Intercede Share Discussion Threads

[boadicea] 30/9/2010 21:31

iiCB - I'm glad to hear you dissociate yourself from the short-termist brigade and I apologise if I put you in the wrong category as the way I wrote it sounded rather offsensive.
In that case you will probably understand the point I was trying to make.

Where we possibly differ is that I would rather the managers of a small innovative companies spent their time developing their technology and enthusing their customers rather than the City. In the case of many of them, the number of customers, being a few large corporations or government agencies, is often quite small and a large multi-pronged publicity department would not make sense.
Public companies are required by regulation to produce comprehensive reports on their business progress at some significant expense, which should to a large extent speak for them.
The City is swarming with so-called analysts, fund managers and financiers who should be ferreting out promising enterprises such as IGP, SRT etc and promoting them as being in their own longer term interest. However the penalties of being more wrong than the competition and being unable to survive any initiative which takes longer than the competitions' to mature, leads to a short-sighted and under-performing sheep-like consensus approach.

In this respect, these bb's - at their rather spasmodic best - sometimes do a better job than the City and get there first.

[iicb] 30/9/2010 19:49

No boadicea, iiCB isn't an example of that, he held Pace for 10 years before finally selling up. iiCB is unimpressed that IGP do so little to market their business overall within the City, hence we saw 4 trades today on a good piece of news. In 4 years of holding IGP, I have sat through it twice going sub 30p, and have never seen since it fell from the toppy days of 70p, it only get near 50p once. The volume has range from Richard Parris big sell of shares to a regular 0 trades per day.

Hence why I write what I do. This little business is impressive with the clients it has, the product it has, the management it has, it fails in how it is seen within the City, the volume of trades it generates and the strength of it's share price

My comments which were described as harsh.... I don't think that call was really fair either. As was pointed out (thankyou for that btw), the directors are well paid in their roles and justly so, but they appear little interested in the share price really, and do not pay a dividend. The real value in this business will appear when they sell or hit the limelight with a huge contract. They are not trading their own holdings, so the share price is irrevelant to them until "the" day comes along.

My thought is whilst waiting for that day to get closer (5-7 years?), use the money for other shares which do move, and then come back to this another day. Why is that not sensible pls??? I don't understand why we appear to differ on this? Do you invest not to make money? Fair enough, you could lose it too, but that's part of life with the stock marke and public companies.

All the best
iiCB

PS : I'm no trader, my trading is aweful currently, in fact, for a brief glimmer, IGP is the one share cheering me up a little.

[igoe104] 30/9/2010 17:04

Good stuff guys and some good posts.

Anyway canada is a area i would like igp to get into, bell id had a foot-hold in their at one stage. hopefully with canada looking to up-grade their security and go more the biometric way and go more like the usa it might call on igp services. (via a partner.)

[fft] 30/9/2010 13:04

if you are worried about pay, you should look at CFL where i have been to the AGM this morning. ceo is on 300k + 5% of EBIT. market cap is between 1 and 2m....

very happy with the report and the contract wins. should (famous last words) put a floor under the price.

[yump] 30/9/2010 10:25

I'm not particularly knowledgeable on pay either - just sounds a lot, but I have a bee in my bonnet about pay differentials anyway and the 'worth' of any one person at work. Lots of directors would have us believe that they do it for the challenge and driving innovation etc. but we don't see them refusing big salaries because the job satisfaction is sufficient - although job satisfaction is obviously sufficient for the people who sit all day on a production line.

O/T now though and something for debate on some other BB somewhere !

I'll be quite happy if IGP deliver some stable share price growth, which is a bit hypocritical I guess.

[wjccghcc] 30/9/2010 09:27

I don't think it's out of line but I'm no expert on renumeration.

Just picking up the annual report of Smartfocus who are a smaller company and less than half as profitable, I see the highest paid director got 239k and total board renumeration was 740k vs 160k and 315k respectively for IGP.

With 55 staff, the average renumeration per IGP employee is 62k. Parris is only getting paid 2.5x the average which I suspect is much better than most UK companies.

Happy to be corrected though.

[yump] 30/9/2010 09:11

WJCCGHCC - 30 Sep'10 - 00:49 - 2273 of 2281

"...They pay themselves 160k and 100k (if I remember correctly) and I'm sure they have other demands on their income apart from buying shares..."

