 September 2005



FOR IMMEDIATE RELEASE 20 September 2005



Chelford Group plc


INTERIM RESULTS FOR THE 6 MONTHS TO 30 JUNE 2005


Chelford Group plc ('Chelford'), the IT supply chain software, SAP reseller/
services and RFID applications group, announces its unaudited results for the
six months to 30 June 2005.


Key points:

• Results show continued growth in turnover and profits.

• These results are reported under IFRS.

• Total turnover increased 16% to £6.5m (H1 2004: £5.6m).

• Profit before tax improved 40% to £702,000 (H1 2004: £501,000)

• Positive cash flow resulted in net cash at 30 June 2005 of £2.6m (31
December 2004: £2.1m; 30 June 2004: £1.7m).

• The SSI Division (supply chain software) achieved a 53% increase in
operating profit to £438,000 (H1 2004: £287,000).

• The SAP Division (value added reseller of SAP software) achieved a 15%
increase in operating profit to £221,000 (H1 2004: £193,000).

• Significant new contracts in the first half year included PDMS
Pharmaceuticals, George Adams, Victrex, Firth Rixson, JT Blakeman, Glisten
Confectionery, Kettle produce, Uniq, Supercook, Findel and Neopost.

• On 1 September 2005, Agility Systems was acquired for a maximum
consideration of up to £3.8m. Agility specialises in supply chain execution
management systems and RFID solutions.


On outlook, William Birkett, Chelford's Chairman, stated :

'The Board will continue to drive organic growth and to seek acquisition
opportunities which fit with the Group's strategy.


'Further good progress has been made in developing our order books during the
first half, with growth in order intake increasing by 48% compared to the prior
year period, across the Group. The increase in the order levels and the new
customer contracts won in the first half provides the Board with confidence for
the future prospects of the Group.'


About Chelford

Chelford Group plc is based in Basingstoke, Hampshire and its shares are quoted
on AIM (stock code: CHR). Chelford now has three principal operating divisions.
SSI is a developer and vendor of supply chain solutions based on its TROPOS
product suite which is sold mainly to mid-sized corporate customers. Chelford
SAP Solutions is a SAP solutions provider to the mid-market. Agility Systems is
a supplier of supply chain execution and RFID solutions to the consumer products
and transport and logistics markets.



For further information, please contact:

Trevor Lewis, Chief Executive today: 020-7367-8888
thereafter: 01256-685400

Steve Liebmann or Susan Scott, Bankside 020-7367-8883 or 07802-888159



CHAIRMAN'S STATEMENT

We are pleased to report our results for the six months to 30 June 2005
reflecting further progress for the Group. Both SSI (SSI Division) and Chelford
SAP Solutions (SAP Division) traded profitably and the Group achieved good
organic growth in a competitive market.

The Group stated in its 2004 annual report released in April 2005 that it had
adopted International Financial Reporting Standards ('IFRS') accounting
standards effective from 1 January 2005. The Group released a statement on 13
September 2005 detailing the effects of adopting the IFRS accounting standards
on the financial statements to 31 December 2004. The 30 June 2005 interim
accounts and accompanying notes to the accounts have been prepared under IFRS
accounting standards together with the comparative figures for H1 30 June 2004
and the year ended 31 December 2004. Please refer to Note 5 for a
reconciliation between IFRS and UK GAAP.


Group Performance

Group revenue increased by 16% to £6.49 million (2004: £5.60 million).
Operating profit increased to £0.66 million (2004: £0.48 million) an increase of
37% over the prior year period. After interest receivable of £43,000 (2004:
£21,000), the profit before taxation for the period was up 40% at £702,000
(2004: £501,000).


The segmental analysis of revenue and profit for the six months to 30 June is:

2005 2004 Change
Revenue: SSI Division £3.80m £3.65m +4%
SAP Division £2.69m £1.95m +38%
------------- ---------- ---------- ----------
Total £6.49m £5.60m +16%
------------- ---------- ---------- ----------

Operating profit: SSI Division £438,000 £287,000 +53%
SAP Division £221,000 £193,000 +15%
------------- ---------- ---------- ----------
Total £659,000 £480,000 +37%
------------- ---------- ---------- ----------

Basic and fully diluted earnings per share was 7.85p (2004: 7.56p) an increase
of 4% on the prior year period, reflecting the tax charge of £182,000 (2004:
nil). On a normalised tax charge, earnings per share increased by 40% when
compared to 2004.

The Group increased its R&D investment for the period to £0.652 million (2004:
£0.306 million), of which £0.298 million was expensed against Profit & Loss.

Cash flow continued to be positive, with net cash in excess of £2.64 million at
30 June 2005 (31 December 2004: £2.08 million; 30 June 2004: £1.71 million).


