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#Bull Case
Added a month ago

Damien Leonard (son of Mark Leonard of Constellation Software) has bought a large dollop of shares (~ 1.75m) between $1.39 and $1.46 on-market. That is significant insider activity, especially with the shares hovering near 52w highs after a very good run already.

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#ASX Announcements
stale
Added one year ago

New CEO Andrew Russell has stepped up to the plate and purchased $100k worth on market. Nothing earth-shattering, but continues the trend of insider buying in recent months.

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#ASX Announcements
stale
Added one year ago

Matt Quinn is at it again, with another ~$126k purchased on market.

The last time he dipped into his pockets to buy shares (see my previous straw), it worked out great with a 50%+ gain in a few months.

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#Management
stale
Added one year ago

Director Matthew Quinn has purchased 350k shares on-market for a total consideration of ~ $157k.

Good to see, especially if it is followed up with more director purchases.

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#ASX Announcements
stale
Added 2 years ago

BVS has come out of the trading halt, and it is every bit the disaster that you would expect it to be.

Not sure how the management team can salvage the situation, but the miniscule glimmer of hope is they have managed to raise $43m of fresh institutional capital to attempt what looks like a difficult turnaround.

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#Strategic Review
stale
Added 2 years ago

If there's one phrase I've come to fear as an investor, it's "strategic review".

You'll never hear that in any positive context.

And given shares in Bravura are down 52% today, it seems that heuristic is holding true.

Man, the magnitude of that fall really is amazing -- we're not talking a unprofitable, cash burning nanocap meme stock -- this was (prior to today) a >$300m market cap company doing a quarter of a billion revenue, CF +'ve, zero debt and even paid a dividend.

925ee18d271c36b8a8140f16bb0cf8a506c771.png

Today's announcement is here in all its gory detail, but the key points are:

  • FY23 Revenue expected to "increase modestly" from FY22, but...
  • Operating costs to increase 16-20%
  • FY23 NPAT to be between -$5m and zero (last year it was $25m!)


Basically, the new CEO is looking reconfigure the entire business. This could well be the result of underinvestment in prior years, which might explain why the fundamentals looked so strong (they were doing 15% net margins a couple years back). Indeed, that's what had attracted me to the business, which had long displayed high margin growth.

Thankfully, as you'll see in my SM portfolio, I sold out at the start of this year at $1.66 (taking a 34% loss at the time!). My reasoning at the time is here.

Looks like we dodged a bullet @BoredSaint ?

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#New CEO
stale
Added 2 years ago

Bravura has continued its musical chairs approach to senior management by announcing Optus executive Libby Roy will be taking over from Nick Parsons as CEO. Nick Parsons had only been in the role since September last year, taking over from Tony Klim. Bravura also rotated their CFO earlier this year. Libby Roy looks well credentialed with vast experience across many companies and industries. She will be well compensated for her time though. Is it just me or does this look pretty generous for a $350m market cap company?dcb71515ce882121f32d7bfe82541405f1ac69.png

Maybe I've just been looking at too many nano caps lately (or maybe it's just that all my micro caps have turned into nano caps).

[Not held]

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#Financials
stale
Added 3 years ago

@BoredSaint I will be looking forward to your review. I am considering starting a small position. The stand out short term flag for me was the point about costs rising at the similar rate as revenue (with not a lot of explanation apart form the usual increasing staff costs) and NPAT guidance reduced from 32 (equal to FY21) down to 25-30. So based on first half NPAT of 15.3 we are looking at a flat half at best and a 33% reduction at worse (hopefully). Reoccurring revenue, cash position and lack of debt is the part that has me interested especially as we enter a period of potential interest rate increase. However, NPAT over the last few years seems to be heading in one direction even as revenue increase. This report was a great example of why you read the results the whole way through. Had you just stopped at results without looking at the guidance your summary could have been completely different.

