Atturra due diligence

[LinChen31]

(This is not financial advice, please do your own research)

Atturra (ASX: ATA) is Australian technology services business. Leader in designing implementing and maintaining IT solutions for many of Australian largest private and public entities.
Main offer:
Advisory & Consulting
Key clients: Australian Government - Department of Agriculture, Water and the Environment.
Australian Government - Department of Defense.
Australian Government - Department of Education, Skill and Employment.
RioTinto.
ACT Government.

Business Applications
Key clients: Australian Government - Department of Agriculture, Water and the Environment.
Australian Government - Department of Health.
Bayside Council.
Midcoast Council.

Data & Intergration
Key clients: The Star
Origin
Lion
AEMO
ANZ
AMPOL

Change Management & Adoption
Key clients: NSW Government.
Oil Search
Coles
Queensland Government.
Newcrest Mining Limited
Woolworths

Cloud Services
Key clients: Australian Government - Department of Defense.
Australian Government - Department of Education, Skill and Employment.
Montague
Spirit Super
AEC - Australian Electoral Commission

Management Control solution

Industry Engagement


Atturra FY21 Financial:
Total Revenues: $98,339,425
Cost of revenues: ($68,773,147)
Gross profit: $29,566,278
Gross margin: 30%

Other income: $2,862,020
Sale and marketing expenses: ($549,592)
General and administrative expenses: ($22,361,644)
Finance cost: ($97,503)
Income tax expense: ($1,925,421)

Profit of the year: $7,564,824

Balance Sheet FY21
Current assets
Cash and cash equivalents: $17,327,577
Trade and other receivables: $23,092,760
Contract assets: $294,225
Other current assets: $108,841
Total current assets: $40,823,403

Current liabilities
Trade and other payable: $26,504,063
Contract liabilities: $3,353,117
Borrowings: $257,072
Lease liabilities: $711,371
Current tax liabilities: $3,009,512
Employee benefit obligations: $4,789,461
Provisions: $1,416,000
Total current liabilities: $40,040,596

Total current assets / Total current liabilities = 1.02

Cash Flow Statement
Cash flow from operating activities
Receipts from customer (inclusive of GST): $105,936,973
Payments to suppliers and employees (inclusive of GST): ($86,519,123)
Net cash inflow from operating activities: $17,522,486

Cash flows from investing activities
Payments for acquisition of subsidiary, net of cash acquired: ($965,052)
Payments for property, plant and equipment: ($74,800)
Proceeds from sale of property, plant and equipment: ($13,853)
Net cash (outflow) from investing activities: ($1,025,999)

Cash flows from financing activities
Dividends paid to company's shareholders: ($6,500,000)
#Final dividend for the year ended 30 June 2021 of 4.45 cents per fully paid share.
Net cash (outflow) from financing activities: ($7,968,375)

Key client metrics(revenues of FY21)
Local and state government: 13% of revenues.
Federal government: 25% of revenues.
Education: 4% of revenues.
Defense: 20% of revenues.
Superannuation and financial planning: 5% of revenues.
Utilities: 8% of revenues.
Other: 25% of revenues.

Client Concentration by revenue in FY21.
Top 20 customer: 62%
21 - 100 customer: 28%
Remaining customers: 10%

Client tenure among its top 20 clients in FY21.
More than 5 years - 33%
3 - 5 years - 20%
1 - 3 years - 47%
Under a year - 0%

Director Interest
Mr. Shan Shamsher Hassanali Moti Kanji (Chairman, Non-Executive Director)
Share hold: 114,943,712 (57.31%)

Mr. Stephen Kowal (Chief Executive Officer)
Share hold: 6,872,943 (3.43%)

Mr Jonathan Yitzchak Rubinsztein (Non-Executive Director)
Share hold: 5,825,055 (2.9%)

Ms. Nicole(Nicki) Bowman (Non-Executive Director)
Share hold: 100,000 (0.05%)

Director total share hold: 127,741,710 (63.69%)

Other
Andris Balmaks (Executive General Manager - Advisory & Consulting)
Share hold: 2,837,405 (1.41%)

Martin Holden (CIO & Head of Emerging Businesses)
Share hold: 1,185,428 (0.59%)

Mr. Peter Murphy (Director & Co-Founder of Noetic)
Share hold: 2,837,405 (1.41%)

Atturra Partner
Microsoft
Boomi
Software AG
infor
Solace
Smartsheet


News and Information
30/01/19
FTS Group appoint Stephen Kowal as Chief Executive Officer.

