As expected, very little substantive news this week. However, the small markets mostly continue their recovery. This has seen some significant rises in more popular shares. To the extent that many now look overbought on a short-term basis. Particularly since there’s a high risk of further profit warnings for many, such as Gear4Music, Focusrite and Mpac.
Here’s what little we did debate:
Getech (GTC.L) - Contract Wins
Good to see the O&G part of the business actually generating license sales:
pleased to announce eight new contract wins that represent in aggregate a total value £1.8m
However, it is unclear how much of this is to new customers and how much is simply renewing existing business:
Included in the new contracts announced today is a three year renewal contract for Getech's Globe platform from an Asian multinational energy company.
Some of this will be recognised in the year just ended:
The Company expects to recognise £0.6m of revenue from these contracts in the year to 31 December 2023
But hilariously, this actually represents a slight (closet) profits warning.
unaudited revenue for FY23 to be approximately £4.0m
Which is a 5% miss on Cavendish's previous estimate of £4.2m. Adjusted EBITDA has been nudged down by £0.1m, which flows directly through to reduced PBT, although clearly this is relatively immaterial given the scale of the losses compared to the revenue. Net cash estimates are reduced by £0.1m also. With no impact on working capital. Cavendish are not brave enough to make forecasts for the current year.
However, the announcement appears to have the desired effect, with the share price rising in response. With markets improving, Cavendish may actually be able to raise the cash that they so desperately need. Together with the large cost-cutting exercise they have engaged in, they may actually survive.
We expect a busier week next week. Enjoy the weekend!