Gresham Technologies Share Discussion Threads

[qantas] 14/5/2015 18:13

hxxp://www.gresham-computing.com/transaction-reporting-pressures-and-challenges/

Compliance

Transaction Reporting pressures and challenges
12 May 2015
Bill Blythe

Regulatory pressures on financial market participants continue to grow, with an increasing focus on accurate reporting of transactional information to the market and regulators.

In fact The European Securities & Markets Authority (ESMA) has introduced an additional layer of validation requirements for registered Trade Repositories (TR’s) to ensure the completeness of data submitted on swap transactions under the European Markets Infrastructure Regulation (EMIR).

From October this year, level 2 validation will come into effect at the TR’s such as CME, DTCC and Unavista. Currently, under EMIR, you can report trades into these TR’s without validating what gets reported. When the regulation comes into force later in the year, if you are not pre-validating your reporting, and you send inaccurate, or incomplete data to the TR’s, they will reject the message, saying that you are noncompliant. Rejection statistics are then reported back to the regulators.

Gresham’s newly released solution, CTC Transaction Reporting, was designed to provide a real-time control framework to validate what transactional data is reported, field by field, to the Trade Repository. CTC will actually ensure each trade passes pre-validation first. Exceptions can be pro-actively managed, incomplete messages rectified and re-validated before reporting back to the Trade Repository.

Are you confident in proving evidence of control in your reporting processes?
If reporting is delegated are you 100% sure that the counter party has accurate information?
Are you aware that the FCA looks at your rejection statistics on transaction reporting that has been submitted, either by yourself or your counter party?

The Transaction Reporting solution is helping clients with ensuring full compliance and evidencing of financial control. If you would like further information a brochure is available here.

[thebullyboy] 14/5/2015 12:01

I wonder if they have some powder dry for the new man when he joins in June.

[4-10] 13/5/2015 09:05

Great report thanks Richp

[gnnmartin] 12/5/2015 19:18

richp, thanks

[richjp] 12/5/2015 17:45

At the AGM last week there were three of us PIs, the same three as last year! I have already covered the reasons for the good positive first quarter so I have nothing to add on that.

I mentioned that they talked last year about some challenges in implementing the early CTC sites. I was told that these issues had now been resolved and were the kind of issues to be expected with early implementations, which seemed reasonable to me. They said that they now have over twenty CTC clients which is more than I thought, but obviously they do not publicise all of the smaller ones. These customers cover a wide variety of business types and applications. As the chairman said, they now feel they have completed the “heavy lifting” and that they are now in a good position to move forward.

The new CEO is still on target to formally join in June as announced, although he has already been involved in various meetings and will be more heavily involved before his official start date. They went through an agency selection process to identify the right candidate and interviewed several excellent people. The main reason for selecting the new man, seems to be primarily because of his sales experience with complex multi-national sales situations. His remuneration package will have strong incentives and the structural balance sheet changes agreed at the recent AGM, which I do not pretend to fully understand, appear to enable the company to issue additional share options without diluting the capital structure of the company.

They praised the work done by the present CEO who was not at the AGM, but was in Australia meeting with Gresham’s most important client there, before going on to Singapore. He is clearly going to have a continuing hands on role.

Their Software as a Service (SAAS)or cloud computing version of CTC should be available by the end of this year. I had been under the impression that it was already available. This initiative is being driven by a potential client who wants an SAAS solution. All the existing sites are therefore on site implementations. They think that the SAAS offering will appeal to a lot more smaller customers although the revenue will obviously be less from them, but the cost of sales should be less as well because of a quicker sales cycle.

They think that the annuity revenue they have been building should become more apparent in 2016. They emphasised again how much they are focussing on an annuity model where ever possible. The revenue from their legacy clients has held up well, with little attrition so far. It seems that the legacy revenue has continued better than they expected when they first started developing CTC some years ago.

Somebody else asked whether they were likely to pay a dividend within the next two years. They would not commit to any time frame but at least one of the board directors is in favour of a dividend when appropriate, however he stressed that was a personal opinion. My feeling is that they want to see a greater contribution from the CTC revenue and be less dependent on the legacy revenue than they are now, before they pay a dividend. I therefore doubt if they will announce a dividend this year at least, although that is just my opinion.

