Made Tech Share Discussion Threads

[someuwin] 11/11/2022 10:36

Agreed that a takeover is highly likely at these bombed out levels. Would be a good bolt-on for Kainos (KNOS). Who will be announcing results on Monday.

[masurenguy] 11/11/2022 10:32

Looks like a couple of big rollovers @21.25p earlier this morning followed by two 100k Buys @22.45p subsequently. The results in September, and the outlook statement, were very positive. They have net cash on the balance sheet, and a current market cap of circa £33m, and they are well below a 1/1 ratio of EV to Sales. There should be a trading update next month as the half year completes at the end of November and it will be interesting to see what progress they have made in the current fiscal year.

[sunshine today] 11/11/2022 10:00

If and it’s a huge if, they do manage to get their act together their is hope.

On the plus side they appear to be winning work, the issue has been making a profit.

A takeover can’t be ruled out.

[cumbrian2] 11/11/2022 09:51

Bit of life today - hoping this turns into another Kainos and looks good value at these levels

[sphere25] 11/11/2022 09:21

Post this on the free board. Just to be clear this is for MADE TECH (21p-21.5p), the speculative high risker that has disappointed but might be in punt territory down here.

There is a flurry of activity coming in here. Volume is notable and picking up at 1.8m. Unsure if there is news or someone is just trying to come in and clear sellers here but I'm keeping an eye open for any whoppers to signal sellers cleared.

Let's have some MEGALODON SHARK EATING buys to clear stubborn sellers and then it might have a chance of rallying.

And now we watch.

All imo
DYOR

15:46 UPDATE
Volume has spiked up to 6.6m without delayed prints so clearly stake builders in the market trying to clear sellers and possibly sniffing value in this higher risk one. It isn't enough though. Volume needs spike much bigger to really get this going (the one's that have disappointed like this usually need blow out volume) but still worth keeping an eye on to see if it does happen.

[tomps2] 20/9/2022 17:19

MadeTech (MTEC) Full-Year 2022 results presentation - September 2022

Made Tech Group plc is a leading provider of digital, data and technology services to the UK public sector. Rory MacDonald, CEO and Debbie Lovegrove, CFO, present final results for the year to 31 May 2022, which show significant growth in revenue and profit and significant opportunities ahead.

Watch the video here:

Or listen to the Podcast here:

[simon gordon] 12/9/2022 19:13

That's a serious puke out, volume wise, today.

Maybe the low is in?

[bones] 12/9/2022 09:01

Bottom line, this is a British business employing lots of people. We all want to see success in those circumstances. I’m just not personally ready to invest in this one yet!

[masurenguy] 12/9/2022 08:55

Cheers ST. I always welcome both bull and bear cases if they are cogently made.

[masurenguy] 12/9/2022 08:54

Some very good points bones. However, they have to create capacity (mainly people), in a difficult market to recruit, in order to undertake their projected sales growth and of course this will hit both the bottom line and cash inflow in the short term.

[sunshine today] 12/9/2022 08:50

Masurenguy, MTEC can still pull it off, as they have have the contracts, and backlog.

To date they have been successful with sales, no doubt about that, they now have to create a business that is capable of making CLEAR profits.

I wish you luck.

[bones] 12/9/2022 08:49

For the record, the actual result was shown as a £0.3M loss and that was AFTER removing £1.8M of staffing costs and treating those as “intangible assets” (which remain undefined). Those costs will instead be written off over 3-5 years as amortisation which, again, will be ignored within the more favourable EBITDA number.

They also trumpet “adjusted profits”, happily ignoring “share based” staff costs as though these are not a business cost. But they are a business cost, being part of the remuneration package that staff receive.

So, you can look at these results in the two extremes. Treat all staff costs as deductible when incurred including “share based” and “capitalised” and that gives you around £2M loss at the bottom line, or take the “adjusted̶1; result which management provides.

As an investor, I want to see cash coming into a business. Here, as the cash flow statement shows (after allowing for the £13M raised at the IPO), they spent £2M in cash, which equates closely to what the P&L a/c would show if they had not capitalised £1.8M of staff costs.

Can they keep expanding at the current rate and generate enough business to pay the additional staff and turn in proper profits and positive cash flows? That’s the question for me.

[masurenguy] 12/9/2022 08:39

Well I take a different view but you are a well established long term bear here. Six months ago you were postulating "Look for the previous owners to take this private at 4P within two years."

