Thanks for the update @peterdoobes. Do you see customer industry...

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12/08/15

22:53

Post #: 15797341
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Originally posted by peterdoobes ↑

There is no doubt the result was good. However it has been boosted by a very low tax rate in the second half which is the main reason why it looks like they smashed consensus. On an EBITDA basis it was pretty much as expected.
I read one paid subscription site today claiming 2nd half profit was 20% higher than first half which bodes well for next year. What they didn't take into account was the effective tax rate in H1 was 21% and in H2 it was less than 3%. And they get paid to write that?
I think GBT has been volatile of late because of uncertainty around FY16 even though longer term it is a definite growth story. In FY16 they will have no revenue from BBY and in March 2016 the Pershing contract ends (after being extended 6 months). They expect this will cost them around $700k in EBITDA combined for FY16. In addition there may be around $3m in increased R&D.
The tax rate is also expected to be around 15-20% up from this years 12%.
So in order to grow earnings they will need to fill all these holes plus add a bit more. They certainly sound optimistic around the amount of clients out there but admit it is very hard to predict the timing. They said the CMI work pipeline is as big as its ever been but that will most likely mean increased costs this year with the revenue to come the following year
Also overnight Just Retirement announced a merger with Partnership Assurance in the UK. In theory this should increase GBT's revenue as Just Retirement is the larger partner in the merger and you would expect will retain the GBT system but it is increased uncertainty nonetheless.
Despite all this GBT generally seem to highlight all the increased R&D they have to do but in the end manage to find enough new clients to keep the revenue growing faster. But maybe this year will be a bit harder with the loss of BBY and Pershing. We may have to wait until the interim in Feb to really know.
It's now trading at just a bit over 18x FY15. Not expensive for a business with decent recurring income and a global product.
I'm sitting on a bit over half my peak holding having lightened above $6. I wasn't sure what to do today. In the end I did nothing.

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Thanks for the update @peterdoobes. Do you see customer industry consolidation as a risk to the business?

GBT Price at posting: $5.35 Sentiment: Hold Disclosure: Held
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Thanks for the update @peterdoobes. Do you see customer industry...

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