SCISYS — Update 28 November 2016

SCISYS — Update 28 November 2016

SCISYS

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SCISYS

Deal beefs up media & broadcast operations

Acquisition

Software & comp services

28 November 2016

Price

111p

Market cap

£32m

Exchange rate

€1.175/£

Net cash (£m) at end H116

1.4

Shares in issue

29.0m

Free float

63%

Code

SSY

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

21.3

24.0

59.7

Rel (local)

24.1

24.0

49.2

52-week high/low

111.0p

65.0p

Business description

SCISYS provides a range of professional services in support of the planning, development and use of computer systems in the space, media/broadcast and defence sectors, as well as to other public and private sector enterprises.

Next events

Trading update

January 2017

Final results

March 2017

Analysts

Richard Jeans

+44 (0)20 3077 5700

Dan Ridsdale

+44 (0)20 3077 5729

SCISYS a research client of Edison Investment Research Limited

SCISYS is acquiring Germany-based ANNOVA Systems for an estimated deal value of £15.3m. ANNOVA is a leading supplier of software-based editorial solutions to the media sector. It has a track record of generating strong revenue growth and in 2015 won a landmark contract with the BBC, which underpins financial forecasts for 12 years. ANNOVA complements SCISYS’s dira! product offering for radio broadcasters, extends the group’s capabilities into television and creates cross-selling opportunities. The deal significantly boosts earnings, aided by cheap debt financing costs, and is value enhancing on our assumptions. Consequently, we believe the stock continues to look attractive on c 10x our FY17e earnings.

Year
end

Revenue
(£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/14

40.4

3.2

8.2

1.61

13.5

1.5

12/15

36.1

0.6

1.3

1.78

84.0

1.6

12/16e

44.0

2.9

8.5

1.90

13.1

1.7

12/17e

53.4

4.0

11.0

2.10

10.1

1.9

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

Acquisition of ANNOVA Systems

SCISYS is acquiring ANNOVA Systems from its management for an initial €11.35m along with an earnout arrangement for up to an additional €16.48m. Our understanding is that the reason ANNOVA’s management chose to sell was because the company had secured a landmark contract with the BBC and wanted to use this as a springboard for further expansion, but lacked the infrastructure to grow outside its core European markets. ANNOVA’s management will stay with the group for at least the three-year earnout period. ANNOVA’s flagship OpenMedia product complements SCISYS Media & Broadcast division’s dira! OpenMedia has a c 90% share of the German market, where dira! is also strong, and 40% of the French market, where dira! has minimal presence.

Forecasts: ANNOVA incorporated

We have added ANNOVA into our existing forecasts from year end. This results in a significant boost to revenue and adjusted operating profit while interest and tax also go up. Revenue rises by 17% in FY17 and FY18, adjusted operating profits go up by 39% and 37%, while EPS rise by 27% in each year. However, the group swings into a significant net debt position: we forecast £7.8m as at 31 December 2016, which rises to £13.5m after including the c £5.6m estimated earnout liabilities, which are on a discounted basis.

Valuation: ANNOVA leverages the opportunity

The stock trades on c 0.87x our FY17e revenue forecast and c 8.2x EBITDA, which is attractive if SCISYS can successfully exploit the M&B division’s strong BBC success story to drive cross-selling opportunities within Europe and extend the product outside Europe. Our DCF model – which is based on our forecasts, a conservative weighted average cost of capital (WACC) of 10% and a 10.7% long-term margin target – values the stock at 142p, or 28% above the current level.

Acquisition of ANNOVA Systems

SCISYS is acquiring 100% of ANNOVA Systems, on a debt-free basis, from five of its management for up to €27.83m. This involves an initial €11.35m (£9.7m), of which €10m is financed through a five-year amortising loan via Deutsche Bank bearing interest of 2.9% per annum, and the balance from the group’s existing cash resources. There is also an earnout that is spread over three years; it is capped at €16.48m and linked to the successful delivery of the group’s project with the BBC. Due to the uncertain value of these payments, SCISYS has established a flexible borrowing programme with Lesmoir-Gordon, Boyle & Co, which enables SCISYS to borrow up to £5m in instalments over the period, at an interest rate of 7-8%. Additionally, SCISYS has the option of satisfying up to 24% of the entire purchase consideration in SCISYS ordinary shares. ANNOVA will remain ring-fenced throughout the earnout period. The vendors are also lending ANNOVA £2.5m via a deferred loan, which is repayable in 2019 and bears interest of 5% per annum. The funds from the loan will be used for working capital purposes and will also act as security in the event of any future claims against the vendors.

