Fd Technologies Public Share Discussion Threads

[badger36] 30/1/2019 11:56

IG, yahoo, adv, all have conflicting volume data. Which is the most accurate?

[badger36] 30/1/2019 11:55

I guess TW will have another piece full of speculative innuendo to the detriment but skirting the zone of being deliberately libellous

[sspurt] 30/1/2019 11:41

Good vol this morning. Looks like a run before the CMD on the 7th.
Mog - 100% agree re accounting "issues". Anyone who thinks there is a problem here with accounting policies/disclosure is barking up the wrong tree. A look at the free cash flows over the last five years is enough to tell you that. The big issue for me is if Kx is stalling in its markets.

[mog] 29/1/2019 23:42

FD's 2015 report says when their holding went to 65% "The acquisition and the put are accounted for under the anticipated acquisition method." They don't explain this method, but from other company accounts I've found it applies where the buyer has committed to buy the minority interest, for example by writing a put option. Then they add the value of the put option on the balance sheet liabilities and otherwise treat the subsidiary as if they have acquired 100%. They do NOT declare a non-controlling interest anywhere.

The key point is the put option making it an anticipated acquisition. Looks like this is all entirely correct by IFRS and consistent with other companies' accounting in similar situations.

[ezram] 29/1/2019 00:27

To be blunt can I state that nothing dishonest is going imho.

I do not think giving a breakdown of revenue by broad source (software vs consultancy) and sector (finance vs other) is a big ask. Nor would it reveal much of use to competitors. Not doing so has clearly damaged the company share price and hurt shareholders. The company have made a mistake with the information day IMHO btw. Making the event " invitation only " and essentially trying to control the content isn't a good approach, and adds fuel to a growing fire.

Swiss do you have a professional relationship ( employee ex or otherwise ) with the company and/or are you still a substantial share holder? IMHO You have been a consistent contributor to this board and have always given a quite balanced view of the companies progress.

[skatersav] 28/1/2019 22:30

Swisspaul, we’re not discussing speculation. We are discussing what the company has stated in their accounts! #faceslap

[swiss paul] 28/1/2019 21:25

you dont respond to any market rumours, any NOMAD will tell you that. Nothing has been proven, so at the moment it is all speculation. If you or others think a fraud is being perpetrated then I suggest you report it as such, otherwise I wold be very wary about making accusations Mr Badger.

On the side of transparency Ezra, why should they show that level of detail. do our competitors show that in their AR&A? - i think not.

Let see how Mr market repsonds on the 8th - to me that will say more than the innuendo.

best wishes to all

[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.