Total Systems Share Discussion Threads

[hugepants] 03/3/2009 13:54

Josh
Its there in black and white. They clearly state they had "unanticipated" business in Q3. So reduced turnover from Q4 when compared to Q3 doesnt represent a negative trend.

[joshalexander] 03/3/2009 13:47

Turnover likely to be lower in Q4 - how come its not coming their way now???.

[hugepants] 03/3/2009 13:45

The bigger Capita Insurance become the more business potentially coming TTS's way.

[joshalexander] 03/3/2009 13:36

The triumph of hope over actuality I fear - yet again re TTS.

[hugepants] 03/3/2009 13:21

Capita bought another insurance business today. Cant be bad news for TTS.

[egoi] 26/2/2009 10:29

Excellent posts HP, indeed quite right Josh too as you say, full year to 'exceed market expectations'.

Not many companies saying that these days. -;)

Of course the other 'outer' here apart from assets being way above share price and possible return to divvy which no-one has mentioned recently would be a couple of additional juicy contract wins. All looking good. -:)

[joshalexander] 26/2/2009 08:57

.."The last quarter of our financial year is likely to see a lower level of
activity than the third quarter but the full year performance should exceed
market expectations at the turnover level".

"a lower level of activity"

There is NO big increase in turnover coming from the Capita contract IMO.
Its there in black and white.

[hugepants] 26/2/2009 08:43

Principle Insurance Holdings

[hugepants] 26/2/2009 08:39

Good post rarther.


I see the Capita results today mentions the insurance contract TTS are working on:



".....We also signed a deal with Principle Insurance Holdings to provide outsourced
services for Principle's motor and home insurance. As part of the contract,
worth in excess of GBP80m over 8 years, Capita is providing an IT platform from
which to launch and sell Sharia compliant insurance (or Takaful) products
direct to consumers in the UK..."


The Total Systems RNS in July last year mentions this 8 year contract. It also says its an "umbrella contract" and "This order relates to phase 1 of the first development under this contract". So it sounds like there could be a good deal more to come from this.



RNS RELEASE

29 July 2008


Total Systems sign contract with Capita for Ultima insurance platform

Total Systems plc ("Total") are delighted to announce the signature of an umbrella contract under which the first purchase order has
been signed off with a value of £2.6M including licence fees of at least £1.05M payable over the minimum eight year term of the contract.

This order relates to phase 1 of the first development under this contract. Following signature Total's customer, Capita Insurance Services
("Capita"), have gone live with Principle Insurance Holdings on Total's customer-centric insurance platform, Ultima. Capita has selected
Ultima as their strategic platform for General Insurance, with speed of implementation being a significant factor in the decision making
process.

Ultima has proved to be a reliable, efficient and flexible platform for many insurers' businesses across a number of products and
multiple distribution channels.

Terry Bourne, Chairman and CEO of Total said "this has been a fantastic project to be involved in. Sharia-compliant insurance products
are new to the UK market and the experience has resulted in our consultants being well versed in the nuances of Sharia-compliant systems. It
is testament to the flexibility of the platform that it can be adapted to meet such complex and challenging products and processes"



ENDS

For further information, please contact:

Mark Grant
Business Development Manager
020 7294 4860
[e-mail]

[cfb2] 25/2/2009 14:30

I've finally dumped the last of my holding in TTS today. Having held the company for about 3 years I've come out with about a £2K loss. Quite why this company needs a listing on the stock market beats me. Best of luck to those still holding.

CFB

[rarther] 22/2/2009 11:52

I remember when I was 15 and got hold of my first copy of the FT - this was the first share I ever looked into. I thought "wow, they have got cash and such a low market valuation, they are well oversold". Now over a decade later they have still got a cash pile and the same valuation, albeit with a few spikes on the way. They have done nothing much at all with their assets.

I really have a lot of time for Terry's diligent management style & his respect for shareholders. If he had been managing Northern Rock or governing the FSA, none of this mess would have happened. He's definitely a safe pair of hands, but it's a misleading investment for many smallcap investors because, unlike most companies listed on the LSE, TTS's glass is always half full and their focus is simply on maintaining their position and treading water.

I have not been a shareholder for a few years, but to this day I don't understand why they are paying for a full listing on the LSE (correct me if this has changed?) when they have no desire whatsoever to raise money? It's nice to have visibility and obviously their customers are in the financial world, but 30 years' experience and good word of mouth is all the evidence of legitimacy they need. Being listed is expensive and time consuming. If shareholders need an exit at least they could move it to aim or a lower exchange where it is so much cheaper.

On the subject of inefficient use of capital, what sort of small company owns its own property in EC1? I saw it from the outside once. It's tiny, more like a flat (certainly does not accomodate their 40-something employees) and was worth a mint. With rising property prices that was the value in this share. It was hidden on the balance sheet because they bought it decades ago and never wrote it up - but that window of opportunity has passed now. Effectively, they are subsidising their prices by having an inefficient asset. Other companies have to pay high rents but they don't. So they have cash sitting in the bank and property rooted to the ground. That's why the market cap has often dropped below NAV, because the money is not doing any work.

Also, searching them on the net, the first thing you notice is that they are paying Google Adwords for top listing when they are the top listing anyway. Then you get to the site and it comes across as extremely amateur for a company with their own team of programmers. The homepage should clearly state their offering and have a huge phone number for prospective customers to ask for an information pack. Instead they've got diagrams and big paragraphs and all sorts which makes little sense to a finance monkey. Just send them a video of how you are going to solve their problem and tell them where to send the cheque!

[8trader] 16/2/2009 23:33

Seems to be a common theme !