Although still positive on IGP, I'm slightly surprised, particularly by the 160k - given the bottom line results / delivery of share price performance to shareholders. Collectively that's a lot off the bottom line.

[felix99] 30/9/2010 08:53

Still hanging in - never owned a stock as long as this. Must say I was tempted to sell when it hit 30p and give up . Seems to have turned again.

Only drag is fact they have picked up 2 mega contracts but still only in line with market expectations. ?

[rivaldo] 30/9/2010 08:38

Excellent news. Onwards and upwards!

WJ, thanks for the update from me too. I don't post here very often due to the high quality of the posts from the other regulars here and I wouldn't contribute much, but you should know that it's much appreciated.

[wjccghcc] 30/9/2010 08:21

That my friends would be Boeing :-)

At the AGM, when we discussed their competitors and I mentioned Boeing in the context of BellID (who were their suppliers), one of the nonexecs laughed though obviously said nothing.

The entire defence industry is moving to PIV-c and with Lockheed and Boeing, IGP now supply the top two.

iiCB, if you want to sell out, now might be a good day to do it as there's no stock around.

[boadicea] 30/9/2010 08:18

I also particularly noted point number 7 from WJ's excellent teport of the AGM discussions -
"Jayne (the operations manager) commented how recruitment was easier in the US because IGP is much better known there than in the UK."

Time it was better recognised within the UK - iiCB is a typical example of this country's problems with its short termist investor led get-rich-quick go-nowhere fixation.

IGP is exactly the sort of innovative small company that the country needs to lift it out of the current problems. There are many others but they often struggle for support and recognition because the potential returns are more than a week away. (E.g. take a look at SRT or CAR).
As a result, many of our best ideas and developments end up being sold out cheap and exploited abroad.

[glasshalfull] 30/9/2010 07:56

Firsty, many thanks WJ for a most comprehensive update. Greatly appreciated.

Also nice to waken to a further significant contract win ;-)

Regards
GHF

[rambutan2] 30/9/2010 01:45

Aren't we in Hirsch?



I don't think I knew that Hirsch had merged with SCM Microsystems last year...



SCM Microsystems is part of Identive Group (NASDAQ: INVE; Frankfurt Stock Exchange: INV). Look at its 10yr chart!

[wjccghcc] 30/9/2010 00:49

No problem.

iiCB, that's very harsh. Parris founded IGP in 1992 while Walker joined in 2000. Both have lived and breathed the business through bad times and (now) good. They have developed the business so that now they secure some of the most prestigious enterprises in the world. Tredoux is interested in 23% of the stock and Sikorski works at the London Business School. They pay themselves 160k and 100k (if I remember correctly) and I'm sure they have other demands on their income apart from buying shares. Unlike many companies, they don't award themselves loads of free share options. It's not as if they don't already have large stakes.

Regarding SOLG, there will always be companies which four or five bag in a few weeks and if you can time them with a sufficiently sized investment then go for it. Me, I'm happy to build up a sizeable stake and take my 10 bagger here after 5 years.

[68ben] 29/9/2010 23:12

WJCC

Thanks for taking the time to update the board.

Regards

LTH

[rambutan2] 29/9/2010 22:44

WJCC, thankyou very much for those AGM insights.

I must admit, I'd not really taken a proper look at the Microsoft angle, so will now.

Unlike iiCB I remain very excited about the growth potential of IGP and very happy to hold onto what has become my largest holding. At some stage the market will appreciate what a gem IGP is growing into.

[courant] 29/9/2010 22:19

iiCB

You may very well be a better trader than me, but I've always found my long-term holdings (in companies like IGP, where valuations are attractive and long term business outlook is excellent, despite significant periods of flat or negative share price movement) outperform my aggregate trading plays over time. There's also something to be said for having a collection of companies that you're extremely comfortable with that you can add capital too at will, and part of this comes from long-term close acquaintance. Please do sell, I'll be adding :-) This is what gives PIs a competitive advantage, not being forced to chase short-term performance targets like fund managers have to.

Regards,

[iicb] 29/9/2010 19:51

PS : Also, I think this is why we see very limited share buys from directors etc. They know the share price isn't going to move much really, they're just drawing salaries and at some point, a day in the next x amount of years, they'll sell and make their money. But as an investor, who counts on share price rises and a decent dividend, it's 1 day we're looking for in potentially thousands, with odd opportunities here and there.

