Got back from holidays yesterday so was able to pull out my...

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.