GetBusy Plc (GETB)

AIM-listed GetBusy Plc is a United Kingdom headquartered software and computer services business. Its geographical areas of operation are categorised into segments, i.e. the UK, US and Australia and New Zealand. As on August-04-2017, its shares were listed on the AIM segment of the LSE. Fidelity Management & Research Co., Hargreave Hale Ltd. and Herald Investment Management Ltd. are the major institutional investors in the company. (Source: TR)

Interim Results: (H1 FY19)
As on July 23, the group reported its interim results for the six months ended to June 30, 2019.

Source: Company filing.

During the six months under review, the group’s recurring revenue increased by 20% on a reported basis and 19% by constant currency basis and stood at £5,386K and total revenue surged by 19% to £6,151k or up by 18% on a constant currency basis. Also, adjusted loss before tax narrowed to £284k from the loss of £492k reported in the year-ago period.

Its SmartVault revenue during the period recorded a strong growth of 29% on a reported basis and 22% on a constant currency basis. Virtual Cabinet revenue recorded an increase of 15 on a reported basis, and Virtual Cabinet adjusted profit nudged by 65% on a YoY basis.

Loss before tax during the period under consideration narrowed to £571k from the loss of £666k recorded in the H1FY18 and loss per share (Basic & Diluted) stood at 1.18p against a loss per share of 1.01p recorded in the H1FY18.

Stock Performance – 1 Yr.

Daily Price Chart (as on July 23, 2019), before the market close. (Source: Thomson Reuters)

Shares of the GETB have plunged by approximately 56% on a YoY basis and down by approximately 15% on a YTD basis, however, in today’s session at the time of writing (before the market close, at 12:17 PM GMT), shares were quoting at GBX 35.0 and was up by approximately 19% against the previous traded level. Also, the 14-day RSI of the stock is hovering in a steep overbought zone. In the year-ago period the group has registered a 52w high of GBX 60.5 and a 52w low of GBX 23.0 respectively.

Conclusion
The group’s decent growth in the H1FY19 led by significant improvement in its recurring revenue, which stands for around 88% of the group’s total revenue, however, total cash has reduced during the first half of the FY19 by £0.5m to £1.9m on account of adjusted loss before tax of £0.3m and a working capital outflow during the period stood at £0.2m. Also, the group has around 3,500 shareholders in Australia, and New Zealand, which in total holds approximately 15% share in the company and almost every shareholder got their shares as a dividend in specie after the demerger from Reckon Ltd in 2017.Now, the board of the company is aware of substantial-high costs and logistical complications to execute a buy and sell of the company's shares from these overseas shareholders.

At the end of the H1FY19, the net worth of the company attributable to the shareholders was negative £2,472k, comprises of negative demerger reserve of £3,085k and retained loss of £2,216k, and also the negative equity attributable to the shareholder of the parent expanded from £1,951k to £2,472k on a YoY basis.

Therefore, based on the above discussion and considering technical measures like 14-day RSI which indicates that the stock has entered a strong overbought zone, we have given a “Watch” recommendation at the current price of GBX 35.0 (as on July 23, 2019, before the market close), while we look for any upcoming catalysts in the near term.

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