Based on our EBITDA forecasts, we estimate earnout payments of £0.6m in FY17, £2.8m in FY18 and £3.9 in FY19, for a total of £7.3m. SCISYS estimates that the net present value of the earnouts, which also takes into account contingencies relating to the BBC contract (ie, payments will not be made if specified milestones are not met), is £5.6m. When added to the initial £9.7m, this gives a total deal value of £15.3m.

On our assumptions and FY17 forecasts, SCISYS is paying 1.9x sales and 10.2x EBITDA for ANNOVA. While this looks on the expensive side, we note that ANNOVA has been growing at a healthy pace in recent years and ANNOVA has the ability to generate high margins (albeit with some volatility; see Exhibit 1) given it has its own proprietary software platform. Further, SCISYS provides cross-selling and international growth opportunities. We also note that SCISYS was able to complete this deal without recourse to equity finance because of its strong balance sheet (a net cash position and freehold property ownership) and healthy cash flows. Additionally, SCISYS knows both ANOVA and its end-market well, and in our view these facts considerably de-risk the acquisition.

Background on ANNOVA Systems

ANNOVA is a leading supplier of software based editorial solutions for the media sector. Its OpenMedia product is used by broadcast journalists to manage all their workflows – planning, creating content and filing their stories. OpenMedia is a mature product that is in use by more than 50,000 journalists, including with major European broadcasters such as RTL, Deutsche Welle, WDR and Radio France. While ANNOVA will operate independently during the earnout period, it complements SCISYS’s Media & Broadcast (M&B) division, which is a leading supplier of systems for radio production and playout. OpenMedia does not compete with dira!, the core product of M&B. dira! is focused on the radio vertical and used by producers and DJs to put programmes together for broadcasting. The two products complement each other in the radio space and interface in a number of installations, including at German state radio broadcasters NDR, WDR and Deutsche Welle, and they will also interface at the BBC.

ANNOVA traces its roots back to 1989, and in 2008 the company was purchased by its management in an MBO from Dalet Digital Media Systems. Based in Munich, Germany, ANNOVA has smaller offices in Paris to service its significant French customer base and London to service the BBC contract. ANNOVA has c 70 employees, which will lift SCISYS’s headcount to c 520. It operates a traditional enterprise software business model (a perpetual licence sale with an implementation/customisation project and ongoing support and maintenance at c 15% of the licence value). Recurring support and maintenance typically represents 25% of total revenues, while ANNOVA also has significant repeat services revenues from some key accounts. ANNOVA is investigating the option of a hosted software-as-a-service model. ANNOVA generated c €7.5m revenue in FY15 on a German GAAP basis, along with EBITDA of €1.2m, for a 17% EBITDA margin. In FY16, it is expected to generate revenues of c £7.5m and EBITDA of c £1.3m.

In 2015 ANNOVA won a landmark 12-year contract with the BBC, replacing the incumbent ENPS system from Associate Press. We note that SCISYS won its own landmark deal for dira! with the BBC in 2009 and hence it is well known that the BBC looks at best-of-breed solutions from the international marketplace (SCISYS M&B is based in Germany). We understand that the reason that the BBC chose ANNOVA’s OpenMedia platform was because ANNOVA has developed a unique “story centric” architecture, which enables it to take a story dialogue into any medium, whether it be television, radio, internet, mobile, social media or another medium. The BBC deal boosted ANNOVA’s December 2015 order book to €35m, though this is spread out to 2027, and is still expected to exceed €30m at the end of 2016. The order book includes a £4m software licensing payment from the BBC contract, which is due upon the reaching of a milestone, scheduled for 2017. The services element of the contract involves significant customer-funded R&D work, worth up to £8m, as the BBC wanted to ensure that the product would be developed and enhanced. The acquisition doubles the revenues of SCISYS’s media and broadcast operations, taking it up to a similar level to the group’s other two major divisions.

