Given today’s uncharted waters, it is nice to own resilient, profitable and cash generative stocks. Especially those like BuildTech software developer Elecosoft - sporting a robust balance sheet and generating high recurring revenues (ED 56%). Traits which should not only provide investors shelter from the worst of the COVID-19 storm, but also thrive once this CAT 5 hurricane subsides.
This morning, the firm said that 2019 turnover and adjusted PBT were “significantly higher” (ED £25.3m & £4.1m) than LY. Closing the period with net funds of £1.1m (vs -£1.8m LY) - underpinned by strong cash conversion (ED 96%), despite investing in new products, and experiencing adverse forex (ED -2%, weaker SEK vs £) & other macro headwinds (Brexit, General Election & subdued Eurozone).
So what about COVID-19? Well, the frustrating thing is that Elecosoft has continued to trade “well” in 2020, with results only marginally impacted towards the end of Q1. Here customers and channel partners have indicated that going forward, there will be a “degree of disruption”, particularly with regards to face-to-face services (19% sales). However most of these activities (eg training/consultancy) have now transitioned to online delivery. In turn lifting demand and reducing costs.