Companies with a strong balance sheet are always cautious on
their outlook because they have plenty of money in the bank and
dont need to worry about raising funds.

And then all the other rubbish, the loss making cash burning rabble
are always bullish so they can get a placing off the ground !

[hugepants] 16/2/2009 23:20

I think so. Brewin Dolphin are predicting earnings of 3.2p per share and a 0.8p dividend.
This Dolphin outfit have been miles too low in their earnings estimates the last 4 years. In fact they've been on average 4p per share too low which makes you wonder why they bother. My cat Hector could have predicted better. Then again its probably based on guidance from the management who like to make things sound as downbeat as possible (they just had to add the bit about essential repairs to take the shine off what would have been a really great trading update).

[rossco] 16/2/2009 22:41

The IMS made mention of "exceeding market expectations". I can only find one broker who has issued a forecast for 2008/09 and they expect profits of £500k with a dividend of 0.8p. So is it fair to assume that the directors are referring to this forecast from Brewin Dolphin?

[scburbs] 16/2/2009 17:07

If you like TTS you might also like NAR. I don't hold either, but have been tracking both. Obviously intermitantly as you can only watch so much paint dry!

NAR has a massive undervaluation on an assets basis but very erratic earnings. Current mid price around 28p. Current NAV of c.90p made up of 40-45p cash, 35-40p net current assets, 10p fixed assets.

but .......

Controlled by one dominant individual, no obvious exit strategy and not cheap on an earnings or dividend yield basis. No purpose to its quoted existence other than paying the salaries of the directors and employees and retaining massive cash buffers to ensure that it can continue to do so!

Sound familiar?

At some point they will both prove to be a bargain, but I suspect it may be (and for some already has been) a frustrating wait at least until the dominant shareholders decide they have had enough. As the executive chairman and managing director are 63 and 64 respectively the prospects for the realisation of NAR's inherent value may be better (how old are the TTS directors?).

These companies can be contrasted with FWY which was in a similar position. FWY was not quite as cheap, but it did not have a dominant shareholder treating it as a personal company and instead had activist investors and a strategy for realising value. FWY has now returned most of the underlying value to its shareholders.

[davidosh] 16/2/2009 16:49

Blimey look what happens if you try to sell ? Sadly the lack of dividend or intention to pay one just leaves investors mulling whether they should really be holding at all. At least with MUBL they intend to pay a maiden dividend in the Summer and they are generating cash and growing earnings far faster than TTS.

The growth at TTS has been negligible for many years and the property gains were always heralded as the big bonus outer which sucked me in too. We have to be honest with ourselves here. It is payout 80% of earnings as a dividend with that cash buffer or forget it .....

[joshalexander] 16/2/2009 16:03

Some of the points that I have been making for the past 18 months
have been very concisely summed up over that last few posts.

[9degrees] 16/2/2009 14:39

Terry if you are listening please just give us a return on our investments by paying a reasonable divi . It doesnt need to be excessive just reasonable .Thanks

[cfb2] 16/2/2009 14:17

The money being made from this company is going nowhere but into the pockets of the directors and employees. For all those people on this thread that think this is good value, why don't you buy some shares as it'd help me out! Unfortunately the MMs won't take any more off me because there are no buyers. I've been dumping my shares whenever there is a sign of a rise beyond cash value and I'll continue to do so.

CFB

[egoi] 16/2/2009 13:14

HP this is a small company beavering away successfully, prudently managed (more so than some similar ones imho, eg Directors not taking imho gross salaries) and protecting their assets, making pretty regular profits.

Apparently that's not good enough for some even in this environment - though I agree they ought to pay a dividend or give a cashback.

Strange times we live in.

[hugepants] 16/2/2009 13:08

Folks
Id argue the Capita tie-up means previous history may not count for much. The contract RNS said they'd be using Ultima as their standard solution for general insurance. I reckon they'll get a lot of business from this. Also a recent RNS mentions they've completed a Sharia insurance solution. This is a growth area.

In any event previous history isnt exactly bad. The company is almost always profitable sometimes significantly so eg. £1.4M pre-tax in 2002.

I think this company represents stonking value at this price with significant upside potential.

[scburbs] 16/2/2009 10:22

I have been following TTS for a while, but do not hold. I completely agree with Davidosh. If they are not going to make any efforts to realise a decent IRR for shareholders from their surplus assets then they are wasting shareholders time and should be a private company.

The idea that they will be absolutely flying when we come out the other end is possible but rather fanciful given their track record. It is much more likely that the business continues to be erratic. There has been no sign of consistent profitability for a number of years.

Massively undervalued on an asset basis, but not undervalued on an earnings or yield basis. In this situation they are only really undervalued if there is an intention to realise the undervalue at some point otherwise the likely IRR for an investor will tend to very low returns over time.

In the current climate the chances of management realising the inherent value are materially reduced. More likely they will just stick with a ridiculous asset buffer to support their erratic business.

The business is effectively being run for the directors and employees rather than the other shareholders. This is easy to do when directors are also substantial shareholders.

[hugepants] 16/2/2009 10:00

David
I think you are being a bit negative. The way Im looking at this is if TTS can grow the business in a the middle of a deep recession then they should be absolutely flying when we come out the other end.

I agree the only way we are likely to see the value outed in the property is if someone makes an offer for the company. They would have to take the value of the property into account then. But aside from that I think it would go a long way to rerating the share price if it was in the accounts at its current market value, not its value 20 years ago.

[davidosh] 15/2/2009 23:30

They are using the property though. If they actually sold and then rented it back there would be even more cash but also a rental cost each year. There needs to be a strategy for returning something to shareholders.