The chart for this stock says it all.

The company is quickly becoming a real gem in the telematics field, over the last month the co. has announced re-seller contracts which will bring in min. 2m or >30% of last years T/O alone.

The company is already experiencing massive organic growth so the co. should be profitable now following last years 500k loss.

The co. has approx. 6m cash and is in one of the hottest growth areas at the moment.

With a market cap. of 25m this will be re-rated x2/3 minimum within the next 6-12 months IMHO.

MM buys went through on Friday with T/O continuing to build, one to put on your monitor...

Thanks for responses. Agree m100 that part of problem is the technobabble, particularly the emphasis on features rather than benefits - well put! CYH are not in the retail market, partridge, thank goodness - the primary market is fleet management, with Sainsbury a good example.

Not surprised that no constructive answers to my posts - these were very much thinking on my bb! (that's not bloody bum, by the way! - lol!). However, I can see the situation much more clearly and will work it through off-line at the weekend and post it here first. Then submit it to the company plus advisors; probably also to Shares to seek to get them to do a piece. I will try to do things: 1. What would present accounts look like if they had operated the conservative accounting policy from day 1; 2. what will forward accounts look like on altternative scenarios. The reason for doing this is based on the assumption that the fall in share price is partly due to poor trading in the first half and partly due to confusion and negativity driven by the accounting change. I think there is a reasonable chance that the exercise might flush out some clarification. In the end of the day my view as an outsider, but potential holder, is with you holders - that the sp is way too low. This exercise is called 'LEGITIMATE RAMPING'! Lets give it a go, anyway.

Eric

I notice in todays I C that it seems the whole board purchased varying (20k to 1.3k) amounts of shares on 21 dec at 66.5-70.5 any comment on this move????

SEADOG. So now the IC are selling old news! Cybit releaswed these details on the 21st Dec:


Directors buy in:

CybIT Holdings PLC
21 December 2004


CYBIT HOLDINGS PLC

Director share dealings

Cybit Holdings PLC was informed on 21 December that the following directors had
purchased ordinary shares of 0.1p each in the company on 20 December.

Name of director No. of shares % of issued Price Enlarged % of issued
purchased share capital shareholding share capital

Neil Johnson 1,000,000 0.10% 1.41p 26,330,000 2.65%
Richard Horsman 666,666 0.07% 1.41p 24,856,666 2.50%
Kevin Lawrence 333,500 0.03% 1.41p 2,663,500 0.27%
Sir John Wheeler 100,000 0.10% 1.41p 400,000 0.04%
David Robins 500,000 0.05% 1.41p 1,300,000 0.13%

Cybit Holdings PLC was also informed on 21 December that the following directors
had purchased ordinary shares of 5p each in the company on that day.

Name of director No. of shares % of issued Price Enlarged % of issued
purchased share capital shareholding share capital

Neil Johnson 20,000 0.10% 66.5p 546,600 2.75%
Richard Horsman 15,900 0.08% 66.5p 513,033 2.58%
Kevin Lawrence 6,670 0.03% 66.5p 59,940 0.30%
Sir John Wheeler 2,000 0.01% 66.5p 10,000 0.05%
David Robins 10,000 0.05% 66.5p 36,000 0.13%

Enquiries:
Cybit Holdings PLC
Kevin Lawrence
01480 389100

Oh dear now that makes me guilty of posting old news :-(

SEADOG

The purchases were the last day before the 50 for 1 issue and the first day of the new issue. The timing of the purchases immediately followed the EGM which included the 50 for 1 resolution. Obviously a concerted endeavour. May have been intended to give confidence in case the market took the issue badly. The shares have eased since, hence my intention to try and clarify the issues around the change to a conservative accounting policy.

Eric

Eric,
Hope yr endeavours are successful.

optomistic,
Sorry, I missed the original release, and picked it up in the IC yesterday, apologies to all. SD

Hey SEADOG go light with the apologies. They're not necessary!!
opto

Unless your names chrissie!!! lol

triangle

Are you the triangle who keeps appearing on charts? resistance and support converge but never meet to close the triangle because the sp breaks away in one direction or the other. In other words you lose your head! ROFL! Good one, eh, Chrissie?

