Gresham Technologies Share Discussion Threads

[jadeticl3] 02/1/2019 09:17

I guess you are right, unless we get a full update very soon which gives us not only news about orders that came very late in the year, but a general statement about the year. Hope springs eternal!

[amt] 02/1/2019 07:40

No news of closing sales so presumably we must expect the worst.

[jadeticl3] 28/12/2018 12:34

While an offer of 220p may appeal to some just now, Iwould be sad to part with these shares at that price. Of course I am a little more than sad just now at the actual share price, I am disgusted.

[tacticaltrader] 27/12/2018 20:31

Hefty takeover premium to be paid - based on recent share price- for Earthport. (EPO)If someone approached GHT with a 220p offer I hope they'd give it some serious consideration.

[inforprofit] 24/12/2018 10:19

Merry Christmas everybody although GHT has not given us any cheer this year.

Any thoughts as to the share price at the end of 2019, somewhere between £1.00 and £2,50 I reckon, so I will go for a mid point of £1.75. However at this level I suspect that GHT will have been acquired since to stay independent the share price needs to be at the upper level.

[richjp] 23/12/2018 12:03

I certainly agree that it can be very difficult to dislodge an incumbent supplier and as GHT becomes more high profile taking on bigger opportunities the competition may start to take more notice. Any company that GHT has previously beaten might be more aggressive still the next time.

The incumbent has the advantage of knowing where the real decision making power lies in a company and all the personal relationships that have been built up. Even if GHT’s offering is superior, assuming that service and back up from the incumbent has been good, it can be easier to remain with that supplier. Buyers can be very risk adverse and it is not just about having the best product.

As far as pricing is concerned I would hope that GHT are pitching at a competitive level. They talk about rapid on boarding when the client introduces new products, so the staffing costs of operating a GHT solution should be advantageous. I suspect as with many companies, when it comes down to the final negotiations there is horse trading to be done.

[gottafly] 22/12/2018 09:37

TacticalTrader - yes very good point and for GHT to ready access to the EU market is clearly important, although historically not much business has been won there, with the UK, Asia and more particularly North American providing the most opportunity. I am guessing here somewhat, but I suspect the EU market is mature and that long established relationships are in place which makes removing an incumbent all the more difficult.

[tacticaltrader] 22/12/2018 09:19

Aside from the added functionality that B2 brings to the offering I think the other important factor is location. This was a masterstroke IMHO to hedge against all possible Brexit scenarios.

[gottafly] 22/12/2018 08:03

crazycanuck thanks for explanation re B2 and the intraday reconciliation requirement, makes sense. I still think GHT could have partnered or JV'd rather than acquire, anyway acquisitions are out of the question now (which I am quietly pleased about) so the focus is now all about organic growth.

As for pricing I do believe that GHT price/position Clareti as a premium product on the basis that it is a class leading solution. Not sure if dropping the price would be an incentive and might alienate existing users, there is a common commercial culture (switch to me) to reward new customers more than existing (loyal) clients which might win customers in the short-term but possibly at the expense of long-term commitments.

Perhaps some price flexibility to meet an individual clients budget would help and I don't know whether GHT's price book is rigidly enforced. In any event, especially with the large deals, I don't think price is the main driver, getting a client to change supplier (fear of change) and breaking long-term relationships is never easy, after all the incumbent supplier is not simply going to let it happen and perhaps will use price as a weapon.

[crazycanuck] 21/12/2018 15:08

Hi Gottafly, I certainly agree with most of your post except the part about B2. I'm not sure if you know much about reconciliations but most companies perform their recs on a T+1 basis (basically next day). In today's world, a lot of banks are now trying to reconcile intraday and be able to produce real time nostro position (yes, exactly what RTN was supposed to deliver). I think Gresham have missed out on sales because
their offering is specifically for EOD recs and the B2 cash mgmt software can provide the intraday positions with an added bonus of being able to generate payments. I'm guessing this was the primary reason for buying the company.

As for gambles, I think they need to look at their pricing as I think this is holding back on sales. They should look at undercutting the big players as they definitely have a top notch product.

