Montanaro European Small... Share Discussion Threads

[hosede] 06/3/2002 13:00

rneeve
would you say the same applied to transEDA (TRA)? Are they in the same marketplace or subtly different?

[rneeve] 06/3/2002 10:35

Hi Guys,

I have never posted here before and have no market position in Mission Testing.

But I am (or rather was) a IT contractor working as a test analyst and I can tell you that that sub-sector has been totally destroyed.

I have only worked for 3 of the last 16 months and I know many triple-A people who are in the same boat.

I haven't looked at the accounts but I am concerned that they don't reflect the near term prospects.

Both testing recruitment (particularly on the contract side) and testing consultancy have been completely blown away as companies have tried to get away without testing, hoping their developers can do the testing as well. Testing was the first thing to get cut back (the testing market collapsed in Feb 01) and will probably be the last thing to get ramped up again if and when things improve.

On the plus side, many top testers are leaving the testing to do other things. If and when things do recover, there will be a chronic shortage of skilled testers and Mission Testing's margins should increase a lot as a result.

If I can offer any insight into the testing market I'm happy to help.

Regards,
Richard

[pippin] 06/3/2002 08:20

Excellent interims out today.

Growth continuing apace, still got £8m cash, positive outlook despite the sectoral stuff, maiden interim dividend. Would that all profit warnings presaged such good figures!

On a five year view, this looks like a possible biggie, IMO.

[johnduffield] 24/1/2002 21:27

Hmmn. I'm not sure that would be any floor. If they got to their NAV there'd be a tacit assumption that they were struggling and burning their cash even with contractors laid off. I fear testing might be vulnerable to cutbacks, and things economic are starting to feel a little shaky.

But the fall since the fairly gentle profit warning looks harsh, and there was a slight rise today albeit on thin volumes and high spreads as per IDD. One for the monitor for now.

[nav_mike] 23/1/2002 06:55

The company mentioned nothing about losses so we have to assume that there will be a profit albeit diminished.

In the current circumstances I feel this co. would be a buy if it reaches its NAV (the bulk of which is cash with no intangibles) which is around 55p

IMHO etc DYOR

Apart from that a promising little company medium to long term

[johnv] 22/1/2002 17:49

I would at least wait until the price cut back up through the 10 day m.a.

[stewjames] 22/1/2002 17:06

Perhaps. Small companies tend to fall for some time after profit warnings though. Good luck!

[pdt] 22/1/2002 17:04

I decided to add to my holding today. I believe at closing the market cap is around £17m and they have some £8m cash in the bank. Taking the cash off the market cap we have the business valued at £9m. I'm guessing that profit after tax will now come in around £1m for the year to 30 June 2002. This seems cheap for a company that is still rapidly growing.

Paul

[stewjames] 21/1/2002 15:38

And there's the reason. Profit warning.

[johnv] 21/1/2002 14:42

mission testing still wearily heading south

[robward] 18/1/2002 16:44

Would you be a buyer EE ?

[eagle eye] 18/1/2002 14:51

The Market Maker's position this morning with the spread at 118-120 masks an interesting position. One quotes 105-120 and the other 118-133.

[johnv] 18/1/2002 14:09

down 10% today & dropping, the chart looks terrible. Either someone out there knows theres bad news on the way or someones dumping their stock. Or the MMs are dropping the stock trying to shake nervous investors out before some good news arrives. Who knows? I dont own any of these yet.

[pippin] 06/12/2001 08:46

Sigh. Overlooked and unloved right now. No-one seems to care that it's an ace company doing brilliantly.

[pippin] 06/12/2001 08:45

Great stock, Mission Testing.

I think it deserves a run (don't know about Mitie though!)

[cockneyrebel] 05/12/2001 21:15

Surprised it has taken until today for this to motor.

According to the Daily Mail Today Granville Baird say buy before resuts on Monday - they will be good.

This stock usually does well before results and on the day of, as they rarely disappoint.

Up today but should be a fair bit more come Monday. Still only where it was in June yet performing beautifully.

180p Monday would be my guess.

imo dyor

[pdt] 08/11/2001 08:13

A positive AGM statement yesterday is probably helping the shares. It also seems that very small purchases will move the price north.

Techinvest are a fan of this one and I read a good Citywire article on them which was out a couple of weeks back.

Paul

[pippin] 08/11/2001 00:14

A couple of buys this am for the first time in a while. No price movement though.

One of those rare tech stocks doing well in the current market.

Not one of my biggest holdings but I do like it. I bought after seeing the MD on Bloomberg after the figures.

[castana] 07/11/2001 16:03

Financial Review

Mission Testing, in its first year as a public company, has met all of the financial aims that it set for itself at the time of its admission to AIM. The Group has achieved an excellent set of results for the year, with future financial indicators looking strong and the completion of our first acquisition in August 2001.

Results
Mission Testing continued its rapid organic growth in the current year, building on the trend of previous periods as shown below.