Exhibit 1: ANNOVA’s recent financial performance

Exhibit 2: ANNOVA’s revenue by type

Source: SCISYS

Source: SCISYS

Exhibit 1: ANNOVA’s recent financial performance

Source: SCISYS

Exhibit 2: ANNOVA’s revenue by type

Source: SCISYS

ANNOVA competes with Avid (iNews product) and Associated Press (ENPS product), which are well-established suppliers of newsroom computer systems (NRCS). There are also other suppliers, like Dalet, which offer “all-in-one” solutions with a less sophisticated newsroom module, and Czech Octopus, which is mainly focused on small to medium-scale media businesses. ROSS Media, which is an ANNOVA partner, has started activities in adjacent areas of social media and cloud computing. ANNOVA has a c 90% market share in Germany, a 40% share in France and a strong presence in Belgium. Other customers are scattered around Europe including RedBull Media House (Austria), Czech Radio, TeleM1 (Switzerland) and 1+1 (Ukraine). While ANNOVA has customers in Turkey and Malaysia, it has no meaningful presence outside Europe.

Key attractions of ANNOVA to SCISYS

ANNOVA is highly complementary to SCISYS’ Media & Broadcast division as the two businesses target similar customers, but are not competitors, and both have their roots in Germany. Further, SCISYS understands ANNOVA’s business and market very well and the two companies have many
co-located projects. SCISYS management has been looking at ANNOVA for more than a year and sees a strong cultural fit in the organisations. All of ANNOVA’s management team have been with the business for many years – five became shareholders in the 2008 MBO – and clearly the media industry is in their DNA. This will enable SCISYS to significantly broaden its media and broadcast target market while the combined business will give it critical mass to better address the international media broadcast market.

We highlight the following points

People. As a result of pre-due diligence work and normal due diligence, SCISYS management believes there is a strong cultural fit between the organisations. We note that SCISYS already has a strong German identity, with c 180 employees based in Bochum, where its Media & Broadcast division is based, and Darmstadt, where the group’s space division is based. Further, the group CEO Klaus Heidrich is German. The acquisition will take the German employee base to c 240. SCISYS M&B has worked with ANNOVA for a number of years and has been involved in integration work involving the respective platforms.

Product differentiation. The OpenMedia and Dira! products do not overlap in what they offer to the customer. OpenMedia is used by journalists to create their news item. Within the radio space, this would then be interfaced with Dira! for producers to schedule into a running order or presenters to broadcast. The products could be marketed as a combined solution.

Customer relationships. SCISYS knows many of ANNOVA’s customers very well and this creates many cross-selling opportunities in the core DACH markets. There will also be a significant opportunity in France where ANNOVA has a strong position, but SCISYS M&B is not represented. Key to the success will be exploiting the strong BBC reference to drive new business across the globe.

Synergies. SCISYS believes there is a huge potential remaining to exploit, both inside and outside Europe, taking advantage of the group’s stronger market position and increased customer awareness. This includes cross selling to existing customers and using the group’s strong European references to expand internationally. There are limited synergies with the group’s other divisions, though we see the potential to sell business systems, eg, along the lines of the recent up sale in the defence division of a business system to the Ministry of Defence.

Forecasts: ANNOVA is incorporated

We have assumed that the deal completes on 31 December, hence our FY16 forecasts are unchanged, and ANNOVA contributes £7.9m of revenues in FY17, rising by 4% to £8.2m in FY18. We assume that £4m of licence revenues from the BBC contract are recognised in FY17, on the expected passing of a milestone. While there will be additional services along with support and maintenance revenues from FY18, we assume that ANNOVA will generate additional lumpy licence revenue to enable modest growth in FY18. In all, group revenue rises to £53.4m (from £45.5m) in FY17 and to £55.1m in FY18 (from £46.9m).

Adjusted operating profit rises to £4.6m in FY17 (from £3.3m) and to £4.9m in FY18 (from £3.6m). We assume a £0.6m net interest expense in FY17 (£0.2m) and FY18 ( £0.2m) , to reflect the €10m bank loan at 2.9% along with associated facility fees and the €2.5m vendor loan, which pays 5% interest. We have maintained the tax charge; while German tax rates are higher, our tax forecasts have been conservative. Our EPS forecasts rise by 27% in each year to 11.0p in FY17 and to 11.6p in FY18.

The initial purchase price of ANNOVA is €11.35m cash, including €1.35m from SCISYS’s existing cash resources and €10m from a bank loan. We assume the expected acquisition liabilities relating to the earnout are £5.6m, on a discounted and contingency-adjusted basis, and SCISYS pays £0.6m in FY17, £2.8m in FY18 and £3.9m in FY19. We assume transaction costs of £0.3m, of which half is expended in each of FY16 and FY17. We forecast a net debt position of £7.8m (previously £1.9m net cash) as at the end of December 2016, and the assumed acquisition liabilities take the adjusted net debt to £13.5m. The net debt position falls to £6.2m a year later, and adjusted net debt falls to £11.3m after the first year’s earnout payment is made. By the end of FY18, net debt remains at £6.2m on our forecasts, while adjusted net debt falls to £9.1m.

