Touchstone Grp Share Discussion Threads

[wjccghcc] 16/1/2003 15:24

Touchstone and Rage are in completely different business areas. That's like suggesting Glaxo buy Safeway!

[astonicus] 15/1/2003 11:42

With Rage plc now in administration, and Touchstone having a strong cash balance, has anyone undertaken a synergy assessment, with a view to Touchstone making an offer at rock bottom prices?

[astonicus] 21/11/2002 19:15

Message to Touchstone MM's

Now then to slip a balancing trade in at 98p after hours, nominally booked at 15.15 under reference 1024K6B102 (printed copies available) is a bit under the belt ... to say the least. Particularly as the 3 earlier trades were 105p, 107.4p, and 110p ... and traded prices lower than pre-results and subsequent, despite an improved performance by the Co.

Something awry me thinks and enquiries of the RA's may be in hand unless we see a return to normalised market trading.

Come on guys, I have the Share Club into this, and my reputation is at stake! Remember the little guys that support TSE. By all means buy back the shares, but at a fair price. Do not attempt to create a forced market unless you wish a visit from the RA's!

A response from the MM's would be much appreciated. A

[astonicus] 21/11/2002 19:15

Message to Touchstone MM's

Now then to slip a balancing trade in at 98p after hours, nominally booked at 15.15 under reference 1024K6B102 (printed copies available) is a bit under the belt ... to say the least. Particularly as the 3 earlier trades were 105p, 107.4p, and 110p ... and traded prices lower than pre-results and subsequent, despite an improved performance by the Co.

Something awry me thinks and enquiries of the RA's may be in hand unless we see a return to normalised market trading.

Come on guys, I have the Share Club into this, and my reputation is at stake! Remember the little guys that support TSE. By all means buy back the shares, but at a fair price. Do not attempt to create a forced market unless you wish a visit from the RA's!

A response from the MM's would be much appreciated. A

[astonicus] 21/11/2002 15:37

Me thinks from the price movements since the positive interim's that Company share buy-back time coming up shortly. Watch them and get stocked up before the ex-div date. A

[astonicus] 14/11/2002 18:49

Thanks Chris,

Tether's revision was both expected and a tad (2 months) late. In truth it reflects more on their their understanding of the stock in current market conditions rather than TSE's performance. Alternatively a play to support my earlier thesis. Until the announcement they were of the view that full year sales could be uplifted by 20%, following the previous year's uplift of 11.2%. I know of few housebrokers so bullish ... or out of touch!

Your penultimate para. is significant, and to a point re-inforces my earlier post. Mr Birch is being 'conservative' and good for him. He comments that some good contract signings in the past 2-3 weeks and 'one large order yesterday (presumably 13th November).

My supposition for full year results, given a mild upturn in the market is turnover of £15.25m to £15.75m ... up at mid point by 9%, or even better. Profit margins should increase marginally given the current market demand for value added products: Current as well as prospective earnings per share will well increase significantly if the share buy-back takes effect.

Now that sounds bullish, but if you look at their track record it is not unreasonable. Don't forget at current prices + 25% TSE could buy back the 33% of publically owned shares for c. £1.3-6m. That's less than half of their cash 'at bank'. The prospect of a private buy-out looks more tenable, don't you think.

And good luck to you Mr Birch... but don't forget the small guys that support your excellent company.

Comments? A.

[chris001] 14/11/2002 17:53

IT services group Touchstone defied market gloom to gently improve both profits and revenues for the six months to September but, despite this achievement and news of 'improved sales activity', house broker Teather & Greenwood has slashed full-year forecasts. Elliott Davis reports.


First-half figures from Touchstone showed profits and turnover inching ahead – up £5,000 to £611,000 and £180,000 to £6.9 million respectively. Managing director Keith Birch claimed this 'modest' growth was achieved against 'a climate of difficult trading conditions'.

Teathers analyst Adam Lawson had been forecasting a £2.45 million profit before tax and goodwill for the full year, from £17 million of revenue. He now anticipates a £2.2 million profit (£2.1 million) and revenues of £15 million (£14.2 million) for the period, but reiterates his 'Strong Buy' recommendation on the stock.

Lawson bases his opinion on Touchstone's ability to 'gain ground while others in the sector have retreated' – an occurrence Birch attributes to the strength of his company's recurring revenue base. 'A third of our turnover is booked before we get out of bed for the year,' he explains.

In addition to this Touchstone supplies a range of software applications, including accounting, customer relationship management and procurement offerings, to customers across a broad spectrum of sectors. When some areas of business are weak, others (most recently the pub and hospitality sector) take up the slack.

After a difficult first half Birch says that conditions seem to be improving, commenting that 'we've seen some good contract signings over the past two or three weeks, including one large order yesterday'. This has afforded Touchstone the confidence to more than double its interim dividend to 1p.

Even after Lawson's downgrade the shares trade on an undemanding forward p/e of 7.3 times.

[seabee] 14/11/2002 14:31

Astonicus
Well reasoned. Like BRDN I see real value here. I for one do not mind the words 'cautious optimism' and 'conservative' in this or any market place!! ;0)
CB

[astonicus] 14/11/2002 13:42

Seabea, thanks for your post.