SSI Division

SSI's profitability increased significantly reflecting improved day rates and
consultancy utilisation. The company's strong competitive position in its target
markets of Food and Drink, Mills and Metals, Chemicals and Pharmaceuticals and
Lean Discrete manufacturing continues to support the winning of new accounts. In
the period significant new contracts were signed with PDMS Pharmaceuticals,
Glisten Confectionery, George Adams, J T Blakeman, Firth Rixson, Kettle Produce,
Uniq and Victrex. Further investments were made in developing TROPOS to include
new target market features and in aligning the product with Microsoft's latest
technical architecture.

SSI continued its R&D investment in TROPOS and invested £0.298 million during
the period (2004: £0.306 million).


SAP Division

The SAP Division revenues increased by 38%, confirming our confidence in the
opportunities presented by SAP in the mid-market. The SAP mid-market is defined
as companies with revenues of up to £800m. To capitalise on this opportunity,
the Group increased its R&D investment during the half-year to £0.354 million
(2004: nil), creating a new SAP Qualified Solution for Grocery Distribution and
strengthening the qualified solution for Mail Order and Retail. With SSI's
strong position in the Food sector complemented by a new SAP Qualified solution,
Chelford can now provide systems solutions to most Food manufacturers or
distributors. SAP Qualified Solutions give improved commercial terms from SAP
and SAP preferred partner status in the UK mid-market for the sectors qualified.
The Group now has SAP Qualified Solutions for Healthcare Logistics, Consumer
Products, High Tech, Mail Order and Grocery. Significant new contracts were
signed during the first half with Supercook (a subsidiary of Hero Food Group),
Findel and Neopost, Europe's leading manufacturer of franking machines. The
Neopost contract is a prime contract for the implementation of SAP and Siebel.
This is a two phase £2.3m contract with the first phase worth £850,000 being
delivered in 2005.


The Agility Systems Acquisition

With the acquisition of Agility Systems ('Agility') in August 2005 the Group has
extended its supply chain solutions portfolio into new areas. As a result of
this acquisition Chelford now has an established presence in the world of RFID,
has increased its recurring revenues and expanded its customer base. Agility
was Intermec's first UK authorised RFID partner, with a portfolio of services
and integration products already in place. Through our new RFID Solution Centre
business, acquired with Agility, we have an excellent foundation for exploiting
this exciting new technology. Agility have a strong management team who will
remain with the company. The acquisition will be earnings neutral in 2005 but
will contribute significantly to Group profits in 2006.


Employees

I would like to extend my thanks to the management team and staff for their
continued commitment to achieving our growth targets and extend a welcome to the
new employees joing the Group as a result of the acquisition of Agility.


Outlook for 2005

The Board will continue to drive organic growth and to seek acquisition
opportunities which fit with the Group's strategy.

Further good progress has been made in developing our order books during the
first half, with growth in order intake increasing by 48% compared to the prior
year period, across the Group. The increase in the order levels and the new
customer contracts won in the first half provides the Board with confidence for
the future prospects of the Group.

[bernieboy] 19/9/2005 15:18

To be honest - I expect it to be damp squib - because just about every other results day has been disappointing! Hoped last week to be up to £3.22 by this time today but the fall mid week took me by surprise. Oh well - guess we'll see soon enough.

[cockneyrebel] 19/9/2005 09:35

looking good tho - Charles Stanley £4 target gives this a lot of room to move imo.

CR

[brad44] 19/9/2005 09:28

i'd prefer the launch pad theory

[aspex] 19/9/2005 08:39

Nice start.
Results tomorrow, I believe.
Will it be a lauuch pad to stardom or a damp squib?

[cockneyrebel] 16/9/2005 11:03

Bunch of sells but no move down - someone is acquiring what they can at this level imo.

Results next week - should wake the market a whole lot more imo - get us on the way towards Charles Stanley's £4 target.

CR

[cockneyrebel] 13/9/2005 13:04

Trying a squeeze perhaps - those of us that have been in this one some time are never surprised to see it marked down because the mm's have a habit of opening a day or three later with a 10p mark up, eating up any fall in one swoop.

Scared they won't have the stock to sell on results day?

CR

[pc4900074200] 13/9/2005 12:57

On 6.5k sales they trot it down to 272p

On 8k+ buys they leave it as it is.

Playing fair again I see.

pc

[doubleorquits] 13/9/2005 11:37

Well I took it as a topping up opportunity so did just that. Can't see any reason for the drop either other than views expressed.

[cockneyrebel] 13/9/2005 11:08

looks like 50/50 buy/sell too - hardly an exodus, probably due a small pull back - results in a week will drag the ounters in before and after imo.

CR

[cockneyrebel] 13/9/2005 11:06

yep, just means the next leg up will be stronger imo.

CR

[this_is_me] 13/9/2005 09:58

There is always going to be profit taking after a rise, some institutions decide how muck they want to invest in a company and if the price rises so does the valkue of their holding so they sell taking some profit.