Aptitude Software Group Plc · LSE:APTD
Aptitude Software — FY2018 Earnings Presentation
35 slides from Aptitude Software's earnings presentation, Mar 25, 2019
Slide 1: 2018 Audited Preliminary Results
microgen plc 2018 Audited Preliminary Results Year ended 31 December 2018 25 March 2019
Slide 2: Group Overview
Group Overview • Across its two operating businesses Microgen plc (“Microgen” or the “Group”) develops, implements and supports business-critical software and related services • Both businesses benefit from high quality revenue streams with excellent forward visibility arising from their recurring r
Slide 3: Proposed Group Structure
Proposed Group Structure • Microgen to be renamed Aptitude Software Group plc in early April 2019 to reflect new focus of the Group • Proposed demerger of Microgen Financial Systems (“MFS”) and admission to AIM expected in 2019 • The future Group structure will facilitate: ‒ A simpler and more focus
Slide 4: Demerger of Microgen Financial Systems
Demerger of Microgen Financial Systems • Admission to AIM considered to provide MFS with the best ownership environment for its future growth • Shareholders in Microgen to receive shares in the new demerged entity in proportion to their respective shareholdings in the Group • Board of demerged MFS e
Slide 5: Microgen Financial Systems' Progress
Microgen Financial Systems’ Progress • Strategic progress achieved since 2014 has established a robust and focused business benefiting from 75% recurring revenues, excellent operating margins and strong cash flow generation • 70% of ongoing revenue from strategic Trust & Fund Administration (‘T&FA’)
Slide 6: Financial Review
Financial Review Year ended December 2018 25 March 2019
Slide 7: 2018 Results
2018 Results Revenue Adjusted operating profit £70.3m £15.7m 12% (6% organic) 9% (2017*: £63.0m) (2017*: £14.5m) Adjusted Full year EPS dividend 19.4p 6.60p 8% 6% (2017*: 18.0p) (2017: 6.25p) 25 March 2019 | Audited Preliminary Results * 2017 results have been restated for changes in the Gro
Slide 8: Continued progress led by Aptitude Software
Continued progress led by Aptitude Software Aptitude Software 60 revenue 50 £52.3m 40 17% (7% organic) Revenue (£m) 30 (2017*: £44.7m) 20 Microgen Financial Systems Ongoing 10 Revenue+ 0 £17.3m Aptitude Software Revenue Microgen Financial Systems Ongoing Revenue (2017: £16.9m) 2016 2017* 2018 * 20
Slide 9: Income Statement
Income Statement 2018 2017* £’000 £’000 Aptitude Software Revenue 52,274 44,721 Microgen Financial Systems Revenue 18,012 18,300 Total Revenue 70,286 63,021 Aptitude Software Adjusted Operating Profit 10,401 8,619 Microgen Financial Systems Adjusted Operating Profit 6,964 7,535 Group Costs (1,626) (
Slide 10: Balance Sheet
Balance Sheet 2018 2017* £’000 £’000 Goodwill and intangible assets 62,979 68,925 Property, plant and equipment 5,417 5,543 Trade and other assets 19,042 17,221 Cash and cash equivalents 29,186 19,137 Total Assets 116,624 110,826 Bank loan and capital lease obligations (11,813) (14,056) Deferred inc
Slide 11: Cash Flow Statement
Cash Flow Statement 2018 2017* £’000 £’000 Cash generated from operations (97% cash conversion (2017*: 113%)) 15,042 15,193 Interest and tax paid (3,508) (2,997) Cash flows generated from operating activities 11,534 12,196 Purchase of property, plant and equipment (985) (1,180) Disposal of subsidiar
Slide 12: Slide 12
Slide 13: Strategic Focus
Strategic Focus • Continuation of organic growth by focusing on specialised financial management software applications which have the common capability of unifying, analysing and rapidly processing high volume complex, business event-driven transactions, scenarios and calculations to deliver finance
Slide 14: Our Portfolio
Our Portfolio • A growing suite of applications with the Aptitude Insurance Calculation Engine successfully launched in 2018 building on the additions to the portfolio of Aptitude Lease Accounting Engine and Aptitude RevStream in 2017: ‒ Aptitude Insurance Calculation Engine ‒ Aptitude Accounting Hu
Slide 15: Application Overview: Aptitude Insurance Calculation Engine
Application Overview APTITUDE INSURANCE CALCULATION ENGINE The Aptitude Insurance Addresses IFRS 17 Calculation Engine, in conjunction requirements with the Aptitude Accounting Hub, offers the data capture, complex accounting capabilities & calculations organisations need to Standard effective compl
Slide 16: Application Overview: Aptitude Accounting Hub
Application Overview APTITUDE ACCOUNTING HUB Enables enterprise finance teams Clients within telco, to standardise and automate their insurance and accounting processes while banking building rich financial data foundations Event-based accounting engine that generates complex debits and Key componen
Slide 17: Application Overview: Aptitude Lease Accounting Engine
Application Overview APTITUDE LEASE ACCOUNTING ENGINE Offers the data capture and Addresses IFRS 16/ complex accounting capabilities ASC 842 organisations need to comply with requirements IFRS 16/ASC 842 Cloud version of the application released in 2018 Standard effective New business contracts secu
Slide 18: Application Overview: Aptitude Revenue Recognition Engine
