Cloud revenue rate now at 34% of total

StatPro Group 15 March 2016 Update

StatPro Group

Cloud revenue rate now at 34% of total

Final results

Software & comp services

15 March 2016

Price

77p

Market cap

£50m

Net cash (£m) at 31 December 2015

1.3

Shares in issue

64.7m

Free float

55%

Code

SOG

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

6.2

(1.3)

(2.5)

Rel (local)

(1.8)

(5.1)

5.0

52-week high/low

86.5p

69.25p

Business description

StatPro Group provides cloud-based portfolio analytics solutions to the global investment community.

Next events

AGM

May 2016

H1 trading update

July 2016

Interim results

August 2016

Analysts

Richard Jeans

+44 (0)20 3077 5700

Dan Ridsdale

+44 (0)20 3077 5729

StatPro Group is a research client of Edison Investment Research Limited

StatPro continues to make solid progress on its transition to the cloud. StatPro Revolution annualised recurring revenues jumped 46% over the year to £7.8m, while the acquisition of Investor Analytics in January boosts cloud revenues to 34% of the proforma total. The group’s multi-tenanted cloud solutions enjoy significant advantages over traditional software and we believe there is an increasing potential for positive earnings surprises, as StatPro moves to late-stage cloud transition. Hence with StatPro’s US-based financial software peers and SaaS companies trading on lofty multiples, we continue to believe there is significant upside in the shares.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/14

32.0

2.6

2.7

2.9

28.7

3.8

12/15

30.2

2.6

2.6

2.9

29.3

3.8

12/16e

34.4

2.6

2.7

2.9

28.8

3.8

12/17e

36.4

3.4

3.6

2.9

21.2

3.8

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

Final FY15 results: In line with recent trading news

FY15 revenue eased 1% at constant currencies to £30.2m (we forecasted £30.0m) while adjusted EBITDA rose 1% to £4.0m on the same basis (we had £4.0m) and the group ended the year with £1.3m of net cash, in line with our forecasts. The group made two acquisitions in Q1, acquiring Investor Analytics (IA), a US-based provider of cloud-based risk analytics solutions, and swapping its compliance module (SPC) for a 51% stake in InfoVest. Also, the company has repurchased 4.25% of its shares, which we estimate will give a small boost to EPS.

Forecasts: FY16 broadly similar, introducing FY17

We have incorporated the small InfoVest deal into our forecasts. Hence, FY16 revenues rise slightly to £34.4m (previously £34.2m) and we forecast 6% growth to £36.4m in FY17. We conservatively eased our profit and cash flow forecasts in FY16, but forecast margins to begin the road to recovery in FY17.

StatPro Performance to launch in September

The StatPro Performance model – the final component in the group’s traditional software suite to switch to the cloud – is in beta testing with three clients and will be launched commercially in September. While StatPro Performance could help drive the business significantly in the medium term, the exact pace of migration of existing customers and the potential to drive new business, is difficult to forecast.

Valuation: Highly scalable cloud-computing upside

StatPro’s stock trades on c 29x our FY16e EPS, which falls to c 21x in FY17e. Alternatively, the shares trade on c 1.6x FY17e EV/sales, one-third of the level of StatPro’s larger US peers, which typically trade above 5x EV/sales, while US-based pure SaaS companies typically trade in the region of 2.6-5.4x EV/sales.

Investment summary: Steady progress to the cloud

Company description: Asset manager software supplier

StatPro’s software products are used by asset managers to measure the performance and risk profile of their funds under management. StatPro’s modular solutions, which were historically installed onsite, are now bundled and delivered as a hosted product – StatPro Seven – and priced on the basis of the number of the customer’s portfolios. StatPro Revolution, a multi-tenant cloud services (or SaaS) application, has substantially broadened the potential market by targeting front offices, smaller players and gatekeepers. The group has c 500 customers, with the largest generating less than 5% of group revenues. StatPro Revolution Performance is a highly scalable cloud-based replacement for Seven, scheduled to go live in September. The Performance module, which is a transaction-based weights and returns and data management system, is described by the company as the “production” tool, while Revolution Analytics is the “distribution” tool, focusing on multi-asset class analytics and online reporting, with controlled analysis sharing a major factor.

