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Final results for the year to March are in line with the April trading update, which had been well ahead of expectations in profit and cashflow: with some customer orders postponed beyond year end, revenue of £10.4m had been 6% behind expectations while adjusted PBT (£0.8m) and free cashflow (£1.0m) were respectively 499% and 227% ahead. Strong cost control still permitted £2.8m (FY19: £2.9m) of R&D, leading to the continuing development of the global large enterprise products, but also of MyID Professional, simplifying the solution and expanding the addressable market. With cost control clearly in hand, and even confidence in cost expansion after two years of restraint, the group is driving opportunities for high-margin revenue growth and the future continues to brighten. Target 80p reiterated, with the chance for TP review with greater COVID-19 clarity at interims in December.
Companies: Intercede Group
AGM statement as expected; Resume with a Buy
Companies: Cloudcall Group
Launch of public preview confirms WANdisco’s LiveData platform has been successfully integrated at Microsoft Azure and that commercial services can begin. As highlighted previously, we believe this will be a significant financial catalyst. No estimate of the expected revenue contribution is given but the company is aiming to sign 50 new customers over the next 12 months. Our conservative scenario analysis suggests this relationship alone could generate over $80m in annual revenues by 2023.
COVID-19 continues to have a profound impact on virtually every industry, on a global basis. Enterprises of all types and sizes are racing to adapt their models to the “new normal”. The more thoughtful are looking not just to effect change, but to improve how change happens, to become more flexible and more nimble as organisations. Sopheon has today announced some major developments to its Accolade platform which look to assist the group’s customers in this endeavour. This note describes the changes to the product range, and draws on a recent customer webinar used by Sopheon to highlight the evolving challenges to enterprise innovation management.
Nanoco has signed a framework agreement with STMicroelectronics (ST). This covers both development work and commercial supply of nano-materials for use in multiple infra-red sensing applications over a five-year period. While the agreement underpins the operational cash runway, which was recently extended to Q221, there is still significant uncertainty regarding future revenues, so our estimates remain under review.
Companies: Nanoco Group
Success breeds success. Take B2B software developer Rosslyn, who over the past few years has meticulously built a leading Big Data & spend analytics SaaS platform (RAPid), supporting an illustrious roster of 100+ clients (many global multi-nationals). Topped off with the synergistic acquisition of Langdon in Sept’19, & becoming EBITDA positive in FY’20 for the 1st time ever - thanks to increasing ARR (+12% to >£6m vs £5.4m LY) & favourable operational leverage (81% gross margins).
Companies: Rosslyn Data Technologies
Avation is a lessor of 48 commercial aircraft to a diversified airline client base. Intra-day yesterday, the group announced that, as a result of the present uncertain backdrop caused by COVID-19, the Board had withdrawn from the previously announced strategic review and formal sale process, and that it was no longer in active discussions with any interested parties. The key reasons behind this were 1) the present uncertainty meaning that an attractive valuation was seen as unlikely to be achieved at this present moment in time and 2) the distraction of the process in the day to day operational activities of the business.
Petards supplies advanced security and surveillance systems to the Rail, Defence and Traffic Technology markets. Intra-day yesterday, the group confirmed that its RTS Solutions subsidiary had secured a multi-year renewal agreement for the provision of software support services to one of its major rail customers.
Touchstar is a supplier of mobile data computing solutions and managed services to a variety of industrial sectors. This morning, the group has released full year results to 31 December 2019, alongside providing an update on progress against the present COVID-19 backdrop. In line with the market updates provided in February and April, group revenue in the year increased by 3.2% to £7.1m, whilst revenue from continuing operations, excluding the Onboard business that was disposed of in the year, increased by 7.2% to £6.7m, driven by traction being gained with new products and services. The gross margin in the year increased by 280bps to 53.9% reflecting the greater proportion of software and service income. This resulted in a trading loss after tax before exceptionals of £89k, which post exceptionals of £412k that predominantly related to the disposal of OnBoard, resulted in a loss after tax of £501k. As previously reported, the year-end net cash position stood at £850k, which reflected an increase of £554k in the year; this post £1.1m of new product development expenditure and cash costs associated with the disposal.
