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I think it will go up after presentation
The intangibles can be ignored. PE is irrelevant as it includes amortisation of said intangibles. I think growth in tangible equity is the best measure to value this company, although cashflow is obviously very important too. Cash flow was a shock this morning but it is stated that cash has increased since the end of H1. Liquidity isn't an issue as I see it but it probably rules out an acquisition which might be no bad thing. If the cash position hits the £9m forecast for the end of FY24, SWG is very cheap.
"the weakening of sterling against the USD and particularly a £0.9 million charge relating to revaluation of US dollar liabilities due in May 2023 and May 2024"
Anyone know what or how much this is? I am assuming it is quite large, if the FX charge on the amount was nearly 1M.
SWG's accounts hide a lot of stuff IMO. Their income may be weighted to the second half, but they are low on money, and there in black and white they have a bill to pay in May 2023. So assuming balance sheet will remain weak for some time.
oogle, C'mon its 55M of intangible assets, plus a deficit of 6.8M non current receivables/payables, with about £2M current assets. Very shaky ground IMO.
Rivaldo posted these numbers earlier:
Cenkos have reduced their forecasts:
this year - 2.4p EPS
next year - 4.7p EPS
So currently at 95p its on a PE of 37.5, with uncertain balance sheet, and a track record of underwhelming us.
Although in reality, it is unprofitable so PE is a misnomer. Seems waaaay over valued still?
What new advisor? They had two. To reduced costs they decided to axe barren****** and retain cenkos. This is the the third year that half year results have come in low but they have subsequently met forecasts in excess of £30 million. That is because their revenue is weighted towards the second half. No denying t he results are disappointing , and the lack of an acquisition is poor . Still have a revolving credit with Barclays for £4 million and £55 million in assets. Its been a tough year, what with war, energy crisis and inflation. Next year will be tough too. I dont think cybersecurity has lived up to expectations. Security is only going to get worse so economising on that will be a false economy. They have some good long term contracts and loyal customers. As the banks say most people would rather change their partner than their bank, same with cybersecurity. See what Phil comes out with on Friday
Or a bid
new advisor, usually means an equity raise is on its way
A lot of buys
Friday 2nd Dec at 1230
12.30 Friday
When presentation
Receivables and payables both ballooned. Revenue/cost recognition on long term contracts can be a bit of a headache. A question for the presentation
Disappointing results, however, there are some positive in there and its clear they are building for the future.
I like the increase in sales headcount and also the link up with the N American distributor of SecurEnvoy.
A number of the costs are temporary blips like FX and the cloud hosting costs which will return to normal in H2.
Very strong H2 last year and bigger contract wins give me belief that they can do the same again in H2 this year.
A bit like watching England football, poor first half and they make life hard for themselves but have real potential to turn things round in second half.
Cheap at 92p. I continue to hold
Cenkos have maintained the fair price of 200p+......they fully explain why......Today is an over reaction which gives buyers a bargain.....Everything looking good for future....
Current cash was less than current liabilities. They might even need to do a raise.
Naughty when the last raise they did was to buy another company, but now that money has been frittered away.
Operating costs are too high for the revenue, and recent tax hikes will hurt these guys.
I dont see a buy out happening, as the group of companies are not really profitable. Their biggest assets are the people, and they can leave any time which is standard practice in the IT world.
me too! I was heavily into these but decided gut reaction was the best one. They are poorly run and no point awaiting a bid.
Now I have some cash.
Sold my relatively small holding as soon as I could this morning. SWG seem one of those companies prone to banana skins. Core trading isn't as rosy as I expected, and the FX loss is just poor planning with hedging only in place after the horse has bolted (or whatever the metaphor is).
Cenkos have reduced their forecasts:
this year - 2.4p EPS
next year - 4.7p EPS
which leaves the P/E looking expensive for some time to come. SWG will remain on my watch list - hopefully it will deliver for holders in H2, but without say contarct win news the share price could drift for some time.
Wonder if Berenberg will lower their £3.80 price target now they have been chopped!
Quick recap and summary on Shearwater - cyber security and software company
FY results to 31/3/22:
+ Revenue (organic) up 13% to group record of £35.9m
+ Adj. EBITDA up 19% to £4.4m
+ Margin maintained at 12%
+ Adj. profit before tax up 24% to £3.0m
+ No debt
+ Cash £5.6m
For this year:
RNS 13/4/22 - Brookcourt (part of SWG) announced a new contract win with a telecommunications company worth potentially £21.0m. Made up of initial 3 year deal worth £12.9m with option to extend for another 2 years for extra £8.0m,.
On this news the share price rose 30% to 145p
SWG (with only 23.8m shares in circulation) is currently valued at 100p/share or £23.8m, with cash at end of March of £5.6m and 0 debt). To me this is a p/e of around 6.0x which is ludicrously low for a growing business in cyber security.
Buying opportunity for the smart investor
Interims 25th Nov last year. Amazed this has not already been swallowed up by competitor. Expect decent figures and SP to march up but not enough when the 10% mob make their quick getaway! They need to change their PR!
Techinvest updated on SWG in their issue covering September as follows FYI:
"Shearwater
112.5p (SWG; AIM)
Shearwater has reported revenue and adjusted EBITDA ahead of market expectations for the year ended March 31. Revenue was up 13% to a group record of £35.9m, driven by a 70% increase in revenue from security solutions as clients returned to offices, and contracts previously on hold were restarted. Adjusted EBITDA increased by 19% to £4.4m with margin maintained at 12%. Adjusted pre-tax profit was 24% higher at £3.0m and corresponding earnings per share increased by 10% to 11p. Shearwater ended the year in a strong financial position with no debt and a net cash balance of £5.6m (23.3p per share).
Average new customer spend was up 43% year-on-year with 186 new customer wins in the period (2021: 155). Twenty new clients were introduced to the company through cross-selling, up 54% on a year earlier. Over 64% of the client base now has long-standing relationships with Shearwater of more than three years. The software product set was strengthened with SecurEnvoy developing its cloud Identity and Access Management platform. Investment was also made in infrastructure to underpin future growth in new international territories. Shearwater added that the new year has started well and first quarter trading is in line with management expectations.
Developing trusted long term client relationships whilst deepening the company’s expertise is allowing Shearwater to provide extended offerings to its blue-chip clients, resulting in larger contracts and enhanced revenue. In addition, seeing the size of the opportunity in the identity and access management software space, management has rightly focused investment on extending the company’s platform in this area. With a strong market backdrop, we anticipate further progress from Shearwater this year and beyond. Strong hold."
They paid of loan notes and are debt free. Cash rising slowly. Hope the update is better than last year. Still looking for acquisition though
Since the placing at 240p this share has been a disaster. No idea what they spent the £2.5m on!
https://masterinvestor.co.uk/equities/shearwater-group-update-should-lift-shares/
...Last year on Nov 2nd.
I wonder whether this guy the was the large seller over the past few months. 893k shares.....no longer a holder as of today's RNS. these things are only going one way from here in my opinion.