Citadel's results were ok in my view.
Good (underlying) growth, defensive characteristics, high margins and recurring revenue. Dividend maintained (shares on a 2.6% fully franked yield).
The business continued to shift more towards software and higher margin recurring revenue, with a much bigger focus on health. As with Alcidion, the company pointed towards the growing opportunities in this sector.
If we go with the underlying numbers (which strip out acquisition transaction costs and contract adjustments), CGL has 14.6c in per share earnings, which is about 9% below FY19.
However, the Wellbeing acquisition contributed only a few months worth of earnings. On a proforma basis, assuming a full year's contribution, EPS would be closer to 19c or 18% growth.
The buisness has stripped out $1.5m in costs from Wellbeing, and this part of the business is performing in line with expectations
This is really just a question on how well they execute on the opportunity they describe. The business is now (in principle) better structured to take advantage of the opportunities and deliver more attractive returns.
No guidance was issued, but the company reiterated expectations for long term 15% organic revenue growth for its software segment, and 5-10% for services. Given the current breakdown, that averages out at around 11% for the total group. Also important to note that software has margins of 65% versus services margins of roughly 30%.
I will update my valuation shortly.
Full results here