09/12/19
FTS Group acquires Galaxy 42 ushering in new growth opportunities in Application Consulting Services.

08/04/20
Anatas named as a winner in software AG partner awards.

14/07/20
Galaxy 42 has announced it has acquired Canberra headquartered IT services consulting house Chartsmart.

10/11/20
Anatas named boomi's 2020 partner of the year for the asia pacific Japan region.

02/02/21
FTS Group acquired advisory firm Noetic Group.

08/04/21
ESAM Consulting joins FTS Group as part of Galaxy 41.

15/06/21
Defense awards 3-years experimentation support contract to FTS Group advisory firm Noetic.

18/08/21
FTS Group acquired Mentum Systems.

31/08/21
FTS Group re-brand to Atturra, the eight FTS Group subsidiaries will be fully integrated into the Atturra brand. (ANATAS, Veritec, Cubic Consulting, ESAM Consulting, Galaxy 42, KoBold, Mentum Systems, and Noetic)

17/09/21
Atturra appointing Estelle Ivory as General Manager, Business Applications in the Microsoft cloud and applications business unit.

22/10/21
Atturra wins the Smartsheet APAC partner of the years Award for 2021.

09/11/21
Lion undergoes ipaas modernization with Atturra to bolster partner success and delight.

09/11/21
Atturra partner with Outsystems, extending its ability to innovate through software at speed.

10/12/21
Atturra Named Boomi's 2021 APJ partner of the year.

22/12/21
Atturra list at ASX under the code ATA.

17/01/22
Atturra Acquires ERP Implementation Business Kettering Professional Services.

03/02/22
Atturra partner with infor to deliver digital transformation initiatives for public sector organisations across ANZ.

14/02/22
Atturra partner with Semestry. And will develop consulting and implementation services capabilities for Tribal recently acquired Semestry Termtime.

15/02/22
Atturra partners with Google Cloud's Apigee to bolster API capabilities.

01/03/22
Atturra complete acquisition with Kettering professional services.

14/03/22
Atturra partner with Vaultspeed to accelerate data warehousing for a data-driven future.

29/03/22
Pursuit Technology and Atturra Announce Strategic Alliance Partnership For Local Government Learning and Workforce Planning.

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[LinChen31]

Atturra HY 22 Results
-First-half revenue: $61.9m, up 44% on PCP.
-Underlying EBIT： $6.4m, up 139%. EBIT: $5.5m, up 68%.
-Net profit after tax: $3.4m, up 40%.
-Strong growth in Defence, local government business.
-Balance sheet as at period end: $37.2m cash at hand, net debt $ 5.8m.
New industry focus: Manufacturing. And add 45 new clients in the first 6 months of the year.

HY 22 financial results detail
Revenue from contracts with customers: $61,879,000
-Time and materials agreements: $40,984,000
-Fixed price agreements: $15,956,000
-Software licensing: $356,000
-Software maintenance and managed services: $1,324,000
-Management fee revenue: $2,405,000
-Other revenue: $854,000

Cost of providing services: ($40,705,000)
Gross profit: $21,174,000
Gross margin: 34.2%

Expenses
General and administrative expenses: ($14,770,000)
Sales and marketing expenses: ($447,000)
Impairment of receivables: ($471,000) Credit losses

Finance costs: ($134,000)
-Interest and finance charges paid/payable on borrowings: ($81,000)
-Interest and finance charges paid/payable on lease liabilities: ($53,000)

