Statpro Share Discussion Threads

[joan of arc] 13/5/2007 19:06

Labatie
I missed something. What was the announcement on the 11th?
What was the FD's purchase?

[labatie] 11/5/2007 10:43

Thanks. Today's announcements clarify things.

[igoe104] 11/5/2007 08:36

LABAtie, I EXPECT this to be back in the 90,s next week. i,m sure the FD wouldn,t have purchased such a large amount, if the company had any finacial set-backs.

[labatie] 08/5/2007 16:39

Today's t/o represents just under 10% of the issued capital. I'm a recent holder. Anyone have any ideas?

[igoe104] 01/5/2007 11:17

I expect the agm, on the 16th may to settle investors nerves, with the candian aquisition.
with the FD buying a large amount, for a small cap company, it looks good to start moving forward, in the near future.

[igoe104] 30/4/2007 10:19

JUST got 18,801 shares, looks good for a rise soon.

[geovest] 13/4/2007 11:33

Selling over, non-stop to first resistence @ 91.

[nickcduk] 12/4/2007 19:29

I think it will bounce back soon enough following a positive AGM statement. Broker note suggests strong buy and EPS for 2007 of 7p. Thats far too cheap for a business thats growing very strongly still.

[gac100] 12/4/2007 17:50

Couldn't agree more Networker. AGM and trading update only a matter of weeks away (16 May).

[networker] 12/4/2007 11:34

First encouraging news for quite a while. Perhaps sentiment will now improve and be reflected in the share price. Presumably the non-exec would not have been a significant purchaser if there were bad news on current trading in the offing at the forthcoming AGM?

[gac100] 12/4/2007 10:42

PS:

Digital Look is currently showing a hugely misleading "directors dealings" for another Statpro director, Carl Bacon, yesterday: suggesting a sell of shares worth £1.7 million because they have a share price of 7,625p !!!

In fact Carl Bacon sold a little over £17,000 worth of shares from his nominee account and bought the same amount for his SIPP; overall holding unchanged.

[gac100] 12/4/2007 10:01

Statpro director buys £138,000 worth of shares

RNS today:

"StatPro announces that it was informed yesterday that on the same day, Mark
Adorian, a Non-Executive Director of the Company, purchased 181,598 ordinary
shares of 1p each in the capital of the Company ('Ordinary Shares') into a Self
Invested Personal Pension at a price of 76p per share ..."

[gac100] 05/4/2007 23:59

I've been having a look back through SOGs last 6 months or so reviewing my stake in the company.

The pre-existing business (ie pre-FRI) appears to have progressed well. Last Septemeber: "prospects for the remainder of 2006 continue to be positive for all of the Company's products across all of its territories." Year-end results showed strong free cash flow, lower than expected net debt, and a net operating margin of 19.2% on continuing operations (before exceptional items). In addition, "We have had a satisfactory start to the current financial year ... and overall performance is in line with our expectations."

It seems then, that current investor concerns are wholly centred on the acquisition and integration of FRI.

On announcing the proposed acquisition of FRI last September SOG stated that the "Board expects that the Acquisition will be earnings enhancing in the Group's financial year to 31 December 2007."

In the year end trading statement released in January: "The initial phase of the integration of our North American businesses is progressing to plan."

On the announcement of results last month: "The integration stage will be substantially completed by the end of the third quarter of 2007." And "FRI's portfolio management system (Raison) ...renamed StatPro Portfolio Management ... is expected to make a positive contribution to our results for 2007."

So, the timetable for integration (and the expected reduction of annualised costs by £1.0 million) appears to be firmly on track. The exceptional restructuring costs for the year ended 31 December 2006, signalled in the January trading update, were "in line with our plans to derive operational synergies, as outlined at the time of the acquisition."

While concerns have been expressed on this board about how the integration is progressing, it looks on the face of it to be going according to plan ...

... That leaves the one possible fly in the ointment. In last month's results: "Following the acquisition, we implemented our accounting policies on software revenue recognition at FRI. This policy, which is more conservative than FRI's in terms of revenue recognition, has had the effect of reducing its contribution compared to that expected at the time of the acquisition." In addition, "we have changed the business model from a licence fee and support model to an annual licence model. Whilst this has a short term impact on the revenue, the directors believe that in the long run this is the best way to build significant shareholder value."

This doesn't seem that bad to me, and the broker reduced its 2007 forecast to reflect this after the results. If the share price had fallen in line with the broker forecast revision, SOG would be trading at around 90p. In fact of course its currently 80p and has been a shade lower, which I guess means the market is rating risk relating to the integration of FRI as about 10% higher than it rated it before the results. While the fall from +100p to 90p reflects the concrete "revenue recognition" issue, I've take the view that the fall to 80p reflects largely irrational fears re the integration itself, and I've been happy to buy a bit more at what I think is a reasonable discount.

There should be considerable upside from here if the forthcoming AGM is reassuring on the integration, which I expect it to be.

In the short term I'd expect SOG to be focusing on organic growth and exploiting its cross-selling opportunities (perhaps the odd small bolt-on acquisition). However, for the longer term, if FRI is successfully integrated, it will be SOGs first experience of a large scale acquisition, which they should learn massively from and which will stand them in good stead for acquisitions further down the line.

OK, convinced myself at least – I'll SOG off now for Easter.

