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Our views differ slightly on this, but appreciate you taking time to elaborate in your reply. It's a bit of quiet board and it's you've an interesting angle to offer on the debate.
I follow closely the banks and finance markets particularly re outsourced products. HSBC's move in the UK I maintain is not surprising on two counts. Following the issues surrounding CPP and iD Theft services, markets have moved away from providing mandatory ID Theft covers, FCA seem to be anti where there is no choice on the part of the customer.The assistance provided now by the ID Theft market amounts to little more than call centre service. Red24 provided much more than that. HSBC's new packages are no longer mandatory which I think is a strategic move to be more compliant. Red24's service is still market leading and I believe that the business will bounce back from this.The removal of the ID Theft cover under the bank accounts is not a reflection of the service of red24 or the appeal of the product.
for now
Very interesting first post of yours. The way you referred to Kidnap & Ransom as just K&R makes me want to ask: are you working in the london insurance market yourself? Or is it more the case that you've really done your research here. Also how have you heard about "rumours of a new product"? Look forward to your reply.
Hi Boxer, boards are for debate so always happy to have my views challenged. Using links, I can support this chronology: 2012: FCA cracks down upon bundled bank accounts (http://www.ft.com/cms/s/0/575a3f40-d7e6-11e1-80a8-00144feabdc0.html) 5 May 2014: HSBC renew contract with Red24 (http://www.red24plc.com/red24-reappointed-by-hsbc) 18 August 2014: Following an internal review, HSBC withdraw business in relation to UK mainland customers (so see your overseas point by implication) ( http://www.investegate.co.uk/red24-plc--redt-/rns/trading-update/201408180700083343P/) What can you provide to challenge that timeline? Was there increased regulatory pressure between May and August 2014? Also, the May contract was for a 1 year extension, but the revenue impact will be felt before May 15, so why was the break clause activated? Finally, in reference to FCA clamping down on non-bank products, and your suggestion that there are no issues with Red24's competitive offering, I note that HSBC are still outsourcing their identity theft coverage (to a non bank), just not Red24? (http://www.hsbc.co.uk/1/2/popups/identity-theft-assistance; http://www.privacyguard.co.uk).
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Not sure where some of the info is coming from supporting the comments that have been made about this share. Sure they have lost the ID theft account from HSBC but all banks are moving away from bundled products as the FCA increases scrutiny of non bank products. HSBC have stripped away many of their services in the UK but red24 have maintained their overseas accounts with HSBC so any talk of poor product is off the pace. They have also secured a number of new accounts and the product recall and K&R business is going well rumours of new product also.
if no sell, the buying must finally push this up off 10p base ...v cheap if they can futureproof the business model (make it more diversified & robust..less dependent on distributors) ...but that is a mighty big if
so why should we? ...long winter without news...unless they can pull a rabbit (contract) out of the hat
oh dear...and sell @9.75 ...must be large offload ...and where is the bod buying??
but effective ask dropping...big sell being filled?
As I speculated on 18/1, the large expatriation (together with other consulting revenues) have masked declines in other parts of the business...declines not related to HSBC's termination of the identity theft business. The consultancy work is great, but as noted 2014 was a busy year in crisis management, will future years present perfect storm of Russia/Ukraine/Syria/Iraq/Ebola, etc? Credit goes to the company for being noticeably more transparent and open than in previous releases...there's some good information on the company's revenue streams and decent commentary from management. However, this only serves to further highlight areas of weakness in my view. They openly accept that they have high fixed costs, and state the loss of the HSBC business will have a strong impact on 2015 FY revenues. Identity theft is as big an issue as ever, so what issues did HSBC have with REDT's offering?
No, a bit short on figures. By the way, has anyone done any work on the prfitability of the contracts that were lost?
the Board are hopeful that the speed of our recovery from the reduction in revenue following the loss of a major contract, which we announced in August 2014, will be rather faster than the recent falls in the share price seem to imply. ...that's is Simon's PoV at least ,,,not many hard figures to support his claim
Seems more positive than expected .. views?
are numerous and endemic..both privately owned and esp USM/AIM (where the management is almost always unaccountable) ...management is usually poor (or at least patchy) and in it for themselves and not for the benefit of shareholders ...even the best investors will get it wrong at least 35-40% of the time ...the gap between the upbeat narrative (entrepreneurial vision) and shoddyv execution is huge and value destroying ...my friend has invested and managed so many opportunities that his relaxed wisdom is reassuring
I'm guilty of often being a bit superficial with my analysis...a big weakness. Think Porter type analysis that your friend probably undertook is the sort of thing that often distinguishes (ex and current) pros from most amateurs. Unfortunately zero sum game...so I should get act together really. I looked closely at RNS feed from last 3 years, to gauge trend in revenues/profitability/delivery on key objectives as a simplistic way of assessing managment. I also looked at m/c, debt, cash and profitablity vs listed peers...but have some difficulties as few true comparators. Finally looked at broader sector trends and geographical factors. A year ago (before I looked) it would have stacked up well in all of those respects and been a cracking prospect...the last year has shown perils of small cap investing imo.
on?
only had brief chat with him, and he was too busy to focus (didn't really do so for redt) ...gbo looks horribly weak, and the 2014 Gardner report (available on mobiliron website) shows how competitive the US market is and how much effort/luck gbo has to make/have to succeed there) ...I have not bought more into strength on rgs...will flip out half c250 (if we bounce there) ...and then see whether next results are more convincing
yep..the profits warning was caused by the bigger of the 2 distributors (I cannot make sense of the numbers otherwise) so perhaps this trauma will act as a wake up.. ...anyway, let's see how they shape up over the next 6-8 months (interims next week thru to finals early summer 2015)...pretty critical period of reflection/readjustment
5-6 seems unlikely unless results come in below expectations, but 8-9 seems almost inevitable. Interesting focus...in truth I had overlooked that aspect. On reflection, they're clearly very exposed in that respect and the risks are quickly apparent. Probably too early for you to to say wrong call (imo), I think next 6-12 months will tell. Watching newsnight I'm reminded of the German prospects here, have to see how that goes. Was he more positive on GBO/RGS? I hope that app isn't the sum total of management's plan to plug the gap in the revenue!
For the security segment the two key distributors each account for more than 10% of group revenue; one distributor accounts for 23.4% (2013: 20.0%) and the other accounts for 10.4% (2013:12.9%).
so 9p...8p...perhaps even 5-6p before bottoms???...until we get some decent visibility on profitability, this looks rough ...Rhaegar, I discussed it with my mate the wonder investor lol...and his focus was on the sales channel, and concern about lack of direct customer relations (see the profit warning rns) ...in the face of (potential) stiff, deep pocketed competition, not having good strong relationships with customers is appalling...so (on reflection) I have to concede I have called this wrong (again) ...now need visibility on the robustness of the business model before doubling up
and we may have a bounce @10p
@9.97p