Strong EBITDA, sales revenue and net profit improvement: Bravura Solutions committed to growth
Sydney, 22 August 2012 – Bravura Solutions Limited (Bravura) today announced its full year results for the financial year ended 30 June 2012.
EBITDA for the 2012 financial year (FY2012) was $23.2 million, an increase of $4.2 million, or 22 per cent growth from FY2011. Sales revenue for FY2012 was $126.6 million, an increase of $5.9 million, or five per cent growth from FY2011. Net profit after tax for FY2012 was $5.4 million, an increase of $26.5 million, or 126 per cent growth from a net loss in FY2011. Operating cash flow improved by an impressive 29 per cent to $20.7 million.
Commenting on these strong results, Tony Klim, CEO and Managing Director, said, “We are extremely proud to convey these robust financial results to the market that reaffirm our commitment to growth. It has been a strong year for us, backed with heightened stability instilled across the business, leaving us on an excellent footing going into the new financial year.
“The Company has continued to make significant progress on all fronts – technological advancements, people focus and product improvements. I am enthusiastic about our future.
“We are also extremely pleased with the large improvement in operating cash flow for the fourth consecutive year. The Board has maintained a steady focus on cost management, and our expansion into offshore markets in Poland and India to utilise lower cost resources and improve our client servicing and focus has been met with resounding success.”
Bravura will continue to nurture and extend its business relationships with existing key blue chip clients, as they increasingly utilise the Company’s software offering across a broader range of products. Regulatory change will continue to drive associated revenue opportunities as Bravura assists its clients to remain compliant with new legislation.
The Company will also focus on winning new business, signing agreements with new clients across multiple geographic regions and extending existing contracts.
FY2012 key results
- EBITDA improved by $4.2 million to $23.2 million
- Sales revenue grew by five per cent to $126.6 million
- Net operating cash flow increased to $20.7 million
- Currency impacted EBITDA negatively by $1.5 million
- Net profit after tax was $5.4 million, a significant increase from the previous years’ net loss of $21.1 million
Sales revenue for FY2012 was $126.6 million. This $5.9 million or five per cent growth was the result of new licence sales and increased professional services spend within the existing installed client base.
FY2012 sales revenue results continued to be impacted by exchange rates that had an overall effect of decreasing sales revenue by $4.9 million. Had the exchange rate from FY2011 remained constant, sales revenue would have been $131.5 million, a nine per cent overall increase.
Licence fee revenue included the renewal of a significant transfer agency contract, as well as sales of Sonata, Bravura’s next generation wealth management software solution for life insurance, trust, pension, superannuation and wrap platforms.
Services revenue relating to these sales will materialise in FY2013. A significant proportion of this will be attributed to assisting the Bank of New York Mellon in further developing their transfer agency services in Europe, Asia and emerging markets with a large program of work scheduled.
EBITDA increased by $4.2 million over the previous year in actual terms and increased by $5.7 million in constant currency. EBITDA growth has been the result of previously noted contracts and sales, as well as an increased focus on underlying operations and cost management strategies. The use of offshore low cost development and support capability has also played a substantial role in cost management. The Company is now seeing the positive effects on financial performance of the significant governance and cost focus built into operations over the past few years.
Had the exchange rate from FY2011 remained constant, EBITDA would have been $24.7 million, equivalent to a 30 per cent improvement.
Operating costs continued to decline as a percentage of revenue as the Company expands its capability and resources in low cost countries and controls discretionary spending where appropriate. The rate of increase in the expense line is less than that of revenue which assists improvement in margins across the organisation.
Whilst managing costs, Bravura also acknowledges the importance of investing in its products and FY2012 sees this continuing with an increase in total spend relating to research and development. The majority of this spend relates to Sonata. The total spend during FY2012 was
$8.5 million (FY2011: $7.1 million), of which $4.8 million was capitalised as intangible assets (FY2011: $1.4 million).