Eric

I promised to post some numbers when I completed my financial model of CYH. Well, I've decided not to do that until I've had a chance to build up a position. Well that's a strong BUY hint, isn't it? But then you would have to do it on my recommendation and they always say DYOR. That is particularly unhelpful in this case because there is a real lack of help from the company in sorting out the impact of the change in accountantcy practise. I have made, what to me, seem reasonable assumptions and the shares come out as very cheap indeed. Anyone with a reasonable understanding of finance is welcome to a copy of my working papers in return for their attempt to validate or otherwise my workings.

What I plan to do is build up a stake and then submit my papers to the company, the advisors and copy the papers to Shares. I think they will be interested enough to pursue cybIT. At the same time I will post a summary on this thread. My assumptions may not be valid but the results are in line with my intuition which is enough for me. Well done to current holders, I say!

Eric

m100

You may be able to help! In tackling a financial model for CYH, I made the assumption that cellular costs would be charged on the basis of 'assets in the cab'; assuming that these were charged out to recover comms centre and transmission costs in line with usage. The quote from the interim results is:

"A refocus of our policy around underlying cellular costs has reduced revenue, margin and cash by approximately 500,000 during the period. The trade-off from adopting this policy will be a reduction in operating costs of approximately 600,000 over a comparative 36-month period .."

This appears consistent with making the charges, however based, over the 36-months of the contract. But how would operating costs be reduced? Hope you can help.

partridge

I understand your concern re cash. However, read the piece on the internal leasing book which I quote:

"At the end of Sept., cash generated from recurring revenues, internal leasing book and services stood at 130K per month. This represents about 30% of monthly fixed cost base before considering cash collected from sales to new and existing customers. This represents a three-fold increase over the comparative prior period. This figure is expected to grow substantially during the second half as cash from the internal leasing book and recurring revenues increase thus further reducing CYH reliance on third party funding."

Taking 'an asset in the cab' as an example my interpretation of this is that
the costs of the asset are borne by the internal leasing book which then passes through revenue and costs on a monthly basis. The system was only started on 1/1/04, prior to which the company took all contract revenue and costs up front. Realising this is the start of understanding how much stronger CYH finances will be under the new system once it works through. The answer to your point is that we are talking of a once-off knock. But no wonder the market has hit CYH shares. That is our opportunity!

By the way, I think you are referring to Trafficmaster re your own use. CYH market is lorry fleets with systems to monitor them from the centre.

Eric

My apologies Eric for not taking enough trouble to understand the basics of this business. Couldn't wait to look at the numbers, which is what I enjoy! If they are dealing with relatively small number of good quality corporate customers then chances of success would imo be much better than retail. Internal leasing always makes me nervous - if they have lots of sales success then short term cash need is high and business can become at the mercy of its lenders, whose appetite can change quickly. Actually find it encouraging that they say markets are challenging, which smacks of honesty in their approach - if I recall correctly Versailles Group appeared to be doing lots of new business (invoice discounting, but still some parallels) until it was discovered many of their "customers" were non existent.This is too risky for me, but could be multibagger and wish holders well.

partridge

On my reading the internal leasing is somewhat different. They fund the asset acquisition themselves. Rather than take credit for it immediately, they assign it to an internal leasing book and then take credit for it over 36 months. That explains the negative cashflow in the last period and provides a positive basis for future results. Do others concur with that reading?

Eric

That seems correct to me I think it is meant to spread revenues rather than produce lumpy figures which would mislead shareholders. Here's hoping for a steady growth and rising sp from now on. Patience will be required as the city boys are slow to pick up on these hidden gems-not the brighter fund managers though. I hope to accumulate while they ignore the potential! Thanks for all the work you put in Eric on ASC and CFP as well very interested in your findings
good luck to all!

Eric

Getting quite interested in this now, not least for my own education. How do they fund the asset acquisition themselves? If the assets leased out are merely own produced software, then perhaps they could be moved from Stock to the Internal Leasing book (within Fixed Assets?). If that is the case, there should not be cash implication, but a profit one depending on value of transfer. If they have to buy some or all of the assets subsequently leased, then my previous argument looks to hold up and the faster they sell the higher the negative cash until the book gets large enough to fund growth from monthly income. All conjecture - can the F/D not be asked to explain in layman terms?

