Gresham Technologies Share Discussion Threads

[amt] 25/3/2015 23:02

Richjp. Companies rarely put figures in targets but leave it to the analysts to come up with their estimates. In this case Gresham have been very specific in their forecasts so cannot really complain. All in place for good growth going forward, look at the run rate on core business. It's an exciting market and I expect over time the share price to begin to reflect the opportunity ahead from the current depressed level.

[jadeticl3] 25/3/2015 18:06

Richjp, it would be an enormous let down if the Directors got the forecast for H1 wrong when we are well into the third month of 6 months. The next few months should have some visibility.

[richjp] 25/3/2015 11:51

There are certainly some positive messages in the results however that is partly I feel down to good presentation. The reality is that total revenue is down 9% compared to the previous year and pre tax profit down by 77%. Cash is a bit higher at 4.7M compared to 4.4M but it would have been lower were it not for 800K received from the taking up of share options.

I find it very encouraging that they gave a definite intention to introduce a progressive dividend policy. That suggests confidence in future cash flow and also gives me some reassurance as I have said many times that cash flow has been a concern for me.

They do express confidence for the future but of course they have said that before.

It is also positive that they say that 85% of 2015 revenue is visible. If they are so confident then why not put a figure on that and give a projection at least for the first half year?

The market was rather underwhelmed by this yesterday with roughly around 25,000 shares bought. The company talks about growth however they have done that many times in the past. This brings me back to something else I have mentioned before and that is the pace of growth. Unless they can indicate that they are capable of compound growth of say 20 to 25% per annum for say five years or more, the share price progress may be rather slow.

Let us hope that TechmarketView have got it right. I think we need a good first half to get the share price moving again.

[4-10] 24/3/2015 14:49

Richard Holway's firm
UKHotViews

Tuesday 24 March 2015

Gresham making more progress in Q1 2015

Gresham Computing, the provider of real time financial transaction control software, publishes its Annual Report, the management take the opportunity of repeating the message of a good start for 2015, with the first 2 months strongly ahead of early 2014. New CTC customers have come on board and Gresham has built a strong portfolio of use cases and reinforced its sales and support capabilities to underpin a higher level of growth (see here and work back).

Ian Manocha, a 15-year veteran of SAS (and prior to that at ICL and Unisys) will join the company as CEO in June as Chris Errington steps aside to take a NED role (see here). Ian will be able to build on the substantial progress made in the company in revitalising the portfolio and re-positioning the company in growing market areas. Gresham fell foul of contract delays and budget issues in several of its customers in mid-2014, resulting in a downgrade of revenue and profit expectations and a drop in the share price. However, given the broader base of CTC customers and the momentum and confidence that is being developed across the business, it is reasonable to expect big things from Gresham, and its new CEO, over the coming years.

[schytalk] 24/3/2015 09:15

The profits warning explained and the reason for a change in CEO - extract from annual report - cannot wait for the new man to start.

With other non-CTC parts of the business in balance, Group profitability in the short term is to a large extent reliant on the absolute level of high margin CTC revenues recognised in the year. Whilst we made good progress in winning new CTC customers during the year and building recurring revenues for the long term, a number of new CTC contracts we anticipated for 2014 were deferred to the fourth quarter of 2014 or moved wholly into 2015. As a consequence, our 2014 profitability was reduced against our expectations and, having invested in sales and marketing early in 2014 in anticipation of winning new CTC customers, our profitability against the prior period also suffered.

Onwards and Upwards.

[schytalk] 24/3/2015 08:18

Great annual report.

Yes very bullish indeed and what I especially like is that there is considerable scope for over performance. I expect the company to out perform the 2015 budget by a country mile. The share price has already been marked up, perhaps the brokers are back on board. The share buy back is a surprise and I am still trying to get my head around that one, seems odd to me given the CTC potential.

An explanation is given as to why the profits warning was required which shows a deferral of revenue rather than a loss of business - "Despite this customer acquisition success we were unable to recognise the level of revenue we had expected in the year due to a number of clients deferring projects at a late stage of the sales cycle, either into the last quarter of 2014 or into 2015. It is a characteristic of our business that such decisions can impact short term reported results whereas the underlying business remains strong, as evidenced by a number of significant customer wins in the fourth quarter. Revenue from these wins will be mainly recognised in 2015. Our strategy of building a recurring revenue base through a bias towards recurring revenue annuity contracts will serve to mitigate the short term effects of changing customer priorities as these revenues build further in 2015."

Positive statements, of which there are many, include:-

The first quarter of 2015 has started well, with a trading performance in the first two months significantly stronger than for the comparative first quarter of 2014.

We are confident of making further progress with CTC in 2015 and continue to win direct and indirect CTC customers and grow CTC recurring revenues in line with our strategy.