Exhibit 3: Forecast changes

 (£000s) 

2016e

2016e

2016e

2017e

2017e

2017e

2018e

2018e

2018e

Prev

New

Change

Prev

New

Change

Prev

New

Change

Revenues

 

 

 

 

 

 

 

 

 

Space

18,245

18,245

0.0

18,748

18,748

0.0

19,270

19,270

0.0

Enterprise Solutions and Defence

17,023

17,023

0.0

17,606

17,606

0.0

18,269

18,269

0.0

Xibis

1,000

1,000

0.0

1,200

1,200

0.0

1,233

1,233

0.0

Media & Broadcast

7,382

7,382

0.0

7,586

7,586

0.0

7,797

7,797

0.0

ANNOVA Systems

 

 

 

 

7,900

 

 

8,200

 

Central

350

350

0.0

360

360

0.0

370

370

0.0

Group revenue

44,000

44,000

0.0

45,500

53,400

17.4

46,940

55,140

17.5

Growth (%)

21.9

21.9

 

3.4

21.4

 

3.2

3.3

 

Gross Profit

44,000

44,000

0.0

45,500

53,400

17.4

46,940

55,140

17.5

Administrative expenses

(40,900)

(40,900)

0.0

(42,200)

(48,800)

15.6

(43,331)

(50,208)

15.9

Adjusted operating profit

3,100

3,100

0.0

3,300

4,600

39.4

3,609

4,932

36.7

Operating margin (%)

7.0

7.0

 

7.3

8.6

 

7.7

8.9

 

Growth (%)

278.9

278.9

 

6.5

48.4

 

9.4

7.2

 

Net interest

(210)

(210)

0.0

(190)

(637)

235.2

(170)

(567)

233.8

Associates

20

20

 

25

25

 

30

30

 

Profit before tax norm

2,910

2,910

0.0

3,135

3,988

27.2

3,469

4,395

26.7

Amortisation of acquired intangibles

0

0

 

0

0

 

0

0

 

Share based payments

(40)

(40)

0.0

(40)

(40)

0.0

(40)

(40)

0.0

Exceptional items (net of tax)

0

(250)

N/A 

0

0

 

0

0

 

Profit before tax (FRS 3)

2,870

2,620

(8.7)

3,095

3,948

27.6

3,429

4,355

27.0

Tax charge

(427)

(427)

0.0

(553)

(706)

27.8

(680)

(865)

27.2

Minority interest

0

0

 

0

0

 

0

0

 

Profit after tax

2,442

2,192

(10.2)

2,542

3,242

27.5

2,749

3,490

26.9

Adjusted EPS (p)

8.5

8.5

0.0

8.6

11.0

27.1

9.1

11.6

26.6

P/E - Adjusted EPS (x)

 

13.1

 

 

10.1

 

 

9.6

 

Source: Edison Investment Research

Valuation: A play on growth and continued margin expansion

SCISYS has developed a strong niche as an expert player in highly specialised IT markets. As these markets continue to gain in complexity, SCISYS should, in our view, benefit from an improving negotiating position. Several factors should help the group to continue to expand margins, including the re-use of bespoke software platforms, better project management, and a continuing de-emphasis on third-party software and hardware re-sales. Further, the management has built an excellent track record in driving margins higher.

On our forecasts the acquisition of ANNOVA will be significantly earnings enhancing from the first full year of operation and we believe it will create economic value on our assumptions. The stock trades on c 0.87x our FY17e revenue forecast and c 8.2x EBITDA, which is attractive if SCISYS can successfully exploit the M&B division’s strong BBC success story to drive cross-selling opportunities within Europe and extend the product outside Europe.

We highlight the following points on the group’s valuation:

Cash generation. The group generated free cash flow of c £13m over the 10 years to FY15. Based on our forecasts, the FCF yields for FY16, FY17 and FY18 are c 11.0%, c 9.2% and c 10.9%, respectively. We note the strong balance sheet at end June (£5.6m cash and £4.2m debts, of which £3.4m are long term. We also note that SCISYS owns the freehold on the group’s Chippenham HQ, which was sold in 2007 for £9m and repurchased in 2011 for £5m.

