Sopheon Share Discussion Threads

[wjccghcc] 11/6/2018 14:12

Given the low volume traded, I'd be surprised. It's not an unusual movement for the share price.

To summarise, smithie, you think (correct me if I'm wrong) that their accounts are suspect and after 20 years of being listed with similar management, they've suddenly gone off the rails and concocted a sinister plot to dupe investors like Globo.

Me, I think it's a receivables spike from the fact that almost all of last year's sales increase occurred in Q4 which wouldn't be paid until H118 and that a company with net cash of $9.5mm and whose product demand has taken off over the last 3 years as companies focus more on innovation probably doesn't need to dupe anyone.

Of course fraud can happen in any company but this seems one of the more unlikely cases IMHO.

[smithie6] 11/6/2018 13:58

btw

the co. has seen its shares fall 10% & the boss owns 20-25% of the co.

so I assume there will be a statement from the co. (at 7am !!) fairly soon including one hopes the data for the current nett cash sitn. & the receivables total. And how they have changed.

And the share price will imo rise a little or fall a lot, accordingly !

[smithie6] 11/6/2018 13:47

WJCC

to give the exact data

Note 17

Trade receivables.
2017 14.2M$
2016 8.7M$

delta =~ 5.5 M$

while claimed increase in annual sales =~ 28.5M$ - 23.2M$
= ~ 5M$

that is what I dont like

(is a claimed jump in sales actually real sales if the end client is NOT actually paying !!.

In 2 cases I have seen claimed sales later get deleted !; Globo & 1 other co. , now de-listed, at a price minimum !! but still alive)

I dont believe/trust a big jump in sales when NONE OF IT is being paid for !!!.

but each person to their own view on that

If you believe it, that's your choice. No skin off my nose, I have no position.

Why do I post ?
..since I had previously looked at SPE accnts...& last week someone asked me on another brd to give an opinion on SPE..& I had time & for me these things are interesting, making or losing money is interesting !, so I did !

[smithie6] 11/6/2018 13:30

nett assets rose by 8M$

3M$ due to issuing new shares
& imo 5M$ due to receivables increasing by 5M$

otherwise nett assetts increased by... 0 ! 😲

[wjccghcc] 11/6/2018 13:25

They've never talked about the balance sheet in any of the previous 20 AGM statements, so why start now? Sure, if cash were tight, perhaps they would have, but at $9.5mm net cash, which is the highest it's ever been, I suspect they don't see the need to change the format of what they've always done.

Anyway, we can go round in circles here - let's leave it until the interims.

[wjccghcc] 11/6/2018 13:19

Yes I see your point but did you take on board my response that almost all that $5mm was in Q4 and therefore not payable in FY17?

I suggest we wait until the interims in August which will show whether receivables have normalised or not.

[smithie6] 11/6/2018 13:06

I see your point

but
do you see mine

that the turnover supposedly jumped by 5M$ over 12 months but 0% of it was paid for. Receivables jumped by 5M$.
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(Work being tailored to a client & not yet done can not legally be booked as a sale, imo...& should be included in deferred/future revenue which doesnt count for revenue or profit until later on when the work has been done and/or a bill sent)

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Agreed that up to each person how they view that. Personally I dont like it, because I know of 2 cases where software cos. have claimed sales which turned out to be lies. (Globo & 1 more; & I have seen countless RNSs reporting false accounts even including Tesco, Pescanova, Speedy (all big companies)...so if I see smoke I usually assume there is a fire !, but up to each person & their own mind.

[wjccghcc] 11/6/2018 12:53

smithie, I don't know what companies you deal with, but Sopheon's client base are very large companies (e.g. P&G, Pepsico) who are often the slowest payers and will never have 30 day payment terms. 60 days at a minimum and a lot have moved to 90 days. Combine that with multi-stage projects as they tailor their software to their client's specifications as Sopheon do, and it's not surprising if there is occasionally a revenue/receivables timing mismatch.

There is always risk with any software company of them not fulfilling their client's requirements and of them having to write off a receivable, but I can't remember that having happened here and they've been listed since 1996!

Would I prefer their receivables being closer to their historical 40% than 50% of turnover all the time? Of course, but that's what their broker is forecasting them to return to this year.

[smithie6] 11/6/2018 12:51

samsj

receivables. "they are being collected"

False imo

Accounts say receivables are 15M$ & snnual turnover was 28M$.

increase in turnover was ~5M$ & increase in receivables was ~5M$.