In summary it all looks encouraging but as I have said before that is not the first time, so let’s look forward to a good set of half year results which we should get in August.

[richjp] 11/5/2015 16:16

jadeticl, cautiously optimistic I would say. I might be just a bit more positive if we had not had so many setbacks in the past.

I think amt is right. Last week's announcement was all very well, but I reckon we need some definitive figures before the share price goes up much more. A strong first half result plus a positive outlook is what we need.

[jadeticl3] 07/5/2015 18:53

Yes, OR the company issues a couple of RNSs saying "new key account contracts have been signed therefore we are now confident of exceeding market expectations"!

I am hoping/expecting that this will happen sometime in 2015.

[amt] 07/5/2015 17:37

Problem appears to be that once a profit warning has come put the blue the market is very sceptical. In this cast though it looks odds on they will exceed market expectations. So perhaps we won't get a rerating until next figures are published.

[jadeticl3] 07/5/2015 17:16

Thanks richjp. Very enlightening. What was your over-riding feeling coming out of the meeting? Relief? Excitement? Caution? Don't spoil your holiday thinking about this too deeply!!!

[richjp] 07/5/2015 16:53

I went to the AGM today and will provide as much information in due course as I can, however I am busy the next few days, so it may be some time next week. It was all pretty encouraging, but then so it was last year!

Just regarding today's announcement, I asked about their use of the word "visibility" with regard to the 90% figure quoted. I was told that most of that business was signed and the unsigned business within the 90% was expected to come from existing customers with whom they were already in discussion. They therefore seemed very confident about that extra business from existing clients.

Part of the reason for the good first quarter, was because that the prospects that they mentioned as being deferred in last year's profit warning had now largely signed up.

I think therefore that there is potential for them to over achieve this year with regard to new orders, but we have to consider that with their preference for an annuity business model, the revenue impact for 2015 might be relatively less.

[jadeticl3] 07/5/2015 16:52

Yes I realise that, which is why I put the question. But if there is visibility on more than 90%, and the majority of this is contracted, then how do we categorise the other which is not contracted but has visibility?

While we have this erudite discussion the share price is rising so let's keep it going!

[4-10] 07/5/2015 12:19

Careful jadetic13 it does say "the majority of which" now does that mean 51% is the a majority? or is it higher the wording indicates higher but it does not say all of the 90% so it is worded carefully.

[jadeticl3] 07/5/2015 12:11

4-10. I like your last paragraph, if it means what I take it to mean viz. "our expected revenues for 2015 are almost certain to be realised as 90% of them are already contracted. Moreover, new contract possibilities(which are not factored into our expectations) are also looking good as we are progressing discussions with many interested clients".

I take it that amt has a similar interpretation.

If so, then whole year 2015 should be fruitful, and I am surprised that the shares have not moved a little more.
Maybe I need to give impetus by adding yet more.

[amt] 07/5/2015 10:29

At current rate the last 6 months of 2015 will all be a bonus on top of market expectations so a lot of upside I would have thought without downside.

[4-10] 07/5/2015 09:16

The following statement posted today sounds positive - is anyone going to the AGM today?
Thanks
4-10

AGM statement

Gresham, the leading software and services company that specialises in providing real-time financial transaction control software to the global matching and reconciliation market, is pleased to announce that at the Company's Annual General Meeting being held today, Gresham's Chairman, Ken Archer, will make the following statement:

"The Board is pleased to confirm that trading for the first quarter of 2015 was significantly stronger than for the comparative quarter in 2014 and in line with our expectations and plan. Our financial position remains strong, with net cash currently ahead of the 31 December 2014 position and no debt.

Visibility over planned total revenues for 2015 now exceeds 90%, the majority of which is contracted. The CTC new customer pipeline remains strong for the remainder of 2015 and beyond."

[jadeticl3] 30/4/2015 10:21

Small moves up are not what we are looking for but they are better than small moves down!

This is not a holding for the impatient!.

[jadeticl3] 29/4/2015 15:47

Looks like prospective clients don't buy shares or don't buy GHT shares or don't read this board!

[jadeticl3] 22/4/2015 18:55

If most agree that CTC is the best solution to this need then we should expect clients to buy this sooner rather than later. I am in no position to know how clearly would-be clients see this as an urgent need that requires a solution which could be the reason for delay rather than looking for the best solution.