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#1H FY22 Results
stale
Added 3 years ago

Bravura Solutions released their results for 1H FY22 today. From their release:

  • Revenue up 14% to A$132.3m (A$115.7m in 1H21)
  • EBITDA up 61% to A$25.3m (A$15.8m in 1H21)
  • NPAT up 69% to A$15.3m (A$9.0m in 1H21) • EBITDA margin increased to 19% (14% in 1H21)
  • 1H22 EPS up 68% to 6.2cps
  • Unfranked interim dividend declared of 3.7cps, bringing the dividend payout ratio to 60% of 1H22 NPAT 

On the surface this looked like a fairly good result with Revenue, EBITDA and NPAT all substantially higher than PCP. However management have flagged that while they expect revenue growth of 10% for the FY22 compared to FY21, operating costs are rising at a similar rate.

NPAT guidance was once again downgraded to $25-30m. This means that their NPAT has decreased from FY21 which was already decreased compared to FY20 even after an acquisition which cost them $42m. They have stated that this is the result of some projects being delayed till FY23.

I have decided to exit my position at a loss which I will detail in a forum post later.

Disc: Not held - Exited my position today after results were announced.

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#Bear Case
stale
Added 3 years ago

At the risk of sounding too much of a pumper in the #Bull case post I thought might be good to post the Bear case as well.

  • CEO left in Sept 2021 without much notice and the new CEO (Former COO) is based in London
  • Although management have stated they expect growth in FY22, it would seem Revenue and Profit would still be less than FY20 even with the acquisition of Delta.
  • Delta only contributed $1.1m in NPAT at a cost of $40m to the business, so you would hope that there would be ongoing growth from this part of the business to justify to cost
  • Covid-19 could continue to impact UK market especially if there is talk of a 4th wave sweeping through during their Winter which could once again slow their expected projects
  • Wealth and Funds management is a competitive field and even in Australia there are plenty of alternatives which seem to be growing at much faster levels (NWL, HUB, PPS)
  • Potential for a takeover if there is further consolidation in this sector
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#Risks
stale
Added 3 years ago

Failure to execute a few years in a row, shifts in accounting for recurring revenue, and the CEO walking away in rather rushed circumstances.

Is this another GBST? Warning signs aren't looking good. 

Disc: Held, but confidence wavering, especially after being burned by GBST a few years back.

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Valuation of $3.50
stale
Added 3 years ago
Lowering valuation to $3.50 based on the FY21 Results presentation. Significant slowing of business activity in the UK market, Bravura’s overall financial performance was lower in FY21. Group revenue decreased by 11% to A$243.0m, and Group EBITDA was down by 15% to A$49.3m. Group reported NPAT was A$34.6m. Wealth Management segment revenue decreased by 11% and Fund Administration segment revenue was down by 12%. However, Bravura’s Contracted Recurring Revenue increased by15% in FY21. As at 30 June 2021, Bravura had cash of A$73.6m.
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Valuation of $3.20
stale
Added 3 years ago
I'm assuming ~10-15% top line growth for next few years to get FY24 revenue of roughly $350m (currently $243m) On a 12% net margin and 250m shares on issue, that's an EPS of about 17cps. A PE of 25 would give a price of $4.25 or $3.20 if discounted back by 10%pa. So overall, no great change to my (very rough) valuation. I think shares are probably about 'fair', and would be a more interested buyer at closer to $2.50.
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#FY21 Results
stale
Added 3 years ago

It wasnt a great year for financial software developer Bravura. Revenue was down 11% to $243m and NPAT was 19% weaker at $32.3m.

Professional services work (implementations and upgrades etc) in all segments was impacted by covid, but underneath this the contracted recurring revenue was up 15% and 84% of revenue was recurring in nature

The balance sheet remains strong with over $73m in cash, there was good cash conversion and the company is forecasting mid-teens growth for Net Profit in FY22.

Bravura is having to bed down some acquisitions and is spending big on R&D to build out it's offering, and follow a more targeted "microservices" product set. 

But it also has a backlog of services work that should pick up now economies are opening in places like the UK.

Given it has very favourable economics and high profitability (even in a bad year they declared a record 6cps final dividend), as well as a good history of growth, it's hard to spot anything too dire in these results. 