The Board firmly believes that executing our strategic plans to achieve long term profitable growth and shareholder value remain on track.

Our financial position remains strong, and the team remain ambitious and excited about the future of the Company.

In 2014, Gresham made good progress in attracting new customers to its flagship product Clareti Transaction Control ("CTC") and delivering a number of complex implementations for our key customer accounts.

Recurring revenues associated with CTC deployments are central to the Company's strategy of building sustainable revenues from institutions engaged in financial transaction processing and I am pleased to report a significant increase in these revenues, which are up almost three times in the year, with much more growth to come in 2015.

I am pleased to report that we have more than doubled the number of CTC customers during 2014, with more progress already announced for 2015.

We entered 2015 with a strong pipeline for CTC and we are confident of continuing our progress towards becoming a leading supplier in an ever increasing market for financial transaction control.

The Board believes there is now a significant market opportunity to accelerate the growth of CTC and to realise our vision of becoming a market leader in real-time financial transaction control. In order to capitalise on this opportunity, the Board has decided it is appropriate to introduce new skills and experience to lead the Company through the next phase of its growth. Accordingly, on 5 March 2015 we announced the appointment of Ian Manocha as Chief Executive Officer, effective 1 June 2015.

Very much - Onwards and Upwards.

[amt] 24/3/2015 07:52

Looks ideal with all his connections to drive the business forward

[amt] 24/3/2015 07:36

Very bullish for 2015 with 85% of revenue already in the bag. So EPS say 4 to 6p I guess 10p next year so plenty to go for.

[schytalk] 23/3/2015 19:12

jadeticl3

A little more volume than of late. I cannot see the share price moving much until we get some more information on the current state of play. The annual report should be available pretty soon since it is already later than last year. So I think for the moment the share price is somewhat becalmed.

[jadeticl3] 23/3/2015 18:46

Well it is not much, but it is an upward movement!!

[schytalk] 21/3/2015 08:27

Salpara111

Sorry you didn't invest but I believe you will miss out.

The new CEO does not join until June which is half way through the Gresham financial year, he will inherit budgets/targets and will have had no influence on them.

I see the financial report due (hopefully) soon as a clear indication of what 2015 will hold for Gresham. My view is that it will be a solid performance for 2015 because of the that profits warning (natural caution not to repeat) and that the new CEO will want to build on that i.e. he is the upside.

Best of luck in your other investments.

DYOR

Onwards and Upwards.

[salpara111] 20/3/2015 17:07

My issue with the change of CEO is the same when any CEO is replaced.
The incoming man is going to paint as downbeat a picture as possible and "kitchen sink" any bad news so that he gets to manage expectations from a low base.
Added to that I have other fish to fry that I feel more confident about!

[schytalk] 20/3/2015 08:21

jadeticl3

I think your post summarises the position perfectly. CTC has great potential and the current CEO has taken it as far as he can which of course included the profits warning. I believe the business is in great shape but there was clearly a timing issue as regards sales since shortly after the profits warning came a series of new contract wins.

I think and hope that the report & accounts will make good reading showing a solid foundation for growth. My one concern is that after having been optimistic with forecasts (and then having to make a profits warning) that the board take an (understandable) over cautious view. However, the new CEO has no link to the past so can make seasoned judgements on new business growth and will clearly want to press on to build shareholder value.

Onwards and Upwards.

[jadeticl3] 19/3/2015 18:27

The outgoing CEO could be good, but not good enough. If the rest of the Board believe they have an exceptional product that should be capable of delivering exceptional results on a given timetable, and that timetable is not met, resulting in a profit warning, which itself results in a loss of confidence and a halving of share price, then perhaps he is not good enough.

[goldnugget] 19/3/2015 18:05

Does a change in CEO mean poor results? obviously they wouldn't replace him if the results were good.

[schytalk] 19/3/2015 17:17

Salpara111

What is your issue with the CEO announcement, seems a positive move to me, a seasoned experienced chap in exactly the right market space. Gresham has established a good CTC foothold, time to make volume sales. I was never a fan of the current CEO but lets say he has done his job, time for the new man to make it happen.

Onwards and upwards.

[salpara111] 19/3/2015 16:56

Well, in the end I decided not to take a stake prior to results due to the recent change of CEO announcement.
I dont expect them to be bad but equally I am not expecting fireworks.

[schytalk] 19/3/2015 15:09

jadeticl3 agree that if there were more contract wins we would have had some form of communication. It is possible that a deal (or two) could be lined up to the results announcement although timing of that, as I know, can be tricky. Basically if a deal is signed it needs announcing pdq to avoid the risk of a false market.

I would hope that the results will be soon, hence my question if anybody had a view, because that would ensure continuity with last year. If the results are delayed somewhat I would be worried because that would probably mean unresolved issues around the accounts. Whilst we are all focused on new wins (essential for the long term) extended use within an existing client would not in my view require an announcement.