Do we have any prospective clients on this thread who could enlighten me as to the perceived necessity for such a solution?

[qantas] 22/4/2015 18:14

hxxp://www.gresham-computing.com/gresham-ctc-again-voted-best-reconciliation-solution/


Press Releases
News:

Press Releases
In The News
Events

Gresham CTC again voted Best Reconciliation Solution
22 April 2015

London, 22nd April, 2015 – Gresham Computing plc, a leading provider of transaction control solutions to international financial institutions and corporates, today announced that its flagship software Clareti Transaction Control (CTC) has won the FTF News Technology Innovation Award for Best Reconciliation Solution. This is the second consecutive year CTC has won the award.

FTF and FTF News established the awards to celebrate and recognise the professionals, financial technology vendors, service providers, industry bodies and regulators that have made significant strides and noteworthy achievements in operational excellence.

Qualified industry participants comprising customers, peers and industry professionals selected this year’s winners and put forward suggestions for nominees via online processes. When asked to vote participants were asked to consider the flexibility, completeness, ease-of-use and innovative features of a solution for automating and managing reconciliation and exceptions management processes.

“We are thrilled to win this prestigious technology innovation award for the second year in a row” says Chris Errington, CEO, Gresham Computing. “This win evidences CTC’s leading reconciliation position in the post-trade processing market, as voted for by customers, peers and industry professionals. It is testament to the strength and quality of not only CTC but also the people within Gresham who work hard to create, sell and support great product”.

END

[richjp] 11/4/2015 10:59

jadeticl,

I remember ages ago someone on the iii board saying that Gresham was providing RTN to some banks as a free trial and that few were paying for it. He came across as a disgruntled former employee so he was not taken too seriously. It seems that he may have been at least partially right.

cc,

I think you have summed up very accurately one of the biggest drawbacks of RTN. With hindsight one would expect an initiative like RTN to come from an industry wide organisation such as SWIFT rather than a small software house. They did get a lot of press coverage at the time though.

schytalk,

I fully understand what Payables Financing is in a normal context. RTN was quietly withdrawn and I was merely suggesting how the announcement might have been buried away. I might have been wrong in that suggestion, but I am correct in saying that RTN was withdrawn so they sneaked the announcement out somehow.

[schytalk] 11/4/2015 09:06

richjp


Payables Financing is not the same as RTN. PF requires a payable book (from a major Corporate) and financing (from a Bank). It allows a supplier to a major corporate (who tend to have very low/mean payment terms) to receive payment early (some would say when it should have been due anyway) subject to a fee. The problem is the Corporate/Bank didn't see any value in paying Gresham for the service and simply did it themselves, so another Gresham service that would not be paid for. I believe most major UK supermarkets offer PF solutions.

[schytalk] 11/4/2015 09:05

richjp


Payables Financing is not the same as RTN. PF requires a payable book (from a major Corporate) and financing (from a Bank). It allows a supplier to a major corporate (who tend to have very low/mean payment terms) to receive payment early (some would say when it should have been due anyway) subject to a fee. The problem is the Corporate/Bank didn't see any value in paying Gresham for the service and simply did it themselves, so another Gresham service that would not be paid for. I believe most major UK supermarkets offer PF solutions.

[crazycanuck] 11/4/2015 08:33

The other key issue with RTN was that you needed all nostro providers to provide data otherwise you could only view some of your positions. The idea was excellent but difficult to get all key banks on side. In fact, cash & liquidity has huge focus right now in the regulatory world and a lot of companies are now looking into buying/build a solution.

I had an interesting discussion with a sales person who works for one of the big rec companies and he definitely sees CTC as a competitor. He was impressed with its powerful matching engine and also the ability to configure a rec.

[jadeticl3] 10/4/2015 21:24

Thanks richjp. This board tells one things not heard elsewhere!!

I have to say that had I known at the time that RTN was found to be liked as a freebe, but that few were willing to pay for the privilege, I would have sold up.

[pari124] 10/4/2015 15:22

Hi all,

Just invested in GHT. Looks like a good company and the accounts are strong, including a good cash balance.

Pari.