Financials: 13 years of healthy cash generation

StatPro has always operated a rental business model, hence recurring revenues are high and contracts are typically for three years. At the end of December 2015, the group’s annualised recurring revenues stood at £28.7m, effectively c 93% of total group revenues. The group has been profitable and generated positive free cash flows in each year since 2003. In FY15, the cloud-related EBITDA loss fell slightly in constant currency terms to £5.9m, while the profit by the mature non-cloud business eased 2% to £9.9m. The group remained cash generative, with cash from operations at £4.0m, while free cash flow was steady at £0.6m, aided by falls in tax and capex.

Exhibit 1: Like-for-like revenue and EBITDA growth

 

Revenue

EBITDA

Margins

 

FY14

FY15

Change

FY14

FY15

Change

FY14

FY15

 

£m

£m

%

£m

£m

%

£m

£m

StatPro Revolution, Risk and Data

10.52

11.43

9

(6.07)

(5.87)

3

(57.7%)

(51.4%)

StatPro Seven and non-cloud

20.00

18.76

(6)

10.09

9.91

(2)

50.5%

52.8%

 Constant currency performance

30.52

30.19

(1)

4.02

4.04

0

13.2%

13.4%

FX

1.50

0.34

22.7%

Group performance

32.02

30.19

(6)

4.36

4.04

(7)

13.6%

13.4%

Source: StatPro accounts

Sensitivities: Financial market volatility, competition

In reaching our forecasts, we highlight three key sensitivities: market volatility (the health of the equity and bond markets will partly determine the IT investment budgets of the asset management firms); risk relating to the transition to cloud services (including ramp-up of the new products and potential for some customers to trade down to a cheaper service); and competition (we continue to believe StatPro holds a significant first-mover advantage in this cloud computing space and that its new cloud products are difficult to replicate).

Valuation: SaaS and peer ratings indicate significant upside

Based on our forecasts, the stock trades on 28.8x our FY16 EPS, falling to 21.2x in FY17. However, these numbers are after c £6m of aggregated cloud-related EBITDA losses in FY15, which reflect the heavy investment in these new products. We expect this loss to narrow as traditional customers continue to gradually switch to the cloud products. After stripping out the cloud-related businesses to reflect the profitable traditional businesses, on our estimates the stock trades on an FCF yield of c 18% in FY16 and c 19% in FY17.

Final results: Acquisition accelerates cloud transformation

Reported revenues slipped by 1% at constant currency to £30.2m. The strong British pound turned this into a 6% absolute decline. In line with the recent trading update, the group’s annualised recurring revenue lifted by 1% at constant currency to £28.7m at 31 December, although this was c 2% lower at actual rates. Approximately 85% of new revenue came from existing clients. StatPro Revolution’s annualised recurring revenue jumped by 46% to £7.8m, to represent 27% of the total recurring revenue book, up from 18% (at constant currencies) a year earlier. Recurring revenues (ie excluding professional services) were 95% of the total compared with 91% in FY14. FY15 adjusted EBITDA was flat at constant currencies at £4.0m, having been 9% lower in H1. Normalised profit before tax eased 1% to £2.6m, while adjusted EPS slipped 4% to 2.6p. The full year dividend is maintained at 2.9p.

Last year management amended the way it presents the group’s underlying performance (see Exhibit 1). This format splits the business into the new growth units and the mature cash cow units. The new business includes the Revolution and Risk cloud services (which had been included in StatPro Seven numbers) along with data. We note the data feed is essential for the functionality of StatPro Revolution. This part of the business grew by 9% at constant currencies to £11.4m and reported an increased EBITDA loss of £6.0m. Meanwhile, the mature part of the business saw a 6% decline to £18.8m in revenues, while its EBITDA margins actually rose by 230bp to 52.8%.

Exhibit 2: StatPro Revolution recurring revenue book since its launch in 2011

Source: StatPro. Note: Historical data has not been adjusted for movements in exchange rates.

The group remained cash generative, with cash from operations at £6.5m, while free cash flow was steady at £0.6m as increases in working capital and capitalised development were offset by declines in capital investment and tax. The previous year included significant investment in offices including the move to the new HQ in Wimbledon. After the dividend (£2.0m), and other minor movements, net cash slipped by £1.4m to £1.3m. There remains a c £0.7m acquisition liability relating to SiSoft, which we anticipate will be settled in FY16.

