Gladstone is a company which has recently become cash generative and is experiencing a turnaround in its buisness. Following a board change the group has turned the corner in securing future profitablility and is on track to report profit ahead of expectations within the next few months. Currently valued just over 5mil this stock is need of a re-rating and seems to have been exempt from the recent rallys.

Excerpts from Full year:

"Gladstone has made a full year profit after tax for the first time of 184k (last year loss 1,676k).

- Earnings per share before goodwill and exceptional items has risen to 1.53p (last year loss 1.50p).

- The quality of earnings has improved. Software support contracts and rentals now represent 37% of turnover (last year 31%).

- Ongoing investment in our core product MRM.plus2 continues to position us ahead of our competition."

"Our MRM trading division is performing in line with management expectations. We raised 260k by an equity placing in September 2003 and will continue to use
this cost efficient route to raise funds for expansion when appropriate. We are
continually looking for the right international opportunities and are exploring
the use of overseas distributors. Holmes Place, one of our private sector
clients, recently decided to upgrade to our central database solution and will
be using our software across 5 European countries. We have good reason to be
optimistic about the future."


Chart:




Full year:

http://moneyam.uk-wire.com/cgi-bin/articles/200312231436156124T.html

Well well, looks like it isnt worth 5million judging by todays response. Up 17% today :) Well guess it's just me holding these here.

Kael..I have been into these for sometime..I do not spend much time on these boards but am amazed that this is such an undervalued company.
If only the company would provide a little more news rather than just giving out positive statements.

I do note that volume has increased recentley so they could be about to move up to they level of 30p that I expect them to reach as soon as the results come out.

I would also like to hear out views/values if anyone else holds these.

I've been buying regularly for the past year for the following reasons:-
Market leaders 70/75%
Strong proven management team
Turnover & profit both accelerating
Increased bottom line revenues from consultancy & licence fees
Cash balances should easily exceed 1m+*
Turnover increasing 8/9m+*
Tax losses of 3m to be utilised
Possible/probably overseas partnerships
Cost control - last years total board remuneration less than 250k
Directors hold around 30%
Market cap 5/6m - farly low for profitable market leading software co.
Recent upbeat trading statement in May
Full order book

*estimates based on February interims

Looks very little downside in current markets.

Web site?

I have an (obvious) interest in small cap software companies so poked around for Gladstone's website which appears to be www.gladstoneplc.com -- but I'm getting not found.

Anyone know the correct URL?

TIA

That is the correct URL. Sharescope gives the web site of every company.
I did a tracert on it and it exists. It seems to be 62.254.200.5 and on ntl.net.com

Try www.gladstonemrm.com I think the plc site has been taken down for about 3 weeks now.

Seems to be a little movement today again.Could it be that something is about to happen, in regard of partnerships.

Kael:

You are right. www.gladstonemrm.com works. And it's all horrible Flash which will not work on every platform or browser.

Let me be very direct: it is very silly to disable the only Google-searchable URL for your company. It is child's play to redirect it. And why change it in the first place?

Why do I make such an issue of this? It all lays questions at the door of their marketing management. Given the importance of the Internet to a tech company, they need to get this right.

Yup completely agree with you on that one MM, as for why they did what they did, I have no idea. It's strange, as far as I can remember. when you typed in www.gladstoneplc.com it would redirect to the mrm site anyway. And yes, marketing needs a rollicking. Did anyone have the opportunity or boredom time to visit the Leisure show thing they were at recently?

This is not Gladstone plc. A piece of text on the MRM site: -

Gladstone MRM is a division of Gladstone plc.

Where is the rest?

Gladstone MRM are the only operational business of Gladstone, which is why it probably re-directs.
My only problem with the site is that the news section needs updating as well as some other areas - many sites use flash now.
They have done multiple sites for Six Continents, Marriott Hotels, John lloyd Leisure & many others, so i don't think it's any lack of web knowledge.

I have just taken a look at the sites..they are poor by any standards and why do they appear so out of date and lacking in news?

Could they be so busy they have no time top spend on own website? Also waste of resources, maybe thats the trick in making profits, which is what the company is now doing rather than wasting time on areas that do not bring a return.

If I had more funds available now..I would buy as I only see value.

Well aI would assume they dont make a lot of buisness via their website. Thus they dont feel the need to make it aesthetically pleasing.

