Cordel Group — Railtech play with scalable potential

Cordel Group (LSE: CRDL)

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Research: TMT

Cordel Group — Railtech play with scalable potential

Cordel Group is a UK technology company that provides an end-to-end data management platform for automated rail infrastructure monitoring. At its core, the company transforms fragmented legacy datasets into a ‘single source of truth’ to monitor networks in near real time, improving safety and mitigating long-term costs. Now embedded in major railroad networks globally, Cordel is positioned to scale either through hardware sales to update legacy data or through AI-powered use cases without a proportional rise in costs. The group’s end-to-end capabilities and ability to customise solutions provide a competitive edge.

Max Hayes

Written by

Max Hayes

Associate Analyst

TMT

Cordel Group

Railtech play with scalable potential

Initiation of coverage

Software and comp services

9 February 2024

Price

4.25p

Market cap

£8m

Net cash (£m) at 31 December 2023

1.2

Shares in issue

199.5m

Free float

44%

Code

CRDL

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(18.3)

(7.6)

(35.6)

Rel (local)

(17.2)

(10.6)

(32.9)

52-week high/low

7.5p

3.8p

Business description

Cordel offers a patented cloud-based platform for master data management and business analytics, together with specialist hardware and software for capturing, analysing and reporting on large datasets within the transport sector, employing sophisticated artificial intelligence algorithms.

Next events

Trading update

May 2024

FY24 trading update

August 2024

Analysts

Max Hayes

+44 (0)20 3077 5700

Katherine Thompson

+44 (0)20 3077 5700

Cordel Group is a research client of Edison Investment Research Limited

Cordel Group is a UK technology company that provides an end-to-end data management platform for automated rail infrastructure monitoring. At its core, the company transforms fragmented legacy datasets into a ‘single source of truth’ to monitor networks in near real time, improving safety and mitigating long-term costs. Now embedded in major railroad networks globally, Cordel is positioned to scale either through hardware sales to update legacy data or through AI-powered use cases without a proportional rise in costs. The group’s end-to-end capabilities and ability to customise solutions provide a competitive edge.

Year end

Revenue (£m)

EBITDA*
(£m)

PBT*
(£m)

EPS*
(p)

Net debt/
(cash)** (£m)

EV/sales
(x)

06/22

2.3

(1.0)

(1.1)

(0.7)

(0.2)

3.2

06/23

3.0

(0.3)

(0.4)

(0.2)

(1.3)

2.4

06/24e

4.7

(0.5)

(0.7)

(0.3)

(0.6)

1.6

06/25e

7.0

0.2

0.0

0.0

(0.7)

1.1

Note: *EBITDA, PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Includes financial leases.

Revenue growth exceeded 100% in H124

Revenue grew 108% y-o-y in H124, to £2.0m, driven by deliveries for Amtrak (US) and Network Rail/High Speed 1 (UK) and new contracts via channel partners, which are used to broaden its geographic reach. Low-margin hardware related to new use cases drove a gross margin decline to 53%; we forecast a return to 70% for FY24 on higher revenue and an improved mix of services, with over 80% margins in H2. Investments in sales and delivery led to an EBITDA loss of £569k in H124, but should drive future operationally geared growth. In H223, a £1.7m capital raise funded investments and Cordel ended H124 with £1.2m net cash.

Positioned for scalable growth

We expect continued momentum from H124, forecasting 54% y-o-y revenue growth in FY24 and 49% in FY25, driven by contract expansions and full-period recognition of H1 wins in FY24, plus pipeline conversion in FY25. We expect investment in sales and delivery to supress FY24 operating margin progression, before swinging to a small profit in FY25 on operating leverage. Break-even free cash flow in FY25 should allow the group to remain debt free. Now embedded in major railroad networks, the upsell potential is high beyond FY25. We do not expect capital needs for organic growth, though large projects or M&A may require fund-raising.

Valuation: Growth and margin potential not reflected

We believe Cordel’s valuation overlooks the expansion potential with its toptier clients, as well as the opportunity to scale globally. Key re-rating catalysts are proving additional use case demand, upselling contracts and winning new clients, especially in the US. Despite faster forecast revenue growth, Cordel trades at a discount to its peers across multiples, signalling upside potential as its recurring data-as-a-service revenue mix increases. Cordel has a £10m mid-term recurring revenue target; delivering this with the current cost structure would validate the strategy.

Investment summary

Company description: Creating safer railways globally

Cordel Group is a UK technology company that provides end-to-end data management for automated rail infrastructure monitoring, with a focus on creating safer, more efficient, sustainable railroads globally. The group’s proprietary platform processes and centralises fragmented data, enabling near real-time monitoring to identify risks proactively, supported by artificial intelligence (AI). This smart approach, which detects problems early to limit disruptions before they become costly issues, has been key to major wins like Network Rail, Amtrak and Australia Rail Track Corporation (ARTC). As a turnkey solution provider, Cordel provides lidar/front-facing video hardware to supply new data or replace legacy data. To process this data into actionable insights, the group provides sophisticated AI software, which is constantly evolving, with new capabilities key to further upselling. The initial product focus has been on clearances, ensuring train and tunnel/platform compatibility, an ongoing concern with varying freight dimensions and new rolling stock (trains). Other use cases are earlier in the commercialisation stage but could accelerate with market demand. For example, investment in unmanned geometry hardware related to a recent deal with Angel Trains accelerated following Network Rail’s planned £36m investment in such technologies.

Cordel employs a land and expand strategy, starting with trials to build trust that can lead to long-term, scalable contracts. Interoperable hardware and software create stickiness, elevating net retention as contracts grow via track miles or use cases. Covering 30,000 of 360,000 addressable miles indicates substantial room to grow, particularly by increasing the value per mile by deploying multiple use cases. The company’s highly customisable end-to-end solutions enable it to become a data management beachhead, a key strength versus competitors in the expansive yet fragmented smart rail market.

Financials: Potential for long-term scalable growth

Cordel’s business model centres on converting trials to long-term managed services, transitioning clients from hardware installation and setup to long-term high-margin recurring service revenues. Contracts have three main elements that customers can utilise as required:

Data processing and setup: core to any contract – 60–70% gross margin.

Hardware setup: if extra data collection is needed – 15–85% gross margin depending on third-party or proprietary hardware and customer sold to.

Long-term data-as-a-service (DaaS): ongoing data management and use case upsell – 80–90% gross margin.

As the business has matured, management has won increasingly valuable contracts, with recent highlights being:

>US$6.7m 6.5-year contract with Amtrak, including US$3.2m setup and >US$700k recurring service revenue.

>£3.2m 6.5-year contract with Network Rail, replacing and managing the National Gauging Database.

Five-year contract with Angel Trains, the UK’s leading rail lessor, covering one-third of passenger trains.