Exhibit 3: StatPro Revolution revenue profile

StatPro Revolution

Annualised
revenue
(£000s)

Number of clients

Average
revenue/
client (£000s)

Annualised
revenue
(£000s)

Number of clients

Average
revenue/
client (£000s)

Annualised revenue bands

2014

2014

2014

2015

2015

2015

<£2k

146

127

1.1

73

69

1.1

£2k - £10k

430

97

4.4

344

73

4.7

£10k-£50k

1,386

62

22.4

1,812

85

21.3

£50k-£100k

1,324

19

69.7

2,158

29

74.4

>£100k

2,066

10

206.6

3,409

19

179.4

Total

5,352

315

17

7,796

275

28.3

Source: StatPro

There were 275 StatPro Revolution customers at the end of the year (as shown Exhibit 3), down from 315 a year earlier. The decline reflects the introduction of the minimum $18k pa spend, up from $1,200, and the average revenue per client has jumped by 67% to £28.3k, with 44% of new sales being upsells to existing clients. The data include fund administrators resellers, rather than their end-customers, as it is not possible to break down these numbers.

In 2015, StatPro introduced a set of SaaS-based KPIs. The average cost of acquiring customers is calculated by dividing the sales and marketing spend by the number of new customers. The implied customer lifetime is one divided by the churn rate (currently c 7%). The implied customer lifetime value is the implied customer lifetime multiplied by the ARR per customer. The data show the impact of the increase in the minimum spend, which has boosted both the cost of acquiring customers and revenue per customer. Clearly, the aim is the boost the LTV:CAC ratio, which has jumped to 16.1 from 9.5 at end June 2015, as the LTV continued its strong rise.

Exhibit 4: Additional SaaS-based KPIs

StatPro Revolution contracts only

Year to 31 December

Year to 31 December

Year to 31 December

2013

2014

2015

Average Cost of Acquiring Customer (CAC) (£000s)

9.7

17.3

26

Implied Customer Lifetime (years)

8.1

11.5

14.8

Average ARR per customer (£000s)

12.5

17

28.3

Implied Customer Lifetime Value (LTV) (£000s)

101

196

418

LTV: CAC

10.4

11.3

16.1

Source: StatPro

Acquisition of Investor Analytics

In January, StatPro acquired IA, a US-based provider of cloud-based risk analytics solutions to hedge funds and asset managers, for up to $16m. IA’s Risk Factor and Monte Carlo models will enable StatPro to provide a broader set of risk models to its customers. The deal boosts the group’s cloud-based annualised recurring revenue run rate to 34% of the total revenue book, up from 27%, strengthens the group presence in the important North American market (IA’s HQ is in New York) and increases US dollar exposure to c36% of group revenues. It also brings significant cross-selling potential both of IAs risk products to StatPro’s client base and StatPro’s solutions to IA’s clients.

StatPro is paying an initial $7m in cash, with a further $3m in deferred payments – $2m after one year and $1m after two years. This represents 2.0x FY15e revenues, which in our view looks attractive in relation to both the asset management software sector and SaaS business model valuations. In the 12 months to December 2015 IA generated $5m of revenues, of which 94% were recurring in nature. A further $6m is payable after one year, dependent on securing a number of new contract wins.

We understand that IA’s small size was limiting its ability to expand the business and becoming part of StatPro should resolve this issue. We note that, as indicated by its name, IA always wanted to expand its product solutions to performance and attribution, but lacked the resources to do so on its own. IA is being integrated into the StatPro Revolution platform, and StatPro anticipates that its existing equity focused asset management clients will wish to subscribe for the additional functionality. Further, we believe that IA’s existing 53 clients, which are all new clients for StatPro, could be interested in Revolution’s Performance and Attribution features. IA generated an EBITDA loss of c $0.3m in FY15. However, StatPro believes it can achieve annualised cost synergies (including data feeds and administration services) of c £0.7m, and is therefore targeting EBITDA of £0.35-0.5m in the first 12 months after the acquisition. Exceptional cash charges of £0.7-1.0m are expected to be made, covering transaction fees and other one-off costs. StatPro has a small net cash position and so the transaction is being financed through its debt facility with Wells Fargo, which has been increased to c £24.5m, £17.0m of which is committed.

