Ann: Mach7 Announces 1H 2021 Results, page-19

Some thoughts/notes from pack ...

Orders and Revenue
- $22.9M of orders FY to date
- > $10.1M of revenue FY to date ($7.1M in half + $3M from HAHK already recognised in 2H).
- With 2H21 “to be strong, far exceeding 1H21” backed up with $7.1 reported 1H revenue + $5.1M reported recurring stream + $3M reported HAHK revenue already booked 2H + unknown? from project revenue and new project wins .... I’m still expecting revenue of >$20M for FY21 (my range being $18-$25M tho).
- Mach 7 was booking about >50% one off fees and <50% annual maintenance ... but this is changing with EUnity. H1 shows low levels of the one off fees being booked (suggesting works has been done on contracts but not yet billed with go-lives). This supports 2H fees being much higher and driving the “far exceeding” claim for 2H revenue (especially given the project wins).

EBITDA
- the negative result is just timing, had the HAHK $3M (at stated 100% margin) come a few weeks earlier, it’d be $1.8M positive (rather than $1.2M negative). This is expected given stage of M7Ts growth journey. Seems some in the market overreacted to this.
- Lower merged business costs will clearly flow in 2H, higher revenue and >80% of new revenue flowing thru to EBITDA ... second half profitability will be quite different to 1H.

NPAT
- this figure will be meaningless for some time as the huge tax losses of Mach7 and EUnity + the various intangibles from the EUnity purchase amortised.
- My old CFO’s always taught me that ‘operating cash is king’ wrt importance vs P&L ... none more so than with Mach7 going forward. NPATA will also be useful tho.

So a solid result with no surprises (except maybe the size of amortisation going forward for me - altho I suspect that’s not a surprise to the professionals). Next major step up when M7T wins it’s first $20M contract - with it’s new found balance sheet strength and integrated offer (with EUnity) M7T should get there in the not too distant future.

Cheers