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On track to hit FY20 expectations

Success in business, investing and life in general revolves around seizing opportunities, whilst equally trying to neutralise any associated risks. As illustrated in yesterday’s trading update by Rosslyn.

Here in September, the company acquired the IP, software, assets, client list, contracts and domain names of Langdon Systems Ltd for a mere £48,750 - directly from the administrator.

So 11 weeks on, how are things progressing? Well the good news is the integration has gone smoothly, with the majority of the 60 customers being retained. Hence albeit relatively small, we believe the deal could ultimately prove to be extremely value and earnings accretive. Generating at least £400k of incremental ARR – and perhaps a lot more, as new accounts are secured and selective price increases are put through.

Elsewhere, Rosslyn has also just won another major spend analytics contract (worth £410k over 3 years). This time with a global rail OEM, who manufactures rolling stock and other infrastructure, with initial revenues set for H2’20.

In terms of trading, the board guided that FY20 results would be more 2nd half weighted than usual, although we understand that the pipeline is healthy, and further high margin RAPid contracts are expected to be signed before yearend. Which when combined with continued tight cost control, means FY20 trading remains in line with expectations.

Finally with regards to the numbers, we have held our FY20 turnover and adjusted EBITDA (post SBPs) forecasts at £7.8m and -£110k respectively, along with reiterating our 12.0p/share valuation.