Good morning!
Firstly, I'm going to take circle back to 17 Nov, when results from Tracsis (LON:TRCS) came out. It's a tradition that I interview CEO John McArthur after full year results, but haven't got round to it yet.
Tracsis (LON:TRCS)
Share price: 517.5p
No. shares: 27.8m
Market cap: £143.9m
Audited results for year ended 31 Jul 2016 - the key figures look good to me, and a broker note says they're in line with expectations.
Key figures;
- Revenues up 29% to £32.6m (fuelled mainly by acquisitions)
- Adjusted PBT up 18% to £6.9m (note the excellent profit margin of 21.2%)
- Diluted, adjusted EPS up 22% to 22.37p (PER of 23.1)
- Net cash of £11.4m - however note that a fair bit of this will be needed for deferred consideration creditors of £6.1m - but I seem to recall John McArthur previously saying that these would be self-funding from cashflow generated before the payments need to be made
As a reader pointed out a fortnight ago, the profit growth has all come from acquisitions. The continuing operations adjusted EBITDA actually fell, from £6.2m to £6.0m.
Balance sheet - not as strong as it was, due to intangibles mounting up from acquisitions. Net assets are £28.7m, but take off intangibles of £26.1m, and NTAV drops to only £2.6m.
However, this is unavoidable at buy & build groups. The good thing about TRCS is that, to date, it's not used any bank debt. So if something did go wrong with trading, there's no risk of the sort of collapse that we've seen before at highly indebted buy & builds.
The number of shares in issue has not risen that much either - up from 20.2m in 2011, to 27.8m now. This is because most acquisitions have been funded from the strong cashflows of the existing businesses - a really good strategy that has worked very well to date.
Overseas order for RCM - this is the potential big excitement. After several years of testing the water, pilots, etc, a "significant" order has been received from the USA for its condition monitoring equipment, which has been a great success in the UK. Although this order is only $0.4m, it's a step in the right direction. The share price contains a premium for the potential of overseas expansion.
Acquisitions - sounds as if they are trading well. The group hasn't really put…
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