Ann: CAT reports solid H1 performance, reaffirms FY18 guidance, page-61

Short version of the below - Competitive pressure but growth is being demonstrated. Long term game, new management.

I saw their presentation and there were a few key points that I thought I would outline although this has no doubt just a reiteration of the above.

The majority of the negative result was in Q1, and largely the first month. New management reacted by making in house changes to front line as well as a new CFO in November/ December. Growth from following months was better in a company that has a stronger 2nd half than 1st naturally anyway.

The key contract that they lost was in a particular area of US soccer in which they lost 155 units to Stat Sport (who got the entire US soccer contract). They mentioned that Statsport (a private company) has received funding from private equity to try and grow and Statsport management appears to have used this to discount tenders. This for me was a concern as Catapult acknowledged that the tender Statsport submitted to US soccer made it almost impossible for them to make money. It would be a concern should this continue.

Despite this Catapult continue to grow in all areas and spending is predominantly on front line which should gain them wins. Prospects are also demonstrating interest due to their Playertek range. Not for purchase but about the integration of grassroots with professional levels i.e. football federations etc. This is the main benefit for all future contracts in my opinion. Statsport do not have the capabilities of CAT but does not make them any less dangerous as a competitor in the medium term.

CAT should grow, albeit slowly, and am happy to sit tight for at least the next 2 years providing no disruptions. Management have indicated that they are looking at being more transparent in relation to wins vs losses which should be good as an investor. If you decide to top up the primary concerns is that margins will be squeezed by Statsport and that will impact cash which will cause need for a capital raising. Sharks are circling, investors are growing impatient, and the board have sold down in the past month. Never a good look as an investor. I am considering small top ups but would characterize myself as hold.