Acquisition of InfoVest Consulting

In February, StatPro announced it was exchanging its existing StatPro Seven compliance module (SPC) licence contracts for a 51% stake in InfoVest Consulting. StatPro Seven is StatPro’s legacy traditional software platform. While most of StatPro Seven’s modules are migrating to the Revolution cloud platform, StatPro had no plans to upgrade StatPro Portfolio Control (SPC) functionality to the cloud. Nevertheless, the SPC module has a distinct market niche, and given InfoVest's specialist skillset, it makes sense for StatPro to transfer the development, support and sale of the product to InfoVest. Further, InfoVest has access to StatPro's global client base to help grow SPC's sales. Additionally, InfoVest brings to StatPro standardised data solutions that will be particularly useful for streamlining customer data in the implementation of cloud transition contracts. StatPro believes InfoVest’s data warehouse solutions could be of value to mid-size asset management companies.

InfoVest is a South Africa-based software provider, specialising in data warehouse, ETL (Extract, Transform and Load) and reporting software for the asset management industry. InfoVest’s managing director is an ex-StatPro employee, who took on his executive role at InfoVest in 2012, and InfoVest has partnered with StatPro for more than two years, providing support for all StatPro’s outstanding SPC contracts. SPC, which is StatPro’s compliance solution, ensures that customer’s portfolios are within predetermined parameters, such as the percentage that can be invested in specified asset classes. These parameters can relate to regulatory or in-house criteria and the solution is separate to StatPro’s risk solution. While SPC could transition to the cloud, this has not been on StatPro’s R&D roadmap. InfoVest generated revenues of c ZAR18m (c £0.76m) in the year to 28 February 2015, including £0.13m revenue from supporting SPC. The business is profitable, so we would expect it to modestly boost StatPro’s EPS.

Current trading and outlook

StatPro is fast approaching the end of the first phase of its transformation to a pure cloud business model, which began with the commercial launch of StatPro Revolution in late 2011.

for StatPro Revolution which is up 52% at £14.7m, representing 40% of the total. The next major driver will be the launch of the StatPro Revolution Performance module, which is scheduled for commercial launch in September. The group suffered from the strong British pound in FY15, as it has a higher proportion of costs in sterling. However, following its recent declines, sterling is now c7% below average 2015 levels, and if it remains there it will support upgrades later in the year.

Exhibit 5: Forecast changes

Revenue (£m)

PBT (norm, £m)

EPS (p)

Old

New

% chg.

Old

New

% chg.

Old

New

% chg.

2016e

34.2

34.4

1

2.8

2.6

(7)

2.9

2.7

(7)

2017e

N/A

36.4

N/A

N/A

3.4

N/A

N/A

3.6

N/A

Source: Edison Investment Research

Forecasts: FY16 profit conservatively eased, FY17 introduced

We have amended our forecasts for the InfoVest transaction. We have conservatively eased our StatPro Revolution forecasts by £0.5m, on the view that the Performance Module will not generate meaningful revenues until FY17. We have increased traditional software by the same amount. Our normalised PBT forecast for FY16 has also been affected by a £0.2m reduction in our assumption for the net capitalisation in development costs. The group spent £4.9m, or 16% of sales, on R&D in FY15, of which 82% was capitalised. We continue to forecast 15% of sales is spent on R&D, of which 72.5% is capitalised and amortised over the subsequent three years. We have made adjustments for the share buyback announced on 14 March – 2.87m shares at 72p – which represents 4.25% of the share capital. We estimate this buyback will increase FY17 EPS by c 2%.

Exhibit 6: Forecasts

 

2012

2013

2014

2015

2016e

2017e

Revenues (£'000s)

 

 

 

 

 

 

Traditional software rental

24,600

24,020

21,650

19,490

17,512

15,562

StatPro Revolution

720

2,190

3,660

5,720

8,410

11,783

Investor Analytics

 

 

 

 

3,205

3,671

Data

4,690

4,210

3,950

3,340

3,286

3,351

Professional services

1,990

2,070

2,760

1,640

2,000

2,040

Group Revenue

32,001

32,486

32,018

30,187

34,413

36,408

Growth (%)

0.9

1.5

(1.4)

(5.7)

14.0

5.8

Op expenses (before devt costs)

(26,614)

(28,162)

(29,410)

(27,847)

(31,542)

(32,843)

Capitalisation of dev costs (net)

147

3

267

512

53

157

Adjusted operating profit

5,534

4,327

2,875

2,852

2,924

3,721

Operating margin (%)

17.3

13.3

9.0

9.4

8.5

10.2

Growth (%)

9.5

(21.8)

(33.6)

(0.8)