If the business can resume some good revenue momentum the current PE of 22 doesnt seem too onerous. Especially with a 2.5% dividend yield.

That being said, it's a tough competitive environment and customers operate in a cyclical industry -- any continued stall in growth wont be treated kindly by the market.

I'm maintaining my small holding for now.

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#Valuation Detail
stale
Added 3 years ago

Valuation Detail (1/7/21)

Attached is the valuation detail and the valuation has the general information and analysis of the company and products, below are the assumptions that drive the calculation of the IV.

IV = $6.05 (base case)

 

Valuation Assumptions:

·         The base case assumes BVS will grow its share of the Wealth Management and Funds Administration markets in ANZ and the UK with only a small contribution from other markets.  I have accepted FY21 guidance (see summary below) and the first year forecasted in FY22 to FY31.

·         Sales Growth: I expect a Covid recovery and return to strong sales growth as BVS cycles into its new subscription-based revenue model, producing mid to high teens % growth for a few years lead mainly by the UK market which grows to double ANZ by 2031.

·         Gross Margin: Expect this to tick up from already very high 92% to 94% over the next 10 years on the back of scale and process efficiencies.

·         EBITDA%: Opex spend at 75% will benefit from operating leverage and I have this reducing to 65% by 2031 which drives EBITDA% growth from 27% to 37%.

·         Tax: Normally not a variable, but due to AU and UK tax rate differences and tax effects of investments and R&D the average tax rate is well below corporate tax rates, so I have assumed a 25% average effective rate which is very conservative when compared to history.

·         Capex: BVS has been and will continue to be driven by investment in it’s products, but the need to generate FCF will persist so I have this growing at half the rate of sales.

·         Share Count: Nominal growth of 1% for ESOP, assume that any capital raisings for acquisitions are EPS accreditive so would have neutral or positive value impact.

·         Discount: Take average long term market risk rate of 10%, terminal value based on EV/EBITDA multiple of 10 which is equivalent to a P/E of 15 and perpetual growth of 3%, again around market long term averages.

·         Risk & Opportunity: No discount for risk due to a strong cash position, large and relatively secure customer base as well as the likely entry of a buyer if BVS becomes distressed in any way.  Opportunities in terms of markets outside of ANZ & UK that are not factored into the base case as well as upside from additional acquisitions I am allow for a 10% premium.

 

BVS is somewhere between a dividend and growth stock, which means that both upside and down side are limited.  It is clear that the industry is growing but it is also consolidating and due to the diversity of products and services BVS offers to those in the finance industry it is hard to get a handle on a revenue KPI to guide assumptions on growth.

None the less it has up until Covid grown strongly and I expect that as the UK opens up more with vaccination rates sales will recover and growth return.  Management have done well so far with organic and acquired product and sales growth, so the money is on them to continue.

 

I own BVS as a bit of ballast in what is generally a high growth portfolio, but my position is in the red. I am looking for them to return to growth post Covid but more importantly I am looking for them to return to FCF’s positive.  It may be another 6-12 months before we see evidence of either.

 

 

 

Company FY21 guidance:

The impact of COVID-19 in the UK and South Africa is expected to continue to affect the business in 2H21. However, the sales pipeline is strong. Accordingly, Bravura anticipates delivering revenue growth from 1H21 to 2H21 in excess of 10% and achieving FY21 NPAT of A$32m to A$35m.

Restructuring: As a result of reduced professional services work, headcount was reduced by ~5%. The reduction in headcount resulted in A$2.6m in restructuring costs in the period. Restructuring is expected to reduce costs by ~A$5.5m in 2H21 compared to 1H21 and deliver A$11.5m on an annualised basis.