Exhibit 4: Cash flow

£000’s

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16e

FY17e

FY18e

Adjusted operating profit

1,676

2,136

2,365

2,662

3,221

3,361

818

3,100

4,600

4,932

Depreciation

662

626

769

919

958

795

730

752

1,015

1,048

EBITDA

2,338

2,762

3,134

3,581

4,179

4,156

1,548

3,852

5,615

5,980

Working capital

446

1,563

(302)

1,902

(4,367)

753

22

1,144

(267)

(276)

Exceptional items/misc

(170)

(341)

(88)

(373)

(1,191)

(135)

0

(125)

(125)

0

Operating cash flow

2,614

3,984

2,744

5,110

(1,379)

4,774

1,570

4,871

5,222

5,704

Net interest

(69)

(91)

(158)

(214)

(217)

(177)

(196)

(210)

(637)

(567)

Tax paid

(355)

(356)

(951)

(157)

(1,325)

100

(583)

(341)

(653)

(638)

Purchase of tangible assets

(681)

(663)

(987)

(1,116)

(666)

(618)

(619)

(880)

(1,068)

(1,103)

Free cash flow

1,509

2,874

648

3,623

(3,587)

4,079

172

3,440

2,864

3,395

Source: SCISYS, Edison Investment Research. Note: FY11 is before the purchase of the Chippenham HQ.

Discounted cash flow valuation. Based on our forecasts (including an 10.7% long-term margin target and a 2% terminal growth rate) and a weighted average cost of capital (WACC) of 10%, our DCF model values the shares at 142p, which is 28% above the current share price. Cutting the WACC by 1% to 9% would lift the valuation to 170p, while raising it to 11% would reduce the valuation to 120p. In calculating the valuation, we have reduced our WACC assumption to reflect the increased scale of the group and greater use of low-cost debt finance. On our modelling assumptions, the 10.7% long-term operating margin equates to 22.5% for ANNOVA and 8.5% for the rest of the group, or alternatively 19.8% for ANNOVA and 9.0% for the rest of the group.

Traditional valuation measures. In traditional P/E valuation terms, the stock trades on 13.1x our forecasts in FY16, falling to 10.1x in FY17 and to 9.6x in FY18.

Peer comparison. Given the group’s increased focus on proprietary software, we compare the company with other IT services companies and value-added resellers which has a significant own-software strategy. On both EV/sales and EV/EBITDA, the stock trades at a significant discount to both its smaller peers in Exhibit 5 (noting considerable dispersion), and to North American and Europe-based large caps. In terms of P/E, the stock is the cheapest across all the companies listed below.

Exhibit 5: Peers

Share

Market cap

EV/sales

EV/EBITDA

P/E

Price

Local currency

Currency

Year 1

Year 2

Year 1

Year 2

Year 1

Year 2

SCISYS*

111.00

32

GBP

1.05

0.87

12.0

8.2

13.1

10.1

1) Small IT services companies / VARs with a significant own software strategy (local currency m's)

CENIT

20.085

168

EUR

1.10

1.05

10.4

9.7

21.6

20.0

D4T4 Solutions

138.5

52

GBP

2.41

2.20

11.5

10.3

15.7

14.0

First Derivatives

2123

524

GBP

3.85

3.48

20.3

18.1

37.2

34.2

K3 Technologies*

310

112

GBP

1.25

1.21

7.6

7.1

12.3

11.3

SNP Schneider*

38.75

193

EUR

2.60

2.46

26.6

20.1

65.9

34.8

Medians

2.41

2.20

11.5

10.3

21.6

20.0

2) Large cap IT services companies (local currency m's)

Accenture

120.43

78186

USD

2.10

1.97

12.5

11.7

20.3

18.5

Atos

97.62

10238

EUR

0.88

0.84

7.3

6.7

14.2

12.6

Cap Gemini

75.47

12948

EUR

1.21

1.18

9.2

8.7

14.2

13.0

CGI group

64.74

19761

CAD

1.93

1.87

10.2

9.8

17.3

16.2

CSC

61.34

8638

USD

1.44

1.43

8.2

7.9

22.0

18.9

Medians

1.44

1.43

9.2

8.7

17.3

16.2

Source: Edison Investment Research, Bloomberg. * Edison Investment Research forecasts. Note: Priced on 25 November 2016.

