SNP Schneider-Neureither & Partner |
Underlying FY16 guidance edges up |
Provisional results |
Software & comp services |
3 February 2016 |
Share price performance
Business description
Next events
Analysts
SNP Schneider-Neureither & Partner is a research client of Edison Investment Research Limited |
Provisional FY15 revenues and profit are in line while the new FY16 guidance suggests a small upgrade. FY15 was a year of strong growth for SNP, helped by a prestigious contract to carve out the ERP systems of the demerging Hewlett-Packard. The group has benefitted from a greater number of projects while margins rose on the back of increased project complexity. Our new FY16 forecasts include the two recent acquisitions, along with a 1.6% underlying revenue increase to put our FY16 revenue at the mid-point of the new guidance. Employee numbers have doubled over the year to c 600 and as there is no sign that the activity is slowing. Hence, we continue to believe the shares are attractive on c 16x FY17e earnings.
Year end |
Revenue (€m) |
PBT* (€m) |
EPS* (c) |
DPS (c) |
P/E (x) |
Yield (%) |
12/13 |
23.5 |
(2.8) |
(64.7) |
8.0 |
N/A |
0.3 |
12/14 |
30.5 |
(0.1) |
(13.9) |
13.0 |
N/A |
0.5 |
12/15e |
56.3 |
3.7 |
69.4 |
20.0 |
38.0 |
0.8 |
12/16e |
75.0 |
6.9 |
123.8 |
30.0 |
21.3 |
1.1 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
SNP says it expects to report FY15 revenues of c €56.3m when it releases its full year audited results. FY15 EBIT (or adjusted operating profit) is expected to be c €4.5m to give a margin of c 8%. Activity remains very busy in early 2016 and SNP now expects FY16 revenue of €72-78m but it has not yet provided EBIT guidance.
In January 2016, SNP completed the acquisition of two separate businesses which gives the group a strong foothold in the Asian markets. We have now incorporated these acquisitions into our forecasts and have assumed they cost €10m to acquire, split into initial and deferred instalments. See our previous note for more details.
We forecast revenue to rise 33% to €75.0m in FY16 (previously €64.0m), including €10m from the acquisitions and c 15% organic growth. We forecast a further 15% organic growth in FY17 to €85.9m (€73.3m). We have maintained similar margin assumptions and EPS jump since the transaction is being funded by the group’s existing cash resources (€14.2m cash on the balance sheet as at 30 September) and so does not add to financing costs. Hence our EPS forecasts go up by 16% in FY16 and 14% in FY17. We forecast the group to end FY15 with €2.5m net cash, which dips to €0.5m net cash at end FY16 before recovering to €5.1m in FY17.
The stock trades on c 38x our FY15e EPS, falling to c 21x in FY16e and to c 16x in FY17e. We believe the ratings continue to look attractive given the forecast strong growth and margin recovery potential.
We have edged up our FY15 revenue and adjusted operating forecasts to be in line with the guidance given in the provisional results. We now forecast revenue to rise 33% to €75.0m in FY16 (previously €64.0m), including €10m from the acquisitions (within the Professional services segment) along with c 15% organic growth. We forecast a further 15% organic revenue growth in FY17 to €85.9m (€73.3m). We have maintained similar margin assumptions and have maintained our interest cost assumptions since the transaction is being funded from the group’s existing cash resources (the group had €14.2m cash on its balance sheet as at 30 September). We have included non-controlling interests for the remaining 30% of Astrums that SNP does not intend to acquire. In all our EPS forecasts go up by 16% in FY16 and 14% in FY17.
In January, SNP completed the acquisitions of Astrums and Hartung Consult, both for undisclosed terms. SNP is buying an initial 51% of each company and will buy the balance of Hartung Consult along with a further 20% of Astrums in January 2018. We have assumed a total deal value of €10m for the two acquisitions, based on sector deals, including a €5-6m initial component and a €4-5m deferred component. We forecast the group to end FY15 with €2.5m net cash, which slips to €0.5m net debt at end FY16 after paying for the acquisitions and rises to net cash of €5.1m at the end of FY17. Additionally, we estimate there are €7.3m of outstanding acquisition liabilities, which along with the initial Astrums/Hartung Consult acquisitions costs take the proforma FY15 year-end adjusted net debt to €10.3m. These acquisition liabilities include €2.8m relating the RSP and our estimates of €4.5m of acquisition liabilities that relate to Astrums and Hartung Consult.
