04.02.2025
Tomorrow morning will see Made Tech (LON:MTEC) publish its Interim Results for the six months to end-November 2024.
The group’s strategy is to provide software and services to run and improve public services worldwide and it could show a positive outlook despite its challenging backdrop.
The Business
Founded in 2008 and listed on AIM in 2021, with staff based in four ‘hub’ locations across the UK (London, Manchester, Bristol and Swansea), Made Tech provides services that enable central government, healthcare, local government and public infrastructure organisations to digitally transform, allowing them to modernise their legacy technology, accelerate their digital service delivery and drive better decisions by using data.
Its Growth Strategy
The group aims to create value through both organic growth and targeted acquisitions.
By focusing on organic growth, it aims to leverage its existing capabilities, deepen its relationships with clients, and expand its market share in a sustainable manner.
The group’s mergers and acquisition strategy is designed to accelerate growth by acquiring companies that offer complementary products or market access.
The group’s Management believes that this dual approach ensures that it scales efficiently while maintaining a strong foundation of service excellence.
AGM Trading Update
On Wednesday 20th November the group issued an AGM Trading Update stating that:
"The board now anticipates that, as a result of these encouraging sales bookings and ongoing delivery momentum, Group revenue for FY25 will be ahead of market expectations set at the start of the financial year.
Adjusted EBITDA is expected to increase as margins are maintained, and the Group continues to be on track to generate positive free cash flow in FY25.
The commitment to digital transformation that the UK Government signalled in the recent Budget is expected to unlock a number of further public sector digital transformation programmes in early 2025, and in particular following the UK Government Spending Review in Spring 2025.
The structural growth drivers of our market undoubtedly remain strong.
The action we have taken to strengthen our business is beginning to deliver results and we are well-positioned to capitalise on the significant opportunities which lie ahead.
As such, the board continues to view the mid to long-term prospects for the Group with confidence.
We look forward to updating shareholders further on the Group's progress in a half year update on trading for the six months to 30 November 2024, which we expect to announce no later than early February 2025."
The Equity
There are some 149,287,059 shares in issue.
Larger holders include Rory MacDonald, CEO (28.53%), Chris Blackburn (14.50%), Hargreaves Lansdown Asset Management (8.78%), Stonehage Fleming Family & Partners (London) (8.65%), Octopus Investments (6.21%), Interactive Investor (Manchester) (5.86%), and Luke Morton (4.03%).
Analyst Views
Following the November AGM Trading Update, analyst Robert Plant at h2Radnor increased his estimates for the group’s year to end May 2025, to show £38.0m (£38.6m) revenues, with adjusted pre-tax profits of £1.3m (£1.4m), generating 0.6p of earnings against 0.9p per share previously.
For the coming 2026 year he goes for £40.0m revenues, £1.5m profits and 0.7p earnings.
He considers that the valuation of the group’s shares is both attractively rated and below that of its Software Services peer group.
Over at Singer Capital Markets, analysts Harold Evans and James Musker rate the group’s shares as a Buy.
They reckon that the group has got its ‘mojo’ back again, citing strong cause for such optimism, given the AGM Trading Update and other announcements which demonstrate how material awards are starting to trickle through, such that while this sector has been tough going, the tide is now turning, as the government looks to make good on its promise to invest in digital transformation.
Counting 12 of the UK Central Government Departments as customers, they think that MTEC is very well positioned to benefit from the potential windfall to come from the Spring 2025 Spending Review.
For the current year they estimate £38.0m revenues, £1.8m adjusted pre-tax profits with 1.1p per share in earnings.
For 2026 the analysts look for £40.0m revenues, £1.9m profits and 1.1p per share in earnings.
In My View
Despite having almost doubled in price since last October, I am not at all put off by this little group’s high price-to-earnings ratios because I believe that it is recovering and that it could see benefits from this Spring’s Spending Review – which could mean brand-new extended contracts for the group.
The debt-free company should have a cash balance of some £9m by the end of May, which compares to its current £40m market capitalisation, with its shares trading at just 27p.
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