Profit before income tax expense: $5,400,000
Income tax expense: ($1,962,000)
Profit after income tax expense for the half-year: $3,438,000

Profit for the half-year is attributable to:
Non-controlling interest: $467,000
Owners of Atturra Limited: $2,971,000

Basic earning per share: $1.98cents

Balance sheet
Current assets
Cash and cash equivalents: $37,185,000

Trade and other receivables: $21,004,000
-Trade receivables: $18,104,000
-Less; Allowance for expected credit losses: ($459,000)
-Other receivables: $3,359,000

Contract assets: $1,807,000
-Opening balance: $294,000
-Additions: $28,372,000
-Transfer to trade receivables: ($26,859,000)

Income tax refund due: $288,000
Other current assets: $1,399,000
Total current assets: $61,683,000

Non-current assets
Trade and other receivables: -
Investments accounted for using the equity method: $542,000
property, plant, and equipment: $220,000

Right-of-use assets: $4,010,000
-Balance at 1 July 2021: $3,275,000
-Additions: $1,313,000
-Depreciation expense: ($578,000)

Intangibles: $12,005,000
-Goodwill - at cost: $11,957,000
-Software - at cost: $1,792,000
-Less; Accumulated amortisation: ($1,744,000)

Deferred tax: $4,302,000
Total non-current assets: $21,079,000
Total assets: $82,762,000

Current liabilities
Trade and other payables: $25,459,000
-Trade payables: $8,574,000
-Accrued expenses: $3,534,000
-Accrued staff bonuses: $3,879,000
-Payroll tax and PAYG payable: $2,144,000
-GST payable: $1,990,000
-Other payables: $5,338,000

Contract liabilities: $1,930,000

Borrowings: $1,000,000
-Loan from related party (263 Finance pty ltd): $1,000,000

Lease liabilities: $886,000
Income tax payable: $723,000
Employee benefits: $5,489,000
Onerous contract provision: $1,066,000
Total current liabilities: $36,553,000

Non-current liabilities
Borrowing: $4,750,000
-Loan from related party (263 Finance pty ltd): $4,750,000

Lease liabilities: $3,295,000
Employee benefits: $454,000
Total non-current liabilities: $8,499,000
Total liabilities: 45,052,000

Current assets / Current liabilities = 1.69

Equity
Issued capital: $52,386,000
-Total share: 200,550,449

Reserves: ($12,060,000)
-Share-based payments reserve: $8,000
Ttansactions with non-controlling interests: ($12,068,000)

Accumulated losses: ($2,956,000)
Equity attributable to the owners of Atturra Limited: $37,710,000
Non-controlling interest: $340,000
Total equity: $37,710,000

Cash Flows
Cash flows from operating activities
Receipts from customers (inclusive of GST): $62,141,000
Payments to suppliers and employees (inclusive of GST): ($59,174,000)
Share of profits of associates received: $45,000
Interest received: $3,000
Interest and other finance costs paid: ($134,000)
Income taxes paid: (4,151,000)
Net cash (use in)/ from operating activities: ($1,270,000)

Cash flows from investing activities
(Payment)/proceeds for purchase of a subsidiary, net of cash acquired: ($3,484,000)
-Acquired Menturm systems.

Payments for property, plant, and equipment: ($34,000)
Payment for intangibles: ($19,000)
Net cash (use in)/ from investing activities: ($3,537,000)

Cash flows from financing activities
Proceeds from issue of shares, net of costs: $22,092,000
Proceeds from borrowings: $4,000,000
Repayment of borrowings: ($198,000)
Repayment of lease liabilities: ($551,000)
Dividends paid: ($679,000)
Net cash from/(use in) financing activities: $24,664,000

Net increase in cash and cash equivalents: $19,857,000
Cash and cash equivalents at the beginning of the financial half-year: $17,328,000
Cash and cash equivalents at the end of the financial half-year: $37,185,000