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K2fly's financial outlook remains strong leading into H2 FY21 off the back of strong contract wins in H1

Last updated: 14:43 01 Mar 2021 AEDT, First published: 13:43 01 Mar 2021 AEDT

K2fly Ltd - K2fly's financial outlook remains strong leading into H2 FY21 bolstered by strong contract wins in H1
In the first half of FY21 K2fly has had continued wins in consultancy and advisory contracts, including with Tier 1 clients

K2fly Ltd (ASX:K2F) enjoyed a strong half-year ending December 31, 2020, with total revenue at A$3.413 million – representing growth of 29% on the revenue of A$2.652 million in the corresponding period of FY20.

Annual recurring revenue in K2fly’s SaaS subscriptions business is up to A$2.4 million – or 175% compound annual growth rate to the end of December 2020 – and total contract value growing to more than A$6.8 million by December 31, 2020.

This increase in revenue is due to the continued growth of the company, new contract wins and sales to Tier 1 clients.

RCubed contracts

Much of the sales success in FY20 is attributed to the introduction of the RCubed software which focuses on mineral resource and reserves reporting across several industry reporting standards including SK-1300, JORC, SAMREC, NI43101 and works for several international bourses including NYSE, LSE, ASX, JSE and TSX.

When K2fly acquired the RCubed solution, major clients using the software solution for their mineral resource and reserve reporting included Teck Resources Ltd (NYSE:TECK) (TSE:TECK) (OTCMKTS:TCKRF) and Anglo Gold Ashanti Limited (JSE:ANG).

In the 12 months leading up to the end of FY20, K2F won significant contracts for the RCubed software solution.

Newcrest Mining Ltd (ASX:NCM) (TSE:NCM) (FRA:NMA) (OTCMKTS:NCMGF), Glencore Canada, Nexa Resources SA (NYSE:NEXA) (TSE:NEXA) (FRA:NE0), Rio Tinto Limited (ASX:RIO) (FRA:CRA1) (OTCMKTS:RTNTF), Gold Fields Australia (a subsidiary of Gold Fields Limited (NYSE:GFI) (JSE:GFI) (FRA:EDGA)), Newmont Mining, Kinross Mining and Sibelco joined the growing numbers of clients using this solution.

In H1 FY21 K2fly also contracted with Orano (Paris) a French-owned international uranium producer.

Additionally, on January 25, 2021, K2fly announced that Alcoa USA Corp (NYSE:AA) signed a new five-year contract for RCubed software solution, for its global operations and major projects, and this will commence immediately.

Quarterly Annual Recurring Revenue (ARR) and Total Contract Value (TCV) growth.

Infoscope solution

The Infoscope platform underpins the company’s ground disturbance, rehabilitation, community and heritage and land access solutions, as well as having a role in underpinning the new tailings solution.

The company continues to work with cornerstone customers like Fortescue Metals Group Limited (ASX:FMG), Westgold Resources Ltd (ASX:WGX) (FRA:0W2) (OTCMKTS:WTGRF) and The Keeping Place, as well as new client Mineral Resources Limited (ASX:MIN) (FRA:F5J) (OTCMKTS:MALRF).

In January 2021 K2fly announced a three-year contract with Rio Tinto Limited (ASX:RIO) (FRA:CRA1) (OTCMKTS:RTNTF) to rollout the heritage solution to their operations in the Pilbara.

SATEVA suite and acquisition

In H1 FY21 K2fly acquired the assets of SATEVA which enhanced its solution suite in the geological operations and technical assurance space.

The model manager suite integrates directly to the resource inventory solution but can also be sold as a standalone solution and was launched in late in H1 in December.

There are also other pieces of IP from the SATEVA acquisition which K2fly is now marketing.

Notably, the automated ore blocker completed a successful trial at one of the world's biggest iron ore mines in H1 and is due to contract in Q3 FY21.

The company is confident the pipeline for model manager is growing rapidly, as are the opportunities for drill tracker in other tier 1 bulk iron ore miners.

K2fly Solution Suite.

Dams tailings solution

In July 2020, the company signed a memorandum of understanding with Decipher, whereby K2fly will acquire (subject to shareholder approval) the business assets including the IP of Decipher for mining and its tailings solution.

Decipher offers cloud-based software-as-a-service monitoring and compliance solutions in tailings management and rehabilitation for mining industry customers.

Additionally, after the balance date, on February 1, 2021, the company announced it had executed a business sale agreement (BSA) to acquire assets held by CSBP Limited (CSBP) and Wesfarmers Chemicals, Energy & Fertilisers Limited (WesCEF) used in the operation of the ‘Decipher for Mining’ business.

The company was also awarded SAP Premium Certified Endorsed app status.

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