CREALOGIX Group — Well-funded, transformation progressing

CREALOGIX (SW: CLXN)

Last close As at 28/03/2024

124.50

0.00 (0.00%)

Market capitalisation

174m

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Research: TMT

CREALOGIX Group — Well-funded, transformation progressing

CREALOGIX continues to pursue its goal of becoming a leading global SaaS digital banking software provider. It reported a 5% fall in H120 revenues to CHF48.6m (H119: CHF51.0m) (c 2% fall on a constant currency basis) and H120 EBITDA of CHF0.4m (H119: CHF3.3m). Recurring revenues now represent 47% of total sales (up from 42% in FY19) and the group reported positive free cash flow of CHF4.9m (H119: CHF2.1m loss). The SaaS transition will continue to drag on results in FY20/21 but with CHF34m of cash (CHF3.8m net cash), the group is well placed to weather any short-term impact from COVID-19 on its business (no impact yet, too early to quantify) and complete its SaaS transformation.

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Written by

TMT

CREALOGIX Group

Well-funded, transformation progressing

Interim results

Software & comp services

24 March 2020

Price

CHF82.8

Market cap

CHF116m

Net cash (CHFm) at 31 December 2019

3.8

Shares in issue

1.4m

Free float

39.6%

Code

CLXN

Primary exchange

Switzerland

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(28.4)

(23.7)

(15.9)

Rel (local)

(2.5)

0.2

(4.0)

52-week high/low

CHF118

CHF82

Business description

The CREALOGIX Group is a Swiss Fintech 100 company and is among the global market leaders in digital banking, providing front-end digital banking technology solutions to banks, wealth managers and other financial services companies.

Next events

FY20 results

15 September 2020

AGM

26 October 2020

Analysts

Richard Williamson

+44 (0)20 3077 5700

Katherine Thompson

+44 (0)20 3077 5730

CREALOGIX Group is a research client of Edison Investment Research Limited

CREALOGIX continues to pursue its goal of becoming a leading global SaaS digital banking software provider. It reported a 5% fall in H120 revenues to CHF48.6m (H119: CHF51.0m) (c 2% fall on a constant currency basis) and H120 EBITDA of CHF0.4m (H119: CHF3.3m). Recurring revenues now represent 47% of total sales (up from 42% in FY19) and the group reported positive free cash flow of CHF4.9m (H119: CHF2.1m loss). The SaaS transition will continue to drag on results in FY20/21 but with CHF34m of cash (CHF3.8m net cash), the group is well placed to weather any short-term impact from COVID-19 on its business (no impact yet, too early to quantify) and complete its SaaS transformation.

Year end

Revenue (CHFm)

PBT*
(CHFm)

EPS*
(CHF)

DPS
(CHF)

P/E
(x)

Yield
(%)

06/18

87.1

5.0

2.39

0.25

34.6

0.3

06/19

101.9

(1.7)

(0.94)

0.00

N/A

0.0

06/20e

105.5

(0.5)

(0.27)

0.00

N/A

0.0

06/21e

111.1

1.6

0.83

0.25

99.5

0.3

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

Interim results

CREALOGIX continues to progress its transformation programme (acceleration of its change to a SaaS model, investment in modularising its Digital Banking Hub and broadening its international implementation partnerships), which will continue to drag on its FY20/FY21 results. H120 revenues decreased by 5% to CHF48.6m (H119: CHF51.0m), a 2% drop on a constant currency (CC) basis. SaaS/Hosting revenues grew by 6% (10% CC) to CHF8.0m (H119: CHF7.6m), with recurring revenue business representing 47% of H120 group sales, from 42% in FY19. International sales, outside Switzerland, constituted 66% of total revenue, up from 64% in H119. The EBITDA margin for H120 fell to 0.8% (H119: 6.4%) but free cash flow improved by CHF7.0m to CHF4.9m in H120, from a CHF2.1m loss in H119.

COVID-19: Strong cash position

To date, CREALOGIX has not yet seen any adverse impact on its business from COVID-19. As a technology business, its staff are well prepared to work remotely; however, management recognises there may be an impact on client banking teams and their ability to execute new technology implementations. Although it is too early to quantify the risk, management anticipates this could lead to short-term project delays but expects no impact on the medium-term prospects for the group. Following its convertible bond refinancing in November, CREALOGIX had gross cash at 31 December 2019 of CHF34m, net cash of CHF3.8m.

