Checkit Interims

Companies: Checkit plc


Checkit plc (formerly Elektron Technology) has released their interim results to 31st July 2019 today.


The numbers are all a bit complicated because of the sale of Bulgin which is now treated as a discontinued item. However... it looks like the remaining business, Checkit, is growing, albeit not as fast as previously expected.


The business they acquired in May 2019, Next Control Systems, is growing at mid-double digits which management suggests is in line with expectations. The task is to integrate these businesses as they will be the engine of growth going forward and this is at the very early stages.


Management has previously said it would be returning £81m through a 2 for 3 tender offer at 65p and we still await the timetable for this cash return. It would be good to get timing clarity on this.


The current market cap of the company is £95m and after the cash return of £81m, shareholders will be left with £14m in cash, and a focussed SAAS business, Checkit.


Equity Development forecast this business to generate revenues of £16.9m in the FY to Jan 2021 but it remains loss making.  This suggests the jury is still out on whether management can make a success of the business with essentially no value ascribed to the newly combined Checkit and Next performance.


Executive Chairman Keith Daley’s vested interest with a c. 12% stake in the company gives real impetus for management to perform.  All in all, it will be an interesting next 6 months for Checkit.


 


The information contained within this post is based on personal experience and opinion and should not be considered as a recommendation to trade nor financial advice.