Year to 2001
£’000 Year to 2000
£’000 15 months to 1999 £'000
Turnover 10,515 6,048 2,220
Gross profit
GP% 2,713
25.8% 1,350
22.3% 434
19.5%
Administrative expenses (1,609) (747) (228)
Operating profit before interest and tax (pre-exceptionals) 1,104 603 206
Operating margin (pre-exceptionals) 10.5% 10% 9.3%
PBT (pre-exceptionals) 1,277 500 162
PBT margin (pre-exceptionals) 12.1% 8.3% 7.3%
Exceptional float related costs (310) - -
Profit after tax 630 371 128

Turnover increased organically by 74% to £10.5m reflecting strong demand for our services, despite a general tightening of markets. The entire turnover is generated from the supply of testing services.

Gross profit increased by 101% to £2.7m. The underlying increase in gross profit percentage of 3.5% to 25.8% is in line with our strategy and this is a trend that we would expect to continue as Group turnover increases by the growing contribution from high-margin consultancy services.

Administrative expenses have been well controlled and have increased in line with our investment in the sales, fee earning and support people required to grow the business still further. The Group has increased its investment in sales and fee earning employees, focusing on the delivery of services across focused market sectors.

Operating profit (pre-exceptionals) increased by 83% to £1.1m from £0.6m, while the operating margin (pre-exceptionals) grew from 10% in 2000 to 10.5% in 2001. The PBT margin (pre-exceptionals) grew from 8.3% in 2000 to 12.1% in 2001.

The exceptional costs of £310,000 relate to the flotation of the Group on the Alternative Investment Market of the London Stock Exchange on 6 December 2000, that have not been written off against the share premium account.

Fee earners
It is the Group’s strategy to utilise contractors where appropriate, due to management of fixed overhead risk that comes from this structure; contractors, often referred to as “associates221; on consultancy projects, are not paid by the company when they are not contracted on billable projects. We will increase the full time headcount of fee earning testing specialists in line with the demand for our services.

Interest
Interest income was £258,000 (2000: £1,000). This increase is due to interest earned on the funds received from the placing that took place with the flotation in December 2000. The funds, net of float costs, of £8.8m have been on deposit with our principal bankers.

Taxation
The taxation charge of £337,000 represents an effective tax rate of 34.8% compared to 25.8% for the previous year. This is mainly due to disallowable float related expenses.

Earnings per share
Basic earnings per share (pre-exceptionals) increased by 94% from 3.31p in 2000 to 6.41p in 2001, while fully diluted earnings per share (pre-exceptionals), increased by 88% from 3.31p in 2000 to 6.22p in 2001.

Dividend and shareholder returns
The Directors propose a final dividend of 1.5p per share, which is the first dividend payable to shareholders since the company’s admission to AIM in December 2000. This dividend is covered 4.3 times by adjusted basic earnings per share.

Balance Sheet
The balance sheet was strengthened by the float proceeds of £8.8m, net of float costs. Cash at 30 June 2001 was £9m with no borrowings. Shareholders funds at 30 June 2001 were £9.7m (2000: £0.3m).

Whilst we have, as required by the steep organic growth during year, used a modest amount of cash to finance working capital needs, the balance of these funds is available for our acquisition plans. £700,000 was utilised in the acquisition of Specialist Testing Solutions Ltd in August.

Acquisitions
On 24 August 2001 the Group acquired the entire issued share capital of Specialist Testing Solutions Ltd for an aggregate consideration of £3.7 million which was satisfied by £700,000 of cash on completion and 1,600,000 new ordinary shares in Mission Testing plc. Of these shares 1,350,000 were issued on completion and a further 250,000 will be issued following Mission Testing’s AGM to be held on 7 November 2001.

Summary
The Group is in a very healthy financial position. The strong organic growth together with the acquisition of Specialist Testing Solutions ensures that the Group is well placed to enjoy future growth prospects.

David Abery
Finance Director 17 September 2001

[reetus] 19/9/2001 10:48

Mission Technology, software testing company, provided the technology sector with a rare boost by reporting a 150 per cent increase in full-year profits.

Announcing its first set of results since listing on the Alternative Investment Market, Mission reported operating profit before tax and exceptional items of Pounds 1.28 million in the year to 30 June. The shares rose 7.5p, or 5.8 per cent, to 137.5p. Chief executive officer Tony Wells said: "The current financial year has started positively with trading and activity levels comfortably ahead of the corresponding period last year. Mission Technology is in excellent shape."

[keyman] 28/12/2000 14:17

Soon we should see a further write-up in Techinvest. Here's hoping for a nice buy recommendation or even a nap tip for 2001.

S

[keyman] 15/12/2000 14:43

Good post Max. Thanks
Steve

[maximillion] 13/12/2000 18:21

Look on Citywire; article there.
Max the Pauper
Hang on, I'll ferret in the archives...

