Fd Technologies Public Share Discussion Threads

[mog] 28/1/2019 17:34

Yes it would be much better if they were open about this.

At the interims recurring licenses from fintech were up 9% to £13.3m and martech 42% to £9.8m so martech could well be overtaking fintech and there could be a lot more potential there. They did however also get a lot more perpetual licenses in Fintech, up 200% to £6.3m.

[badger36] 27/1/2019 20:12

It's either creative/fraudulent accounting and the mere suspicion has decimated market cap so it behoves the company to set the record straight. Silence implies something is amiss

[ezram] 27/1/2019 14:38

I think what both of you two are saying is that the figures themselves need more detail.
It brings to the forefront the need for the company to be more transparent about the actual sales going from Kx, both inside and outside finance and those revenues arising from the core initial group streams.

Its not impossible that the Kx revenues inside finance have dried up, and no more large OEM size deals exist (only so many large institutions that these deals make sense for exist and most of these are customers from an inspection of the two websites history).

That really leaves expansion then relying on deals in other sectors.

[mog] 26/1/2019 20:05

Nope your summary is fine (happy for you to have had the last word :) )

[skatersav] 26/1/2019 16:10

Mog, I like your optimistic outlook, but they didn’t buy the 35% in 2014. And the problem with your argument (in my opinion, and meaning no disrespect) is that the Kx minorities have been receiving about £3m a year. That implies Kx is profitable, as you would expect given the value the market attributes to the Kdb language. If it’s not profitable, then it must have had some heap of cash in it when they bought it to keep paying out £8m a year of divs! This is all about trust in the accounts, trust in the audit, and trust in the execs. Going forward, I accept your approach works: they own 100%, they pay some extra interest on the debt they borrow. But if this is an accounting shenanigan, and if the net income has been overstated for the past three or more years (materially!), then trust becomes harder. IN any event, I will now bow out of this debate and allow you the last word, should you wish it :)

[mog] 26/1/2019 15:58

Sure but this is based on the assumption that the dividends are similar to the profits, and that Kx Systems Inc is a stand-alone subsidiary completely ring-fenced in all respects from FD. From an accounting point of view they have to try to treat it like that but in practice they are so closely involved I'm not sure it's worth trying to separate them, Kx boosts the value of FD and FD boosts the value of Kx by both working together, FD owns Kx so if Kx is becoming extremely valuable I'm happy. I find it easier to think of FD having bought the remaining 35% in October 2014 instead of writing the put option for the 35%, they would now have the then £27m value of the put as extra debt and have paid about £4m interest on that debt, not too bad. However I agree the disclosures you suggest would be interesting, and certainly Kx profits should have been disclosed.

[skatersav] 26/1/2019 13:26

I agree with our maths, but that means Kx is the vast majority of the group’s profits, which raises questions about the economics of the rest of the company. This small subsidiary for which we have almost no financial disclosure, and for which there are reasonable questions about how it is consolidated into the group’s net income, represents the vast majority of be group’s profits. We should be asking to see the last 10 years accounts for the sub, and I think the shareholder registers for the same periods as well.

[skatersav] 26/1/2019 13:26

I agree with our maths, but that means Kx is the vast majority of the group’s profits, which raises questions about the economics of the rest of the company. This small subsidiary for which we have almost no financial disclosure, and for which there are reasonable questions about how it is consolidated into the group’s net income, represents the vast majority of be group’s profits. We should be asking to see the last 10 years accounts for the sub, and I think the shareholder registers for the same periods as well.

[mog] 26/1/2019 10:09

All sounds fair enough, particularly Kx being key, but is it really possible to separate the performance of Kx from FD? For example how much of FD's marketing, sales, consulting etc feeds through to Kx sales and profits?

With Kx being key don't we want it to make as much profit as possible? If it did make £3m for 35% that's £8.6m for 100% in 2018 up from £1m in 2015 - excellent!

[skatersav] 25/1/2019 17:17

It’s a similar number in 2017... over time, there should be some correlation between the profitability of that division and the cash it contributes to the parent. Arguably, the dividend should be lower than the net income of Kx, as it invests in new stuff, in which case the effect of the minorities would be greater than I am estimating.

The only way to settle it is for FD to release the accounts of the subsidiary. While they are at it, I would quite like to see the shareholder register. Kx is core to the investment proposiiom.

