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Brady — Disposal simplifies the group structure

Brady — Disposal simplifies the group structure

Brady is selling its US-based recycling business for an initial c £3.3m with c £1m balance in 18 months. The disposal will simplify the group, boost cash resources towards £8m and enable management to focus on its core physical trading commodity and energy businesses. Additionally, the company has said that FY17 revenues will be c £2m lower than consensus at £27m due to a faster-than-anticipated switch to the recurring revenue model and two projects slipping into H118. We have cut our FY18 forecasts for the disposal and the lower trading guidance. Nevertheless, if management can successfully transition the business to the cloud, there is a lot to go for as E/CTRM is an attractive growth industry and Brady has a very high quality customer base.

Analyst avatar placeholder

Written by

Brady

Disposal simplifies the group structure

Trading update

Software & comp services

2 February 2018

Price

58.5p

Market cap

£49m

Net cash (£m) at 31 December 2017

4.4

Shares in issue

83.4m

Free float

68%

Code

BRY

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(6.8)

(12.4)

(26.3)

Rel (local)

(4.4)

(12.3)

(30.8)

52-week high/low

79.0p

58.0p

Business description

Brady is the largest Europe-based E/CTRM player. It provides a range of transaction and risk management software applications, which help producers, consumers, financial institutions and trading companies manage their commodity transactions in a single, integrated solution.

Next events

Final results

March 2018

AGM

May 2018

Analysts

Richard Jeans

+44 (0)20 3077 5700

Dan Ridsdale

+44 (0)20 3077 5729

Brady is a research client of Edison Investment Research Limited

Brady is selling its US-based recycling business for an initial c £3.3m with c £1m balance in 18 months. The disposal will simplify the group, boost cash resources towards £8m and enable management to focus on its core physical trading commodity and energy businesses. Additionally, the company has said that FY17 revenues will be c £2m lower than consensus at £27m due to a faster-than-anticipated switch to the recurring revenue model and two projects slipping into H118. We have cut our FY18 forecasts for the disposal and the lower trading guidance. Nevertheless, if management can successfully transition the business to the cloud, there is a lot to go for as E/CTRM is an attractive growth industry and Brady has a very high quality customer base.

Year
end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/15

27.4

1.0

1.0

0.0

59.5

N/A

12/16

30.3

2.3

2.4

0.0

24.4

N/A

12/17e

27.0

(1.8)

(1.8)

0.0

N/A

N/A

12/18e

23.7

0.8

0.8

0.0

77.6

N/A

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

Trading update: Recurring revenues rise to 67%

FY17 revenue is expected to be c £27m (we forecast £29.0m), including the recycling business, with adjusted EBITDA in the range of £0.5-0.7m (we forecast £1.8m on Brady's basis). There was a faster-than-anticipated transition to the recurring revenue model, with £1.7m of one-off licence revenues transitioned to £0.8m of annual recurring revenue, and 67% of revenues are now recurring. Additionally, two contracts with revenue of £0.8m slipped into H118. There will be exceptional restructuring costs of c £2.0m.

Disposal: Lifts cash resources towards £8m

Brady is selling its recycling business to AMCS Group, an Irish software company, for a maximum cash consideration of £4.6m. The group ended FY17 with net cash of £4.4m (we forecast £5.7m) and the disposal will lift this towards £8m. Brady chose to sell the business as the recycling industry is a challenging end market, and the software platform was not suited to the transition to microservices.

Forecasts: FY18 adjusted down

We have reduced our FY18 revenues by 23% to reflect the disposal and trading issues. We have incorporated £2m exceptional charges in FY17 and now expect the group to end FY18 with net cash of £6.8m (previously £7.9m).

Valuation: Well positioned for a recovery

While we only forecast modest profitability in FY18, with the shares on c 78x our earnings, the shift to microservices and cloud delivery will enable much improved scalability of the business model. Meanwhile, the shares are underpinned by the c 67% recurring revenues and the very high-quality customer base.