[tacticaltrader] 21/12/2018 14:03

Thanks everyone for all the posts since the 'blip'! Given the volume of shares traded had Kestrel been buying then they would have to have purchased just over 500k shares to reach the 13% notifiable mark. In normal times I would have expected that to happen. So a few scenarios:1. The market is dead and so they are in no rush to acquire.2. They are waiting for the expected contract announcements to be released before committing any further funds.3. Perhaps someone has made an offer and they have been taken 'inside'. (I would imagine over the years a variety of different folk have made offers for GHT only to be rebuffed by Kestrel & Co.)4. IM is on the way out and they are hovering until the announcement before making a move. 5. GHT couldn't land and expand due to Drone action.

[gottafly] 21/12/2018 10:53

richjp,

Good to see yet another considered post from you. I agree that cash is critical and that a fund raising needs to be avoided at all costs, however, is there enough cash given the recent B2 acquisition. If a fund raising is needed I don't even want to think about at what level this might be at.

I am not a fan of the dividend, whilst ceasing it would I am sure not be good for the share price in the short-term, I see little point of it at these low levels. The idea, as I understand it, was to reward shareholders and underline the fact that GHT was an annuity revenue business and here for the long-term. The irony is, I suspect, that the very investors that this encouraged to buy in are the very ones happy to exit at any price following the profits warning!

I know you have been very supportive of the GHT management (and fair play to you on that) but the management, which really just means IM because it is such a small executive board (just CEO/CFO), simply has not performed.

With these recent events I am wondering whether the departure of Rob Grubb was far more than 'a change of life style/career' especially now that he has a new senior post. Could he see trouble ahead and had a variance of opinion with IM, I am beginning to think so. Remember that GHT has repeatedly only just made the numbers with nothing to spare.

When IM joined GHT in 2015 he was given 1.5 million share options at £1.10 being a 10% premium over the current £1.00 share price Some three years on he/we are now sitting at a loss in share price terms of a third. I cannot describe this as anything other than dire!

So the million dollar question is - is this just a blip or something more fundamental. My view is that it is simply not just the case of deferred deals, it is a loss of focus by the management caused by the B2 Group acquisition. I know I am a lonely voice in this regard but in my opinion, with a small executive management team, acquisitions are inevitably a distraction to normal organic business and it is assumed that normal business will take care of itself for a while.

The C24 acquisition was clearly a plus but it was very synergistic and covered some gaps in the Clareti offering, it was also done quickly and at modest cost. B2 maybe a good acquisition but the cost is not modest, especially at the current GHT SP, and it is a supplementary rather than a key offering, something I reckon that could have been achieved by a JV or partnering.

I see little prospect that IM will be replaced but he is very definitely in 'last chance saloon' territory. The danger here, is that with such a big share price fall, IM will take some gambles (although I am sure he would not view it that way) to rapidly get back on course. After all, from a personal point of view, when your share options are so underwater where is the downside. The non-execs have a key role to play here to ensure that any corrective action is done in a very measured way, even if that means a long recovery period for the share price

Anyway, happy holidays everybody and fingers/everything crossed for 2019.

[richjp] 20/12/2018 17:29

The last two weeks have obviously been a disaster but surely the trashing of the share price is way too excessive unless there is something else we do not know yet.

I know I keep banging on about it, but I still think the cash position is the most important factor at the moment. Assuming we get a trading update in January I hope they can give some reassuring and convincing news about the cash position and their ability to generate cash going forward, to dispel any concerns that there might be regarding the need for a fund raising. If they can also give a commitment to maintaining the divi that would also be encouraging. If they can do all of that I think we could start to see a recovery in the share price and the revised broker target of 180P could look very feasible within a twelve month period.

I am not giving up on the management at the moment, although if something else nasty comes out of the woodwork in the future then I might consider changing my mind.

I have been away for a week but I do not seem to have seen any evidence of really heavy institutional selling. If someone does attempt a low ball bid for the company it will be the institutions that will be the ones to decide what happens. Independent observers such as TechMarketView have described GHT’s technology as disruptive, although I think the word disruptive is being used a bit too often by companies these days and it has become a more common marketing term. If the technology is as good as we are lead to believe however, I would like to think that there might be several potential buyers in the frame and we should at least get a competitive bidding situation meaning that we might get a decent price, albeit not as much as we might have hoped a while ago.

[planit2] 20/12/2018 11:15

By now it would have been nice for all the customers that have signed up over the last 5 years to be increasing their spend and usage of the service. I think that by now profit warnings of this type shouldn't be happening as there should be depth of sales growth meaning we are not as reliant on signing all these new deals.

