 FYI Hybridan published this on 28th February whilst I was on hols:
"Shearwater Group 33.5p £7.86m (SWG.L)
Financial Calendar:
Year End June, Report October, Interims September, Report November
Three Main Shareholders:
L Jones 12.3%, Schroder Investment Management 11.8%, Philip Higgins 11.1%
Key Investment Points:
Cyber recovery, Strong H2 Growth, Low Rating
We feature a cybersecurity, advisory, and managed security services group with IP offering a range of technology solutions including identity access, email encryption, and managed cyber services driven by AI. The worldwide spending on information security and risk is predicted, by consultancy firm Gartner, to increase to more than $220bn in 2025 with 11.7% growth.
SWG has three businesses providing technology cyber, security, and regulatory services from four offices with corporate clients in 50 countries and via 350 resellers. The focus is on helping clients manage the interaction between technology, process, and people to increase operational resilience.
Alongside its Interims, which were reported in November, it announced a $12.8m, five-year contract, with a leading global mobile telecommunications company. It will provide hardware, software, and support services to enhance its client’s monitoring capacity of texts inter alia which have increasing regulatory obligations. Revenue recognition will be phased across the contract and approximately $3.5m is expected within the current year.
The Interims to September, without this deal, reported that revenues improved by 8% to £11.3m with an increased underlying loss to £1.1m, reflecting an agreed margin reduction on a strategically significant account and adverse FX movement. The interim net cash increased from £2.2m to £3m.
The second half is always stronger due to customer procurement cycles and there are often material contracts concluded around the end of March, which is then followed by a slow 3 months to June. Consequently, the Y/E has now been changed from March to June 2025.
In January, trading was reported to be on track and at the same time, performance Options were granted to the new CFO. These are contingent on achieving an Adjusted EBITDA of £2m for the 15 months to June 2025 (including the three slow months), which would be a 130% increase on the 12 months to March 2024. The full options packaged would only occur if the Adjusted EBITDA for Y/E June 2026 is £3m or
more. Directors have recently purchased shares at 35p.
For the 15-month ending 30 June 2025, full year revenues are set to rise 72% to £38m, with a pre-tax profit of £0.4m.
Hybridan Comment: We calculate that the 2025 EBITDA/EV is a lowly 3x, which seems to underestimate the recovery and H2 growth in an increasingly hostile and complex
geopolitical world." |
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