In H124, revenue grew 108% y-o-y to £2.0m with momentum across regions (US up 16x and UK up 58.5%). We expect momentum to continue in H2, forecasting 30.3% y-o-y growth in the half and a 54% increase for FY24, to £4.7m. Historically the stronger half, H2 should also benefit from a full-period contribution from Amtrak, as well as from contracts won at the end of H1. H1 gross margins declined due to Angel-related hardware investments, but we expect this to revert to over 70% for the full year on higher revenue and no-foreseeable low-margin hardware revenue in H2. Investments in future sales and delivery led to an EBITDA loss of £574k in H124, which we see continuing to end-FY24 before this investment drives operationally geared growth in FY25. For FY25, we forecast a 49% increase in revenue, to £7.0m, and a move to a small EBITDA profit. Growth levers include new customer wins from executing on its US-focused pipeline, upselling new use cases and cross-selling across departments within the business. Beyond FY25, maturing contracts and recurring revenue should enable steadier growth and higher margins, with management targeting £10m in recurring revenue, which seems achievable through existing customers and the pipeline.

Valuation: Share price does not reflect momentum

In our view, Cordel’s current valuation does not reflect its long-term growth potential, overlooking opportunities to expand with tier one clients like Network Rail, Amtrak and ARTC. Key milestones that could catalyse a re-rating include demonstrating demand for additional use cases, upselling existing contracts and acquiring new clients, particularly in the US where there is a higher likelihood of securing seven-figure annual contracts. Despite faster forecast revenue growth than peers, Cordel trades at a discount on EV/sales multiples, signalling upside potential as the company grows and transitions to a higher mix of recurring DaaS revenues. On CY25e EV/EBITDA, an 11% premium to peers reflects early stage profitability. In the mid-term, delivering on management’s goal of £10m in recurring revenue on a diversified customer base with its current cost structure could provide the strongest validation of the group’s technology and strategy. We note that while the company is currently solely focused on exploiting the potential of the rail vertical, its software can be applied to any linear-recorded dataset, providing scope to expand into new verticals in the longer term.

Sensitivities: US and use case expansion key to re-rating

Cordel’s growth and margins depend on expanding its US presence, reliant on the new US team to execute. Delivering on its land and expand strategy also relies on deploying new use cases beyond rail clearances, currently the sole use case. Lack of demand for other use cases in early pipeline stages could limit expansion and revenue growth. Diversifying beyond the top three clients mitigates risk, but still requires demonstrating additional use case viability, especially in the US market where Cordel is focused.


Company description: Creating smarter railways

Cordel Group is a UK technology company focused on building safer, more efficient and sustainable railways across the globe. The company partners with major rail operators like Network Rail, Amtrak and ARTC to provide an end-to-end automated data management solution that optimises the monitoring of tracks and surrounding environments (together: rail corridors).

Rail networks may suffer from fragmented legacy data that is decentralised, largely unusable and not formatted specifically for the rail industry. At its core, Cordel’s proprietary platform processes, centralises and unlocks value from this data by enabling near real-time insights through AI. This not only reduces the costs and inefficiencies of manual track surveillance, but also proactively mitigates risks before they become expensive problems. Cordel’s technology also helps operators maintain compliance; for example, most of the US rail network is legally required to implement automated Positive Train Control (PTC) systems to ensure safe, human error-free travel. Cordel offers services such as automated asset mapping and change management to support these systems.

Exhibit 1: Edison TV interview providing an overview of Cordel

Source: Edison Investment Research

Once deployed, Cordel upsells contracts in two ways: 1) by covering more track miles, and 2) by adding new use cases that substantially expand the contract value. The group’s clearance solution has been key to securing contract wins by providing a quick and effective way to assess compatibility issues. Clearances examples include seeing if new rolling stock (trains) is compatible with existing tracks or if freight trains can safely pass through tunnels, under bridges and alongside other trains based on their varying loads. For Amtrak, having a near real-time clearances solution is also vital for its expansion into freight.

With its core platform and AI now developed, management believes the group can rapidly build applications for new use cases to meet emerging customer needs by reprocessing existing data in slightly different ways. While relatively straightforward, adding a new use case can potentially double the annual value of a contract, providing a powerful mechanism for operationally geared growth.

Cordel’s solution is sticky, embedding deeper within customers’ infrastructures with the more hardware it deploys and use cases it addresses. Currently, these are the other use cases the company seeks to address, with all of them earlier in the development pipeline than the clearances solution:

Ballast profiling for track stability: monitoring and ensuring the correct distribution and placement of ballast, which is crucial for track stability.

Vegetation management: identifying potential issues from overhanging trees and other vegetation near tracks to prevent safety hazards.

Overhead line equipment monitoring: regular inspection and management of overhead lines to maintain railway infrastructure integrity.

Geometry analysis: ensuring tracks are correctly positioned and aligned, which is essential for the safe operation of trains.

While these sound simple to manage, certain factors can create ongoing small changes to the shape and size of the rail infrastructure, creating long-term costs and risks if not addressed early. For example, extreme droughts can cause ground subsidence, rails can sink into the ground from soil erosion and hot/cold weather can change the shape of the metal in the track. To help mitigate these risks, rail operators need to regularly inspect infrastructure and track geometry, making adjustments and maintenance fixes when necessary. These issues are globally recognised, with Network Rail budgeting c £36m for unmanned geometry technologies in its next budget cycle starting 1 April 2024 (Control Period 7). This has motivated Cordel to accelerate its investment in geometry by extending its existing partnership with Angel Trains, a rolling stock provider, to equip its trains with new unmanned geometry units in H124, in line with its strategy of demand-driven development. The alternative to Cordel’s real-time solution is manual measurement, potentially leading to larger development work and creating potential risks if not managed properly.

Cordel can also deploy its light detection and ranging (lidar)/front-facing video hardware when networks do not have their own sensors or have incomplete datasets. Incomplete datasets are often highlighted through Cordel’s data processing capabilities, where for example it might highlight that there is a missing platform or signal in the existing, potentially stale data. The more hardware deployed, the greater the real-time comprehension of the network, underpinning another upsell opportunity.

In addition to working with tier one rail infrastructure organisations, Cordel partners with rolling stock and engineering firms to integrate its hardware and software, thereby broadening its potential reach, as highlighted by the Angel contract.

A strong data management heritage

Founded in 2013 in Sydney, Australia, under the name Maestrano, the group originally specialised in master data management for small and medium-sized enterprises (SMEs), consolidating siloed data to provide actionable business intelligence through proprietary AI. In July 2019, the group acquired Airsight, a specialist in lidar technology suited to recording data in transport corridors, facilitating the group’s expansion into rail (Exhibit 2).

Exhibit 2: Cordel Group company timeline

Source: Edison Investment Research

Airsight’s Corridor.ai product (Cordel.ai after 2020) was key to the acquisition, offering hardware and software to automate inspections, predict failures and improve asset management for transportation, especially rail. The group sought to drive adoption by integrating its own data management and application interface (API) capabilities, simplifying access to disparate data through a centralised cloud platform interoperable with third-party software.

Early momentum, including contract wins in Australia, the UK and the US, saw Maestrano pivot to solely focus on the growing rail opportunity. This strategic shift was reflected in its rebranding as Cordel Group in November 2021 (Exhibit 2). With this focus, Cordel has been phasing out other acquired products, including:

Airsight: a consulting business operating on day rates, misaligned with Cordel’s ‘as-a-service’ model.

Nextcore: lidar drones, which faced competitive price pressure.