There should be loads of evidence by now that the service is good and that it is being rolled out and expanded on by all of the financial companies selling the services on.
There should be growth from lots of different avenues which I see no evidence of. Perhaps companies are not willing to pay for these services but are happy to get them for free (where have I heard that from before).

[double double] 20/12/2018 09:13

Whether they do or not get the remaining planned revenues, the forecasts have been cut and N1SINGER, on the ebitda, have always been on the money.

Not what some may want to or need to hear now but from past experience and looking at the share price graphs Gresham has always recovered but does take upto 3/4 years. I am not sure yet if we are at the bottom, we may be clearer in Jan trading update. Just watch the share price ahead of that update.

[gottafly] 20/12/2018 08:36

jadeticl3 I would not be expecting any further announcements this year from GHT unless it was another trading update/profits warning! GHT have stopped publishing the signing of each deal so there would have to be a material change to generate an announcement.

The last trading update was pretty clear - Gresham has very good visibility of a further 15% of planned revenues, based on a small number of high-value, incumbent vendor replacement software deals where Gresham has achieved preferred vendor status following successful competitive evaluations. Subject to these software deals being contracted and recognised by 31 December 2018 as anticipated, the Group expects to close the year with continued strong Clareti growth and Group revenues broadly in-line with expectations.

There is a view that the share price fall has been overdone but it seems (to me) as if the current market price is assuming that not all of the remaining 15% planned revenues will be realised and that the results will be further downgraded i.e. GHT will disappoint again. The best I think we can hope for is a trading announcement early in 2019 confirming progress.

As expressed previously I think IM has all but lost control and that GHT is fast becoming a rudderless ship. I still have faith in the product and the GHT staff so there can still be a happy ending (for us long-term investors), fingers and everything else crossed, the roller coaster ride continues. My view, however, is that GHT will be bought for a 'song' because of the current low share price and associated sentiment.

As always DYOR.

[double double] 20/12/2018 07:46

Kestrel are now carrying huge losses with Gresham. Hopefully they will try something. 220p to 66p they cannot be happy. And stop any cheap offers at these prices we must be at risk.

[amt] 20/12/2018 07:10

Doesn't look like they had a great year.

[amt] 19/12/2018 20:27

I think the jury is out. It appears to be a temporary blip but the market seems to fear the worst.

[jadeticl3] 19/12/2018 20:08

Is anybody on this site expecting any deals to be clinched before the year ends? If so are we expecting to have it announced? Or are we expecting the usual January update to brief us. Does anybody receive/read Gresham Communications? When one reads this it seems to be such a great tech company providing just what businesses need, such that it is difficult to believe that a drop in share price from 220p to below 70p is a genuine valuation of this company! Or does this company spend too much time telling itself how valuable it is rather than just getting down to completing deals??

[gottafly] 17/12/2018 08:51

jadeticl3 - very difficult to say what this actually does to this years numbers although it looks like a 2019 revenue item.

GHT clearly see this as a material contract (hence the previous announcement) and they have had some expense on this 'joint venture' and expense tends to be very much front ended with benefits/revenue to follow. Could this contract be one of the main reasons that GHT 2018 costs are far higher than expected?

I suspect the comfort factor of a contract extension - not that long though is it being only 9 months but an impressive AUD 1.3 million - will enable the revenue recognition to be reviewed/revised, so a possible addition to the 2018 revenue 'black hole'.

[jadeticl3] 17/12/2018 08:31

The recent statement which caused the shares to plummet said revenues to date were only 85% of forecast, but more were expected before the year end. How far does this statement alone go in Meeting forecast?

[gottafly] 17/12/2018 08:20

Here is the announcement if you missed it.

Extension of Clareti innovation service with major bank

Gresham Technologies plc (LSE: "GHT", "Gresham", "Company" or the "Group"), the leading software and services company that specialises in providing real-time data integrity and control solutions, is pleased to announce the following contract extension.

Further to the announcement of a strategic fintech partnership with a major bank in the Asia Pacific region on 26 September 2018 and subsequent press releases in October 2018, Gresham is pleased to confirm that the bank has now extended the Clareti innovation service referred to therein until September 2019, continuing the successful first phase of joint development activities carried out so far and further supporting the bank's digital transformation programme.

The contract extension will contribute AUD $1.3m to planned Clareti services revenues in financial year 2019, bringing the total contract value to AUD $2.65m. Further extensions are expected and will be announced as appropriate.