Valuation: Upside potential post-transition

With management confident of its medium-term targets, based on our unchanged FY22e estimates (revenues CHF116m, EBITDA CHF13m), peer group multiples would suggest an EV of CHF200m+ is achievable (a 100% premium to today’s share price). For investors willing to take a medium-term view, CREALOGIX remains a defensive play, with an attractive valuation, particularly when compared to its closest peers, of 1.1x FY20e sales.

Interim results

H120 revenues decreased by 5% to CHF48.6m (H119: CHF51.0m), a 2% drop on a CC basis. SaaS/Hosting revenues grew by 6% (10% CC) to CHF8.0m (H119: CHF7.6m), with recurring revenue business representing 47% of H120 group sales, from 42% in FY19. International sales, outside Switzerland, represented 66% of total revenue, up from 64% in H119. The EBITDA margin for H120 fell to 0.8% from 6.4% for H119 but free cash flow rose by CHF7.0m to CHF4.9m in H120 from a CHF2.1m loss in H119.

CREALOGIX continues to make progress on its transformation programme (acceleration of its change to a SaaS model, investment in modularising its Digital Banking Hub and broadening its international implementation partnerships) but, as previously announced, this will continue to drag on results in FY20 and FY21. As well as the SaaS transition, the relative strength of the Swiss franc has also been a headwind in H120. However, management remains confident the group’s investment in the consolidation and standardisation of its product portfolio will deliver economies of scale and efficiency gains, with demand for its SaaS offering increasing steadily.

SaaS transformation: Revenue dynamics

As management has highlighted, the move to SaaS impacts organic revenue growth and margins – management estimated that H120 revenue and EBITDA were CHF4.8m lower as a result. This is because, in its first year, a CHF1m traditional (one-off) perpetual licence deal would typically generate CHF1m, together with an additional 20% of maintenance revenues. However, on a SaaS basis this might be only c CHF0.45m pa (ie CHF1.8m/four years). Additionally, SaaS revenues are recognised pro-rata, so if the contract above was signed in the last month of the period, it would only generate CHF38k of revenue in that period. However, the SaaS model is more lucrative over the long term, breaking even after four years and generating significant revenue upside thereafter (ie CHF0.45m vs CHF0.2m annually for the perpetual licence model).

Product development: Enhancing the hub

In H120, CREALOGIX has continued modularising and consolidating its Digital Banking Hub, including ‘sunsetting’ certain product features and investing in new product development. New developments to be launched later in CY20 include a Conversational Engagement App, a cloud-based offering that allows banks to communicate securely with their customer base, enabling delivery of, for example, chat or video-based investment advice. Management also introduced an enhanced multi-banking solution to support open banking, particularly targeted at the Swiss and German markets. This solution offers a one-stop shop to both corporate and retail customers, allowing them to monitor and manage their liquidity across banks and bank accounts.

Internationalisation: New client wins

International sales, outside Switzerland, represented 66% of total revenue in H120, up from 64% in H119. In addition to smaller contracts and projects, notable new contract wins in H120 included a Swiss SME bank, Valiant, which licensed the new multibanking module from CREALOGIX and Killik & Co, a UK wealth manager that has licensed CREALOGIX’s Digital Engagement Platform. CREALOGIX also acquired two new Tier 1 clients: a leading Southeast Asian bank (representative of increasing demand for digital banking solutions for an increasingly affluent middle-class in the region) and Raiffeisenverband Südtirol. CREALOGIX also won a comprehensive digital transformation project for a major Saudi Arabian customer, with the opening of a CREALOGIX branch in Riyadh.

Financials: H2 weighted, before any COVID-19 impact

We have updated our forecasts to reflect the refinancing of the convertible bond in November 2019, but otherwise our headline revenue and EBITDA numbers remain unchanged for the moment. Although CREALOGIX has yet to see an adverse impact on its business from COVID-19 with just over three months left before the end of the financial year, we note that FY20 risk is clearly on the downside due to its negative (but as yet unquantified) impact on the economy and business.

To achieve our FY20 revenue estimate, H220 overall sales need to increase by 17% over H120. The Goods service line, although only 4.5% of overall turnover, is furthest adrift, needing to more than double in H2 versus H1; however, we understand that a forthcoming Swiss regulatory change (the introduction of the QR-bill in June, whereby all Swiss payment slips will be replaced by a new QR code – meaning all invoice processors in Switzerland must update their systems to allow payment of QR-bills within a 2 year grace period) should mean this increase will show in Q420. The other service line most behind is Licensing fees, with a major order expected close to the end of the financial year.

