Ubisense Share Discussion Threads

[hastings] 04/5/2013 22:10

I thought this worth posting again, given where we are now and where we were then!!

(stand first)Professor Andy Hopper talks to Jenny Chapman about the company he chairs, Ubisense, post-flotation. Was it a good idea?



(starts)"Ubisense quiet on IPO gossip" ran the headline in the News in November 2010. The same story also carried the news that the company had just raised a further £5m from new and existing investors.

Fast forward to June this year and Ubisense had floated on AIM, the stock rising from its 180p debut to 212.50p within the hour.

This was the first Cambridge IPO for some years, the city has been keeping its powder dry and then it turns out bigger things are afoot, Autonomy.

I mention the "A" word because I am listening to Professor Andy Hopper, Ubisense chairman, also head of Cambridge University's computer department; he reckons the sky's the limit for Ubisense, just like ARM and Autonomy.

I want to find out why Ubisense decided to float, what it has meant to the company, how it makes a difference.

There are hints of just how ambitious the company is all around in the offices in St Andrew's House, part of the old Philip's premises in St Andrew's Road, Chesterton. The meeting room I am sitting in is called "Pacific", there is a large poster on the wall "The Road to Lean Production".

Ubisense is all about being able to find things very quickly, in real time. The technology is already installed in factories around the world, and Prof Hopper sees no limit for its ubiquity: "It could be in every building on the planet," he says.

The genesis for Ubisense was 20 years ago in Prof Hopper's then office which stood next to what is now Judge Business School. It was the Olivetti computer lab, part of the university, and which had started out in a cramped set of three rooms in Market Hill.

"When we moved to the Old Addenbrooke's site we were on three floors instead of in three rooms and you couldn't find anyone. Roy Want, who was my PhD student came into my office and said `What can I do?' On a whim I said he could sort out how to find everyone.

"Roy then designed an indoor location system. We all wore badges like medals and everyone knew where everyone was. We then put it in the whole of the computer lab and a number of the people working there are here now."

Great, isn't it, a company turning over £20m was founded on a whim. But it was to take some years before the business was formed. In 2002 the core team got together and it has been a success from the word go.

"But this stuff is difficult, getting it to work. It's complex technology, some hardware, but mostly software. We had to get to a scale where a large number of things could be tagged and located quickly. It's taken 20 years of know-how and then working your guts out to get it to work.

"As chairman I know more about the technology than is sensible," he adds.

But he is quite some chairman, with a track record matched by few, straddling academe and business, making a personal fortune as well as for others, he was involved in Acorn, ARM, Virata and is chairman of RealVNC, the company run by Andy Harter, who worked with him in the computer lab.

And it all seems to have gone incredibly smoothly for Ubisense, which is very much a Cambridge story. All the money has come from "the great and good of Cambridge" as Prof Hopper puts it, all of it angel investment, no sniff of a VC. At the time of the IPO the company had around 80 investors.

"The board has been able to concentrate on the business rather than wrestling with an investment structure. The investors said yes each time we went for more funding and the time spent on this was reasonable, the hassle ratio was completely under control. Distraction has been missing."

This said, the straightforward days have diminished with the stricture of having to provide half year reporting to the market now that the company is public.

"But this overhead is necessary for the company to grow. One of the reasons for the flotation was to give us the opportunity to acquire other businesses, although I've nothing up my sleeve at the moment, but we could raise the cash."

Another reason was to give the very supportive and patient angels a chance to make some money from their investment, although most have chosen to hold on to their shares.

Richard Green, chief executive, came on board in 2004 when Ubisense merged with Ten Sails, another Cambridge company. He had experience of taking a company public, which kind of suggests the thought had been there for quite a long time.

"This is a niche and potentially a huge business," Prof Hopper says. "It's unbounded. Look at GPS satellites, to me the notion of the same in location indoors is obvious. GPS doesn't work very well indoors." Ubisense does.

This sort of talk leads to a mention of Autonomy: "I think it's fantastic," he says, adding: "I don't see any reason why we should not grow into being the dominant supplier." Later, he says the £10bn Autonomy sale to HP is something for others to aspire to, and that it is bound to fuel start-up investing in the city from those who have reaped the rewards.

Back to the business in hand, and to give you an idea of the sort of application for Ubisense technology, one of the most recent installations is at the Mini plant at Cowley. Parts are tagged, and you know, in real time, exactly where they are all the time. It saves a lot of money.

But there have been some less likely applications, like the cows in Denmark, tagged for real time location; but mostly it's in industry, and the company has a close working relationship with world leading industrial tools firm, Atlas Copco.

At this point he asks me how I see the business scene in Cambridge these days. I rather stupidly say that propositions have become stronger because the tekkies have brought along the management experts at an earlier stage.

A few minutes later, after other things have been discussed, Prof Hopper says: "I am a strong believer in the notion that the founders can be smart business people and this stereotyping of engineers not understanding is complete nonsense." Mind you, they did bring in Mr Green at Ubisense.

It's a good story, Ubisense, and the only complaint Prof Hopper has about the whole exercise of floating is actually nothing to do with the business, it's the tax system.

"It needs to be looked at. Capital Gains Tax is 28%, but 10% if you hold 5% or more of the company.