Cordel’s heritage of managing and consolidating large datasets has created a valuable core engine essential for leveraging vast amounts of unstructured lidar and video data. By solely focusing on rail, rather than a range of verticals, management has refined its core data processing capabilities, enabling faster development of tailored railway products that are essential for driving scalable growth. As at end-H124, Cordel had 35 employees based in Australia, the UK and the US, with offices in Australia and the UK.

Product: Three layers underpin end-to-end solution

Cordel designs solutions to seamlessly integrate with client systems, enabling continuous network monitoring and analysis, building on Cordel’s heritage in master data management. The company’s end-to-end solution is completed by the ability to provide proprietary lidar hardware to improve the reliability, recency and frequency of data collection. The company chooses lidar over methods such as intelligent video review or 3D scanning due to its superior measurement precision, especially in critical applications like clearances, where accuracy is paramount.

Cordel’s core engine addresses the challenge of making large, unstructured lidar datasets more accessible and easier to use. The software provides a user-friendly interface for clients to visualise data by performing advanced functions like point cloud creation – a 3D representation created using lidar measurements. Clients can also load and analyse external datasets like previous scans, offering a versatile platform, and can integrate this managed data across systems and platforms through an API. The group’s ability to standardise and validate lidar data ensures consistency and interoperability, enhancing usability across systems.

Cordel has a built a comprehensive stack from the ground up, incorporating hardware, data analysis and user interface (UI) design. In contrast to industry norms, the group’s open data access approach is unique, as data siloing is common in rail, and allows for greater data capture to be used to enhance the accuracy of its technology.

First layer: Hardware and data capture

The base layer of Cordel’s technology is lidar and front-facing video hardware for mobile data capture on trains. Data is captured in two ways:

Unattended – continuous capture on low frequency maintenance trains enables wide network coverage for tasks like geometry analysis.

In-service passenger – allows high-frequency data collection over smaller sections of track.

Historically, hardware adoption has been limited by cost and technology constraints, primarily relating to weather or age deterioration. Additionally, alternative lidar products have been designed for maintenance trains only, reducing data capture and potentially causing disruptions to in-service passenger trains.

Cordel’s Wave sensors leverage more durable, low-maintenance and miniature lidar from autonomous driving technologies to develop cost-effective wide-scale solutions. Benefits include wider deployment and increased data capture, enabling enhanced retrospective analysis for early issue identification, improving timeliness and accuracy across the network.

Finally, Cordel consolidates data from lidar, video and other sources into a unified database for comprehensive analysis. The combination of advanced hardware and managed data provides a powerful platform, which can be used to generate AI-powered real-time visual surveys of an entire rail network.

Given the significant data capture, management keeps raw data in ‘hot storage’ for six to 12 months for immediate needs, following which it is archived for longer-term retention based on client requirements. Archiving data reduces costs of storage but also provides clients with a ‘time machine’ view of the railway to assess conditions over time.

Recently, the group has been building a portfolio to include a wider range of sensors to enable more use cases. Acquired from third-party specialists, these may be more expensive than Cordel’s standard Wave sensors but will enable expansion into potentially high-growth new use cases, like unmanned geometry. To make contracts more attractive management may sell sensors at cost, affecting margins in the short term, with scope for rapid margin expansion following setup (see Strategy section below). Encouraging greater use of hardware across multiple vehicles captures more up-to-date, accurate data.

Second layer: Data management the foundation of all contracts

To balance maximising insights and minimising costs, Cordel selectively processes just 5–10% of collected data. Processing focuses on the highest-quality data captured under optimal conditions, as well as the most relevant information specified by the client. For example, in Australia and the US, less populated rural areas may require less frequent monitoring than busy urban zones. This selective approach optimises effectiveness, efficiency and costs at scale.

The company uses proprietary software that can remotely access and process data. This software leverages 4G wireless connectivity and breaks the continuous incoming data into smaller chunks, which can be separately and more easily processed in near real time.

Cloud integration is essential for securely storing the vast indexed data and ensuring accessibility, with Cordel’s system handling upwards of 110 gigabytes (GB) daily for customers. Condensing this big data is key for generating actionable insights. For example, Cordel was able to refine 50GB of Amtrak lidar data into 10 megabytes (MB) of clearance profiles, containing only the essential information.

Systematic indexing by time and location simplifies retrieving the most relevant data segments. Together, these capabilities allow Cordel to handle large datasets and deliver actionable insights efficiently.

This second layer is the platform on which all its contracts are built. For example, in 2021 Cordel won a competitive bid to replace the UK’s legacy National Gauging Database with a more resilient, modern system – Cordel’s Railway Gauging Data Solution (RGDS). Following an 18-month setup period, Cordel now owns and manages the gauging database through RGDS, providing consistent, high-quality data that enables National Rail decision-makers to make informed choices within hours instead of months as with the previous dataset.

Leveraging AI, Cordel can transform data into a comprehensive spatial understanding of railway environments. Through API, organisations can access this information on leading third-party enterprise asset management (EAM) and geographic information systems (GIS) platforms.

Cordel’s proprietary technology produces real-time infrastructure surveys, enabling change detection and predictive maintenance. These surveys are best illustrated through points clouds – detailed 3D digital rail corridor representations with AI categorisation providing geometric data on object surfaces.

Third layer: AI-driven use cases

Addressing specific use cases is driven by AI. For clearances, Cordel partners with D/Gauge, an AI clearance specialist. D/Gauge’s Rift product utilises Cordel’s full network lidar capture and automated processing stack to drive applications such as:

accurate clearance measurement between infrastructure and rolling stock (see Exhibit 3);

passing clearance management for safe train passage;

simulation of new trains through corridors through superimposing virtual rolling stock; and

route clearance for safe cargo movement.

Exhibit 3: Automated measuring of clearances with point cloud example

Exhibit 4: Video showcasing AI-driven asset management

Source: Cordel

Source: Cordel

Exhibit 3: Automated measuring of clearances with point cloud example

Source: Cordel

Exhibit 4: Video showcasing AI-driven asset management

Source: Cordel

Although the group has partnered with D/Gauge for clearances given D/Gauge’s expertise, the group believes it has the internal capabilities to expand into new use cases without a partner, underpinning greater margin potential. Roadmap priorities include enhancing existing applications to provide comprehensive solutions at scale, with current developments including:

monitoring ballast distribution for track stability;

identifying vegetation hazards;

inspecting overhead lines; and

analysing track geometry.

At its H124 results, Cordel confirmed it had taken its first commercial strides into new use cases following its expanded partnership with Angel Trains, to equip rolling stock with unmanned geometry hardware (using sensors to measure track alignments, gradients, profiles, etc).

Another key product in the pipeline is an AI-as-a-service offering, which will enable clients to upload their own lidar data for processing and analysis using Cordel’s AI to classify point cloud elements. This lowers barriers for clients challenged with deploying new rail hardware, letting them validate the effectiveness of Cordel’s platform on existing data. By showcasing AI abilities on client data, management aims to build trust and provide an easy entry point to demonstrate value. Releasing this AI-as-a-service product is a key short-term milestone to expand Cordel’s client base.