View Attachment

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Valuation of $6.05
stale
Added 3 years ago
Bravura Solutions is a software provider for the Wealth Management and Funds Administration industries. It’s flagship product Sonata provides a platform to consolidate disparate systems to support regulatory compliance and enhance customer experience. Below is analysis and notes on the company with details on valuation assumptions and the detail of the valuation in the straw. I currently hold BVS and have a base case IV of $6.05 Business Analysis: • Leadership: Solidly lead by Tony Klim as CEO and MD for over a decade, he owns about 0.5% of the company and according to YahooFinance insiders own 10.8% but I could see very little of this on the board. Industry and IT experience and knowledge is strong on the board and senior management, but I would like to see a founder and higher board ownership. A 3.3 star rating on Glassdoor (65% Recommend to a friend, 78% CEO approval) is so so… • Product: BVS provides critical software for clients, so it is a big decision to both switch to and away from BVS systems, which slows customer acquisition but improves retention. Contracts are long term (5-10 years) but revenue can still be a little lumpy due to implementation revenue front loading contract revenues. • Sales Growth: Covid has interrupted sales cycles in the UK, temporarily killing what was very solid growth rates for BVS and exposed some weakness in the legacy business model in which 50% of revenue was Contracted Recurring Revenue. The move to subscription-based client revenue increases this to 70% and provides a flatter revenue over the life of a customer, rather than higher upfront. This switch is also a drag on current revenue growth but will strengthen future revenue. • Competition & TAM: Management estimates market sizes of GBP1.2b in the UK and A$1.0b in AU with BVS having penetrated less than 10% of these markets, so room to grow. It’s a competitive market but a long list of blue-chip clients in ANZ and UK shows the strength of BVS’s offering is solid and it continues to broaden its offering via acquisition. • Gross Margins & Investment: It has Gross margins over 90% which are typical of software service companies and provide significant operating leverage. However, the rapid changes in industry requirements and competition require continued investment in systems updates and improvements. In the last 15 years over $225m has been invested in Bravura’s product suite and in the last 2 years around 90m of cash paid out on investments. FCF has mostly been positive in recent years but has been slightly negative in FY20 and H1 FY21 as spend on PPE and R&D continued to grow despite a setback in sales. • Opex: Professional service work requires high head counts but a rationalisation of that in H1 FY21 will see some savings and scale provides operating leverage. Currently Opex is around 75% of sales and I expect it to remain high but a reduction to 65% in the next 10 years should be possible with sufficient top line growth. • EBITDA Margins: Depreciation and Amortisation are significant at 7-8% of sales, so excluding them gives EBITDA margins of around 25% which will increase with further growth (est 37% by 2031) due to operating leverage which is the product of starting with such high Gross Margins. • Balance Sheet: looks solid, but note the very high intangible assets from acquisitions and the capitalisation of R&D expenses will see high levels of amortisation expenses in the P&L in future years. Looking through this at FCF’s will provide a better insight to performance than NPAT. However, keep an eye on significant movements in Contract Liabilities (pre-payment of maintenance contracts) and Trade receivables which will distort cash flows. Risks & Opportunities: • Cash and Cash Flow: $56m cash on the balance sheet reduces risk, operating cash flow positive but due to Covid FCF’s have been negative as operating leverage (a knife that cuts both ways) worked against the company with lower sales. FY21 dividends have been reduced to conserve cash for investment and growth which is a good move. • Industry Consolidation: BVS has grown organically but also by acquisition, so far acquisitions of Fincomp, Midwinter and Delta look to be strategically good purchases and at reasonable prices. However, the industry is consolidating rapidly which may lead to overpriced purchases or competitors buying their way ahead of BVS, but also the possibility of BVS being taken over – hopefully for a healthy premium. • Regulation: BVS continually invests in providing software that is up to date and facilitates regulatory compliance. Regulation requires additional development spend but it also widens the moat between incumbents like BVS and newcomers. • Security: Data security and integrity are critical in all industries but particularly in the finance industry, so systems issues or security breachers that damage customers or their clients are potentially very damaging to BVS. Below are extracts from financial