Hits: 6

27 April 2020

SimplyBiz – Operational Update

Share Price 166p

Mkt Cap 161m

Conflict Disclosure: No Holding

 

  • Update The intermediary support package for remote working is providing cashflow while the customer base remains strong. Pay freeze and bonus freeze for staff and reduced exec. Dir’s pay. The board reconfirms its recommendation of a final dividend for 2019 but will not recommend a interim dividend in the current year. Guidance withdrawn. Outlook is confident and trading comfortably within bank covenants. I think the reference to the slow housing market in the outlook means that mortgages is the main impact.

 

  • Estimates Revenue of £72m for Dec 2020 was expected which is a 14% increase on 2019 which will come down. There is £37.7m debt none of which is repayable in the current year.

 

  • Valuation PE 12.4 X on Dec 19 EPS though EPS may decline in the current year.

 

  • Conclusion Shares down 30% since February but with a large amount of debt following the acquisition of Defaqto the company is not yet as cheap as it could be.

10 March 2020

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SimplyBiz- FY Results 

Share Price 175p

Mkt Cap £169m

Conflict Disclosure: No Holding

  • Results Revenue up 24% to £62.8m. Adjusted EBITDA up 49% to £17m. Adjusted EPS up 15% to 13.4p. Net debt £27m. DPS 4.26p. Outlook confident and optimistic. Guidance is for marginally lower growth in 2020. Checking the adjustments I am not sure that share option charges (£512k) should be stripped out nor the depreciation of the lease asset (£707k). There are also exceptional of £2m acquisition costs.
  • Estimates 23% PBT growth is expected in the current year to £18.2m, which is marginally lower. However, this was driven by the acquisition of Defaqto which may have added, say £10m to the £12.3m revenue growth.. There is some more to come as Defaqto wasn’t owned for the whole year but looks like downgrades.  
  • Valuation PE 14, Yield 2.4%
  • Culture The gender pay gap is 49% but it comes out well on Glassdoor with 4.4.
  • Conclusion The high margin, cash generative nature of Defaqto improves the quality of the business, but with downgrades and relatively expensive shares its not one for me.

28 January 2020

SimlyBiz – Trading Update 

Share Price 234p

Mkt Cap £226m

Conflict Disclosure: No Holding

  • Update Full year revenue is up 24% and EBITDA up 50% achieving a margin of 27% (2018 23%). Organic growth has also been delivered, defined as growth excluding acquisitions. Net debt is £27m representing under 1.6C EBITDA. Outlook say directors are confident that overall performance is broadly in line with expectations. The board is confident and optimistic.
  • Estimates a 28% revenue increase was expected to £65m and a 45% EBITDA increase to £16.6m so revenue looks a little behind but EBITDA a little ahead so the operating margin of 27% is ahead of expectations.  
  • Valuation PER 18.7X yield 1.8%. EV/EBITDA 15X
  • Culture The company scores well on Glassdoor reviews at 4.4 out of 5 as a good place to work in Huddersfield. CEO’s remuneration of £308k is not excessive.
  • Conclusion The Defaqto acquisition looks to be a very good one despite the 14X EBITDA multiple paid for the business. With 41% operating margins and cash generation being proven the shares could continue their re rating.

10 September 2019

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SimplyBiz – H1 Results

Share Price 199p

Mkt cap £193m

Conflict Disclosure: No Holding

  • Results Revenue up 20% to £29.1m. Adjusted EBITDA up 30% to £6.8m. Adjusted EPS up 8% to 5.52p. Net debt £30.1m. Outlook is said to be “in line” and the company is on track to meet expectations. Organic growth is calculated at 5%.
  • Estimates FY PBT is estimates at £14.8m, EPS 12.6p
  • Valuation PER 15.8X Yield 2.8%
  • Conclusion The pre close trading statement said management was “confident” in full year expectations and this word is repeated today. The shares have come back from their 240p high in June and look reasonable value.

20 March 2019

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SimplyBiz – Acquisition 

Share Price 191p

Mkt Cap £146m

  • Acquisition The company is acquiring defaqto for £74.3m which is a multiple of 14X historic EBITDA. The acquisition is finance via a placing, a vendor placing and the introduction of a new £37.5m bank facility. Post acquisition the company will have leverage of 2.3X EBITDA. The acquisition is expected to be earnings enhancing during the first 12 months of ownership
  • Estimates The earnings enhancement is a factor of financial engineering when a lot of the consideration is made up of debt. Paying 14X EBITDA suggests earnings enhancement will be small. Synergies are not set out in detail
  • Valuation PER for December 2019 is 15X pre acquisition and yield is 2.1%.
  • Conclusion This is a “strategic acquisition” which usually transalates as overpaying as indeed they seem to have done.  Notwithstanding that this is a high quality business trading at a reasonable price in PER terms.

11 September 2018

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Simply Biz – H1 Results  

Share Price 177p

Mkt Cap £135m

·         Results  H1 revenue up 13.7% to £24.2m. EBITDA up 22% to £5.4m. Note their definition of EBITDA excludes share based payments which differs from many.  Adjusted PBT up 60.8% to £4.5m (reported loss £1.16m) and EPS up 61.7% to 4.68p. Net cash now of £1.2m and a maiden dividend of 0.98p.

·         Estimates The house broker forecasts 10% revenue growth in 2019 and 23% PBT growth. Having come to market in March I expect these forecasts to be in tact.

·         Valuation Dec 18 PER is 16.9 falling to 13.7 in 2019 with a yield of 1.5% rising to 2.4%

·         View  The shares look reasonable value for a strong company. But I do wish they wouldn’t strip share based payments out of their adjusted numbers.

17 July 2018

SimplyBiz – Trading Statement  

Share Price 185p

Mkt Cap £141m

·         Update Trading in the half year to June shows revenue up 13.7% from members up 5.7%. Adjusted EBITDA is in line with expectations. The company IPO’s in April 18

·         Estimates – Reported to be trading in line. Revenue current year is expected to be £51m and is forecast to grow at a modest 7.6% in the following year.

·         Valuation PER is 17.6X Dec 18 and yield 1.4%

·         Conclusion  This is a growth business but is difficult to scale so can be expected to follow an acquisitive strategy. Usually that goes very well for a few year until the company experiences fading returns (see above)