Harvest Technology plc - Outlook for 2021

On 9 December 2020, Harvest Technology plc issued an update on its performance in 2020 as well as revised forecasts for the 2021 financial year. In this respect, Harvest noted that it has outperformed its original targets for 2020 as the positive trend registered during the period from January to September continued during Q4. Moreover, notwithstanding the current economic challenges resulting from the Covid-19 pandemic, Harvest reasonably expects that it will experience growth in profit in 2021. Although H1 2021 is expected to remain challenging, the economic outlook is projected to start improving in the second half of the year. Indeed, for the 2021 financial year, Harvest is now anticipating revenues to be in the region of €19.5 million compared to the projected figure of €18.3 million disclosed in the Prospectus in November 2019. Similarly, profit before tax for 2021 is now projected at €4.0 million compared to the previous estimate of €3.4 million reflecting also improved margins as the EBITDA margin is projected to increase to 25% in 2021 compared to the forecasted EBITDA margin of around 21% for 2020 and the previous estimate of just under 24% for 2021.

In view of the above, Harvest added that it expects to maintain dividends of €0.06 per share for 2021. However, it also highlighted that no firm commitment is being made at this juncture in this respect as Harvest considers the distribution of additional dividends as and when appropriate.

Business update

Providing an update on its operations and business pipeline, Harvest explained that by the end of Q2 2021, it aims to achieve important development milestones in key business areas. Harvest will invest further to upgrade its technology platforms to ensure that ‘Apcopay’ services (the payment processing arm of Harvest) are both scalable as well as versatile. With clients in more than 25 countries, Harvest will be working on increasing its international presence and diversifying in industries it serves, extending its partners network and introducing new online payment products and services.

While consolidating its local presence in terms of business opportunities as travel starts to reopen, Harvest will also step up its focus on internationalisation across all subsidiaries. The success registered by PTL (which provides systems integration services and multiple other IT solutions) in Mauritius in partnership with IBM has provided the company with invaluable experience in this respect. Moreover, APCO Ltd (which provides various automation solutions) is actively exploring new opportunities in South Africa and a significant amount of preparatory work has already been concluded.

In addition, the projected steady cashflow generation is expected to support future large contract financing and funding for potential ‘Merger & Acquisition’ opportunities. Aside from focusing on developing its growth internationally, Harvest will also be considering investment opportunities with a view to strengthening and complementing its business portfolio.

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