Cash flow continued to be a focus area for the Company and improved for the fourth consecutive year. At $20.7 million, it increased by 29 per cent compared to FY2011, and highlights the Company’s focus on its cash position and ensuring prudent management of the day-to-day costs involved with operation. Revenue and cash streams that are more recurring in nature have also continued to support robust cash flow.
A significant cash outflow included $8.7 million relating to the share-buy program currently underway. This was assisted by Ironbridge Capital exercising their final options and generating an inflow of $4.3 million.
The Company’s total borrowings increased by 14 per cent due to the fit out of a new data centre in the UK, to support transfer agency clients operating in a hosted environment. Total net assets of $106.6 million included a reduction in intangibles of $6.0 million. As at 30 June 2012, there were no further deferred settlements relating to any previous acquisitions.
A new banking arrangement has also been secured, with long-term client Commonwealth Bank Australia (CBA). CBA will support the Company from a lending perspective, as well as being a potential acquisition and transaction partner. The Company’s existing banking facility with BOS International expires in December 2012.
The Company remained well within its banking covenants as at 30 June 2012.
Capital management strategy: On-market share buy-back
On 22 August 2011, the Company announced an on-market share buy-back to purchase up to ten per cent of the shares in issue at the time. The buy-back formed part of a financial management strategy to ensure capital was effectively managed and that shareholder return would be maximised over the long term.
As at 30 June 2012, the Company had purchased a total of 61,713,641 shares at a total cost of $8.7 million, equivalent to 95 per cent of the relevant shares. The share buy-back will continue until the ten per cent goal has been reached, or 5 September 2012.
Events since last year
During the last 12 months, the Company has undertaken major product releases, client implementations and 79 client upgrade projects across all products and regions. Key strategic relationships with major clients including the Bank of New York Mellon, Russell Investments and Partners Life have been strengthened as these clients continue to consolidate their businesses onto Bravura technology applications and expand their use of the Company’s offerings.
Bravura also signed five new contracts with existing clients including the Bank of New York Mellon, Statewide Financial, an Australian government client, Politis Investment Strategies and Russell Investments.
The Company will continue to focus on the accelerated adoption of Sonata as the wealth management application of choice for key players in European markets, and anticipates global growth driven by legislative changes. By positioning Sonata as a key strategic application with our major blue chip administration clients, Bravura intends to leverage off their success and attract new clients to their wealth management administration services; mirroring the success Bravura has experienced in the European transfer agency market. In order to support this anticipated growth, the Company has increased its sales resources and delivery capability appropriately to cover the needs of the existing and future client base.
The Company expects to continue to witness increasing levels of demand for life insurance administration applications in multiple geographic markets, particularly Asia, and is confident that Sonata is well suited to industry needs, evidenced by the early success of New Zealand based client Partners Life.
The Company will continue to focus on cost management through further investment in its Indian and Polish operations, as Bravura gains further productivity, efficiency and flexibility benefits that allow the Company to support the implementation and delivery needs of Bravura’s wealth management and transfer agency solutions over the coming financial year.
The Company also expect increasing interest in its application hosting capabilities, both in Europe where Bravura currently manages most of its UK clients under this arrangement, and extended to Australia and New Zealand where this is now available. As Bravura continues its discussions with clients around its capabilities, the Company is enthusiastic about early signs of interest.
The Company will continue to invest in its processes, procedures, products and people to ensure that it delivers the highest possible level of business applications, implementations and service to its growing client base.
Brian Mitchell, Chairman of Bravura said, “Having achieved strong and robust financial results, developed rich and deep functionality into our product offerings and gained valuable insight into our markets and clients, we are confident of our affirmed commitment to growth. Our improved sales revenue, EBITDA, net profit and cash flow results will see Bravura continue to deliver future growth and shareholder value”.
Bravura’s Chairman, Brian Mitchell and Chief Executive Officer, Tony Klim were quoted in this press release. To ask Brian or Tony a question regarding the release or to discuss it in more detail, email PR@bravurasolutions.com