Remember this stock has a small NMS of 500. Larger deals can therefore be held over and declared later. So we may see more activity today, Friday or early next week ... particularly as the buy price is considerably less than that declared at the last trading update ... yet the indicies are now higher, the numbers better and looking to move further north in the next 4 months or so.

Remember also that this is largely a quality, family owned stock with a few of us external's holding around 1/3rd? of the stock. With a buy back of 10% of the total issued stock that equates to 33% of externally held holdings.

The numbers released today are pretty good given the climate and coments on 'cautious optimism' by Frank Birch (MD). They may however be masked by such 'conservative' tactics as not scoring contracts awarded but not yet commenced. If I was a family owning shareholder and looking to buy back 1/3rd of the public holding, my tactic would be to keep the price lowish.

We will see what transpires: 1) Significant shares (at least over 70k)will be bought soonest, or, 2) the price might drop following this post (in which case, if the family interest are seen behind that they will have to defend potential challenge through the regulatory authorities. 3) Alternatively, if the family is looking to take this private, they will need to buy back the shares at a premium.

Having looked at all three scenarios, from their perspective, I think I would plump for a combination of 1 and 3.

Any comments from other minority but supportive shareholders?
A

[seabee] 14/11/2002 13:03

Astonicus/GZR
Agree with your comments. I was rather surprised that there wasn't much activity this a.m. Although figures reasonable, I felt punters expected much more and I thought we would see a more dramatic fall off. (Famous last words, as no doubt it will now fall like a stone). I see a growing recognition of the potential here.
CB

[gzr] 14/11/2002 10:18

Yes, Astonicus, you are right, they haven't bought any shares back yet. Now the results are out, this could happen any time. What with the yield and fairly low pe ratio, this should underpin the shares at the very least. The buy back will hopefully give them a boost in the short term.

[astonicus] 14/11/2002 09:11

GZR. You might care to work up the impact of the approved share buy-back scheme on prospective EPS, PER's etc.

At 30/9/02 TSE had 10.491m fully paid and issued shares. It obtained approval to buy back 1.0125m at the AGM i.e just under 10%. Without a signigicant increase in general market climate I expect TSE to turn in Turnover marginally up on last year (£14.19GBP) - up by say 5-10%. I do expect to see an increase in profit margins particularly arising from the higher value e-procurement systems. If the market picks up we could all be in for a very pleasant set of full-year results.

All in that suggests some very good full year figures based on solid performance, backed by quality management and a solid balance sheet.

What do you think?
A

[gzr] 14/11/2002 08:44

Div yield now 3%, not bad for a tech stock. PE ratio of about 10 if they match last year results for the full year.

[gzr] 14/11/2002 08:37

Not a lot of growth in the first half but at least they've doubled the dividend and seen some encouraging signs for the second half.

LONDON (AFX) - Touchstone Group PLC, an IT services group supplying
integrated business solutions and services to mid-size UK companies, said it is
cautiously optimistic about the full year after signs of improved sales.
The group reported a 3 pct increase in profit before tax, exceptionals and
goodwill for the six months to Sept 30 2002 to 794,000 stg from 771,000 on
turnover of 6.9 mln stg, up from 6.7 mln.
The board more than doubled the interim dividend to 1 pence from 0.47 pence.
Managing director Keith Birch said the group continues to benefit from
increasing service-based revenues and is encouraged by the early gains in sales
of new e-procurement systems.
"Signs of improved sales activity in recent weeks leads us to view the
prospects for the rest of the year with cautious optimism."
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[cossie] 13/11/2002 08:16

some people don't believe it!

[astonicus] 12/11/2002 17:08

CR/MM just watch the effect of the results due Thursday. Nothing to suggest other than a continuation of previous year's trends. A 30% gain is not out of the question ... provided the wider indicies move positively.
A

[minuteman] 12/11/2002 13:48

Quieter than I thought in this stock, Rich, never mind, the crowd will catch up! Probably when the stock has moved 30%. lol

[astonicus] 11/11/2002 11:31

CR Given the small market size (NMS of 500) you may find that these were earlier buys, now booked as sales. We had difficulty last week buying more than 700 at the asking price
A

[cockneyrebel] 11/11/2002 11:19

Well, 3K sold today can't be much profit in that at this level. One of the cheapest techs on the market, a superb long term history, director buying, positive statement, PE 7, 2%+ yield - who takes profits 3 days before the results?

CR

[cossie] 11/11/2002 11:13

results out on thursday should be quite interesting. Directors were buying at 113p in October.

[astonicus] 08/11/2002 11:03

Touchstone's opener has moved up, a tad as expected to 117p. Anyone on level 2 out there able to advise on what's in the wings.

Thanks, A

[astonicus] 08/11/2002 00:02

That T trade (Deal 9) shown as a sale was probably a buy first thing this am. Explains why I could not buy my £1,500 at 104p at the time ... as the buy price was pushed out to 110p whilst I was on the phone.

Don't forget the AGM approved re-purchase of 1m+ shares. If the Board is to do that it will need to do so shortly, or after the next dip, if it is to get shareholder value

A

[minuteman] 07/11/2002 11:55

I thik these should tick up nicely over then next two weeks, looking at the tiny volume today....