"This means you don't want to go below 5% and that is completely and utterly bonkers, a disincentive to entrepreneurs. Investment does not happen because people want more than 5%. It's just not right, it distorts the business and is bad for UK plc and for company growth. This is one of the reasons we don't have bigger companies."

[p1nkfish] 24/4/2013 13:12

I think 247p is on the low side as are 2014/5 estimates.
Once ove the 52 week high it will get past 270p imho.
30%+ upside from here imho.

[p1nkfish] 23/4/2013 13:31

now is a good time to look to aim.
good news is just ignored and has no share price impact at all.
low £ will help exporters.
sentiment poor and may become weaker.
if that's not telling people valuations will/are becoming interesting I don't know what will.

[p1nkfish] 09/4/2013 19:56

excellent nws today sounds like PSA Group but so little interest in the market. Only profit will cause a re-rating. It needs news just to stay where it is.

[p1nkfish] 28/3/2013 07:34

good news but how much is it worth?

[hastings] 23/3/2013 08:21

The tech here is clearly very impressive and the foundations have been put in place. Profits will begin to roll next year and beyond. Of course, depends on your horizon and how patient you are. Personally happy to tuck this away.

[p1nkfish] 22/3/2013 23:04

Overall technology.
AMO have executed well but IPTV is relatively commodity.

[hastings] 22/3/2013 22:15

Beating Amino should be no problem. On what basis! Profit? Cash generation? from what you have been saying in relation to UBI, AMO should have won hands down.
Of course, the award wasn't about that was it!

[hastings] 22/3/2013 00:08

Won a nice award at the Cambridge News Business event tonight, beating off opposition including Amino!!

[p1nkfish] 15/3/2013 07:15

They need to get the message out else this will drift down to the lows.
Without attracting investor money all the news in the world won't make a difference. They have been lacking on that front as it should be getting more attention than it is.

[p1nkfish] 24/1/2013 10:43

noticed it and at this point non-too-concerned given the expenditure needed to roll-out the contracts won that will payback. Not cheap to have to increase hardware build and have people jetting about to install and survey. In fact burn not as high as I might have expected. Bit like building out electricity or water infrastructure but on a much smaller scale.

either u think this can fly or you don't. until it starts spinning off some cash there is a certain act of faith involved as with all early stage tech investments.

[dibbs] 23/1/2013 23:54

p1nkfish,

I also hear what you are saying and by no means do I think UBI has become a basket case, rather the timescale for delivery is longer than my patience!

Just wonder how you guys view the cash position? Reported as £2.6 million now, down from over £5 million this time last year and £3.3 million at the interims.

Dibbs

[p1nkfish] 23/1/2013 18:28

patience needed but looks one of the most exciting hardware/software/industrial/infrastructure newbies for years.

[hastings] 23/1/2013 13:24

Agree with you p1nkfish, good post.

[p1nkfish] 22/1/2013 18:55

The sell-off is over done in my opinion. In time this will become a software services company and that side has better margins. The hardware base is being laid now. The results don't look too bad. I would be worried if margins were heading down which it doesn't appear to have happened. Until they get the hardware infrastructure embedded the revenue can be lumpy. Over time that will become a smaller proportion of the total as software services sit on the infrastructure. That's the business model I see with recurring revenue becoming more predictable.

With the deals in place they have a solid foundation to build upon.

Growth will kick-in and it will be profitable growth.

[dibbs] 22/1/2013 11:56

Disappointing to see targets missed again. Have sold the few that I still held in a SIPP. Needed growth and trading ahead of expectations when on a sky high PE and not this sort of RNS.

GLA those who remain.

Dibbs

[azalea] 26/12/2012 11:48

On the 13/4/2012,the IC gave UBI as a Buy @ 215p. In its update On the 6/9/12, the IC gave UBI as a 'speculative high risk Buy @ 212p'.

The company reported H1 revenues up 6.2%, with losses widening from £320k to £830k. Adjusted diluted losses of 3.1p a share versus profit of 0.4p

Morningstar reports brokers' 2012 consensus estimated forecast PE 694.53,
PEG -8.19. 2013 estimates PE 60.5, PEG 0.06.

[hastings] 24/12/2012 17:44

Got to laugh that people follow these tipsters!!! UBI will, all being well next year, further north than where it is now! Despite what some may think!

[timtom2] 24/12/2012 14:59

Will it get tiped for 2013?
That would add a bit more momentum.
Buys now might not look too stupid if it does.

[p1nkfish] 24/12/2012 12:32

Give it time and it is a £500M market cap if not acquired first. The tecHnology is key to drive efficiency in large scale manufacturing, storage and handling. Look at the deals and news. It will sbe ubiquitous and embedded with both hardware, software (system) and maintainence revenue streams.

It will be more stable than the likes of CSR as industrial based.

The downside I have heard is that roll-out of new factories will slow due to the downturn/depression. That's partly a benefit as manufacturers need to sweat their assets and this product will increase process efficiencies and become more desirable with or without new factories to maintain profitability.

Expect turbulence but the next results should have some of the delayed business in them and the forward look be positive.

It's a 5 year hold imho.