[green sand] 05/4/2007 12:47

I was always a little concerned about the size of the FRI deal. It was big enough to create mayhem if it did not quite go as per the proposal.

During March AXA declared a 9.9% interest and Herald 8.6%. The size and timing of those holdings give me some solace with regard to the medium to long term. It is difficult to envisage that the 12th March results came as a mega surprise to institutions taking holdings of that magnitude? But what do I a mere mortal know? Only that I am a few points down and will wait until the AGM and hope that we don't get a further slap.

Good luck

GS

[geovest] 05/4/2007 10:12

igoe, 9/10 times it's a bad idea to try and catch the knife, 1/10 times it's a great idea ;/)
Is this 1/10. 30% drop in shareprice on relatively low volume with final sell-off yesterday on increased but still mediocre volume, co-inciding with the end of tax year. MACD at its lowest level since Sep 2001. RSI @ 18, lowest since Nov 2004. The sell-off is hugely overdone.
Time will tell, but me, this aint no knife, its £ notes! Where's my bucket ;-)

[igoe104] 05/4/2007 09:21

I agree geovest, put as they say never catch a falling knife.

[geovest] 05/4/2007 09:11

I think you are right to raise the issue of the FRI aquisition. The FRI business consist mainly of two parts. The first is the provision of valuation data, which is a recurring revenue model similar to the current Statpro model. The second is the portfolio management products where FRI charged a licence fee plus implementation and integration service if required and annual maintenance fee. This is normally where revenue recognition can be more aggressive.

Statpro will change the business model for new business of the portfolio management business to their existing model, i.e no upfront licence fee, but a recurring monthly fee plus implementation and intergration cost. Existing business fully implemented again should not be the problem as it will continue to provide a regular stream of annual maintenance fees. The problem area is probably systems sold but not fully implemented, where (best case) profits were recognised on parts of the project not yet completed, or (worst case) revenue may have been recognised without taking the full project expenditure into account. I don't think it's the worst case scenario because Statpro would have ligitimally provided in full for this in the 2006 results as an exceptional item.

It therefore seem likely that the problem is that Statpro may have to complete implementation of the systems already sold at lower margins than anticipated. Given that implentation typically takes 3-6 months and that FRI was already in the accounts for 2 months, the problem should mostly 'wash through' halfway through by the end of the first quarter. I still don't thnk it is a serious problem. FRI was included in the 2006 results for 2 months which showed that aquisitions (FRI + Alpai & Kizen) produced a operating profit of £359k before amortisation and exceptionals (19.2% margin)

Statpro's strength is their ability to buy good products, make them even better and cross selling existing and new products. They will have plenty of this to do over the next year or two.

Hopefully we will get more clarity after the AGM on 16/5, but to me it remains a very strong buy at these levels.

[wjccghcc] 05/4/2007 07:57

I think the jury is out on the Canadian acquistion. It looks like they were surprised by the aggressive accounting policies. The market doesn't like the possibility of other problems arising there - always a risk with any acquisition.

[geovest] 05/4/2007 07:48

Nothing new as far I could find. It's been drifting down on relatively low volumes with a big drop yesterday on reasonable volume. I think its just profit taking combined with peeps who bought on Dec Mag tips when price shot up from 90 to 110 who are now selling out in disappointment.

Personally, I've been buying over the last few days. PE of 11, 85% recurring revenue in a growing market, strong cashflow. I see a 50% upside within 12 months.

[joan of arc] 05/4/2007 00:12

Has everyone gone to sleep on this. The share price is nose diving and no one has any comment to make.

Is it due to people taking profits (fiscal yr end), fear of a dollar meltdown, concern that they have gone ex-growth or what?

Or as they are now down 30% in less than a month are we looking at a mega buy oppportunity?

Someone tell me please!

[gac100] 23/3/2007 13:22

Just done the sums to put some flesh on my earlier prospective p/e more or less unchanged before and after results comment.

Pre results 2007 eps forecast 8p: average closing (mid) price week before results 104p = 2007 p/e 13.0

Post results 2007 eps forecast 7p: current (mid) price 90p = 2007 p/e 12.9

[green sand] 23/3/2007 13:09

Thanks gac100, looks as though we are being "hindered" at present. I think I will stick around until May: -

"We have had a satisfactory start to the current financial year with further
progress on the integration of FRI and our cross selling initiatives, and
overall performance is in line with our expectations. We will provide a further
update on trading at our AGM on 16 May 2007."

Good luck

GS

[gac100] 23/3/2007 12:55

GS - from Citywire 12-Mar-07:

"Analyst Robert Sanders at house broker Arbuthnot says an earlier target price of 130p a share 'can still be justified as it is derived from comparing StatPro's valuation against a basket of similar stocks'.

However, he says this and Arbuthnot's current strong buy recommendation on StatPro shares are under review because of today's results coupled with the anticipated impact currencies may have on StatPro's 2007 numbers.

'Although we continue to believe that FRI will lead to cross-selling and up-selling opportunities, we have factored in the current $1.93 US dollar exchange rate and the adoption of StatPro's more conservative revenue recognition policy,' Sanders said.

The broker has reduced its 2007 estimates, including sales to £23 million from £24.3 million, profit before tax to £4.9 million from £5.9 million, and earnings-per-share of 7p versus 8p."

Full article here:


SOGs underlying performance and prospects remain good as far as I can see, though I guess the headline-grabbing negatives in the results will hinder the share price short term.