Exhibit 1: Forecasts
2015e |
2016e |
2017e |
|||||||
(€'000s) |
New |
Old |
Change |
New |
Old |
Change |
New |
Old |
Change |
Revenue |
|
|
|
|
|
|
|
|
|
Professional services |
47,259 |
46,969 |
1 |
64,138 |
53,461 |
20 |
73,677 |
61,399 |
20 |
Software |
9,041 |
9,041 |
0 |
10,862 |
10,545 |
3 |
12,207 |
11,865 |
3 |
Group revenue |
56,300 |
56,010 |
1 |
75,000 |
64,006 |
17 |
85,884 |
73,264 |
17 |
Growth (%) |
84.7 |
83.8 |
1 |
33.2 |
14.3 |
133 |
14.5 |
14.5 |
0 |
Professional services contribution |
4,727 |
4,697 |
1 |
6,414 |
5,346 |
20 |
7,736 |
6,447 |
20 |
Software contribution |
3,164 |
3,164 |
0 |
4,888 |
4,745 |
3 |
6,104 |
5,932 |
3 |
Non-segment-related expenses |
(4,033) |
(4,033) |
0 |
(4,275) |
(4,275) |
0 |
(4,506) |
(4,506) |
0 |
Other operating inc & other taxes |
641 |
641 |
0 |
680 |
680 |
0 |
716 |
716 |
0 |
Adjusted operating profit |
4,500 |
4,469 |
1 |
7,706 |
6,496 |
19 |
10,050 |
8,590 |
17 |
Operating profit margin (%) |
8.0 |
8.0 |
0 |
10.3 |
10.1 |
1 |
11.7 |
11.7 |
(0) |
Growth (%) |
N/A |
N/A |
1 |
71.3 |
45.3 |
57 |
30.4 |
32.2 |
(6) |
Net interest |
(796) |
(796) |
0 |
(775) |
(775) |
0 |
(775) |
(775) |
0 |
Profit before tax norm |
3,704 |
3,674 |
1 |
6,931 |
5,721 |
21 |
9,275 |
7,815 |
19 |
Exceptional items |
356 |
356 |
|
0 |
0 |
|
0 |
0 |
|
Profit before tax |
4,060 |
4,030 |
1 |
6,931 |
5,721 |
21 |
9,275 |
7,815 |
19 |
Taxation |
(1,111) |
(1,102) |
1 |
(2,079) |
(1,716) |
21 |
(2,783) |
(2,344) |
19 |
Non-controlling interests |
0 |
0 |
|
(225) |
0 |
|
(248) |
0 |
|
FRS 3 net income |
2,949 |
2,928 |
1 |
4,627 |
4,005 |
16 |
6,245 |
5,470 |
14 |
Adjusted EPS (c) |
69.4 |
68.8 |
1 |
123.8 |
107.1 |
16 |
167.1 |
146.3 |
14 |
P/E - Adjusted EPS |
38.0 |
|
|
21.3 |
|
|
15.8 |
|
|
Source: Edison Investment Research
Exhibit 2: Financial summary
€'000s |
2012 |
2013 |
2014 |
2015e |
2016e |
2017e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||||
Revenue |
|
|
27,157 |
23,536 |
30,480 |
56,300 |
75,000 |
85,884 |
Cost of sales |
0 |
0 |
0 |
0 |
0 |
0 |
||
Gross Profit |
27,157 |
23,536 |
30,480 |
56,300 |
75,000 |
85,884 |
||
EBITDA |
|
|
3,714 |
(1,972) |
862 |
5,615 |
8,842 |
11,259 |
Adjusted Operating Profit |
|
|
2,951 |
(2,714) |
(66) |
4,500 |
7,706 |
10,050 |
Amortisation of acquired intangibles |
0 |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
1,505 |
356 |
0 |
0 |
||
Associates |
(107) |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
2,845 |
(2,714) |
1,439 |
4,856 |
7,706 |
10,050 |
||
Net Interest |
20 |
(85) |
(66) |
(796) |
(775) |
(775) |
||
Profit Before Tax (norm) |
|
|
2,972 |
(2,799) |
(132) |
3,704 |
6,931 |
9,275 |
Profit Before Tax (FRS 3) |
|
|
2,865 |
(2,799) |
1,373 |
4,060 |
6,931 |
9,275 |
Tax |
(947) |
477 |
(344) |
(1,111) |
(2,079) |
(2,783) |
||
Profit After Tax (norm) |
2,025 |
(2,322) |
(477) |
2,593 |
4,852 |
6,493 |
||
Profit After Tax (FRS 3) |
1,918 |
(2,322) |