Hosting and SaaS revenue grew to CHF8.0m in H120 from CHF7.6m in H119. Recurring revenue (Hosting/SaaS plus maintenance) increased to CHF22.7m from CHF20.5m in H119, with our forecast indicating CHF18.1m for FY20.

Exhibit 1: Half-by-half analysis

CHF000s

2019

2020e

 

2021e

 

H1A

H2A

FY

H1A

H2F

H2/H1 change

FY

Y-o-y change

FY

Y-o-y change

Services

20,499

21,003

41,502

20,110

20,903

4%

41,013

-1%

39,550

-4%

Goods

2,519

2,557

5,076

1,408

3,160

124%

4,568

-10%

4,112

-10%

Hosting and SaaS services

7,604

7,125

14,729

8,032

10,058

25%

18,090

23%

25,920

43%

Maintenance

14,693

13,411

28,104

14,673

15,807

8%

30,480

8%

32,256

6%

Licensing fees

5,706

6,796

12,502

4,388

7,003

60%

11,391

-9%

9,214

-19%

Total revenue

51,021

50,892

101,913

48,611

56,931

17%

105,542

4%

111,051

5%

Gross profit

37,567

39,594

77,161

37,407

43,671

17%

81,078

5%

87,396

8%

Gross margin

73.6%

77.8%

75.7%

77.0%

76.7%

 

76.8%

1%

78.7%

2%

Opex before depn and amortisation

(34,310)

(40,991)

(75,301)

(36,970)

(41,532)

 

(78,502)

4%

(82,739)

5%

Adjusted EBITDA

3,257

(2,820)

1,860

437

2,139

 

2,576

38%

4,657

81%

EBITDA Margin

6.4%

(5.5%)

1.8%

0.9%

1.5%

 

2.4%

 

-

 

Depreciation

(1,218)

(1,448)

(2,666)

(1,275)

(1,391)

 

(2,666)

 

(2,666)

 

Adjusted operating profit

2,039

(2,845)

(806)

(838)

748

 

(90)

 

1,991

 

Operating Margin

4.0%

(5.6%)

(0.8%)

(1.7%)

1.6%

 

(0.1%)

 

(1.8%)

 

Associates

(274)

-

(274)

-

-

 

-

 

-

 

Net interest

(311)

(260)

(571)

(238)

(202)

 

(440)

 

(375)

 

Edison Profit Before Tax (norm)

1,454

(3,105)

(1,651)

(1,076)

545

 

(531)

 

1,616

 

Amortisation of acquired intangibles

(2,567)

(2,542)

(5,109)

(2,464)

(2,645)

 

(5,109)

 

(5,109)

 

Profit before tax

(1,113)

(5,647)

(6,760)

(3,540)

(2,100)

 

(5,640)

 

(3,493)

 

Source: CREALOGIX (historical), Edison Investment Research (forecasts)

Cash flow: Strong cash position

Following its CHF25m convertible bond refinancing in November, at 31 December 2019 CREALOGIX had gross cash of CHF34m (CHF3.8m net cash). In addition to the bond financing, the group’s cash position was supplemented by strong free cash flow of CHF4.9m in H120 (H119: CHF2.1m loss), arising from a combination of improved cost control, tighter working capital management, effective project delivery and, ultimately, satisfied customers.

We note that December is typically the low point in the cash flow cycle with the majority of maintenance revenue collected in January. We also note the group spends c 20% of revenues on R&D, all of which is expensed as incurred rather than capitalised.

Outlook: Targets maintained

On the H120 results call, management reiterated that its order book and pipeline remain full and that, before considering any short-term impact from COVID-19, the group remains confident of achieving its revenue targets for FY20. Management also reiterated its medium-term targets for ‘solid cash flow’ and double-digit EBITDA margins.

On this basis, with just over three months left before the end of the financial year, we retain our current year forecasts, but note that FY20 risk is clearly on the downside, with the impact of coronavirus on the economy and business known, but as yet unquantified. We will review our forecasts once we are better able to quantify the business risk.