Are the claimed increase in sales real sales since they were not paid for ?
If they have been paid for then the co. would imo have issued an RNS. They havent. So, my guess is that the mountain of receivables is still there.

(if the co. issues a 7am RNS saying that receivables was 15M$ & is now 5M$ & cash has risen by 10M$ then the share price rises

but

if a 7am says that receivables is still 15M$ (& phps that the claimed sales & profit numbers for 2017 are to be re-stated due to some minor accounting rule (ie. they were false !)) then the share price falls !! (halves ??).

Spin the wheel !!

[smithie6] 11/6/2018 12:46

I also warned about Globo, a few days ago. And on Globo msg brd. at ~ 35p ..it the doubled to 70-80p...before ending at 0p.

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Receivables for SPE increased by the amount of the increase in yearly sales in 2017, ie. the big increase in yearly sales in 2017 did not get paid for, so does one believe that claimed jump in annual sales ?

Receivables are now 50% of annual sales.

6 months of claimed turnover in 2017 has not been paid for.
For me that is unacceptable & not believable. Each to own view.

Try paying your workers with an IOU each month, because your clients give an IOU to the SPE accounts dept. They wont accept it !!

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Im only giving my view. Each person to their own. I honestly have no position & had no position in Globo. But I should have shorted in both cases.

[samsj] 11/6/2018 12:32

nonsense - net cash from operating activities is above profit for the year. Of course receivables are going to be up, major wins in Q4 in growing software co. You could have said the same for 2016 re receivables, they are being collected. Someone made a bizarre globo connection in 2017 on stockopedia, again with zero evidence.

[smithie6] 11/6/2018 12:32

al101

debtors days

so debtors below must have increased by ~4M ??
almost all of the jump in sales in 2017 was landed in the last 30 days of the fin. year ?

but not paid for

too dubious/risky for me

(& noting that USA (the dirs are Americans) had FLAT turnover in 2017. So, can a jump in another region in one 30 day period at end of fin. year (& not paid for) be believed ??)

& even months later the co. doesnt include the collection of receivables in its trading update; as 99.9999% of cos would have done.

If the co. were to announce that it had collected 80% of the 15M$ of receivables then the share price would rise

but the co. has had 5 months to declare that & hasnt.

[al101uk] 11/6/2018 12:29

I was in for a small amount mainly to get a feel for the company, back out at the first sign of decline, but will be monitoring. Be interesting to see if you're right.

[wjccghcc] 11/6/2018 12:20

smithie, you're ignoring the fact that the business is very Q4 weighted (over 33% FY revs). Whereas H1 revenues increased by $1mm, H2 revenues increased by $4.3mm (from $11.7mm to $16.0mm), almost all of which would have been in Q4 and not paid until Q118. In that context, an increase in receivables of $5.7mm over the year is not out of whack.

Historically, receivables have always peaked at the finals and then reduced significantly (by 20%) by the time of the interims and I would expect to see something similar this year.

Bottom line, net cash rose from $4.2mm to $9.5mm last year - hardly a sign of balance sheet distress. Their broker is forecasting $16mm net cash by the end of this year and $21mm by FY19.

In my experience, suspect companies consistently report working capital issues (e.g. Globo). I've seen many good companies have a one off spike in working capital due to timing of large sales which then normalised in the subsequent period. I never touched Globo for those reasons but am happily invested here.

[smithie6] 11/6/2018 12:10

al101
"On the face of it though, the receivables appear to be from newly due accounts"

partly agreed...for "increase in receivables"..but that 100% of the increase in sales in 2017...that NONE OF IT was paid for.

NONE OF IT !!

& coupled with the fact that receivables is 1/2 of the claimed turnover of 1 year !

imho that all looks to me like a waving giant red flag & with a lighthouse fog horn blowing below it at the same time !

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Sorry, but I think the co. is telling porkies !!

& has perhaps/probably claimed income for future years as part of annual sales, when it should imo have not been & should have been counted as deferred or future income & not included in annual profit calculation.
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Note.
the cash supposedly generated by annual profits ..imo DOES NOT EXIST & is sitting in the receivables bucket....!! & imo is/was not part of real profit for 2017.

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Each to own view. But receivables at 50% of annual sales. I cannot see any justification for that...so for me the shares are a bargepole job since I dont believe the numbers. Partly since the accounts & auditor know it is not normal & have made NO EFFORT to justify it in the accounts nor include in the trading update that outstanding debts at year end were then collected in next 3 months & cash is now X; which is what 99.9999% of normal companies would have done.