The risk reward doesn't add up on this stock anymore. I know the business is positive, and we may well see 50p maybe by Christmas, but it's just cash doing nothing, providing no better than a bank.

[iicb] 29/9/2010 19:41

WJCCGHCC - good writeup, thankyou.

Although I appreciate how businesses want Microsoft solutions, in the past, they are often found to be limited in use, adopt their own standards (as you mentioned), which isn't always the best, and also Microsoft aren't too well known for their security in the marketplace anyhow.

I pretty much get the feeling now with IGP that it's share price is unlikely really to get much lift until a buyout or huge contract comes along. Hence, I suspect, should it rise this Christmas, I may sell up and exit. You talk about 5-7 years time for a multiple of the price, but you could have bought Solomon Gold at the start of September for around 5p and it's now 29 days later 45p.

I can't see the point anymore, however much I like the business, of having money tied here for years stagnating.

Anyway, still here for now, thanks again for a good post, nice to learn what was said at the AGM.

iiCB

[wjccghcc] 29/9/2010 18:16

It was a pretty upbeat meeting with all the directors happy to take questions during and after. It was a good opportunity to clarify some issues and get a feel for the longer term direction of the company. All resolutions were passed so they'll now be in a position to pay dividends if they want.

Various points (in no particular order):

1. The patent suit was settled because it was unlikely to come to trial until 2012 and would have been a jury trial so lots of expense for another 2 years with an unpredictable outcome even though IGP felt they had a very strong case. The settlement with AI makes it unlikely there will be further disputes in this area.

2. They don't view themselves as a one product company but more as providing a platform (like SAP) for clients to which different products/modules can be added. Once the platform is installed, it's hard/unlikely for it to be replaced. The software part is only a small part of what they provide - the whole secure process of lifecycle ID management is more important. The main danger is of contract cancellation before it is implemented (e.g. I suspect the UK ID card cancellation has left a large hole in their budget this year).

3. Their older competitors seem to be falling by the wayside. The industry view is that the AI/Corestreet merger hasn't worked with the combined revenues in the last quarter lower than AI alone in the previous year. BellID has closed their US office and are focussing on the bank EMV space.

4. Their main threat/opportunity now is Microsoft who seem to be getting their act together in the ID space with Microsoft Forefront. Obviously, there's a risk of clients wanting an all Microsoft solution but it's also an opportunity as several clients are approaching IGP wanting services added to Forefront.

5. The US is definitely the growth driver in the short-term with the requirement for PIV interoperability filtering down through the defence industry. Other enterprises are also specifying they want to use the PIV standard. There's an interesting article here which talks about the potential spread of PIV versus the existing standards.



In a way, IGP has an advantage in that MyID is primarily a PIV system although it supports the other standards whereas AI/Microsoft have a vested interest in pushing their own standards.

6. As the US agencies seek/are required to do more with their PIV cards, they are realising the limitations of using the GSA managed service. I suspect we'll see more agencies moving away from that over time.

7. They're likely to open a US office in the next 12 months, probably in Washington. Interestingly enough, Jayne (the operations manager) commented how recruitment was easier in the US because IGP is much better known there than in the UK.

8. I don't get the sense they're looking for an exit in the near term. The market potential is significant and the pipeline continues to strengthen. Acquisitions are being considered but it's hard to find a target that would add a lot to their platform without putting them into competition with parts of their client base (e.g. Gemalto, Oberthur etc.)

Personally, I'm happy to hold and add on any further weakness. Progress here is always going to be lumpy and there may be the odd period which dissappoints but I see them being a multiple of today's shareprice in 5-7 years time when they do finally agree to be bought.

[glasshalfull] 29/9/2010 16:36

I believe our resident expert WJ was attending. Any feedback gratefully received for those of us unable to make meetings given our geographic locations.

Regards
GHF

[rambutan2] 29/9/2010 16:27

Likewise, I'd be v gratefull for any thoughts.

[fft] 29/9/2010 14:43

hi,

it appears i missed all the IGP holders at the mello do on monday evening. Wish i had known you were there. I seemed to talk to the CEO of RGD most of the evening. Has anyone got any insights from the AGM that they can share with us ?

many thanks.