Strategy: Building on early global success

As a relatively new rail industry entrant, Cordel is focused on expanding the deployment of its clearances solution among existing and new customers to establish market presence, building trust and showing the effectiveness of its technology through proof-of-concept contracts. Significant scope remains to extend hardware across rolling stock and widen network coverage with existing clients. For new clients, management is focused on its core Australia, UK and US markets, with channel partnerships broadening geographic reach to new regions. Initial clearance deals could enable an effective land and expand approach, where Cordel can broaden mile coverage or cross-sell maturing pipeline offerings. We note that once embedded in an organisation, Cordel’s solution is sticky given the costs and effort to replace hardware and remove integrated software, particularly if the group addresses multiple use cases.

While diversifying into other verticals is part of the long-term vision, management expects the immediate focus to remain on rail, avoiding overextension across clients, capabilities and time zones. Initial steps into related domains such as Australian level crossing analysis, where rail intersects with road, reflects a cautious approach to expansion.

Multi-channel strategy to grow globally

Cordel employs direct and indirect sales models to balance focused engagement with broad reach. The direct approach focuses on established US, UK and Australian markets where Cordel seeks to strengthen its influence. While direct engagement is preferred, to avoid margin sharing, indirect models can provide access to new geographies and a broader customer base.

Cordel typically partners with track maintenance and construction engineering companies, like Holland LP or Ricardo, as well as rolling stock providers, like Angel Trains. By reselling Cordel’s hardware and software, the partners enhance their own offerings. Recent examples include:

After announcing a partnership with Holland LP in February 2023, Cordel secured its first Mexico deal in H124. The customer purchased a Holland inspection vehicle with a permanently mounted Cordel Wave lidar unit to create a network digital twin.

A A$500,000 Australian project for Level Crossing Safety Research builds on a previous National Transport Research Organisation (NTRO) engagement. Cordel is providing data and automation expertise for the government’s A$180.1m regional level crossing programme, while Ricardo will engage with compliance stakeholders, as well as with the NTRO for ongoing alignment with related research initiatives.

In August 2022, Cordel won a five-year contract with Angel Trains, the UK’s leading rail lessor, covering one-third of passenger trains. As part of the agreement, Cordel installed sensors on Great Western Railway trains, delivering automated infrastructure monitoring and expanding its Network Rail relationship.

In addition to technology, Cordel and D/Gauge also support each other with referrals. In January 2023, D/Gauge was acquired by TÜV Rheinland, a leading German transport inspector, opening new opportunities for Cordel through TUV’s extensive European market reach.

US and Europe are the focus

Cordel focuses on established rail networks where issues and needs are clearly defined, prioritising straightforward engagement over involvement in complex new projects like High Speed 2 (HS2) in the UK.

Further penetrating the US market is management’s primary goal. There is potential to not only further engage with Amtrak’s 21,000-mile network, but also with the seven other major US rail networks, which cover an additional 145,000 miles, as well as shorter tier two lines (see the Market section below). These organisations typically have substantially larger budgets and more autonomy than other regions, providing financial leverage alongside regulation like PTC to drive demand. Additionally, Amtrak’s aim to expand into freight, which necessitates more comprehensive clearance data due to cargo variability versus passenger trains, catalysed adoption of Cordel’s clearances solution. This strong mix positions the US as an attractive growth opportunity beyond Amtrak’s network alone.

Europe’s established rail networks, budgets and infrastructure challenges make it the next priority, which could be accelerated through Cordel’s partnership with TÜV through D/Gauge. Management also sees potential in the Americas given networks may share personnel and track between North and South America. Asia would likely require local partnerships for entry due to unique challenges.

Management believes conducting business successfully in the UK enhances its international credibility. The UK’s railway network, overseen but not directly owned by Network Rail, highlights the need to navigate complex public and private sector dynamics to effectively implement technology and services. The UK budget encompasses various costs across five regions, while private companies like Angel Trains autonomously decide on investments based on resale potential.

While specific UK standards may not directly apply abroad, the experience gained is valuable when expanding to other complex markets requiring nuanced public-private coordination, like Germany, France, Spain and Italy.

Land and expand strategy gaining traction

Cordel uses a land and expand strategy to gradually broaden engagements, often starting with proof-of-concept trials to demonstrate value and build trust. The following are key examples of successful execution of this strategy:

Amtrak initially approached Cordel to perform clearance analysis on data scanned in 2021–22. Following successful delivery, Cordel was awarded a more than US$6.7m six-and-a-half-year contract to supply a fully automated software suite for survey and clearance management.

In November 2023, the group was awarded a new DaaS contract to create a digital twin of HS1 through monthly automated surveys, following a successful proof-of-concept contract won in 2021. We note the group now has several contracts with Network Rail (RGDS and HS1), strengthening its position to expand to other departments.

As previously discussed, Cordel has the ability to offer various services such as clearances, vegetation management and ballast profiling on the same mile of track, which enhances the potential for increased revenue per mile.

With investments in its technology largely complete, the group is focusing on sales and delivery, recently hiring:

a head of strategic growth, project delivery lead and marketing personnel in the UK;

a senior sales and delivery engineer in the US; and

software engineers, including lead AI engineers, in Australia.

These hires should help Cordel to win new clients and deliver on contract expansions. Consequently we forecast revenue acceleration in FY25, leading to a move to operating profitability.

Transitioning to a data-as-a-service phase

Over time, we see a smoothing in Cordel’s revenue generation as its client roster grows and contracts mature, underpinned by expanding DaaS revenue following lumpier initial setup fees. This shift is consistent across clients and contracts as, initially, higher costs are incurred for integration and database development, resulting in lower margins.

The contracts then transition to steady recurring payments for continuous data analysis, creating high-margin streams. Cordel aims to replicate this shift quickly across clients, pursuing a ‘hockey stick’ growth pattern – an initial investment followed by high-margin recurring revenue. Below, we highlight the gross margin progression for the various stages:

Hardware setup: from 15–85% depending on third-party or proprietary hardware and customer sold to.

Setup (processing stage): 60–70%.

DaaS: 80–90%.

The Amtrak contract provides a clear example of this transition. The 6.5-year deal involved higher initial costs for the 18-month rollout, generating half of the contract revenue of this period. The subsequent five-year period shifts to consistent annual DaaS payments of c US$700,000 for clearances analysis. Additional use cases can further increase value over time, without the need to install additional hardware.

As the focus is on enabling high-margin recurring monitoring revenue, not immediate hardware profits, management may bundle hardware, even at low margins or at cost, as a strategic investment in future data income. Additionally, as Cordel wins more contracts, management believes it will learn how to deploy and customise solutions faster, shortening the implementation phase and accelerating the transition to service revenue.

Market: A specialist in a rapidly growing market

Globally, infrastructure digitalisation and spatial computing trends present significant market opportunities as sensor proliferation expands collectible data volumes. However, most edge-stored data is siloed, meaning it is isolated and restricted to individual systems or applications, offering potential for specialists, like Cordel, to centralise and derive insights across use cases.

Rail’s economic and sustainable credentials are driving substantial government funding and private investment in automation, catalysing rail infrastructure technology advancement. This confluence of factors could drive a near tripling of the US$100bn (as of 2021) smart transportation market, as illustrated in Exhibit 5.