09:38, Thur 16 Nov 2000
Company Focus: Mission possible (Citywire Research Report)

Mission Testing is flagging its move onto AIM with the modest sound bite: ‘We want to be to software testing what Microsoft is to the desktop’, writes Joanne Wallen.

Mission Testing is in the process of raising some £10 million through a placing which should value it at around just £40 million. At the moment therefore, chief executive Tony Wells’s ambition sounds wildly implausible, but then Bill Gates hasn’t forgotten all those who belittled his ambition to put a computer on every desktop.

Not that the comparison with Microsoft, even if you ignore scale for a moment, is particularly effective. The two companies are nothing like each other. Mission Testing does not develop software, nor does it currently have a mass market, high volume product or service.

However, it does have a market that has crystallised within the last year or two as a result of Year 2000 computer problems, and is coming into its own as a result of the Internet.

Software testing has traditionally been at best a black art and at worst non-existent. Rare is the developer that enjoys testing their program code, and beyond that, few companies have ever had systems and processes in place for testing and stress testing whole systems before they go live.

With Year 2000, and the huge amount of program changing that had to go on to ensure the traditional two-digit dates accepted 00 as 2000 and not 1900, companies began to take system testing more seriously. The larger companies even set up special ‘test factories’, with dedicated teams to test the amended software before it went live.

‘Year 2000 made companies begin to take testing seriously, but then the Internet came along, and the number of systems now out in the public domain has exploded’, Wells told citywire.co.uk.

With the growth in business-to-business and business-to-consumer e-commerce, systems failures for firms operating in this area can now be seen by the entire customer and supplier base. Also, the Internet is a 24 hours a day, seven days a week medium, and therefore gives companies little time to install and test new software.

Mission Testing was set up in April 1998 by Wells and a colleague as a testing consultancy, to cover all aspects of the testing life-cycle including setting up internal systems testing procedures, ensuring the user specification matches the technical specification, checking code, documentation, advising on what testing tools to buy and providing consultancy staff.

The company has two units, Mission Testing Direct, which provides consultants on a contract basis into companies, and Mission Testing Consulting, which takes full responsibility for a customer’s testing needs and uses its own software testing laboratory to test e-commerce systems.

Wells said with the Internet, the customer profile for software testing has changed. It is no longer necessarily the IT manager’s domain; now the marketing director, responsible for initiating perhaps a major Internet system or marketing campaign is the person to sign off the system and therefore needs the confidence that it has been tested.

Mission Testing does not develop any of its own testing software. It has agreements with major software testing tools vendors such as Rational Software, Segue and Compuware, and it will use these or advise customers to use these as appropriate. What Mission Testing offers, according to Wells, is its expertise and an ‘innovative217; packaged approach to selling its services to customers.

e-Mission enables a company to test the functionality of a new system, and i-perform allows the system to be tested under stress by simulating thousands of live users hitting a Website. Wells said they are ‘easy to procure packages with a fixed price for fixed results’.

The main problem with a business like Mission Testing, is understanding what really differentiates it, and what are the main barriers to entry for the competition. Mission Testing has at least three competitors: Imago QA, Sim Group (owned by Gresham), and Israeli consultancy Tescom. However, Wells said: ‘In terms of performance and revenue growth, we have come a long way much faster than any of these’.

Wells insists there are several things that differentiate Mission Testing. One is the company’s recruitment policy. ‘We do not have a graduate recruitment scheme. All our consultants are very experienced, senior people’. The second is the company’s sales policy ‘We have an aggressive sales policy. We don’t just make a sale and then everyone piles in to work on the project. We are constantly out there winning the next piece of business’, said Wells.

Finally, it is the knowledge and know-how the company has built up in the testing arena, Wells maintains. ‘If you gave two people the same ingredients, the experienced chef might make a delicious cake, the other person might not make anything at all’, he said.

The company is ‘profitable and cash generative’. It made profits of £500,000 last year, but analysts’ forecasts for the year to June 2001 are for turnover of £10 million, and profits of £1 million.

The company already has customers in Belgium, Holland and Ireland, as well as the UK, and Wells said the model is highly transferable both to Europe and to the US. UK customers include Cap Gemini Ernst &Young, Microsoft and One2One

Mission Testing will use the money it raised from flotation to ‘consolidate our position through the right acquisitions’, mainly of companies with ‘the right calibre of testing consultants and the right client base’. ‘Testing was off the radar a few years ago. Now companies are setting aside an increasing part of their software budgets for testing’, Wells said.

Even if the ambitions to be like Microsoft are misplaced, there is no doubt that just as no-one would accept a car that constantly breaks down because it has not been road-tested, people will begin to reject out of hand any software that does not work first time out-of-the-box.

Perhaps Mission Testing should aim to be what Microsoft is not to the desktop.

Shares should start trading on AIM in early December.

[hanedan] 13/12/2000 11:52

if someone has information or a good news about that please let us know