Interesting to note the RNS from yesterday:

LONDON (AFX) - Gladstone PLC said it raised 110,000 stg before expenses via
a placing of 1 mln shares at 11 pence per share.
It added the proceeds of this placing will be used to strengthen the balance
sheet for business development.
rn

Possible reason for the lack of movement on high volume days.

I see from the returns yesterday that Ben Merrit C.E has bought 200000 shares at 11p. While another non ex has sold over 1 million at 12.7p.

A bit odd but I see this as a vote of confidence by Ben in the business.

I just look forward to the results or a positive trading statement before they go into a closed period.

Why do you think they needed to raise the cash though as I though they had over 500,000 in the bank and were ahead on profits from May statement?

Do you think they may be buying another business so to expand?

Could be, it wasnt a large sum of money - if it was I would have been a bit worried but waiting and holding these ones - still fundamentally undervalued.

Trouble with this one it looks like dead money until results. However, just the time that one sells it shoots up for some unknown reason so I will sit and wait and even buy a few more if it slips back to 11p

This is looking very interesting now. Acquisition in the making:

LONDON (AFX) - Gladstone PLC said it has issued and allotted a total of 1.5
mln new shares via a placing at 11 pence per share, raising 165,000 stg before
expenses.
The proceeds of this placing will be used to strengthen the balance sheet
for business development.
rn

Key part is the latter sentence.

Has not done anything for the share price Kael.

Of course it hasn't, reason being that it was placed at 11p. current mid price is 11.25p There needs to be further clarification on the company's position. Of course a trading update wouldn't go amiss current value stands at 11.25p = @ 4.7million.

Question that investors would like to know is why would they need to make a placing when they are cash generative? There are only a few possible reasons for this. The only reason I would panic about is that they are in the red atm.

This imo is not the case. Therefore it leaves us with a few options, most of which would be encouraging. The only inkling for the moment is that last sentence, which, the way it is worded, could mean any number of things. IMO they would either be looking to make an acquisition, funding for international expansion or funding for a new product. Whichever option proves to be correct they are the market leaders in their buisness and that can only be encouraging.

I am currently still holding and will until the share price represents fair value. I expect that to occur after full year results. At the very least this little company is worth 10million. Full year results will give a clearer picture, it's just a shame they are a few months away. :(

As with so many AIM companies the directors take the piss and give small sharesholders no information and do not give a stuff. So many insider deals done. Here we have one director selling over a million shares at 12.7p and another buying at 11p and no information as to whom purchased the others.

The current CEO only added 200,000.

Do you think the buyers were kept in the dark and shelled out 250K?

I agree we are at the mercy of company directors on many of the companies we invest in, but as far as i can see they have done everything above board.
I'm sure if you emailed or rang them they would probably tell you a bit more within the realms of legality.
Apparrently they had a good show at the LIW in Birmingham the other week & I'm sure patience will be rewarded - hang in there.

Orion..you seem to have a fair knowledge of the company..Are you an informed investor that has gleaned greater information from a source that is fully clued-up on the current state of affairs/current business/assoiciates (soon to be?)

Were you at the show?

You say hang in there - sounds as though you know this could be rewarding?

I notice this has started to rise today, are the results due very soon?

i rang the company the other day to enquire re the date for results i was informed that they have till the end of feburary to issue the results for this year ... but stated that it will be more likely before then as per last year ..in which case we are looking at the start -mid december ..expect some movement ( most likely upwards around then )

i hold gladstone

Yes, beginning of December is expected.

What are the fixed assets made up of? It has a high net assets value against its market cap.

i have sold out on these today.. good company with a static share price.. there is value elsewhere ....

Well I never, people selling out of GLD! Fair enough, yes there is value elsewhere and I expect the share price is being held down for the upcoming consolidation. However, giving the recent rises in tech stocks this is looking even more undervalued than it was. Not for those who like the rollercoaster ride, but the AGM and interims should prove interesting and hopefully the end of the price manipulation.

Kantona - Static for 9 months yes, but the 50 & 200 day MA suggests that GLD could well break out on the upside very soon; and when it does break, well there looks to be an easy 50% upside. That 9-month plateau will act as a considerable springboard, so I would recommend you look at the chart and reconsider. This share is now a strong Buy - currently c.13p

One of the few good techs not to have broken out yet - when it does be ready!

I noticed the price as been sliding back to its support level during the week, on little volume.

Late on though a surge of bigger buying for this tiddler took place.