If the accnts are false, good luck getting compensation in USA, Netherlands or wherever in the world the dirs actually are !
(definitely not based in the UK)
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Im only giving my opinion, each person to do own research & make own decisions. I have no position, short or long. (but short looks best bet, but risky in case produce a good trading RNS)

[davebdavid] 11/6/2018 12:06

I must say I jumped out this morning. I too made a couple of decent buys and a bad one. I cannot quite work out what is happening with these shares but a few posts I have read are saying it is around 39% over valued.
My feet got too cold! I hope I do not regret it but time will tell.

[thaiger] 11/6/2018 12:05

Do you think the Institutions not looking at facts & figures before buying in the over subscribed placing @ 986p!!??

[bamboo2] 11/6/2018 11:57

Hi Villa, not sure. I have been following the chart here very closely. I have made quite a few very good trades, then one bad one!

Price could have been pumped to get the insiders placing away at a good price.
[combined with the promise of a buyback?]
Pure speculation.

From a pattern pov, the chat could be making a H&S, but this is nowhere near confirmation which is an eod close below approx 840. If it did confirm the tp would be iro 750.

Elco is a better bet imo, but I am biased as I hold.

[villarich] 11/6/2018 11:31

It's worrying that this has given back pretty much all of the gain from last week. Are we thinking the previous rise to £10 was too fast?

[al101uk] 11/6/2018 11:05

Smithie6,

Thanks for your feedback I had another look and the results do detail debt over 30 days and over 60 days. Overall this increased and debt over 60 days was the main contributor to that, but that was from $780k to $1.3 million. Over 30 days actually reduced by $600k.

Making no comment on if you're right or wrong at this stage, I think it will take at least one more set of results to start figuring things out. On the face of it though, the receivables appear to be from newly due accounts.

[smithie6] 11/6/2018 10:37

let's move this thread back to be the top of list of SPE threads

[gouwang] 11/6/2018 10:25

!FOLLOWFEED

[smithie6] 08/6/2018 12:30

page 24
blah blah about recognising sales

imo covering the cos. bum
& it mentions that it will introduce IFRS15 in the future & will then reveal more about treatment of revenue

they could imo re-state prior sales numbers using IFRS15 as an excuse, although they say they dont "anticipate" it, a get out clause if ever I saw one.

(dirs. could re-state sales & profit (down) & just say it is was due to a minor difference in interpretation of what is a sale between accounting minions...& nothing to do with the dirs. !!)

Page 24 includes some red flags imo when combined with the nos. in accounts. & it mentions treatment of sales by agents & option to return the goods.
And clearly the claimed jump in sales are not getting paid for !

(btw. Globo kept itself running by raising new money by issuing new shares, sadly instis & PIs were conned & queued to subscribe !
At SPE they have ramped up their payables (bills to pay, ie. not paying a chunk of their bills) arguably intentionally to cover up the terrible increase in receivables.

(so, receivables have jumped & payables have jumped. Is it a real business ? with an accounts dept. chasing ppl who havent paid ? )

(an agent could claim a big sale, the profit for it is claimed, the sales staff phps get a small payment, the dirs/mngrs benefit (eg. via bonuses or selling shares at an inflated price)

but the supposed end client doesnt pay so the agency does pay SPE..& the cash is not generated...& receivables goes up

but creates the risk of a 7am RNS as that previous sale & profit is re-stated (deleted !) & receivables reduced. With obvious fall in the share price if it where to happen.


claimed annual sales of 28M$
receivables of 14M$

6 months of turnover hasnt been paid for !!

wtf !!

far too fishy for me, so Im staying away. A pile of poop imho, unless a fair justification exists & imho that is impossible, 50% is far too high.
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(if you claim you sell 100 used cars at 10,000$ each. =1M$ but you can only show 1/2 of the cash for them
then did you actually sell 100 cars or not ? where are all those 100 cars now ??! All gone or 50 still with you ? If there are IOUs for 1/2M$ but the cars have gone, how 'good' are those IOUs ?! If a buyer gave you an IOU does it mean he doesnt have the cash ? If 50 car buyers dont like them will they bring them back & rip up their IOU ?

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perhaps some 'sales' are being counted as sales that should phps be split between X% being counted as a sale in that year & Z% being counted as deferred/future income & which is not included in turnover or profit in that specific year