[mog] 25/1/2019 12:12

But those are dividends not profits, we don't know what reserves Kx had built up from which dividends can be paid. I agree that a minority interest line should be there.

[skatersav] 25/1/2019 06:56

They paid out a little over £3m to the minorities of Kx last financial year. You can calculate this figure by comparing the dividends line on the Company cash flow statement with that of the Consolidated cash flow statement. The difference is how much they paid out in divisiveness to minorities of Kx. And to be clear, I know they are consolidating. I don’t have any issue with that. I have an issue with the lack of a minority interest line on the income statement and I think it should be about £3m. Certainly, it should at least exist.

[middlesboroughfc] 24/1/2019 13:15

Could warn

[mog] 24/1/2019 13:08

ss, how do you get £3m pa profit after tax for Kx? Unless we know the details of Kx Systems Inc finances post 2015 consolidation with FD it looks like guesswork to me.

From FD 2015 accounts (Kx stake was increased to 65% 31st October 2014) there is quite a lot of detail about Kx finances. Combine p51 (Kx from 31st October 2014 to 28th Feb 2015) and p73 (Kx 1st March 2014 to 31st October 2014) gives £8,956k revenue and profit after tax £1,037k, rather than £3m.

This is in line with what would have been the effect of FD paying for the remaining 35% of Kx, from my previous post about £1.2m pa in loan interest payments.

Also they say "Kx Systems will continue to be fully consolidated going forward" and repeat this several times, and in subsequent annual reports. They have always been open about it.

[glavey] 24/1/2019 06:25

EzraM,
I think you need a lie down.

[skatersav] 23/1/2019 19:46

Hi Mog, you can calculate it by comparing how much they paid out in cash to the minorities of Kx (a smidgen over £3m) with the net income of £10.2m. That gets you 30%. You have to make the assumption that the net income of Kx is equal to the amount it contributed in cash.

[ezram] 23/1/2019 11:51

I have an interest in this share Galvey. I had held a long time, and I will do so again. Idiots constantly shouting " up up and away" are ultimately responsible for the over correction in the share price recently. [ Which will continue further btw ] It basically made the people behind TW's posts life easy.

If it had independent analyst views and balanced debate the share price would be growing, albeit slower, and it would provide a sensible dividend, and thus a better long term investment.

Idiot accounting that people can use to smear and blur also doesn't help but certain people not taking a rational view, considering both the pro's and con's is a much bigger problem. These forums are used to construct private investor views and essentially the direction of the wind on any particular week.

I yearn for the day you provide sensible.

[glavey] 22/1/2019 19:48

EzraM,
The rest of your post is sensible and reasoned. Why spoil it?

[mog] 22/1/2019 12:27

Thanks, and it will be interesting to see if they address any points that have been raised at the capital markets day (if anyone from here is going?) or in the 2019 annual report

[ezram] 22/1/2019 12:03

Why the fact on the Kx purchase was not made clear is a mystery. The CFO should be asked to explain why not, and what other figures could be considered aggressive. It is not a major concern of mine though. I am sure its common practice.

Glavey, you and Moorsie should meet up. The both of you would get along like a house on fire I think. Horatio Nelson with his blind eye has nothing on you two.

Mog, your comment on the new software is taken onboard. I agree that this is probably nothing to worry about. The lack of expansion though is a concern, and yes, my patience broke. Its nice to read a rational contribution with a balanced view though.

[mog] 22/1/2019 08:13

I'd be interested how you arrive at 30%. Another way of looking at it is if they had paid out £41m 3 years ago for the remaining 35% of Kx the extra interest at 2.25% + LIBOR, say 3% during last 3 years, would have been £3.6m, compared to pre-tax profit of £35m, so about 10%.

[skatersav] 22/1/2019 07:52

I intend to ask the company. However, given this issue represents about 30% of the reported EPS over the last three years, I had thought you might have an explanation. I guess you’re not that worried about the reality of this company’s economics, or accounting disclosure.

[glavey] 22/1/2019 05:13

ds8095,
Why are you asking me? Wouldn't you be better asking the company? (Or maybe you can say how it should be?)

EzraM,
Your silly comment rather beneath you and your claim just semantics. I've nothing more to say in this respect.

[mog] 21/1/2019 00:00

Well they are open in the notes that they consolidate everything but I agree it creates uncertainty until they own 100%