2.5

27.3

Net interest

(493)

(273)

(291)

(290)

(385)

(345)

Profit before tax norm

5,041

4,054

2,584

2,562

2,539

3,376

Amortisation of acquired intangibles

(440)

(402)

(188)

(32)

0

0

Share based payments

159

(192)

(26)

(121)

(200)

(213)

Exceptional items (net of tax)

(693)

(347)

0

0

(700)

0

Profit before tax

4,067

3,113

2,370

2,409

1,639

3,163

Taxation

(1,387)

(1,030)

(774)

(788)

(711)

(945)

Minority interest

0

0

0

0

(56)

(71)

Net income

2,680

2,083

1,596

1,621

872

2,147

Adjusted EPS (p)

5.9

4.5

2.7

2.6

2.7

3.6

P/E - Adjusted EPS

13.1

17.2

28.7

29.3

28.8

21.2

Source: Company accounts, Edison Investment Research estimates

We have noted before that the transition of a traditional software vendor to a cloud model is a painful process. However, we believe there are a number of reasons why the group could shortly move into an upgrade cycle:

Ever-increasing StatPro Revolution functionality. The cloud product is upgraded quarterly, with the version 67 out shortly. Advanced risk was completed in 2015, the Performance Module is the main deliverable scheduled for 2016, while Fixed Income Attribution is expected to be completed in 2017.

Imminent StatPro Revolution Performance module launch. This product is the final stage of the group’s transition to the cloud. As with Revolution, its pricing is based on number of portfolios, but with a minimum of c $75k. The product will have strong attractions to larger asset managers that require fully transaction-based (rather than holdings-based) returns. The product is run off Amazon cloud, so the client can take advantage of elastic server power to generate results over minutes that previously would be calculated over hours on a fixed number of servers. StatPro expects to convert the bulk of its existing client base to the new product over two to three years. This migration process could boost professional services revenues, particularly on larger projects.

Developing the reseller channel. StatPro now has close to 50 fund administrator resellers. The channel has been developing revenues at a slower pace than was anticipated, with one of the first resellers only recently moving above its initial number of portfolios. Nevertheless, this channel could gain more traction on the back of increasing Revolution functionality. The Performance module launch could also be of use to fund administrators as the increased transaction-based functionality could be of interest to the fund administrators’ pension fund customers.

Investor Analytics cross-selling. StatPro anticipates that its existing equity focused asset management clients will wish to subscribe for the additional IA functionality. Further, we believe that IA’s existing 53 clients, which are all new clients for StatPro, could be interested in Revolution’s Performance and Attribution features.

Rejuvenated traditional software momentum. The InfoVest deal has created traditional software momentum since the compliance products future is now safeguarded, and its pipeline has jumped. We understand there could be a similar opportunity with StatPro Portfolio Management (SPM), which is the remaining component of the legacy StatPro Seven software suite. SPM is a portfolio accounting/management solution that is only sold in North America, mainly Canada.

Valuation: A long-term play on cloud computing

Having expanded its product suite and geographic position through a series of acquisitions over its 22-year history, StatPro has evolved its product suite to a cloud computing environment. It has exploited the group’s domain knowledge, technical skills and access to data to develop an entirely new software application from scratch. We note that one of StatPro’s key competitors recently abandoned a cloud project, apparently due to the challenges of switching to the cloud. Also, we understand that only other supplier with an equivalent level of Risk functionality is MSCI (Barra, Riskmetrics) but its products sit on two separate platforms, while StatPro’s are integrated on a single platform. We highlight the following points on the group’s valuation.

Strong cash generation: StatPro has been profitable and generated positive cash flows for many years and its payment-in-advance model typically generates cash from working capital. The group generated £0.6m of free cash flow before dividends in FY15 and we forecast this to rise to £1.3m in FY16, and to £3.0m in FY17. These numbers translate to FCF yields of 1.3%, 2.4% and 5.9% respectively, which are attractive given the transitioning business model and the ongoing heavy investment in the cloud products. We estimate that reversing out StatPro Revolution’s £5.9m EBITDA loss in FY15 would imply an FY15 FCF yield of c 13%.