1,028 |
2,949 |
4,852 |
6,493 |
||
Minority interest |
(127) |
(84) |
(40) |
0 |
(225) |
(248) |
||
Adjustments for normalised earnings |
0 |
0 |
0 |
0 |
0 |
0 |
||
Net income (norm) |
1,897 |
(2,405) |
(517) |
2,593 |
4,627 |
6,245 |
||
Net income (FRS 3) |
1,791 |
(2,405) |
988 |
2,949 |
4,627 |
6,245 |
||
Average No of Shares Outstanding (m) |
3.4 |
3.7 |
3.7 |
3.7 |
3.7 |
3.7 |
||
EPS - normalised (c) |
|
|
55.7 |
(64.7) |
(13.9) |
69.4 |
123.8 |
167.1 |
EPS - normalised & fully diluted (c) |
|
|
55.7 |
(64.7) |
(13.9) |
69.4 |
123.8 |
167.1 |
EPS - FRS 3 (c) |
|
|
52.5 |
(64.7) |
26.6 |
78.9 |
123.8 |
167.1 |
Dividend per share (c) |
24.00 |
8.00 |
13.00 |
20.00 |
30.00 |
40.00 |
||
Gross Margin (%) |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
||
EBITDA Margin (%) |
13.7 |
-8.4 |
2.8 |
10.0 |
11.8 |
13.1 |
||
Adjusted Operating Margin (%) |
10.9 |
-11.5 |
-0.2 |
8.0 |
10.3 |
11.7 |
||
BALANCE SHEET |
||||||||
Fixed Assets |
|
|
4,236 |
7,759 |
8,291 |
14,263 |
24,627 |
25,136 |
Intangible Assets |
2,327 |
5,194 |
5,190 |
11,151 |
21,151 |
21,151 |
||
Tangible Assets |
1,486 |
1,070 |
1,231 |
1,241 |
1,606 |
2,115 |
||
Other |
422 |
1,496 |
1,871 |
1,871 |
1,871 |
1,871 |
||
Current Assets |
|
|
18,316 |
16,145 |
17,882 |
36,487 |
41,415 |
50,063 |
Stocks |
0 |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
7,309 |
9,105 |
11,286 |
20,847 |
27,771 |
31,801 |
||
Cash |
10,152 |
6,355 |
5,681 |
14,725 |
12,729 |
17,348 |
||
Current Liabilities |
|
|
(4,781) |
(5,804) |
(9,782) |
(20,028) |
(27,278) |
(31,287) |
Creditors |
(4,781) |
(5,204) |
(9,182) |
(19,428) |
(26,678) |
(30,687) |
||
Short term borrowings |
0 |
(600) |
(600) |
(600) |
(600) |
(600) |
||
Long Term Liabilities |
|
|
(772) |
(4,338) |
(2,501) |
(12,501) |
(17,001) |
(17,001) |
Long term borrowings |
0 |
(2,250) |
(1,650) |
(11,650) |
(11,650) |
(11,650) |
||
Other long term liabilities |
(772) |
(2,088) |
(851) |
(851) |
(5,351) |
(5,351) |
||
Net Assets |
|
|
16,998 |
13,762 |
13,890 |
18,221 |
21,763 |
26,912 |
CASH FLOW |
||||||||
Operating Cash Flow |
|
|
3,022 |
(2,110) |
2,579 |
5,690 |
8,467 |
10,830 |
Net Interest |
42 |
4 |
(66) |
(796) |
(775) |
(775) |
||
Tax |
(1,826) |
(1,062) |
(1,102) |
(1,037) |
(1,941) |
(2,597) |
||
Capex |
(465) |
(230) |
(701) |
(1,126) |
(1,500) |
(1,718) |
||
Acquisitions/disposals |
(107) |
(2,267) |
(500) |
(3,203) |
(5,500) |
0 |
||
Shares issued |
4,839 |
(35) |
0 |
0 |
0 |
0 |
||
Dividends |
(2,048) |
(937) |
(335) |
(483) |
(748) |
(1,121) |
||
Net Cash Flow |
3,457 |
(6,638) |
(124) |
(956) |
(1,996) |
4,618 |
||
Opening net debt/(cash) |
|
|
(6,695) |
(10,152) |
(3,505) |
(3,431) |
(2,475) |
(479) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
(10) |
51 |
() |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(10,152) |
(3,505) |
(3,431) |
(2,475) |
(479) |
(5,098) |
Source: Company accounts, Edison Investment Research
|