Exhibit 6: Financial summary

£000s

2013

2014

2015

2016e

2017e

2018e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

42,598

40,359

36,106

44,000

53,400

55,140

Cost of Sales

0

0

0

0

0

0

Gross Profit

42,598

40,359

36,106

44,000

53,400

55,140

EBITDA

 

 

4,179

4,156

1,548

3,852

5,615

5,980

Adjusted operating profit

 

 

3,221

3,361

818

3,100

4,600

4,932

Amort'n of acq'd intangibles

(283)

0

0

0

0

0

Exceptionals

(1,191)

(135)

0

(250)

0

0

Share based payments

(35)

(42)

(11)

(40)

(40)

(40)

Operating Profit

1,712

3,184

807

2,810

4,560

4,892

Net Interest

(217)

(177)

(196)

(210)

(637)

(567)

Associates

0

0

3

20

25

30

Profit Before Tax (norm)

 

 

3,004

3,184

625

2,910

3,988

4,395

Profit Before Tax (FRS 3)

 

 

1,495

3,007

614

2,620

3,948

4,355

Tax

(153)

(766)

(241)

(427)

(706)

(865)

Profit After Tax (norm)

2,701

2,394

384

2,482

3,282

3,530

Profit After Tax (FRS 3)

1,342

2,241

373

2,192

3,242

3,490

Average Number of Shares Outstanding (m)

29.0

29.0

29.0

29.3

29.9

30.5

EPS - normalised (p)

 

 

9.3

8.2

1.3

8.5

11.0

11.6

EPS - FRS 3 (p)

 

 

4.6

7.7

1.3

7.5

10.8

11.4

Dividend per share (p)

1.46

1.61

1.78

1.90

2.10

2.30

Gross Margin (%)

100.0

100.0

100.0

100.0

100.0

100.0

EBITDA Margin (%)

9.8

10.3

4.3

8.8

10.5

10.8

Operating Margin (%)

7.6

8.3

2.3

7.0

8.6

8.9

BALANCE SHEET

Fixed Assets

 

 

16,164

17,155

16,553

32,281

32,334

32,390

Intangible Assets

7,006

8,233

7,831

23,431

23,431

23,431

Tangible Assets

9,137

8,899

8,635

8,763

8,816

8,872

Deferred tax asset & associates

21

23

87

87

87

87

Current Assets

 

 

19,270

18,886

17,839

20,458

23,578

24,723

Stocks

344

325

211

257

312

322

Debtors

13,829

12,334

12,299

13,712

16,652

17,206

Cash

3,969

5,798

4,352

5,512

5,636

6,218

Current Liabilities

 

 

(12,261)

(10,561)

(12,003)

(14,588)

(17,342)

(17,431)

Creditors

(9,508)

(9,686)

(8,699)

(11,534)

(14,538)

(14,877)

Short term borrowings

(2,753)

(875)

(3,304)

(3,054)

(2,804)

(2,554)

Long Term Liabilities

 

 

(4,090)

(5,023)

(2,333)

(16,273)

(14,420)

(13,045)

Long term borrowings

(3,888)

(4,595)

(2,007)

(10,307)

(8,994)

(9,880)

Other long term liabilities

(202)

(428)

(326)

(5,966)

(5,427)

(3,164)

Net Assets

 

 

19,083

20,457

20,056

21,878

24,150

26,637

CASH FLOW

Operating Cash Flow

 

 

(1,379)

4,774

1,570

4,871

5,222

5,704

Net Interest

(217)

(177)

(196)

(210)

(637)

(567)

Tax

(1,325)

100

(583)

(341)

(653)

(638)

Capex

(666)

(618)

(619)

(880)

(1,068)

(1,103)

Acquisitions/disposals

0

(358)

(889)

(9,660)

(600)

(2,800)

Financing

(16)

(61)

(14)

0

0

0

Dividends

(381)

(435)

(340)

(670)

(577)

(650)

Net Cash Flow

(3,984)

3,225

(1,071)

(6,890)

1,687

(55)

Opening net debt/(cash)

 

 

(1,241)

2,672

(328)

959

7,849

6,161

Other

71

(225)

(216)

0

(0)

(0)

Closing net debt/(cash)

 

 

2,672

(328)

959

7,849

6,161

6,216

Source: SCISYS accounts (historicals), Edison Investment Research (forecasts)

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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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by SCISYS and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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.
Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2016. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Orexo — Update 28 November 2016

Orexo

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