Agree the share price is somewhat stuck at the moment although we had good volume when the new CEO was announced, he does not start until June so I guess we are treading water somewhat. So I hope we see a positive annual report putting some meat on the bones. I think mid to long term this share will fly but getting it to move from the current level seems problematic, I guess only a series of continual goods news will do that. As always DYOR but I think this share is a very strong buy at current levels.

Onwards and upwards.

[jadeticl3] 19/3/2015 11:16

My thinking runs like this Schytalk, "if they had unmitigated good news (like three recents key accounts contracts) we would have heard by now. If nothing on the news front is imminent they will keep to the same date. If they think a piece of good news is imminent they will hold the announcement to include it, especially if the results are a little difficult to present (like explaining the profit warning).

At the moment nothing is happening to the share price. Even very good days in the market fail to move GHT.

[schytalk] 19/3/2015 08:20

A year ago today Gresham announced their annual results, anyone any idea when this is happening this year, should be very soon?

The annual report will make fascinating reading given the roller coaster last 12 months.

Onward and upwards.

[wh1spa] 17/3/2015 10:05

Only a Third of Investment Organizations Have Advanced Data Infrastructure in Place Despite it being a Top Priority, Accordin...Source: Business WireInstitutional Investors' Expansion into New Asset Classes and Markets is Driving Need for Data DexterityA new global survey commissioned by State Street (NYSE: STT) of 400 senior executives at investment organizations reveals that while 81 percent view data and analytics as one of their top strategic priorities, only 37 percent have advanced data infrastructure, expertise and high quality governance in place.The survey, titled "The Innovator's Journey: Pathways to Data Dexterity" identifies three groups of organizations at different points of progress: Data Starters, who are just beginning their journey, Data Movers, who are making strides and Data Innovators, who are uncovering the real value of advanced infrastructure, expertise and high-quality governance."Effectively managing data is no longer optional, whether it's big, fast or smart," said Jeff Conway, executive vice president and head of State Street Global Exchange. "The opportunity to bring real value to data and analytics lies in plotting your exact point on the path to innovation. Organizations plagued by legacy systems, a lack of talent and weak data governance will miss the opportunity to extract investable insights from data without a clear vision."From Paralysis to Performance – Starters, Movers and InnovatorsThe survey found that for Data Starters, legacy IT issues and compliance pose major barriers to progress and outdated systems are making it difficult to get the full value of their data. Meanwhile, Data Movers are increasing their investments more rapidly by replacing legacy systems with new data architecture and applying tools for analyzing investment risks and performance of individual asset classes. However, despite being the group most concerned about regulation, only 20 percent plan to significantly increase their spending on compliance and reporting capabilities.On the other end of the spectrum, Data Innovators recognize the value of data and analytics and are confident in the competitive advantage it brings. Innovators prize data quality and integrity and set high standards for data governance and security that are entrenched throughout the business. Additionally, they are acutely aware of the importance of insight generation and using advanced tools and techniques which enable them to conduct performance and risk analysis across investment portfolios, including alternative asset classes.The survey found that:Nearly half (49 percent) of Innovators see data and analytics as their single most strategic priority;Thirty-eight percent have increased investment in data by more than 10 percent each year and are seeing a return on their investment;Forty-four percent strongly agree that their investment in data and analytics is a source of competitive advantage, compared with only 15 percent of Movers and 5 percent of Starters."Staying ahead in a fast-changing market will be as much about cultural change as about adopting new technology," continued Conway. "Data Innovators who prize data as a strategic asset are investing in it, protecting it and getting value from it at every level of their organization. Regardless of being a Mover, Starter or Innovator, investment organizations need to focus on getting to the point with their data capabilities and building strong foundations - so they can gain a competitive edge in the high-tech investment model of the future."For the full report, please click here.Join the conversation with State Street on Twitter to map out what will be the #NextBigIdea for data, analytics and the future of finance.About State StreetState Street Corporation (NYSE: STT) is one of the world's leading provider of financial services to institutional investors including investment servicing, investment management and investment research and trading. With $28.19 trillion in assets under custody and administration and $2.45 trillion* in assets under management as of December 31, 2014, State Street operates in more than 100 geographic markets worldwide, including the US, Canada, Europe, the Middle East and Asia. For more information, visit State Street's web site at www.statestreet.com.* Assets under management include the assets of the SPDR® Gold ETF (approximately $27.3 billion as of December 31, 2014), for which State Street Global Markets, LLC, an affiliate of SSgA, serves as the distribution agent.CORP-1316Photos/Multimedia Gallery Available: State Street CorporationAnne McNally, [e-mail]@StateStreet

[jadeticl3] 11/3/2015 19:12

Qantas, thanks for this, and for your previous, lengthy post, the one which Mike Bell and I discussed and agreed that we would welcome and benefit from some of your expert comment. So how about it before we all forget?