Exhibit 7: Cash flow

(£'000s)

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16e

FY17e

Adjusted operating profit

7,790

7,349

5,056

5,534

4,327

2,875

2,852

2,924

3,721

Depreciation (incl s/w)

839

1,103

1,062

1,194

1,136

1,484

1,192

1,415

1,481

Working capital

(444)

(129)

1,589

329

539

(44)

(1,045)

172

182

Amortisation of devt costs

1,962

2,338

2,706

3,061

3,401

3,348

3,538

3,690

3,802

Exceptional items

0

(139)

(488)

(885)

0

42

11

(700)

0

Operating cash flow

10,147

10,522

9,925

9,233

9,403

7,705

6,548

7,501

9,187

Net interest

(812)

(513)

(423)

(306)

(98)

(10)

(84)

(385)

(345)

Tax

(77)

(961)

(844)

(1,261)

(1,616)

(1,173)

(832)

(951)

(699)

Purch fxd assets (incl s/w)

(790)

(1,196)

(1,334)

(979)

(1,008)

(2,289)

(949)

(1,204)

(1,274)

Capitalised development

(2,194)

(3,205)

(3,451)

(3,208)

(3,404)

(3,615)

(4,050)

(3,742)

(3,959)

Free cash flow

6,274

4,647

3,873

3,479

3,277

618

633

1,218

2,922

Source: Company accounts, Edison Investment Research estimates

Traditional valuation measures: the stock trades on 29x FY16 EPS (Edison forecasts), falling to 21x in FY17. These are above most of its peers, reflecting heavy investment in the group’s new cloud products.

Peer comparison: the stock trades on 1.6x FY17 revenues (less than a third of its US peers and in the bottom half of UK peers) and 11.2x FY16 EBITDA (below its US peers). We note that StatPro’s profits remain depressed by losses at Revolution (£5.9m EBITDA loss in FY15).

Exhibit 8: Peers

Price

Market cap

EV/sales

EV/EBITDA

PE

Local currency

Local currency

Year 1

Year 2

Year 1

Year 2

Year 1

Year 2

StatPro

77.00

50

1.7

1.6

13.5

11.2

28.8

21.2

1) US-quoted investment management software peers

MSCI

69.83

6898

6.7

6.2

14.7

13.2

25.2

20.9

FactSet

155.06

6387

5.7

5.2

16.1

14.6

23.4

21.0

SS&C

61.03

6191

5.9

5.4

14.7

12.6

19.0

15.9

Envestnet

24.12

1013

2.2

1.9

14.3

10.3

25.0

17.1

Medians

5.8

5.3

14.7

12.9

24.2

19.0

2) Investment management software peers quoted in other countries

GBST

4.51

304

2.5

2.4

14.5

11.4

21.8

16.0

Iress

11.10

1777

4.9

4.5

15.6

14.2

24.2

21.3

Linedata

36.55

268

1.7

1.7

6.3

6.1

12.2

12.1

SimCorp

303.90

12612

5.7

5.4

23.8

22.7

32.4

30.5

Medians

3.7

3.4

15.1

12.8

23.0

18.7

3) UK-quoted financial software peers

Fidessa

2315.00

887

2.6

2.5

11.9

11.4

28.2

26.7

First Derivatives

1465.00

355

3.3

2.9

16.9

14.5

30.3

26.6

Brady

56.75

47

1.5

1.4

21.9

9.6

70.9

18.9

Lombard Risk

11.13

34

1.3

1.2

6.5

5.1

27.8

12.4

Medians (excl Lombard)

2.6

2.5

16.9

11.4

30.3

26.6

4) US companies with SaaS business models *

Callidus

13.40

754

3.1

2.6

28.2

21.1

47.3

34.6

Cornerstone OnDemand

30.68

1681

3.9

3.1

63.6

35.1

1804.7

87.7

Incontact

9.49

589

2.2

1.9

27.6

20.5

N/A

256.5

NetSuite

64.22

5137

5.2

4.1

63.7

46.0

150.0

92.7

Salesforce

72.11

48379

5.8

4.8

27.6

23.1

71.3

54.8

Ultimate Software

179.36

5174

6.5

5.4

26.6

21.7

55.6

44.7

Workday

72.07

13837

8.0

6.1

94.1

80.2

3002.9

249.4

Medians

5.2

4.1

28.2

23.1

110.7

87.7

Source: Edison Investment Research, Bloomberg. Note: *These companies are predominantly in the human capital management software or CRM/ERP spaces and none is a direct competitor of StatPro. Prices at 14 March 2016.