Application Overview APTITUDE REVENUE RECOGNITION ENGINE The Aptitude Revenue Addresses IFRS 15/ Recognition Engine offers ASC 606 specialised functionality enabling requirements telcos in particular to comply with IFRS 15/ASC 606 requirements Key differentiation to other Further new business signed
Slide 19: Application Overview: Aptitude RevStream
Application Overview APTITUDE REVSTREAM Aptitude RevStream offers Addresses IFRS 15/ broader revenue management ASC 606 functionality than the specialised requirements functionality of the Aptitude Revenue Recognition Engine Client base weighted towards technology and media / Software-as-a- publishi
Slide 20: 2018 Financial Highlights
2018 Financial Highlights Revenue Adjusted operating Proportion of profit US Dollar revenues £52.3m £10.4m 54% 17% (7% organic) 21% (2017*: £44.7m) (2017*: £8.6m) (2017*: 57%) Organic software Recurring revenue R&D as %age of revenue growth base software revenue 23% £24.0m 34% 24% (2017*: 35%)
Slide 21: 2018 Financial Highlights
2018 Financial Highlights 60 Software revenue 50 £24.8m 40 37% (23% organic) Revenue (£m) (2017*: £18.1m) 30 20 Services revenue £27.5m 10 3% 0 2016 2017* 2018 (2017: £26.6m) Software revenue Services revenue 25 March 2019 | Audited Preliminary Results * 2017 results have been restated for chang
Slide 22: Acceleration of Investment
Acceleration of Investment • Building on recent sales successes and in anticipation of the proposed new structure of the Group, the Board has accelerated investment in the future growth of the business to both maximise current opportunities and ensure the continued long-term development of the busin
Slide 23: Summary
Summary • Excellent early success with the Aptitude Insurance Calculation Engine establishing an already valuable Recurring Revenue Base for this application • Encouraging number of sales of its cloud-enabled applications, Aptitude RevStream and Aptitude Lease Accounting Engine • Good progress made
Slide 24: Microgen Financial Systems
microgen Financial Systems
Slide 25: Overview
Overview • A solid performance with an increasing focus on Trust & Fund Administration (‘T&FA’) following the disposal of the non-core Payments software business in the year for £6.9 million • Ongoing revenues generated by T&FA increased to 70%. Application Management business continues to perform i
Slide 26: 2018 Financial Highlights
2018 Financial Highlights Ongoing Revenue+ Ongoing adjusted operating profit + £17.3m £6.5m 2% (2017: £16.9m) (2017*: £6.5m) Increasing Recurring revenue proportion of proportion T&FA revenue + 70% 75% (2017: 62%) (2017: 75%) * 2017 results have been restated for changes in the Group’s accounting
Slide 27: 2018 Financial Highlights
2018 Financial Highlights 20 T&FA revenue 18 £12.1m 7% 16 14 (2017: £11.3m) Revenue (£m) 12 10 App Man revenue 8 £5.1m 4 6 (2017: £5.6m) 2 0 2016 2017 2018 T&FA Application Management 25 March 2019 | Audited Preliminary Results 27
Slide 28: T&FA Growth
T&FA Growth • Revenue increased 7% to £12.1 million (2017: £11.3 million) • T&FA now represents 70% of Microgen Financial Systems’ ongoing revenues (2017: 62%) • T&FA recurring revenue base increased by 5% to £9.0 million (2017: £8.8 million) • Growing opportunity in respect of additional services a
Slide 29: Disposal of Payments Software Business
Disposal of Payments Software Business • Disposal of Payments Software business for consideration of £6.9 million on 2 July 2018 • Disposal enables further concentration of resource on the T&FA sector, the strategic focus of the business • Gain on disposal of £3.2 million being the difference betwee
Slide 30: Summary
Summary • Independent business focused on T&FA which is proposed to be demerged and admitted to AIM during the course of 2019 • Combination of organic growth and targeted acquisitions to further enhance market positioning within T&FA • Investment continuing in the team and organisation to further im
Slide 31: Appendix A: Summary of Accounting Policy Change
Appendix A Summary of Accounting Policy Change
Slide 32: Summary
Summary • On 1 January 2018, the Group adopted a number of new standards, principally IFRS 15 and IFRS 16, and made changes to its accounting policies on a retrospective basis and consequently the Group’s prior year financials have been restated • IFRS 15 “Revenue from contracts with customers” chan
Slide 33: Income Statement
Income Statement 2017 As originally presented IFRS 15 IFRS 16 2017 £’000 £’000 £’000 £’000 Aptitude Software Revenue 44,340 381 - 44,721 Microgen Financial Systems Revenue 18,300 - - 18,300 Total Revenue 62,640 381 - 63,021 Aptitude Software Adjusted Operating Profit 7,946 651 22 8,619 Microgen Fina
Slide 34: Balance sheet
Balance sheet 2017 As originally presented IFRS 15 IFRS 16 2017 £’000 £’000 £’000 £’000 Goodwill and intangible assets 68,925 - - 68,925 Property, plant and equipment 1,825 - 3,718 5,543 Trade and other assets 15,650 1,480 91 17,221 Cash and cash equivalents 19,137 - - 19,137 Total Assets 105,537 1,
Slide 35: Cash flow statement
Cash flow statement 2017 As originally presented* IFRS 16 2017 £’000 £’000 £’000 Cash generated from operations 14,142 1,051 15,193 Interest and tax paid (2,841) (156) (2,997) Cash flows generated from operating activities 11,301 895 12,196 Purchase of property, plant and equipment (1,180) - (1,180)
Aptitude Software Group — FY2018 Earnings Presentation on 6ix