Companies: AVAP TST PEG
Watchstone has this morning announced a proposed second return of cash to shareholders, totalling a further £18.4m/40p per share. The rationale for this second tranche relates to the Board having previously allocated a cash buffer of £20m for any possible fines or penalties arising from the now lapsed SFO investigation. Subject to shareholder and court approval, this further return is anticipated to be made on or around 31 July 2020. Shareholders approved the first £50.5m/110p per share return of cash on 27 April 2020, which remains subject to court approval on 11 June 2020 and is scheduled to be paid on or around 30 June 2020.
Companies: Watchstone Group
Oxford Metrics has delivered solid 1HMar20 results, with sales of £15.0m (PY: £16.1m) and adj. PBT £0.3m (PY: £1.7). Within this, Yotta demonstrated continued ARR progression (up +15% to £6.8m) while at Vicon, the division added additional bluechip customers, further validating its industry leading position. Progress was, however, held back by lockdown restrictions. £1.1m of expected orders slipped to post period, but have now largely been fulfilled. Had they occurred as expected group sales would have been flat y/y. Looking ahead, CV19 related uncertainty leads us to withdraw forecasts. At this stage we expect disruption to be short-lived. As such – and considering OMG’s persuasive track record - we continue to view the company as a long-term winner in this growth industry.
Companies: Oxford Metrics
1HMar20 sales flat at £2.3m, MRR also flat at £340k. Net loss £-2.0m (PY: £-1.9m), period-end net debt £0.14m. On MRR - a new customer win and also upsells were offset by customer churn. New sales generation has been slower than planned. In response, INX has reduced staff headcount by 20%, starting in January. Covid has negatively impacted business performance – meaning longer sales cycles and higher DSOs. Encouragingly therefore, cash collection improved post period-end (to £0.3m). Further, two upsells have been secured, meaning YTD upsell value is up +10% y/y. Despite this progress, prudently, INX has decided to further reduce costs, with the objective of obtaining a monthly breakeven performance. This, combined with the company’s renewal pipeline and cash position, is said to provide sufficient funding for the current year. The board is however mindful of the sustainability of the changes made and as such, is in the early stages of reviewing its longer-term strategic options to introduce fresh capital. Forecasts remain U/R.
Companies: I-Nexus Global
ECSC Group plc* (ECSC.L, 70.5p/£7.0m)
Companies: ECSC Group
The Panoply’s trading update for the year to March 2020 confirms that H2 trading was solid, and that the Board expects to report revenue and EBITDA in line with market expectations. The group’s financial position remains robust and will be enhanced by cash collections from the solid 20E trading performance. The Panoply is actively involved in the response to the COVID19 pandemic, with the business being only minimally impacted so far. Overall, we believe the announcement contains a number of positive messages. However, with ongoing macro-driven uncertainty over the medium/ longer-term outlook, we revise forecasts. Our FY 21E and FY 22E EBITDA estimates are reduced by 37% and 21% respectively.
Companies: The Panoply Holdings
Rosslyn is expected to move into positive operating EBITDA for FY20E. Moving the business model into self sustaining status will be a major milestone. Rosslyn has raised £7.3m gross in a Placing of new equity to increase its sales & marketing capability, maintain its investment in R&D and position it to take advantage of bolt-on acquisition opportunities.
Following the announcement of a business restructure and temporary cost reduction measures to reduce costs by A$12m, we have updated our forecasts for Seeing Machines. We believe that the significant measures taken by the management offset a weaker revenue outlook, as the impact of COVID-19 looks likely to continue for longer than anticipated. The net result is a similar to previous expectations in terms of cash, which we believe remains sufficient to see the company through FY22 ahead of profitability in FY23. The long-term effects of the business restructure is expected to be positive for shareholder value as demonstrated by our DCF based valuation which increases to 7.2p (from 7.0p).
Companies: Seeing Machines
The Panoply’s trading update reveals the business entered FY 21E with a £15m order backlog and that the group expects to report a strong trading performance for Q1 21E, having recorded £9.5m of new contract wins since the start of the year. A further positive is confirmation of a $5.2m contract win with a global philanthropic organisation by the group’s FutureGov unit (included within the £9.5m total). Against an ongoing backdrop of COVID19 driven uncertainty, this is a very positive announcement in our view. Noting that c70% of group turnover is now generated by public sector clients, we continue to believe The Panoply is well-placed to weather the COVID-19 pandemic and we maintain estimates following the release.