However, irrespective of the short-term risk, with management confident of its medium-term targets, for the longer-term investor we continue to believe CREALOGIX represents an attractive proposition at a defensive valuation of 1.1x our current FY20e sales estimate. Looking through to our maintained FY22 estimates (revenues CHF116m, EBITDA CHF13m), peer group multiples suggest an EV of CHF200m+ could be achievable (a 100%+ premium to today’s share price).

Exhibit 2: Peer group analysis

Name

Year
end

Current
price (ccy)

Quoted
ccy

EV ($m)

Sales growth
1FY (%)

EV/
Sales 1FY (x)

EV/
Sales 2FY (x)

EBITDA margin 1FY (%)

EBITDA margin 2FY (%)

EV/
EBITDA 1FY (x)

EV/
EBITDA
2FY (x)

P/E 1FY
(x)

P/E 2FY
(x)

CREALOGIX Holding

Jun-20

82.8

CHF

118

3.6

1.1

1.0

2.4

4.2

45.7

25.3

NM

NM

UK/European (non-US) Software

Temenos

Dec-20

103.2

CHF

8,722

18.3

7.6

6.8

41.3

42.1

18.4

16.1

26.2

22.6

Sopra Steria Group

Dec-20

87.4

EUR

2,614

6.5

0.5

0.5

11.3

12.0

4.6

4.1

7.6

6.5

Flatex

Dec-19

21.4

EUR

648

6.7

4.5

3.3

30.7

37.6

14.6

8.8

21.0

13.7

First Derivatives

Feb-20

1752.0

GBp

654

10.7

2.3

2.1

18.9

18.9

12.4

11.2

20.2

18.1

Intellect Design Arena

Mar-20

51.0

INR

52

(3.6)

0.3

0.2

5.5

12.2

5.1

2.0

19.6

6.9

GFT Technologies

Dec-20

6.6

EUR

331

NM

0.7

0.6

10.8

11.4

6.4

5.7

8.9

7.3

Gresham Technologies

Dec-20

115.0

GBp

82

8.2

2.6

2.4

15.2

17.5

17.1

13.8

50.0

35.9

Mean

7.8

2.6

2.3

19.1

21.7

11.2

8.8

21.9

15.9

Median

7.5

2.3

2.1

15.2

17.5

12.4

8.8

20.2

13.7

North American Software

FIS

Dec-20

102.8

USD

79,544

31.7

5.8

5.4

44.1

46.4

13.2

11.7

16.3

13.9

Broadridge Financial

Jun-20

90.8

USD

12,035

3.1

2.7

2.5

20.8

22.1

12.8

11.5

18.0

16.4

SS&C Technologies

Dec-20

35.7

USD

16,124

1.9

3.4

3.3

39.8

40.6

8.5

8.1

8.7

8.1

Q2 Holdings

Dec-20

55.3

USD

2,970

30.7

7.2

5.8

4.2

7.6

NM

NM

NM

NM

Envestnet

Dec-20

50.2

USD

3,136

10.2

3.1

2.8

21.7

22.2

14.4

12.8

22.7

20.1

Tecsys

Apr-20

17.3

CAD

163

35.7

2.3

2.1

10.2

11.3

22.1

18.2

NM

42.4

Mean

18.9

4.1

3.7

23.5

25.0

14.2

12.5

16.4

20.2

Median

20.4

3.3

3.1

21.3

22.1

13.2

11.7

17.1

16.4

Source: Refinitiv (share price data as at 23 March 2020), Edison Investment Research

Exhibit 3: Financial summary

CHF'000s

2017

2018

2019

2020e

2021e

2022e

Year end 30 June

Swiss GAAP

Swiss GAAP

Swiss GAAP

Swiss GAAP

Swiss GAAP

Swiss GAAP

PROFIT & LOSS

Revenue

 

 

74,858

87,144

101,913

105,542

111,051

115,922

Gross Profit

59,695

67,277

77,161

81,078

87,396

94,230

EBITDA

 

 

7,304

7,031

1,860

2,576

4,657

13,050

Operating Profit (before amort. and except.)