At end-FY23, Cordel covered 30,000 miles, an 8% share of the 360,000-mile addressable market in serviceable nations. Expanding to fully nationalised countries would increase the opportunity to 850,000 miles.

Exhibit 5: Substantial opportunity in fast growing market

Source: Cordel Group

Substantial growth opportunities in established markets

As previously discussed, Cordel’s strategy centres on growth in its core markets of the US, the UK and Australia. Exhibit 5 illustrates the addressable market potential through expanding the share of miles covered or cross-selling additional use cases, underpinned by substantial funding and government initiatives. At its H124 results, the group indicated it is in late-stage pipeline discussions with many of the key target customers listed below, especially tier one customers, and two US railroads. As shown below, US private railroads invest c US$23bn annually to modernise their freight networks alone, and so deploying Cordel’s solution requires a relatively minor investment for each railroad yet could generate up to US$1m per year in service revenue for Cordel, assuming contract sizes similar to Amtrak.

Exhibit 6: Market dynamics in key geographies

Source: Edison Investment Research

A specialist in a vast landscape

The smart rail market is expansive yet fragmented, ranging from large consultancies to hardware/software vendors that may lack rail focus or leverage different technologies/use cases. In Cordel's core regions, mandates may exist to engage SMEs, excluding larger players who may solely pursue bigger contracts. The fragmentation enables Cordel to selectively target projects aligning with its focused expertise in AI-powered end-to-end rail infrastructure analytics, including lidar deployment, data management and UIs. Additionally, management believes that its smaller size and rail focus enable it to deploy its technology faster and provide greater customisation versus peers.

Exhibit 7: Competitive landscape

Source: Edison Group, compiled from various sources

Cordel’s selective focus, tailored solutions and tier one relationships distinguish it from both broad consultancies and specialised vendors, enabling a targeted competitive strategy. Competitors include:

Large consulting firms: the likes of Deloitte, Capgemini and Cognizant may lack specialised rail domain knowledge, instead providing generalist technology services across industries. Their scale also leads them to target only larger contracts, creating an opening for Cordel on niche rail infrastructure projects.

Rail hardware/software vendors: includes Siemens, Hexagon, Fugro and One Big Circle. Cordel may better tailor its services to fit client specifications. For example, management believes Fugro focuses on very precise track measurements, whereas Cordel may balance speed with accuracy, and One Big Circle focuses on video data, rather than lidar.

Hardware specialists: most of the names in Exhibit 7 are product-driven whereas Cordel is more end-to-end software/services focused, augmented by hardware provision. This makes them potential partners for collaborative client engagements or acquisition targets to expand Cordel's product portfolio.

Smaller niche players: for example, Vysiion, Lenz Labs and Sensonic. Cordel differentiates through its tier one partnerships and end-to-end capabilities.

Management

Cordel’s board comprises CEO John Davis, Non-executive Chairman Ian Buddery and independent Non-executive Directors Jonathan Macleod and Nicholas McInnes.

John was appointed CEO in March 2023 after joining the board in 2018 as a non-executive director. He has over 20 years’ experience with banks and small businesses, previously serving as marketing and product director for Barclays Business. He has also founded and led several London-based fintech startups.

Chairman Ian Buddery provides extensive public company expertise from past roles leading eServGlobal and other ventures. He also has experience with IPOs, acquisitions and trade sales. Jonathan Macleod is a chartered accountant and financial advisor and Nicholas McInnes is a former British diplomat focused on trade and investment.

The management team consists of the CEO, CTO Aaron Hoye, CFO Thouraya Walker, CRO Mike Turner and GM Product and Delivery Paul Mullins.

Financials

Cordel’s H124 results show that momentum continues to build across all geographies, driven by contract extensions and new wins. For H224, new contracts with Mexico and HS1 announced late in H1 will fully contribute to revenue. Further growth will be driven in two ways: 1) converting pipeline targets into customer wins with the full material benefit in FY25, and 2) upselling existing contracts. With data processing complete among the current customer base, management believes it can more easily upsell new use cases or cross-sell to other departments within a network.

Management is primarily targeting the US for growth given the appetite for longer, more substantial contracts due to the autonomy and significant funding each network receives. A multi-million dollar contract may be transformational for Cordel, yet a fraction of a tier one network’s balance sheet.

In the mid-term, Cordel believes it can achieve a DaaS revenue base of over £10m per annum. This would require replicating three to four more contracts the size of Amtrak, most likely in the US, plus around seven more at £500k – in line with most existing customers. According to management, this is achievable from the group’s existing pipeline. The company believes that it can now scale, at least to end-FY25, on the existing cost base, driving a swing to operating break-even in FY25.

Business model

Cordel's business model centres on converting trials into long-term managed service contracts, transitioning clients from upfront hardware capital expenditure to ongoing DaaS operating expenditure that generates high-margin recurring revenues. Management believes accumulating experience and expertise over time can help reduce deployment latency and costs, shortening this transition period. Contract expansions, either through additional miles covered or new use cases, may require additional hardware sales to enable new capabilities or expand network coverage.

Revenue recognition is client dependent. Hardware revenue is always recognised upfront, then the setup period is determined internally based on customisation and implementation scale. After setup, DaaS revenue is recognised on a straight-line basis for the remainder of the contract term.

Payment terms are customised but are typically monthly or quarterly. Cordel maintains strong cash collection and no bad debts, reflecting its high-quality customer base, but may see working capital swings if contracts are signed late in the year.

H124 results: Strategy execution drives strong growth

Revenue increased by 108% y-o-y in reported currency in H124 and 111% at constant currency to £2.0m, with momentum building across all key geographies:

US: revenue up 16x y-o-y to £791k, driven by the Mexico contract in partnership with Holland LP (included under US) as well as progressing to plan with US$6.7m Amtrak contract, following the contract win in H223.

UK: revenue up 58.5% y-o-y £1.05m, securing a new DaaS contract with High Speed 1, moving its Network Rail RGDS into live production and extending its partnership with Angel Trains to integrate new hardware.

Australia: revenue down 47.5% reflecting the winding down of Airsight activities. Highlights included an extension with ARTC and its research project with NTRO.

On a half-on-half basis, revenue was down 6.7%, reflecting seasonal factors and client budget cycles. As Exhibit 8 shows, H2 has historically been the stronger half for Cordel, giving us confidence in our forecasts. The more modest half-on-half increase to our H2 forecast reflects recurring revenue from existing customers, with less reliance on new customer wins.

Exhibit 8: Geographic revenue progression, H122–H224e

Source: Cordel Group

New contract wins resulted in more hardware versus software and services revenue, decreasing gross margin by 18.8pp y-o-y to 53%. As contracts mature, higher-margin recurring revenue should become more predominant, with management expecting gross margin to return to over 70% by end-FY24. Investments in sales and delivery slowed margin growth on higher revenue, with the group reporting an EBITDA loss of £574k in H124 (H123: loss of £789k). With investments complete, this positions the group for operationally geared growth.

In H223, Cordel completed a £1.7m capital raise, funding investments in sales and delivery and closed the year with gross/net cash of £1.28m. Cash reduced by £92k in H124 to £1.19m, with a large working capital inflow of £671k substantially offsetting capex of £115k, lease payments of £20k, exchange losses of £49k and the EBITDA loss.