[qantas] 11/3/2015 17:05

hxxp://treasurytoday.com/2015/03/the-trouble-with-excel-ttti

The trouble with Excel

The most common treasury technology is Excel; for the expert-user it is powerful, familiar and flexible. But for a large corporate trying to match and reconcile high volumes of accounts receivables transactions it is potentially a serious liability. What can be done about it?

Still using spreadsheets? Of course you are. In fact, more than half the respondents of a recent survey of global corporates said they do, to manage their general ledger or accounts receivable (AR) processes. The survey, commissioned by Gresham Computing, also revealed that amongst these spreadsheet users, 39% were taking three days or more to allocate and reconcile money received in their back office, with 16% taking up to a week to do this.

Despite the old world charm and familiarity of spreadsheets, if it is taking so much time to match and reconcile AR then potentially there will be a negative impact on working capital and forecasting processes. When dealing with high transaction volumes this could prove to be a significant risk.

Spreadsheets persist in the AR space regardless of the threat they may pose, simply because there is no suitable alternative, says Chris Errington, Gresham’s CEO. It has been estimated, he reports, that some companies complete up to 80% of their reconciliation activity manually using spreadsheets. True, in other financial functions – and in the right hands – Excel is a rapid and functional tool that is an attractive proposition, but it also has a number of well-known flaws. Not least of these is the lack of a standardised way of using it and locking down data to ensure it is doing exactly what you think it is doing, consistently.

For most large businesses, the natural technology to turn to for AR processes would be its ERP or accounting system, notes Errington. Whilst he feels these can be adequate tools for simple reconciliations – comparing one balance with another and then perhaps providing some functionality around resolving differences – their lack of specialisation is soon revealed. Most ERPs, he says, “often have an issue with complexity when dealing with volumes”. The main problem accounting systems have is in dealing with business process problems “that give rise to information that does not seem to correlate but should do”. These systems, he adds, are not generally able to deal with complex matching requirements where, for example, the cash coming into a bank account needs to match the sales invoice issued. “And when you can’t use these systems, you typically turn to Excel.”

The nub of the matter is the need to execute complex matching where the data being matched is non-standardised, states Errington. With few examples of truly standardised data anywhere in the corporate world (SWIFT messages perhaps coming closest), the balance of data is unfortunately likely to be of the non-standardised variety. In the context of AR, he notes that whilst bank receipts may exhibit similarities from bank to bank, there is no uniformity. For sales receipts, the data is almost entirely user-prescribed, even if a commonly deployed platform is used to create those invoices.

The problem being faced by companies seeking a solution that can help improve matching and reconciliation is that the process requires that system to be able to handle any source or form of data. “There are few software solutions able to accept such non-standardised data and deal with it efficiently,” notes Errington. The only real alternative, and by far the biggest competitor globally for such vendors, is of course Excel. It can import most forms of data “ready for the application of human intelligence to sort and process that data”. But, as discussed above, both the cost and risk factors rise commensurate with complexity and volume. Despite these drawbacks, letting go of spreadsheets will not be easy. “It’s a mind-set change, firstly to realise that there is something available, and secondly to then change the organisation to adopt and start controlling that part of the business in a more efficient way.”

Vendors in this space include AutoRek (Reconciliation Software), SunGard (IntelliMatch), Chesapeake (T-Recs) and Gresham (CTC). These firms typically target the asset management, investment banking and transaction banking community. The latter may white-label a solution: ANZ does so with Gresham’s CTC, for example. However, the barrier to uptake of specialist matching and reconciliations software is often the fact that Excel is, to all intents and purposes, free. “It’s only free to the point where you are accurate and get nothing wrong; the moment you get one thing wrong it is not free,” argues Errington.

But there is an even greater risk to consider, he warns: the knowledge of how a particular spreadsheet works is often tied up with the person who created it. A business running a $100m receivables ledger that is using Excel to control matching of sales invoices to bank receipts has a significant working capital risk exposure if the understanding of the macro that imports that data into Excel rests with just one person. The cash may not be allocated if for some reason that person is not available.

The use case for a specialist system is always the same, says Errington: “trying to control non-standardised transactions, to make less errors and to demonstrate that control and in the long-term to save money by replacing manual processes”. If such a system can remove much of the cost and risk of manual spreadsheet-based processing, it would at the very least be particularly useful for large corporates with the significant matching and reconciliation challenges commonly felt by the AR/AP functions of their captive shared service centres. Ultimately, he argues, “the more transactions are made, the less Excel can be used on an ongoing basis”.

[jadeticl3] 10/3/2015 16:11

I agree Mick Bell, in that this occurred to me as a possibility, but so did the opposite, which is why I am asking Qantas for a more expert opinion than my own!