reports which provide background information on products and markets in particular Sonata and recent acquisition details: Our Products & Services Bravura delivers a comprehensive range of Wealth Management and Funds Administration products supported by professional services. • Wealth Management: Sonata, Garradin, ePass, Heritage Wealth Management products • Funds Administration: RUFUS & RUFUS SaaS, GTAS, GFAS, Babel • Professional Services: Software implementation, Software development, Support, Hosting and managed services, Training Our Markets Bravura operates over a wide number of financial services markets across two operating segments delivering software and services to manage and administer financial products. • Wealth Management: Pensions, Superannuation and Kiwisaver, Life insurance, Wrap platforms, Investment products, Private wealth and portfolio administration. • Funds Administration: Fund managers, Third party administrators What is Sonata? Sonata is Bravura’s flagship software product used by financial institutions across the globe to administer financial products such as investments, wrap platforms, life insurance, superannuation, pensions and Kiwisaver on behalf of their customers. Bravura’s clients typically deploy Sonata either themselves, managing their own IT, operational and administrative aspects of the system within their organisation, via an outsourced hosted or SaaS deployment or through a third-party administrator who manages Sonata on the client’s behalf. What does Sonata do? Sonata provides a platform that can enable Bravura’s clients to unify a number of disparate, siloed IT systems and provides a single-client view of customer information that facilitates consolidated reporting. In doing so, Sonata assists clients to reduce the costs associated with maintaining multiple software systems and enhances their customer experience through more streamlined digital engagement. Who is Sonata for? Typical clients of Sonata include major local and international banks, life insurance companies, wealth management companies, superannuation funds and KiwiSaver providers, and administration and IT outsourcers who provide services to financial institutions. Sales of Sonata are driven by the need to support regulatory changes, drive costs from operations and to deliver digital and mobile experience to customers FY20, an additional A$36m was invested in our product suite in order to capitalise on our significant long-term sales pipeline. Bravura further enhanced our product suite in FY20 by acquiring Midwinter Financial Services and FinoComp, for A$50m and A$25m respectively. Midwinter’s award-winning financial planning software offers our clients self-directed digital advice capabilities and advisor administration, while FinoComp offers highly flexible microservices that can be independently deployed to solve specific business challenges. Oct20: Delta is a UK software company that provides technology to power complex pensions administration in the UK market. Delta’s highly regarded products support the administration of SIPPs (self-invested personal pensions) and SSASs (Small Self-Administered Schemes), including the full range of complex client drawdown options available under the pension freedoms legislation. Delta’s technology currently supports the needs of more than 30 UK clients. • Bravura to acquire Delta Financial Systems (Delta) for a total consideration of up to GBP23.0m (A$41.5m*) • The acquisition complements Bravura’s core Sonata offering and broadens Bravura’s growing ecosystem of products and services • Building on FY20 pro forma revenue of GBP6.0m, Delta is forecast to achieve revenue growth in the range of 20- 30% with margins similar to Bravura’s Wealth Management segment • Expected to be EPS accretive in FY21 and funded from existing cash reserves
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Valuation of $4.45
stale
Added 4 years ago
October 2020: 12-month PT. I consider BVS to be the "value" play in the funds administration and wealth management software space. If you look at the charts of HUB, NWL and MAI, you can see what is possible when a company in this space has positive sentiment around it. I believe the solid fundamentals that BVS exhibits (including good margins, plenty of net cash on the balance sheet, insider ownership, and solid annual growth in revenues and profits) combined with the industry tailwinds they enjoy, added to the announcement of their acquisition of UK-based Delta Financial Systems today (12-Oct-2020), will all result in BVS getting positively re-rated by the market, starting from today. 12-Apr-2021: Update: Not looking super good here... I hold BVS shares. Lowering my PT to $4.45. They're worth more than $2.83. I'd like to see them break out of that downward sloping channel... If you were a trend follower you wouldn't want be seen within a mile of this one, but as a value investor... there's a case that they are oversold at these levels.
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#H121 Results
stale
Added 4 years ago