FY24 forecasts: Reflect revenue re-investment

Our FY24 forecasts indicate continued positive momentum for the rest of the year, with year-on-year growth of 54% to £4.7m (H224e forecast growth of 30.3% y-o-y). We believe this will be driven by a full half-year contribution from Mexico and the UK, as well as continued Amtrak revenue. We believe the company may also deliver new smaller trial contracts across railway networks and rolling stock providers, although these will be more material to FY25 revenue. In the UK, growth may be affected by the transition from CP6 to CP7 (1 April) as contract talks are put on hold. We forecast a slight revenue decline in Australia, reflecting discontinued Airsight operations, partially offset by the NTRO research project.

Unlike its contract with Angel Trains (which has lower gross margins relating to the deployment of the new unmanned geometry hardware), management expects H2 revenue to be mostly software setup and services related only, driving a move back to over 70% gross margins for the full year on higher H2 revenue.

On operating expenses, we forecast 39% y-o-y admin expense growth to £4.2m reflecting additional hires, resulting in an EBITDA loss of £515k for FY24. We have reflected the new lease taken out for premises in Australia at the start of CY24. With no debt, interest payments on new leases drive our financial expenses assumptions.

Our free cash flow forecast is affected by a £95k capex increase, reflecting higher H1 spend and lower FY23 levels following Nextcore flight equipment disposal. The higher free cash outflow reduces year-end net cash to £803k before leases.

Exhibit 9: Forecast summary table

£’000s

FY23

y-o-y growth

FY24e

y-o-y growth

FY25e

y-o-y growth

Revenue

3,046

34%

4,700

54%

7,002

49%

Gross profit

2,255

51%

3,290

46%

4,936

50%

Gross margin

74%

8pp

70%

-4pp

71%

0pp

EBITDA

(274)

71%

(515)

88%

220

N/A

EBITDA margin

-9%

33pp

-11%

-2pp

3%

14pp

Normalised operating income

(391)

64%

(650)

-266%

40

N/A

Free cash flow

(690)

42%

(412)

40%

142

N/A

Net debt/(cash)

(1,283)

278%

(803)

37%

(843)

-5%

Source: Cordel, Edison Investment Research

FY25 forecasts: Moving to profitability

Cordel has several levers to drive scalable growth in FY25, including contract expansions and a full year contribution from customers won in H224. We reflect this potential with 49% y-o-y revenue growth to £7.0m, with a gross margin of 71% from a steady improvement in the revenue mix. We expect the group to swing to EBITDA profitability in the year on operating leverage, now investments in R&D, sales and delivery are mostly complete. After factoring in depreciation on the new lease, we forecast an operating margin of 0.6%. R&D tax credits in Australia and loss carry forwards in the US and UK should offset tax in FY25.

Higher operating cash flow could drive positive free cash flow. We note that the business is historically not capital intensive with minimal foreseeable development costs, which are all expensed. This should result in an increase in end-FY25e net cash to £843k.

Potential for smooth long-term revenue and margin progression

Beyond FY25, we see potential for steadier revenue as existing contracts mature and DaaS sales grow as a percentage of total revenue, also driving margin expansion. With hardware and software integrated into several major rail networks globally, this should improve customer retention while providing case studies to attract new clients and diversify the customer base. We believe management’s mid-term target of £10m recurring revenue is achievable, requiring a small increase in Amtrak style contracts and c 10 customers paying c £500k annually – in line with current levels.

We do not foresee the need for capital raises to fund organic growth. However, a large, transformational project requiring substantial working capital or M&A to vertically integrate, such as acquiring a hardware provider, may necessitate fund-raising.

Valuation

As discussed, Cordel has successfully transitioned to solely focus on the rail industry, completing the necessary investments in its technology stack. The group has successfully won several proof-of-concept trials and long-term contracts with major tier one players and is now in a position to scale profitably. Our valuation analysis shows that Cordel’s current rating does not reflect the current long-term growth prospects, including:

Land and expand: executing on upsell opportunities within embedded tier one clients Network Rail, ARTC and Amtrak via more miles or use cases, driving revenue expansion.

US dedicated team: successfully winning new clients with the other US tier one and potentially tier two rail networks, using Amtrak delivery as a key case study. An additional customer has the potential to add over £1m in annual recurring revenue.

Delivering on DaaS growth: delivering on gross margin expansion with existing clients as the company transitions to recurring service revenue. However, we note overall margin progress may be offset by net client setups and investment in sales/delivery to support revenue momentum.

Key milestones needed to catalyse a re-rating include demonstrating demand for additional use cases, expanding contracts, and acquiring new customers, particular in the US.

We note that while the company is currently solely focused on exploiting the potential of the rail vertical, its software can be applied to any linear-recorded dataset, providing scope to expand into new verticals in the longer term.

Peer valuation: At a discount despite faster forecast growth

We value Cordel against small-cap rail technology, data management and spatial data peers creating digital twin solutions, given there are no direct competitors at Cordel’s size. We also compare it to large data management companies providing intelligent rail offerings, which have greater business model similarity.

We value Cordel on EV multiples. The EBITDA margins across its peers demonstrate the group’s potential, where we believe a 17% margin (the mean of the small-cap peers in CY23) is achievable in the mid-term. Given the different year ends of all the peers, we compare on a calendar year basis assuming a 40/60 fiscal year split for Cordel based on historical seasonality.

Exhibit 10: Peer valuation

 

Year end

Share price

Quoted
ccy

EV
(£m)

Sales growth

EBITDA margin

EV/sales

EV/sales

EV/EBITDA

EV/EBITDA

Company

 

 

 

 

 2023–25 CAGR

CY25

CY24e (x)

CY25e (x)

CY24e (x)

CY25e (x)

Cordel Group

Jun-24

4.25

GBp

7

42%

8%

1.3

0.9

N/M

11.1

Small cap

 

 

 

 

 

 

 

 

 

Tracsis

Jul-24

855.0

GBp

244

7%

21%

2.8

2.6

13.3

12.0

IQGeo

Dec-23

365.0

GBp

219

15%

25%

4.5

3.9

22.3

15.6

Microlise

Dec-23

128.5

GBp

134

12%

14%

1.6

1.5

12.0

10.3

Oxford Metrics

Sep-24

96.5

GBp

65

14%

20%

1.3

1.2

6.5

5.9

1Spatial

Jan-24

53.5

GBp

58

N/M

N/A

1.7

N/M

9.0

N/M

Maps

Dec-23

3.1

EUR

45

12%

25%

1.7

1.5

7.7

6.2

Mean

 

12%

21%

2.3

2.1

11.8

10.0

Median

 

12%

21%

1.7

1.5

10.5

10.3

Premium/(discount) to mean

 

30%

-13%

-42%

-58%

N/A

11%

Large cap

 

 

 

 

 

 

 

 

 

Hexagon AB

Dec-24

117.9

SEK

26,210

6%

38%

5.3

5.0

14.2

13.0

Bentley Systems

Dec-23

51.9

USD

13,585

11%

36%

12.5

11.3

35.7

31.8

Trimble

Dec-23

51.9

USD

11,261

3%

27%

3.7

3.5

14.2

13.1

Informatica

Dec-23

30.2

USD

7,893

6%

34%

6.0

5.6

17.7

16.3

Fugro

Dec-23

16.7

EUR

1,801

11%

18%

0.9

0.8

5.2

4.5

Mean

 

8%

31%

5.7

5.2

17.4

15.8

Median

 

6%

34%

5.3

5.0

14.2

13.1

Total mean

 

10%

26%

3.8

3.7

14.3

12.9

Total median

 

11%

25%

2.8

3.1

13.3

12.5

Premium/(discount) to mean

32%

-18%

-66%

-76%

N/A

-14%

Source: Refinitiv, Edison Investment Research. Note: Prices as at 8 February 2024.