[bones] 10/9/2022 16:23

Got to be a better tip than the Mail from 8 months ago which included this nugget of wisdom:

”The stock is now £1.12, a decline that is undeserved and should reverse this year and beyond.”

[masurenguy] 10/9/2022 10:48

Three to buy: Made Tech
Shares Magazine

Made Tech helps the public sector update its digital technology. Its lucrative contracts with the likes of NHS Digital bode well. The company has been challenged by wage inflation and the need for “costly contract staff” to meet its £38.2m order backlog, but it has managed far better than the market predicted. Revenue jumped by 120% for the year to 31 May 2022 and sales bookings rose by 115% to £51.1m. There appears to be “substantial scope” for a share-price re-rating. 35p

[metis20] 02/9/2022 20:06

"Headcount of 478 (414 permanent employees and 64 contractors) at 31 May 2022 (31 May 2021: 235) - recruitment target achieved despite increased demand and competition for talent"



"Recruitment accelerated in H2 in line with our strategy, despite the continuing macro challenges, with headcount increasing by over 100% year on year."

Outlook

"With a robust balance sheet and strong levels of client acquisition and talent recruitment, enabling the fulfilment of the contracted backlog, Made Tech is well positioned to capitalise on the substantial and continuing growth of the digital transformation market."

[bones] 02/9/2022 17:11

Kainos also has a big chunk of business as the UK partner for US giant, Workday, servicing the private sector.

[sunshine today] 02/9/2022 16:45

One problem with that.

KNOS revenues shows just 37% of turnover from the public sector, and that’s the very sector that’s not “sticky,”; because each contract has to be tendered for, and at this time, government departments, can’t favour bidders who did a fantastic job on previous contracts.

Since MTEC only works for public sector, it’s very limited in that respect.

It was only a few months ago MTEC admitted it was letting clients down through lack off staff, so not a great start on the stock market.


KNOS is clearly a success story and one to aspire to.

Todays price here might be a bargain, but it’s going to be a hard slog, unless some big fat high margin contracts land.

Good luck.

[someuwin] 02/9/2022 14:57

This graphic from the mighty KNOS shows well the stickiness of these large scale software projects.

Once a client is using your services they tend to keep using you.

The reason is that modern software projects never end. They require constant support / maintenance / modifications / updates / patches / integrations etc etc.

Look at the iPhone for example IOS will never be 'finished' software - just a perpetual stream of updates. Similarly Office365, never a finished product we all pay for it as a subscription now so we've always got the latest version.

This is why I like pure play software companies.

Not too bothered by the profit numbers at this early stage for MTEC - looking at the bigger picture KNOS floated at £164m valuation and hit £2.5bn last year. Will MTEC go on a similar trajectory? No reason why not.

[bones] 02/9/2022 10:49

But what does that mean in a business that is basically about people skills? Those “capabilities” can walk straight out of the door with a job offer from a competitor. I am highly sceptical that a consultancy company can create IP that can be protected by company patents or knowhow, etc.

What I am getting at is that this figure just appeared at the interim stage without any notes of explanation. That should be rectified at the final results stage as the details will have to be given but I am really keen to understand them. “Data/Cyber capabilities” sounds like a cliche and tells me very little about what that means. It’s important if it has boosted bottom line profits by half a million or more to know what it really is about.

[wjccghcc] 02/9/2022 09:16

I think it's the capitalised capex on Data/Cyber capabilities. Of the software sector, about 75% capitalise R&D so not that unusual.

[bones] 02/9/2022 08:45

The interim results balance sheet showed, for the first time, a capitalised figure of £453,000 for “intangible assets” (up from zero). I’m guessing these are employment costs that are regarded as building some kind of “asset”. The recent Singer note said something about changing their own forecasts to allow for “R&D”;.

What this means is that profits were elevated by £453,000 due to a simple accounting adjustment. I will be interested to see what the total adjustment is at the final results and, more importantly, what it represents, given that this is basically a people business.

Capitalising expenditure as intangibles is one of those vague areas that can be used by some companies to massage profits but usually that’s in high tech or industrial sectors where they do create new intellectual property in their industrial processes.

[wjccghcc] 01/9/2022 19:11

Looks like they generated 1.2mm cash in H2. Broker forecasts it to drop 3mm next year to net cash of 9mm due to increased capex on Data and Cyber capabilities.