 

5,916

5,441

(806)

(90)

(90)

1,991

Amortisation of acquired intangibles

(1,799)

(2,944)

(5,109)

(5,109)

(5,109)

(5,109)

Exceptionals

-

-

-

0

-

-

Operating Profit

4,117

2,497

(5,915)

(5,199)

(3,118)

5,079

Associates

(21)

(20)

(274)

0

-

-

Net Interest

(936)

(429)

(571)

(440)

(375)

(375)

Profit Before Tax (norm)

 

 

4,959

4,992

(1,651)

(531)

1,616

9,813

Profit Before Tax (Statutory)

 

 

3,160

2,048

(6,760)

(5,640)

(3,493)

4,704

Tax

(1,751)

(1,350)

436

149

(453)

(1,317)

Profit After Tax (norm)

3,208

3,642

(1,215)

(382)

1,164

8,496

Profit After Tax (Statutory)

1,409

698

(6,324)

(5,491)

(3,945)

3,387

Minority interest

(360)

(681)

(73)

0

-

-

Net income (norm)

2,758

2,944

(1,288)

(382)

1,164

8,496

Net income (Statutory)

1,049

17

(6,397)

(5,491)

(3,945)

3,387

Average Number of Shares Outstanding (m)

1.06

1.23

1.38

1.39

1.40

1.40

EPS - normalised (CHF)

 

 

2.59

2.39

(0.94)

(0.27)

0.83

6.08

EPS - Statutory (CHF)

 

 

0.99

0.01

(4.65)

(3.95)

(2.82)

2.42

Dividend per share (CHF)

0.50

0.25

0.00

0.00

0.25

1.00

Gross Margin (%)

79.74

77.20

75.71

76.82

78.70

81.29

EBITDA Margin (%)

9.76

8.07

1.83

2.44

4.19

11.26

Op Margin (before GW and except.) (%)

7.90

6.24

(0.79)

(0.09)

1.79

8.79

BALANCE SHEET

Fixed Assets

 

 

26,430

62,506

62,373

57,825

53,050

52,739

Intangible assets and deferred tax

18,119

54,330

58,465

54,225

49,116

49,116

Tangible Assets

1,385

1,363

2,351

2,040

2,374

2,063

Investments & pensions

6,926

6,813

1,557

1,560

1,560

1,560

Current Assets

 

 

52,495

49,576

42,452

62,689

65,908

76,833

Stocks

3,419

5,950

3,580

4,998

5,259

5,490

Debtors

15,301

22,934

26,028

25,352

26,675

27,845

Cash

33,775

20,692

12,844

32,339

33,974

43,498

Current Liabilities

 

 

(24,219)

(29,704)

(43,012)

(40,774)

(42,641)

(44,292)

Creditors

(24,219)

(29,704)

(29,571)

(35,774)

(37,641)

(39,292)

Short term borrowings

-

-

(13,441)

(5,000)

(5,000)

(5,000)

Long Term Liabilities

 

 

(25,191)

(11,325)

(2,564)

(25,211)

(25,211)

(25,211)

Long term borrowings

(23,154)

(9,291)

(1,459)

(24,280)

(24,280)

(24,280)

Other long term liabilities

(2,037)

(2,034)

(1,105)

(931)

(931)

(931)

Net Assets

 

 

29,515

71,053

59,249

54,529

51,106

60,069

CASH FLOW

Operating Cash Flow

 

 

9,735

3,388

499

8,110

4,867

13,235

Net Interest

(616)

(455)

(431)

(440)

(375)

(375)

Tax

(1,273)

(421)

(28)

446

143

(436)

Capex

(862)

(1,117)

(2,584)

(3,000)

(3,000)

(2,550)

Acquisitions/disposals

(346)

(11,814)

(8,892)

-

-

-

Financing

(215)

(2,447)

(273)

-

-

-

Dividends

-

(559)

(342)

-

-

(349)

Net Cash Flow

6,423

(13,425)

(12,051)

5,115

1,635

9,524

Opening net debt/(cash)

 

 

(3,354)

(10,621)

(11,401)

2,056

(3,059)

(4,694)

Other

844

14,205

(1,406)

-

-

-

Closing net debt/(cash)

 

 

(10,621)

(11,401)

2,056

(3,059)

(4,694)

(14,218)

Source: CREALOGIX and Edison Investment Research


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This report has been commissioned by CREALOGIX and prepared and issued by Edison, in consideration of a fee payable by CREALOGIX. Edison Investment Research standard fees are £49,500 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.

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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 2020 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.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by CREALOGIX and prepared and issued by Edison, in consideration of a fee payable by CREALOGIX. Edison Investment Research standard fees are £49,500 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 2020 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.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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