It was a tough half for Bravura, with revenue down 14% and Net profit 54%.

Lower UK project work due to covid was blamed, and the result was broadly within guidance.

This is another one where you have to try and look through the covid anomoly. If it is a genuine one-off speed bump before growth resumes at its previous levels, then I think shares are really attractive.

This is a healthily profitable business with a strong balance sheet and a high degree of contracted recurring revenue. There's a big addressable market and demonstrated growth (on average). The economics are really nice at scale.

The largest segment, Wealth Management, saw a 17% lift in contracted revenue. And there seem to remain good industry tailwinds.

The company is guiding for a 10% lift in revenue from the first to second half (so around $241m in total for FY21, or ~10% lower than FY20), with NPAT between $32-35m (a 17% drop). So it could be some time before we will see any tangible return to growth. I think it could take until FY23 before revenues completely recover. But from there i'd like to think 10-15% sales growth is achievable.

This is however a competitive industry, and there are plenty of other good solutions available to users. The moats for Bravura aren't massive, so execution will be key.

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#2020 AGM Addresses
stale
Added 4 years ago

24-Nov-2020:  AGM addresses by the Chairman and the CEO

{I hold BVS shares.]

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#New Contract
stale
Added 4 years ago

Bravura has signed a 7 year contract with Award Super (previously First State) -- Australia's second largest super fund that manages ~$130b in funds and has >1 million members. Bravura will provide an "integrated ecosystem" of its products, underpinned by Sonata Alta.

No financials were provided, though clearly this is a material win. Certainly good news.

Although implementation work has started, it hasnt changed the outlook for a flat 2021 NPAT. Moreover, the second wave of UK lockdowns and stalling Brexit negotiations is slowing the progress of sales, and the FY21 result will be significantly weighted to the second half.

The market remains unimpressed and shares continue to drift back towards the March lows. Should BVS resume growth in subsequent years -- even relatively modest growth -- I think shares remain a good long term opportunity.

 

Announcement here

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#New Contracts
stale
Added 4 years ago

27-Oct-2020:  Bravura signs long-term contract with Aware Super [plus FY21 Outlook]

Aware Super are the mob who have been in the bidding battle with Uniti (UWL) over the acquisition of OptiComm (OPC), which Uniti appear to have won at this stage.  Aware Super (previously First State Super) is Australia’s second largest superannuation fund, managing nearly A$130b in retirement savings for more than 1m members. Aware Super supports its members with superannuation, retirement, investments and advice.

Aware Super has selected Bravura to provide the technology to power its mission-critical operations, which support the administration of the retirement savings of its members. Aware Super is implementing an integrated ecosystem of Bravura products, underpinned by Sonata Alta and encompassing AdviceOS, Babel SuperStream messaging and member and adviser digital offerings. Bravura’s products will underpin Aware Super’s provision of superannuation, income stream, unit trust and advice offerings. Bravura will also provide a dedicated Sonata Alta support team. The contract is for an initial term of 7 years.

Sonata Alta is a new, digital-first operating model, underpinned by Bravura’s highly regarded Sonata platform with in-built industry standard process orchestration to achieve high levels of automation and supported by a best-inclass ecosystem with the flexibility to evolve alongside client needs. Sonata Alta’s cloud BPaaS (Business Process Automation as a Service) platform provides clients control over their customers’ data, operations and end customer experiences.

Tony Klim, Chief Executive Officer at Bravura Solutions said:

“We are delighted to provide Bravura’s world-class technology to Aware Super. Sonata Alta and Bravura’s ecosystem of products are ideally suited to providing Aware Super unprecedented control, flexibility and a highly personalised member experience at scale to support their members for and in retirement.”

Deanne Stewart, CEO at Aware Super said:

“After a rigorous selection process, Aware Super selected Bravura as its technology partner for this key initiative. We look forward to working closely with Bravura to deliver exceptional outcomes for our members.”

Implementation work at Aware Super has commenced.

FY21 outlook

As noted at Bravura’s FY20 results, while the new sales pipeline remains strong, due to the wider impact of COVID19 there is greater uncertainty in the timing of deal closures when compared to prior years. It is possible that FY21 NPAT will be similar to FY20.

There is no change to FY21 Outlook as a result of the Agreement signed with Aware Super, however the second wave UK lockdowns and stalling Brexit negotiations have increased uncertainty and are slowing the progress of pipeline opportunities in the UK.  As a result, Bravura expects FY21 NPAT to be significantly weighted to the second half of FY21.