Exhibit 9: Financial summary

£'000s

2012

2013

2014

2015

2016e

2017e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

32,001

32,486

32,018

30,187

34,413

36,408

Cost of Sales

0

0

0

0

0

0

Gross Profit

32,001

32,486

32,018

30,187

34,413

36,408

EBITDA

 

 

6,728

5,463

4,359

4,044

4,339

5,202

Adjusted Operating Profit

 

 

5,534

4,327

2,875

2,852

2,924

3,721

Amortisation of acquired intangibles

(440)

(402)

(188)

(32)

0

0

Exceptionals

(693)

(347)

0

0

(700)

0

Share based payments

159

(192)

(26)

(121)

(200)

(213)

Operating Profit

4,560

3,386

2,661

2,699

2,024

3,509

Net Interest

(493)

(273)

(291)

(290)

(385)

(345)

Profit Before Tax (norm)

 

 

5,041

4,054

2,584

2,562

2,539

3,376

Profit Before Tax (FRS 3)

 

 

4,067

3,113

2,370

2,409

1,639

3,163

Tax

(1,387)

(1,030)

(774)

(788)

(711)

(945)

Profit After Tax (norm)

3,654

3,024

1,810

1,774

1,828

2,431

Profit After Tax (FRS 3)

2,680

2,083

1,596

1,621

928

2,218

Average Number of Shares Outstanding (m)

62.2

67.5

67.5

67.6

66.2

65.1

EPS - normalised (p)

 

 

5.9

4.5

2.7

2.6

2.7

3.6

EPS - FRS 3 (p)

 

 

4.3

3.1

2.4

2.4

1.3

3.3

Dividend per share (p)

2.70

2.80

2.90

2.90

2.90

2.90

Gross Margin (%)

100.0

100.0

100.0

100.0

100.0

100.0

EBITDA Margin (%)

21.0

16.8

13.6

13.4

12.6

14.3

Operating Margin (before GW & except.) (%)

17.3

13.3

9.0

9.4

8.5

10.2

BALANCE SHEET

Fixed Assets

 

 

60,272

55,992

56,113

51,857

58,692

58,642

Intangible Assets

57,683

53,524

52,546

48,613

55,659

55,816

Tangible Assets

1,974

1,883

2,470

2,233

2,022

1,816

Other assets

615

585

1,097

1,011

1,011

1,011

Current Assets

 

 

10,675

10,312

10,441

10,665

3,382

3,545

Stocks

0

0

0

0

0

0

Debtors

6,962

6,167

7,722

8,462

9,647

10,206

Cash

3,681

4,014

2,692

2,203

(6,264)

(6,661)

Current Liabilities

 

 

(19,927)

(18,514)

(20,271)

(19,778)

(21,289)

(22,103)

Creditors

(19,913)

(18,502)

(20,259)

(19,660)

(21,171)

(21,985)

Short term borrowings

(14)

(12)

(12)

(118)

(118)

(118)

Long Term Liabilities

 

 

(1,400)

(882)

(598)

(1,227)

(3,325)

(1,926)

Long term borrowings

0

0

0

(801)

(801)

(801)

Other long term liabilities

(1,400)

(882)

(598)

(426)

(2,524)

(1,125)

Net Assets

 

 

49,620

46,908

45,685

41,517

37,460

38,158

CASH FLOW

Operating Cash Flow

 

 

9,233

9,403

7,705

6,548

7,501

9,187

Net Interest

(306)

(98)

(10)

(84)

(385)

(345)

Tax

(1,261)

(1,616)

(1,173)

(832)

(951)

(686)

Capex

(4,187)

(4,412)

(5,904)

(4,999)

(4,947)

(5,234)

Acquisitions/disposals

0

(990)

0

0

(5,625)

(1,399)

Equity financing

5,689

0

2

64

(2,100)

0

Dividends

(1,627)

(1,856)

(1,889)

(1,960)

(1,959)

(1,920)

Net Cash Flow

7,541

431

(1,269)

(1,263)

(8,466)

(396)

Opening net debt/(cash)

 

 

3,399

(3,667)

(4,002)

(2,680)

(1,283)

7,183

HP finance leases initiated

0

0

0

0

0

0

Other

(475)

(96)

(53)

(134)

0

()

Closing net debt/(cash)

 

 

(3,667)

(4,002)

(2,680)

(1,283)

7,183

7,580

Source: Company accounts, Edison Investment Research estimates

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