Could it be about to blow early next week. Check the trading out over the past month and you can see it looks like someone is building a stake and then letting the price slip back as people get bored with holding the stock while others around are moving up. Then they move in again, in larger 50k blocks.

I am going to buy Monday as I can see no down side. They are just building cash,that they mau use to buy the smaller shareholders out with.

This is a hot stock for the coming weeks. I can see a price of 15 -18p by end of month.

Contracts announcements also due.

I'm a chartist, but not an expert in candlestick interpretation; so I reproduce the following without comment. Posted by Isis on a competitor site:

"Hammer is a potentially bullish pattern which occurs during a downtrend. It is named because the market is hammering out a bottom.

Recognition Criteria:

The long lower shadow is about two to three times of the real body.
Little or no upper shadow. The real body is at the upper end of the trading range. The color of the real body is not important."

Any minute now, any minute now, any minute now....

This is one i have a lot of faith in. And the Directors have mopped up a lot of shares after the restructuring. Volume improving, breakout may be imminent.

This was in this weeks edition of Shares magazine:-

Chiefs sign up to a pumped-up Gladstone
When Ben Merrett, chief executive of Gladstone (GLD), joined the group two years ago, it was losing 250,000 a month. It is now profitable, generating cash and able to benefit from tax losses which should last for at least another two years.

The news that both Merrett and chairman Jeremy Stokes have bought shares in Gladstone is an indication of their increased confidence in this company, whose results are rapidly improving. Together they invested 102,000, mainly at 10.06p.

Gladstone provides customer-relationship management software to the leisure industry, in particular local authorities and membership health clubs such as Holmes Place. As a result of the e-government initiative, local authorities have to be prepared for online booking and payments. Gladstones systems are designed to do this.

Also, the membership clubs are faced with the need to become more efficient. The companys systems allow for direct debits and one-to-one relationships between clubs and their individual members. These are relatively inexpensive.

The interims are due later this month and could lead to further interest in the shares, which are selling on an historic PE of 10. The company indicated in January that it had good reason to be optimistic about the future. The interims will be the first opportunity to flesh out this optimism with actual profits.

Good spot paddington bear - now basic business is profitable and they have cleaned up old share register they look well placed, albeit existing customer base seems thin. Some parallels with PTL in growth area of local authority work - with PTL it was government directive for hospitals to put in place facilties for patients. It took longer than hoped but did get there in the end and PTL have responded accordingly. GLD appear to have strong market position on e-government requirements of local authorities. Nature of that market suggests it probably will again take time, but downside now looks very limited. I bought at time of share consolidation/split and expect to hold minimum one year. Once real evidence of growth in local authority market, it could take off like PTL. DYOR.

Bought inot this today on the basis of the share tip

Sdaly down a little but am waiting for the news to come flowing in

There were some reasonable buys today which could've broken us out - unfortunately it is only natural that some who have been in a while could'nt resist the temptation to take a profit.
Directors recently spent 100k on shares - Still cool for 20p+

This thread seems to be attracting the wildlife - bears, pumacats, partridges - could be time for crocodile,stockbunny et al to join in? While waiting for it to rise, notice that its full name is an anagram of lots ganed (missing an i but still reassuring!)

Some big buys today - should please all the beasts on here!

As long as the buys keep coming I dont think the wildlife will bite!!!!

Looking forward to the results and perhaps then we will discover why the directors invested 100k of thier own money in the company - must be good news

i got my dividends today so whats on the cards????????????????/

er, i don't think there dividends - i would buy a pint & some fish & chips, then forget about them.

Interesting to see a small Life Fund appears to have accumulated a notifiable stake. Bit surprised it is a qualifying investment, but nevertheless quietly reassuring - maybe the beasts will get a meal out of this one soon!

paddington bear, i think you are right ????????????LOL

The following post was made on iii and is an excellent effort - well worth the read.


I have read some of the past posts on this board with interest – it appears that many of the contributors to the conversation have emotional hang ups about the past. I am new to this company, and believe that history is dragging down the share price creating an exception buying opportunity – when compared to the sector averages.

