StatPro Group
Written by
StatPro Group |
In-line Q1 trading with “strong” pipeline |
AGM trading update |
Software & comp services |
19 May 2016 |
Share price performance
Business description
Next events
Analysts
StatPro Group Group is a research client of Edison Investment Research Limited |
|||||||||||||||||||||||||||||||||||||||||||||||||
StatPro says that Q1 trading was in line with expectations. New sales of StatPro Revolution, the cloud service, have progressed well and Revolution now represents c 36% of annualised contracted revenue. Management says the pipeline for the remainder of FY16 is “strong”, which is notably increasingly upbeat language. With StatPro continuing to advance to late-stage cloud transition, we highlight the increasing potential for positive earnings surprises. 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* |
EPS* |
DPS |
P/E |
Yield |
12/14 |
32.0 |
2.6 |
2.7 |
2.9 |
27.4 |
3.9 |
12/15 |
30.2 |
2.6 |
2.6 |
2.9 |
28.0 |
3.9 |
12/16e |
34.4 |
2.6 |
2.7 |
2.9 |
27.5 |
3.9 |
12/17e |
36.4 |
3.4 |
3.6 |
2.9 |
20.3 |
3.9 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Trading update: Cloud is now 36% of the run rate
StatPro says that Q1 trading is in line with expectations and the group has been signing new business from both new and existing clients (ie conversions and upsells). The group had a very busy Q1 with two acquisitions made and StatPro also bought back 4.25% of its shares. The recently acquired Investor Analytics is being integrated into the Revolution platform while InfoVest, which is being run as an autonomous operation, is making good progress. The company also announced the appointment of two non-executive directors. We are maintaining our forecasts.
Investment case: Risks increasingly on the upside
The group’s multi-tenanted cloud solutions enjoy significant advantages over traditional software. However, the transition from a traditional software business to the cloud is evolutionary – StatPro took its first steps towards the cloud transition back in 2008. Nevertheless, StatPro remains ahead of the pack, and we note that one of its key competitors recently abandoned a cloud transition project, apparently because of the challenges with transition. StatPro remains fervently on its path to becoming a pure cloud-based analytics service provider, with c 36% of annualised contracted revenue now coming from cloud services, up from c 20% a year earlier. The StatPro Revolution Performance module – the last major component in the group’s switch to the cloud from its traditional StatPro Seven software suite – will be launched commercially in September.
Valuation: Highly scalable cloud computing upside
StatPro’s stock trades on c 27x our maintained FY16e EPS, which falls to c 20x in FY17e. Alternatively, the shares trade on c 1.5x 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 3.3-5.7x EV/sales.
Exhibit 1: 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 and 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
|