Partridge

Eric - depends how they are providing their radio/cellular/data infrastructure - access masts, networks, data collection, etc. and how they pay, time, data, or hardware. Either they have built parts of their their own network (unlikely) or would guess they are piggy backing off a tier 1 provider. If I read this comment correctly (and they wont say exactly for commercial sensitivity reasons)it looks like they have firmed up some sort of wholesale agreement with a carrier(s), and thus have reduced their own personnel, operating, technical support costs. Would make sense. Its less risky, has smaller margins, but then pure profit for every customer spread over the 3 yr period. Various resellers also sell their tps services as well. Typical business model. The market is "challenging" least they are honest!- so looks like they are reducing their risk, and some profit to remain competitive. Boom and bust! or steady as it goes? - the latter it seems..

Partridge, m100

Feel dangerously close to being out of my depth. Suspect its partly due to the technical terminology and partly due to a less than lucid explanation of their finances. This post comes with a health warning to all who buy on technical analysis rather than fundamentals!

Taking the internal leasing first. They do show finance costs of assigning debts to finance companies of 374K (down from 517K) but don't say what this is for. The internal leasing book appears to be linked to the new recognition policy relating to fixed and mobile assets. The impact of 950K on the top line implies that the assets installed on client fixed and mobile sites under the previous system would have brought in 1140K of revenue. This is reduced to 190K by taking credit for the first of six periods only (may be handled monthly but I am assuming 6-monthly periods to coincide with 6-month accounts). The cost equates to half the revenue and is handled similarly. Partridge mentions software, but the mobile asset is presumably the gizmo in the cab, a mix of hardware and software. The former system took the revenue and costs up front even though the client probably pays periodically under a 36-month contract (there may be an up-front fee). Why the complication of the internal leasing concept? Presumably the package paid for by the client is effectively a turnkey operation: fixed and mobile assets, cellular services, central control operation, Fleetstar-Online software, installation and maintenance services. It presumably makes sense to separate out the charges relating to the fixed and mobile assets and cellular services.

Similarly, for cellular services, it appears that they used to take full credit up-front. Now they are spreading that over the 36-month contract. It could well, as M100 suggests, cover a move to buying out services which would then explain the 600,000 savings over a 36-month period. If they are paying as they go they could hardly have taken credit up-front.

The "Group Financial Performance" appears, by just giving selected facts, to be intended to confuse (or intentionally confuse, which may be worse!) Once I have one or two reactions to my working papers, I agree the step of writing to the F/D to seek clarification. In the end of the day, it is important: the sp could be much lower than it should be because noone can interpret the finances. Hardly in the company's interest as they may well need to raise finance to fund expansion. As investors, we want the sp gain now rather than waiting for the entanglement to unravel!

Eric

Hi Eric,

I've just had a quick scan of the full year report and interims. I'm not holding any CYH so wasn't wearing my "rose tinted" glasses :-) However, I once had a stake in "Eagle Eye Telematics" (don't know if they're still going, but market competion looked rife even in those early days and customers were quick to chop and change when they found a better deal).

You've made a lot of valid points and I still need to do more research to get up to speed totally with all your comments.

Looking at the interims RNS from the Stock Exchange site - the first thing that stuck out was the missing brackets around the 2,251,560 admin. expenses (intentional slip of the pen? lol!).

Turnover has stagnated in reality which could have made things look worse without the "smoke and mirrors". I take it that turnover growth is down because of the "challenging market conditions" (never a popular phrase with investors).

Accounting for revenue and costs upfront suggests an aggressive company confident of improving their client base year on year. However, It appears that CYH have gone for the "softer" option, which means posting lower turnover in each period but giving the impression of solid growth (when you quite rightly point out that in year 3 they could simply be reaping the gains made in year 1 !). All this means is that the directors bonuses can be "enhanced" due to perceived year on year solid growth when all goes well and if market conditions continue to be "challenging" then at least the losses in future won't appear quite as hefty.

I think I would be worried more about why CYH are finding trading conditions difficult than the accounting tricks....

Has the market reached a saturation point at this stage ?

Is there a competitor undercutting CYH and other Telematics providers with low price quality kit ?

Cheers

OG

Anyone seen any evidence of mapAmobile being promoted?..thought this would be a moneymaker

Douggie,

I haven't seen any major promotion. And I personally don't think it will bring in much bacon, afterall who (apart from Parents with 'mobile chrildren') needs to track a mobile phone? Its very Big Brother and I can't see huge volumes - IMO. I've got no doubt it is profitable though - I just doubt it'll set the balance sheet alight!

skids

I have to add as well, that I think that is CYH's problem - everything seems to be small potatoes. They need some big money deals. Until then I'm watching and waiting from a distance (no longer a holder after much waiting).

skids