Ann: Q4 FY19 Sales Activity Update, page-6

Got back from holidays yesterday so was able to pull out my modelling and update with the latest info. I've processed the quarterly sales results to give a two year view of sales wins and have used the data to project revenue.



The data has only been reported this way for last 12 months. However, I was able to extract the FY18 data using various statements and data reported when FY19 data was reported comparing YOY half or quarter results. I can't extract FY17 data by quarter - only reference I can find in this form is for the whole of FY18 vs FY17 (49% higher for annuity and 40% for projects). So fair to say the trend extends back into FY17.

Random comments:
- RDF's Q3 update said they expected new business to finish strongly in Q4... and they certainly did that!
- Good trend upwards in new business wins - both project and annuity
- Wins don't include large US$30M Pennsylvania tender (announced as won - but contracts yet to be finalised).
- No losses included in new business of course - only significant loss is the yet to be quantified Texas change. It's unclear whether RDF will lose all revenue, or just part eg. by continuing a monitoring service but without fines ... or ... receiving some compensation for the change.
- Retention rates reported throughout as being >90% with some quarters at 100%.
- Note, the big annuity win in 2Q18 was the NSW mobile speed camera contract

My revenue modelling forecasts ~A$62M revenue for 2H19 ... assumptions being:
- Annuity/project initial split as reported 1H18
- Retention of annuity at 90%
- New annuity at average of previous 2 halfs, adjusted for average of 4 year contracts
- New project revenue at average of previous 5 qrts (projects revenue is within 18mnths of win)
- Constant currency
- No hit to FY19 revenue from Texas law change ... this will occur in FY20 tho with partial offset from Pennsylvanian contract win.

Therefore, assuming 1H margins and cost base, I think RDF is likely to be slightly NPAT positive in 2H19 with a chance of being positive for full year.

The constant currency assumption for the qrt is poor as the A$ has fallen - this could drive an extra $2-5M on above revenue. However, since OPEX will go up by almost as much, I'm not bothering modelling at this stage.

Overall seems to me that Mark Talbot has down a great job of steadying the RDF ship and returning it to growth. The Texas law change is obviously a speed bump, but another contract the size of NSW speed mobile cameras or Pennsylvania work zones and it'll be behind them.