Why? Well all the clues are in the annual accounts and in the last six months RNS releases. The salient points being:

Chairman’s statement Dec 2003
1 “I believe the market undervalues us” – very rare for this to be allowed by advisers! As these sort of statements can cause all sorts of problems if future listing particulars are required – therefore they are not often said.
2 “losses dramatically reversed into a more PREDICTABLE level of profitability”

CEO report
3 Results show “twice the combined results of Membertrack and Microcache before they were acquired” – i.e. in spite of the troubled past the underlying business has grown.
4 “best product in the market”
5 “competitors have struggled to emulate” [our technology]
6 customers are taking company into new markets – Holmes Place in 5 European countries. To have your customers take you to new markets is by far the lowest risk method of expanding your business – trust me I have been trying it for years.
7 Low broadband costs will allow greater service to members – low broadband is here already.
8 Most salient comment from the CEO – we have “Reasons to be optimistic to the future”

All the above comments are real positive buy signs – that auditors and advisers have been happy to agree with.

Looking at the financials….

Reported a PBT in 2003 of 183K on T/o of 7.9m. Okay T/0 fell a little but profits returned. The real upside is hidden in the detail of the prelim results.

Of the 5.6m of admin expenses 400K related to depreciation of the R & D bill. The R & D is now fully depreciated and so this cost will not occur again and will fall straight to the bottom line.

The company is now at a net nil cash position and so the net 60K interest charge will fall away

The directors are confident that the products are market leading and will grow in the future – lets say the gross profit grows by say 5% (which is hardly market leading) this will add 300K to profits as long as costs remain under tight control.

So what will the profits grow to?

PBT 2003 183K
R & D finish 400K
Interest 60K
Business growth 300K
Total 943K

I would suspect that given the past trading there will be significant tax losses available for the near future and so the PBT will be reatained by the company.

Therefore the business is trading on 6 x full PBT – the sector average is 12 to 15 times. This suggests that there is an upward correction to come and the fundamentals suggest a 27p share price as a minimum – sector leading products normally demand a premium – so 30 – 35p looks possible.

Looking at cash flow – the goodwill will be added back and assuming a constant level of working capital (not unreasonable given the low assumption in profit growth) free cash flow will be 1.38m against a market cap of 6m. I doubt there is any other market leading growth tech company that can boast this sort of ratio of cash flow to market value.

Other buy signs – of the 6m market cap 1.5m is underpinned in freehold property – giving an economic value of 4.5m.

The chairman and CEO have bought shares recently – these sorts of guys only take one-way bets! I would if I had their knowledge.

The final point – why are the results being published in such a hurry – if it was bad news they would have had to send out information in a hurry (24/48hrs). Normally interim prelim statements are made after two months not two weeks – the only reason to get them out in a hurry is if they are so good or if there is a buyout or offer on the table! I would try to buy it out at this price – the cash flow alone would pay off any debt in two/three years – think about it!

Of course DYOR, but don’t let the past cloud your thinking – the past cannot be undone.

Hunt for Value

Very good interims today adds credence to the "good figures take less time to add up than bad" theory mentioned by myofbic. Quietly positioning itself for growth phase (shareholder register reduced by 75%, strengthened balance sheet/cash). Just hope they don't spread themselves too thinly in overseas markets and concentrate on maintaining/developing existing UK customer base, in particular burgeoning Local Authority market. DYOR

Just noticed good results with very positive growth expected.. I think as news filters around they will reach much higher levels as longer term they still seem very undervalued.

I have just added a few to those I hold.

I have reviewed my investment in this as it seems it has no following and very little volume of late.

What is wrong with this.. I have not yet sold but thinking of doing so very soon.

Any views?

Whats wrong with it? Two words, one beings with B the other begins with M.

Bizpack stick with the facts & figures & you'll be alright.

GLD is in expansion mode now having opened an office in Dublin, bought new larger premises in Glasgow & will be opening a new office in Sydney in September.
They have also issued an upbeat trading statement as well as a batch of contracts & plenty of news on their website listed below - all looks very rosey & the company is massively undervalued.

http://www.gladstonemrm.com/gladstoneinternet/default.aspx

http://www.gladstonemrm.com/gladstoneinternet/default.aspxhttp://www.gladstonemrm.com/gladstoneinternet/default.aspx

Nice chart breakout underway with higher lows and higher highs since February. Two closes above 16.5p and there is an enormous gap above, into which we would head. Going up at a time when technology shares in general have been struggling. A good sign.

Sudden 10% rise this morning to 16.75p. Looks promising. Anyone know why - any thoughts Hawick?

Tipped in the IC today - also good report in Moneywise & Broker reiterates 2.19p EPS giving P/E of 7.5 at current levels - cheap.

Great - thanks Orion. I'll take a look at IC

Lucky I held onto to mine...Lets hope next week will take them well over 20p.

i understand the brokers say true value is about 22p