Author Topic: JAN  (Read 1496 times)

galumay

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JAN
« on: September 29, 2020, 06:18:27 PM »
A new business in the personal portfolio, in line with my strategy to invest in the riskier businesses not yet fully proven, via the personal portfolio.

29/9/20 purchased a position in JAN with funds realised from selling ICU.

Janison Education Group Limited provides assessment and learning platform solutions in Australia and internationally. The company operates in two segments, Assessment and Learning. The Assessment segment implements and operates a platform for the provision of digital exam authoring, testing, and marketing to national education departments, tertiary institutions and independent educational institutions. The Learning segment operates a learning management platform that manages the content and learning programs for corporate and government clients.

Obviously the business has benefitted from the COVID situation, but the strong growth in revenues has propelled the business to a position where it will be profitable and cash flow positive this year, and I believe some of the covid driven gains will be sticky. The business is basically debt free. Directors hold a lot of shares, 87% held by top 20, only 13% free float.

What can go wrong - the revenue drops back to pre-covid levels and the business becomes unprofitable again. Management use the current rosy outlook to borrow or raise and then make stupid M&A, Big clients like Naplan change provider.

Why thats unlikely - revenue growth is not just driven by covid, there has been organic customer & revenue growth, Management have been good capital allocators to date, assessment contracts are probably quite sticky.

galumay

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Re: JAN
« Reply #1 on: October 24, 2020, 08:15:47 PM »
Results for Q1 20-21,

Q1 FY21 Highlights
• $7.8m Group Revenue +53% growth on pcp1
• Underlying Assessments Platform revenue growth of +29% on pcp
• $5.7m Assessments Revenue +68% growth on pcp
• $1.5m EBITDA, up +$1.2m or +425% on pcp, with positive Assessment EBITDA of $0.5m
• $2.3m positive operating cash flow, $12m cash on hand as at 30 September 2020
• 50% Gross Margin, up +3.4 percentage points on pcp
• Successful ICAS delivery and significant improvement in customer experience. $2.7m revenue in Q1
with >$4.5m expected full year (revised up from $4.0m previously) • +21% revenue growth in Learning division; 3 new client wins

So execution continues in a positive direction. If the scaling continues I suspect the business will be profitable by mid year, already generating strong FCF, its just the impact of amortisation of IP that creates negative EPS at current scale.

galumay

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Re: JAN
« Reply #2 on: November 27, 2020, 08:58:34 AM »
25/11/20 Trading update announcing that the ICAS business is performing stronger than expected, SP reacted positively and is now up about 25% from my entry point. Original guidance for ICAS was $4.0m revenue, then raised to $4.5m, outcome $4.8m - under promise and over deliver is always a good look!

ICAS Highlights

$4.8m Revenue, +30% above management expectations
80% Gross Margin
$2.3m EBITDA and Net Cash Flow contribution
300,000+ tests administered
2,500+ schools (approximately 20% of all Australian schools), 114 new schools
41,000+ parent purchases and contact details, +11% or +4,000 new contacts
98% improvement in customer satisfaction and seamless event delivery

Worth noting that I completely missed how big of a lever ICAS would be, I missed how cheaply they bought the business - $1.6m and the FCF from the business already exceeds the purchase cost! Unis obviously not very good at valuing assets they are disposing! So while it looks like a good decision to take a position in JAN, its clear I missed one of the main reasons to buy at that point - the market failing to value the ICAS purchase in the SP - so my success so far is due to luck rather than skill.

« Last Edit: November 30, 2020, 04:08:53 PM by galumay »

galumay

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Re: JAN
« Reply #3 on: February 22, 2021, 08:01:56 AM »
H1 2021 results, closing in in profitability as expected, hopefully will be very close to positive by mid year.


galumay

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Re: JAN
« Reply #4 on: August 26, 2021, 08:21:48 AM »
FY 2021, JAN had a very poor 2nd half to 2021 and lost most of the gains of the first half, this was despite growing revenues, so at this stage scaling is not working. The explanation is partly the cost of moving to online being a much bigger part of the business due to Covid, but I will be watching very closely in the next couple of 4Cs for a turnaround and a move back to cash flow positive and hopefully profitability.

I note that JAN failed to provide a quantitive outlook statement for FY22 which is of itself some concern. Coviction on this business has dropped considerably.




galumay

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Re: JAN
« Reply #5 on: March 02, 2022, 11:34:53 AM »
More bad news for H1 2022, JAN continues to grow expenses faster than revenue - so not scaling up at all. Cash flow is negative now as well.


galumay

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Re: JAN
« Reply #6 on: August 22, 2022, 06:05:51 PM »
My suspicions with $JAN confirmed with the release of their AR for FY22, not that there was really any new info, just confirmation of the deteriorating margins meaning its just not scaling. Revenue growing, but FCF falling heavily, at least they have no debt and I will wait and see what they can achieve in normalised conditions without all the usual suspects to blame. Its only a very small position anyway due to my lack of conviction.

I just looked at the investor presentation - another red flag there, JAN reference a "broker consensus table"  🚩


galumay

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Re: JAN
« Reply #7 on: February 27, 2023, 09:59:49 AM »
Another absolute shocker from #shitco JAN, no wonder they didnt mention earnings once in the report until you get down to the income statement! A big loss, huge negative OCF, will likely need a CR before EOFY.

galumay

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Re: JAN
« Reply #8 on: August 11, 2023, 07:10:02 PM »
Slightly better H2 to finish off the FY, but huge red flags with this mob, market update for the FY2023 trading results fails to mention earnings at all, just waffle about bullshit EBITDA, so we know a significant loss is coming again this year, depreciation running at 150% of OCF so the loss is obvious but they fail to talk about it at all. A dud of a business.


galumay

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Re: JAN
« Reply #9 on: February 06, 2024, 07:48:56 PM »
Well that went well, finally decided to sell out and take my losses, sold late last week for 26c, today they announced a new contract and went up 47%.

So it took my 3 years to make the right decision and then having already had all that opportunity cost, I then left 47% on the table - if I had just taken 4 days longer to make the decision!! Hindsight is a wonderful thing. I need to put it behind me, its not a 50% better company today than it was yesterday - the real error is hanging on so long, not selling 4 days too soon.

I need to not be gun shy as a result, in fact I need to be more decisive in selling off businesses which dont fit our investment strategy.