Inspired Share Discussion Threads

[valhamos] 27/3/2017 13:12

Computer software whether internally generated or acquired diminishes in value over time and then requires further development or replacement.

Of the £771k 2016 software amortisation which has been excluded in arriving at the adjusted eps £600k relates to software acquired as part of the STC Energy acquisition in 2015 which is being written off over 5 years. I would say that was a normal business expense.

[1gw] 27/3/2017 11:52

I suppose with amortisation of the computer software and customer databases I think it's a question of whether they have been incurring "extraordinary" costs in these categories related to their recent acquisitions or whether there is a material ongoing cost of maintaining and developing them. I think it is reasonable to exclude amortisation of such costs from "underlying" numbers if the costs are largely transient while the business integrates the various recent acquisitions. I would agree it is not so reasonable to exclude amortisation of such costs if they are essentially expected to continue at this level.

On computer software, they added a relatively large £0.7m in 2016 "internally" (vs £0.1m in 2015). It is amortised over 5 years on a straight-line basis, so the £0.7m internally generated in 2016 would mean £0.14m amortisation (in addition to what is being amortised from previous years spend). So relatively insignificant compared to the £4m PBT.

On databases they added £0.38m in 2016, a bit less than they did in 2015. This is amortised over just 2 years, so the amortisation from this year's additions would have been £0.19m.

Combined, about £0.33m amortisation from this year's additions to internally generated computer software and customer databases, if I have the numbers right. Most of the amortisation excluded from the "underlying" numbers comes from the amortisation of recent acquisitions, which I think is reasonable.

On share-based payments I agree. I have never understood why these are sometimes omitted from underlying earnings numbers if such share-based payments are an ongoing feature of the company's business model.

[igoe104] 27/3/2017 11:06

I`ll be topping up if this falls, certainly a sound company.

[valhamos] 27/3/2017 10:34

Rivaldo

Undoubtedly the analysts will use the higher figure! I guess I latched on to your use of the "market" as in "The market uses broker forecasts". The market will value the company based on all the information available and not just the highest adjusted eps which the company/brokers are keen to promote.

Personally these days I tend to avoid companies which persistently have huge adjustments to basic eps that I am not comfortable with and adjusting for computer software amortisation and share based payments (that is remuneration) are examples of this.

[yump] 27/3/2017 09:53

So what is it then ?

[rivaldo] 27/3/2017 09:53

Valhamos, I completely agree that you have to use all the available info. I never said otherwise!

However, it is a fact that the prime figures against which results are measured are those in the various analyst forecasts, which are almost always the adjusted EPS and profit figures, NOT the "reported" headline figures.

[trier1] 27/3/2017 09:45

The company has this time produced THREE sets of eps. None of them are appropriate as two exclude share based payments (also known as earnings) & one fails to exclude external intangible amortisation. I doubt many here seriously think any of these figures are the appropriate ones to use. Sure they beat broker estimates but you do need to look at the actual growth based on real earnings and compare with the actual PE.

[runthejoules] 27/3/2017 09:44

Thanks ALan, Rivaldo, Nurdin & Fizzypop. No more money to buy the dip myself but you've put us back in the blue for today! Let's hope it continues.

[cheshire man] 27/3/2017 09:43

Happpy to hold on the good news this morning :-)

[valhamos] 27/3/2017 09:34

rivaldo

"The market uses broker forecasts" I think that's incredibly simplistic as if the market is going to ignore the totality of the information in the accounts. And from the accounts we see that the 1.27 adjusted eps has been so adjusted to exclude the amortisation of computer software and the impact of share based payments.

I have been here since 4.5p though have reduced a little recently but INSE do like to adjust their adjusted eps as much as possible so some caution is required when looking at the quoted adjusted eps in the light of frequent acquisitions. Hopefully in years to come shareholders will come to see the benefit in growth in basic eps.

[fizzypop] 27/3/2017 09:31

and me so 20,000 picked up.

[nurdin] 27/3/2017 09:11

You convinced me :o)

[rivaldo] 27/3/2017 08:45

The market uses broker forecasts, which were for between 1p and 1.19p adjusted EPS.

INSE beat those forecasts with 1.27p EPS.

Panmure Gordon say Buy this morning and have reiterated their 1.5p EPS forecast for this year.

That puts INSE on a current year P/E of just 10.8 for this year.

I've bought some more following the small profit-taking this morning.

[alan@bj] 27/3/2017 08:42

For the RNS, try this link:-

Dividends

The Board is delighted to propose a final dividend of 0.32 pence per share subject to approval at the annual general meeting of the Group. Following the payment of an interim dividend of 0.13 pence per share, the total dividend payable for the year ended 31 December 2016 is 0.45 pence per share. This represents an increase of 29% over the dividend payable in respect of 31 December 2015, being 0.35 pence per share.

The dividend will be payable to all shareholders on 13 July 2017 to shareholders on the register on 9 June 2017 and the shares will go ex-dividend on 8 June 2017.

[runthejoules] 27/3/2017 08:16

Can someone cut & paste please, I didn't get the rns, bloody advfn... I see it's an instant sell-off. Profit Taking due to oil being down or that amortisation? Still good dividend... when is it paying?

[trier1] 27/3/2017 08:11

Looks ok, lots more disclosure of amortisation of internally generated intangibles so appropriately adjusted eps rather less than one might have assumed

[croasdalelfc] 27/3/2017 08:00

But the market will use the basic eps of 0.71p.

[1gw] 27/3/2017 07:51

Looks good to me. Will it be enough to convince any watchers to jump in and buy some in case the price runs away again?

[rivaldo] 27/3/2017 07:27

Excellent results - 1.27p EPS is well above forecasts of 1.1p and 1.19p from Shore Capital and Panmure Gordon.

The 0.45p dividend is right at the top end of expectations.

Order books are very high, with strong revenue visibility. And the outlook is great:

"2017 has started positively with the performance seen in 2016 continuing into the current year and the Board is confident that the Group will continue to go from strength to strength in 2017."

This year should produce 1.45p EPS or more, giving a current year P/E of only around 11 or 12.

This is a very impressive, well-managed company.

[runthejoules] 24/3/2017 10:58

I suspect a little of the fall has been the Trump slump and fall in oil too, the latter of which always corrects... and which energy companies never pass on to customers anyway!

[hjs] 24/3/2017 10:40

Profit takers has pushed the share price lower but come Monday, they will buy in after the results which IMHO, will be very good together with a brilliant outlook will push this share to 21p. This is not a recommendation so do your own research. Current outlook Forecast for 2018 is very good with a very low PEG.

[1gw] 24/3/2017 10:11

After what seems like quite a few tips, starting with the Midas one, I think a lot of investors (particularly those who didn't get in on the initial tip) may well be looking closely at the results with a view to buying in if the results seem to support the thesis of the tipsters.

[diesel] 24/3/2017 09:57

Agree Rivaldo, not surprising to see a bit of retracement after such an 'unexpected' strong movement and a bit of consolidation and new holders at this level will set it up well for next week. At least that spike put this on the radar and it does warrant closer inspection by those who don't normally buy in this sector.

[rivaldo] 24/3/2017 09:38

Indeed. I can understand a bit of profit-taking from some, but Monday's results and outlook should be very strong, setting us up for current forecasts between 1.3p and 1.45p EPS this year, strongly up from 1.1p-1.19p last year.

Which leaves INSE on a rather cheap rating. And the 0.5p dividend forecast for this year gives around a 3% yield too.

[mfhmfh] 24/3/2017 09:13

added to my holding today. let's see what Monday brings.