– ENDS –

[I hold BVS and UWL shares.]

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#Delta Acquisition
stale
Last edited 4 years ago

12-Oct-2020:  Bravura acquires Delta Financial Systems

Key points

  • Bravura to acquire Delta Financial Systems (Delta) for a total consideration of up to GBP23.0m (A$41.5m*)
  • The acquisition complements Bravura’s core Sonata offering and broadens Bravura’s growing ecosystem of products and services
  • Building on FY20 pro forma revenue of GBP6.0m, Delta is forecast to achieve revenue growth in the range of 20- 30% with margins similar to Bravura’s Wealth Management segment
  • Expected to be EPS accretive in FY21 and funded from existing cash reserves

Bravura Solutions Limited (ASX:BVS) (Bravura) has today announced the acquisition of Delta for a total consideration of up to GBP23.0m (A$41.5m*).

Delta is a UK software company that provides technology to power complex pensions administration in the UK market. Delta’s highly regarded products support the administration of SIPPs (self-invested personal pensions) and SSASs (Small Self-Administered Schemes), including the full range of complex client drawdown options available under the pension freedoms legislation. Delta’s technology currently supports the needs of more than 30 UK clients.

The acquisition broadens Bravura’s product suite. Delta’s products represent a natural extension to Bravura’s core Sonata offering and expand Bravura’s ecosystem of products and services. The acquisition also provides an opportunity to offer Bravura’s other products to Delta’s client base.

Commenting on the acquisition, Tony Klim, Chief Executive Officer said:

“We are delighted that Delta is joining Bravura. Both businesses have complementary products that together, provide a compelling offering to support the mission-critical operations of wealth management firms in the UK.”

Commenting on the acquisition, Michael Power, CEO and Co-Founder of Delta said:

“Bravura is a leader in the UK wealth management marketplace and Delta’s products sit perfectly alongside Bravura’s offering. The Delta management team look forward to working together with Bravura to deliver outstanding service to both Bravura’s clients and Delta’s clients.”

The transaction is expected to be completed by the end of October 2020 subject to regulatory approvals.

* Based on the AUD/GBP exchange rate of 0.55 on 9 October 2020.

– ENDS –

[I bought BVS shares this morning.  I was actually planning to buy some before this announcement and this acquisition did not change my mind.  BVS is trading at a discount to their peers, or they were before today certainly - and probably still are.  Their share price has risen +8% so far today (from their $3.38 close on Friday to $3.65 now) on this news.  The market seems to like it.  I think it will draw attention back to BVS, which has been left behind as others in this space have done well and their share prices have powered ahead (NWL, MAI, HUB).  I consider BVS to be the value play in the funds administration and wealth management software space.]

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#Overview
stale
Added 4 years ago

I need to do more work on this, but from what i've read so far Bravura seems like an interesting opportunity. Encouraged to see some support from some of our experienced members too.

A provider of software to the finance industry, with about 2/3rds of revenues coming from Wealth Management and the rest from Funds administration.

A high margin, scalable business with high customer retention and recurring revenues (77% of total). Also some good regulatory drivers and a rock solid balance sheet.

Historical growth in sales has been strong, about 12% per year on average since FY15, with EBITDA growth up around 27%pa over the same period. 

That being said, revenues grew only 6% in FY20 and profit was 10% higher on a per share basis. And covid-19 seems to have caused an extension in the sales cycle.

These do not appear to be structural issues, and with shares on a PE of roughly 21, with a 3% yield, it seems attractively priced if the group can sustain anything near low double digit growth.

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Valuation of $6.75
stale
Added 5 years ago
Recurring revenue was up 31% in 1H19 compared to the pcp and comprised 72% of total revenue. Recurring revenue has grown as new clients are added and existing clients broaden their use of functionality, supported by the long term nature of Bravura’s client contracts. Bravura’s significant recurring revenue base provides a high degree of certainty around its long-term earnings profile and future cash flow expectations. New contract wins also attract implementation fees over the initial 2 to 3 year period, as clients deeply embed Bravura’s solutions into their business’s core operating model.
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