On EV/sales, Cordel trades at 1.3x CY24e and 0.9x in CY25e, with the widening discount from 42% to 58% reflecting its faster forecast growth than peers. We believe the CY25e EV/EBITDA of 11.1x and the premium of 11% to the small-cap peers reflects the early-stage profitability of the company.

The increased discount when including large caps highlights Cordel's earlier stage, less established model and smaller size. This signals upside potential as Cordel grows its presence and executes its land and expand strategy with tier one partners.

DCF: Current rating does not reflect land and expand potential

Our reverse 10-year DCF uses an 11% WACC, applying a risk premium to reflect the company’s size and early stage, and a 2% terminal growth rate. To justify Cordel's 4.25p share price based on forecasts to FY25, the model requires EBITDA margin expansion to 11.6% from 3.1% in FY25. It also requires revenue growth to fall from 49% in FY25 to a 13.5% CAGR from FY26–2033.

Exhibit 11: DCF sensitivity table (p/share)

Mid-term revenue growth, FY26-33

3.50%

8.50%

13.50%

18.50%

23.50%

EBITDA margin, FY26-34

14.0%

2.87

3.97

5.44

7.38

9.94

13.0%

2.60

3.60

4.95

6.72

9.06

12.0%

2.32

3.24

4.45

6.07

8.19

11.0%

2.05

2.87

3.96

5.41

7.31

10.0%

1.78

2.50

3.47

4.75

6.43

9.0%

1.51

2.14

2.98

4.09

5.56

8.0%

1.24

1.77

2.49

3.44

4.68

7.0%

0.97

1.41

2.00

2.78

3.81

Source: Edison Investment Research

In our view, Cordel’s valuation overlooks current contract momentum, particularly with existing contracts offering potential for operationally geared growth. Management may opt to invest in sales and delivery to sustain revenue momentum or focus on margin expansion by upselling existing contracts needing minimal investment. A blended approach is also possible. Our sensitivity analysis highlights upside to the current rating under either approach, as highlighted by the dark grey cells in Exhibit 11.

Sensitivities

Client concentration: Cordel’s current revenue is driven by three main customers, Network Rail, Amtrak and ARTC, which could lead to a substantial decline in revenue if any customer were to churn. There are positive lead indicators that the group’s customer base is diversifying, supported by channel partners like Holland LP and Ricardo.

US expansion: management is primarily targeting the US for growth, expanding its US team, the success of which will be influential to the rate of growth and margins of the business.

Execution risk: land and expand underpins management’s growth strategy with existing customers, however revenue and margin progression are dependent on the rate at which the company can expand track miles or use cases covered.

Demand for use cases: currently clearances, or gauging, is the sole use case deployed, with other use cases earlier in the development pipeline. A lack of demand for these other use cases could have an impact on growth.

Competition: large companies or smaller specialists may expand into Cordel’s lidar and end-to-end data management capabilities, heightening the risk from competition.

Foreign exchange: the company’s international footprint exposes Cordel to FX sensitivities. In FY23, the group had net assets denominated in foreign currencies of £1.3m. Based on this exposure, had the pound weakened by 10% or strengthened by 10% against these foreign currencies with all other variables held constant, the group’s PBT would have been £127,198 lower or £127,198 higher, versus a reported loss of £465,584.

Limited free float: the free float of Cordel is relatively low at 44%, restricting liquidity.

Exhibit 12: Financial summary

£'000s

2021

2022

2023

2024e

2025e

30-June

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

1,690.0

2,272.7

3,046.5

4,700.0

7,001.7

Cost of Sales

(649.3)

(775.3)

(791.7)

(1,410.0)

(2,065.5)

Gross Profit

1,040.7

1,497.4

2,254.8

3,290.0

4,936.2

EBITDA

 

 

(1,040.0)

(958.2)

(274.2)

(514.9)

220.4

Normalised operating profit

 

 

(1,153.1)

(1,125.0)

(391.5)

(649.9)

40.4

Amortisation of acquired intangibles

0.0

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

0.0

(92.4)

0.0

Share-based payments

(65.3)

(65.4)

(57.4)

(63.4)

(91.0)

Reported operating profit

(1,218.3)

(1,190.4)

(448.8)

(805.7)

(50.6)

Net Interest

(4.1)

(14.4)

(16.8)

(17.0)

(17.0)

Joint ventures & associates (post tax)

0.0

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

(1,157.1)

(1,139.4)

(408.2)

(666.8)

23.5

Profit Before Tax (reported)

 

 

(1,222.4)

(1,204.8)

(465.6)

(822.6)

(67.5)

Reported tax

200.6

4.1

(132.6)

0.0

0.0

Profit After Tax (norm)

(1,157.1)

(1,139.4)

(408.2)

(666.8)

18.1

Profit After Tax (reported)

(1,021.8)

(1,200.7)

(598.2)

(822.6)

(67.5)

Minority interests

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

(1,157.1)

(1,139.4)

(408.2)

(666.8)

18.1

Net income (reported)

(1,021.8)

(1,200.7)

(598.2)

(822.6)

(67.5)

Basic average number of shares outstanding (m)

169

170

199

199

199

EPS - basic normalised (p)

 

 

(0.69)

(0.67)

(0.20)

(0.33)

0.01

EPS - diluted normalised (p)

 

 

(0.69)

(0.67)

(0.20)

(0.33)

0.01

EPS - basic reported (p)

 

 

(0.61)

(0.70)

(0.30)

(0.41)

(0.03)

Dividend (p)

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

72.9

34.5

34.0

54.3

49.0

Gross Margin (%)

61.6

65.9

74.0

70.0

70.5

EBITDA Margin (%)

-61.5

-42.2

-9.0

-11.0

3.1

Normalised Operating Margin

-68.2

-49.5

-12.8

-13.8

0.6

BALANCE SHEET

Fixed Assets

 

 

1,482.8

1,689.6

1,410.2

1,682.4

1,552.4

Goodwill

1,223.4

1,223.4

1,223.4

1,223.4

1,223.4

Intangible assets

0.0

0.0

0.0

0.0

0.0

Property, plant & equipment

126.8

132.5

73.9

130.0

90.0

Right of use assets

132.5

98.8

28.9

245.0

155.0

Other

0.0

234.8

84.1

84.1

84.1

Current Assets

 

 

2,973.8

1,896.0

3,413.2

2,609.5

2,902.3

Stocks

190.2

246.9

143.8

197.0

294.3

Debtors

522.2

1,309.4

1,986.0

1,609.6

1,764.8

Cash & cash equivalents

1,538.2

339.7

1,283.5

802.9

843.3

Other current assets

723.3

0.0

0.0

0.0

0.0

Current Liabilities

 

 

(518.1)

(782.8)

(1,022.3)

(1,095.0)

(1,319.4)

Creditors

(340.2)

(580.2)

(662.2)

(815.9)

(1,040.2)

Tax and social security

0.0

0.0

0.0

0.0

0.0

Short term borrowings

0.0

0.0

0.0

0.0

0.0

Lease liabilities

(40.7)

(44.9)

(32.7)

(85.0)

(85.0)

Other current liabilities

(137.2)

(157.6)

(327.4)

(194.1)

(194.1)

Long Term Liabilities

 

 

(96.6)

(67.5)

(2.0)

(157.0)

(72.0)

Long term borrowings

0.0

0.0

0.0

0.0

0.0

Other long term liabilities

(96.6)

(67.5)

(2.0)

(157.0)

(72.0)

Net Assets

 

 

3,841.9

2,735.3

3,799.1

3,039.9

3,063.3

Minority interests

0.0

0.0

0.0

0.0

0.0

Shareholders' equity

 

 

3,841.9

2,735.3

3,799.1

3,039.9

3,063.3

CASH FLOW

Op Cash Flow before WC and tax

(901.0)

(1,027.0)

(343.6)

(677.6)

129.5

Working capital

(963.4)

(74.0)

(321.6)

251.1

(28.1)

Exceptional & other

58.6

71.8

36.1

160.3

91.0

Tax

0.0

0.0

0.0

0.0

0.0

Net operating cash flow

 

 

(1,805.8)

(1,029.3)

(629.2)

(266.2)

192.4

Capex

(158.5)

(160.2)

(60.8)

(146.1)

(50.0)

Acquisitions/disposals

2.7

12.5

69.4

1.7

0.0

Equity financing

1,966.2

21.6

1,725.1

0.0

0.0

Dividends

0.0

0.0

0.0

0.0

0.0

Other

(26.1)

(61.7)

(145.5)

(70.0)

(102.0)

Net Cash Flow

(21.4)

(1,217.1)

959.0

(480.6)

40.4

Opening net debt/(cash)

 

 

(1,564.3)

(1,538.2)

(339.7)

(1,283.5)

(802.9)

FX

(4.7)

18.6

(15.2)

0.0

0.0

Other non-cash movements

0.0

0.0

0.0

0.0

0.0

Closing net debt/(cash)

 

 

(1,538.2)

(339.7)

(1,283.5)

(802.9)

(843.3)

Closing net debt/(cash) including financial leases

 

(1,400.9)

(232.3)

(1,250.8)

(562.9)

(688.3)

Source: Edison Investment Research, company accounts

Contact details

Revenue by geography (H124)

10 John Street

London
WC1N 2EB
United Kingdom
https://cordel.ai/

Contact details

10 John Street

London
WC1N 2EB
United Kingdom
https://cordel.ai/

Revenue by geography (H124)

Management team

Non-executive chairman: Ian Buddery

Executive director and CEO: John Davis

Ian has extensive public company experience and a long background in the telecommunications and financial services industries in both international and local markets. Ian has founded multiple companies, obtained venture capital and angel funding, performed two IPOs, six acquisitions and two significant trade sales. Ian was the founder, CEO and executive chair of eServGlobal, founded in 1991 and listed on the Australian Securities Exchange in 2000 and London’s AIM in 2004. Ian was appointed a director of Cordel Group on 6 December 2017.

John has been working with banks and SMBs for more than 20 years. Based in London, John was the marketing and product director for Barclays Business from 2005–10 before setting out on an entrepreneurial career as the co-owner and managing director of Business Centric Services Group, an award winning, high-growth business, helping banks and telecommunication companies to enhance their digital engagement with and propositions for small and medium-sized businesses. He also acted as chair and co-owner of two other London-based fintech start-ups. John completed the sales of all three of these companies during 2016 and 2018. John was appointed a director of Cordel Group on 4 May 2018 and CEO on 1 March 2023.

Executive director, company secretary and CFO: Thouraya Walker

Executive director and CTO: Aaron Hoye

Thouraya’s background includes roles at Mazars LLP, Standard Chartered Bank and Oliver Wyman. She is a fellow of the Association of Chartered Certified Accountants and holds a degree in mathematics from the University of York. Thouraya was appointed as CFO on 1 April 2023 and a director on 3 May 2023.

Aaron co-founded Cordel in 2012 and has extensive technology experience of both hardware and software across a range of settings, covering a wide range of remote sensor technologies, including lidar and photogrammetry, data fusion and data processing, machine learning, UI design and more. He has a degree in computer sciences and mathematics from University of Newcastle, New South Wales. Aaron was appointed a director of Cordel Group on 14 April 2022.

Management team

Non-executive chairman: Ian Buddery

Ian has extensive public company experience and a long background in the telecommunications and financial services industries in both international and local markets. Ian has founded multiple companies, obtained venture capital and angel funding, performed two IPOs, six acquisitions and two significant trade sales. Ian was the founder, CEO and executive chair of eServGlobal, founded in 1991 and listed on the Australian Securities Exchange in 2000 and London’s AIM in 2004. Ian was appointed a director of Cordel Group on 6 December 2017.

Executive director and CEO: John Davis

John has been working with banks and SMBs for more than 20 years. Based in London, John was the marketing and product director for Barclays Business from 2005–10 before setting out on an entrepreneurial career as the co-owner and managing director of Business Centric Services Group, an award winning, high-growth business, helping banks and telecommunication companies to enhance their digital engagement with and propositions for small and medium-sized businesses. He also acted as chair and co-owner of two other London-based fintech start-ups. John completed the sales of all three of these companies during 2016 and 2018. John was appointed a director of Cordel Group on 4 May 2018 and CEO on 1 March 2023.

Executive director, company secretary and CFO: Thouraya Walker

Thouraya’s background includes roles at Mazars LLP, Standard Chartered Bank and Oliver Wyman. She is a fellow of the Association of Chartered Certified Accountants and holds a degree in mathematics from the University of York. Thouraya was appointed as CFO on 1 April 2023 and a director on 3 May 2023.

Executive director and CTO: Aaron Hoye

Aaron co-founded Cordel in 2012 and has extensive technology experience of both hardware and software across a range of settings, covering a wide range of remote sensor technologies, including lidar and photogrammetry, data fusion and data processing, machine learning, UI design and more. He has a degree in computer sciences and mathematics from University of Newcastle, New South Wales. Aaron was appointed a director of Cordel Group on 14 April 2022.

Principal shareholders

(%)

Nicholas Smith

12.83%

Aaron Hoye Family Investments

12.83%

Amati Global

7.65%

Havenwood Pty

5.33%

Chris Gorman

4.93%

Ian Buddery

4.50%

Guiness Asset Management

4.20%


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Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

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The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Cordel Group and prepared and issued by Edison, in consideration of a fee payable by Cordel Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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