Trading update: Transition to recurring model has been substantially achieved

FY17 revenue is expected to be c £27m (we forecast £29.0m), including the recycling business, with adjusted EBITDA in the range of £0.5-0.7m (we forecast £1.8m on Brady's basis). The £2m revenue miss is largely explained by two factors:

1)

Management has taken a strategic decision, where possible, to renew contracts on a recurring basis. During FY17, £1.7m of one-off licence revenues were replaced with rolling agreements providing recurring licence revenues, with an annual value of £0.8m for an initial five-year term and rolling annually thereafter.

2)

Two projects, with a value of c £0.8m, which were expected to be recognised as revenue in FY17, have slipped into H118. Undoubtedly this reflects the complex nature of many of the group’s projects.

A key priority for Brady has been the transition from a traditional one-off licence model to a recurring revenue model, in order to improve earnings visibility and deliver sustainable growth. The bulk of new licence revenue in FY17 was on a recurring basis, albeit for sales of additional users, and this has affected the short-term performance. FY17 recurring revenues were 67% of the total, up from 62% in FY16 and 56% in FY15. The bulk of the balance of group revenue is in professional services and development, and hence we would not expect to see the recurring revenue percentage rise much further in the near term. Work has continued on the restructuring of the business in order to better integrate the service offerings, resulting in exceptional costs of c £2.0m. Net cash as at 31 December 2017 was £4.4m (2016: £7.3m).

Disposal: Enables management to focus on the core physical trading commodity and energy businesses

Brady is selling its US-based recycling business to AMCS Group, an Irish software company focused on the waste and recycling sector, for a maximum consideration of £4.6m. We understand that Brady intends to use the proceeds to support its transition to microservices that we would expect to eventually lead to a cloud-based delivery model. The disposal includes Systems Alternative International which Brady acquired in November 2012 for an initial £3.9m, along with ScrapRunner, which Brady acquired in July 2015 for c £1.3m.

Brady will receive gross proceeds of up to £4.6m less an adjustment for any excess of current liabilities over current assets (estimated to be c £0.3m). Brady will receive c £3.6m ($5m) on completion with the balance payable in 18 months. For the year ended 31 December 2016, the Recycling Business generated revenues of £4.9m and operating profit of £0.8m. FY17 operating profits are expected to be £0.3m. As at 31 December 2017, the recycling business' unaudited net assets were £6.4m, including intangible assets of £4.6m.

Forecasts: FY18 updated, review FY19 after finals

We have reduced our FY17 forecasts in line with the statement. This puts EBITDA (Brady definition) in the middle of the range at £0.6m, which equates to a £1.1m loss on the Edison definition. The FY17 numbers include the recycling business, which will be shown as a discontinued item in the FY17 results. For FY18, we have reduced our revenue forecast by 23% to £23.7m, which includes the impact of the recycling disposal. We forecast FY18 EBITDA of £3.0m (Brady definition), which equates to £1.4m on the Edison definition. We have added the £2m exceptional items in FY18, which we assume will all be cash. Consequently, we now forecast the group to end FY18 with net cash of £6.8m (previously £7.9m). This is before the final c £1m payment for the recycling business in FY20. We will review our FY19 forecasts following the final results in March.

Exhibit 1: Forecast changes

FY17e

FY18e

FY15

FY16

Old

New

Change
(%)

Old

New

Change
(%)

Revenue

27,374

30,269

29,000

27,000

(7)

30,822

23,732

(23)

Total operating costs

(28,333)

(29,736)

(31,521)

(30,680)

(3)

(29,952)

(24,922)

(17)

Operating result before exceptional items (Brady)

(959)

533

(2,521)

(3,680)

46

870

(1,190)

(237)

Add back:

 

 

Depreciation

582

678

700

700

0

700

590

(16)

Amortisation of acquired intangible assets

1640

1718

1750

1750

0

1750

1750

0

Amortisation of other intangible assets

1187

1598

1843

1843

0

1885.12

1855.36

(2)

Adjusted EBITDA (Brady definition)

2,450

4,527

1,772

613

(65)

5,205

3,005

(42)

Deduct: Amortisation of capitalised dev't

(1,187)

(1,598)

(1,843)

(1,843)

0

(1,885)

(1,855)

(2)

Add back: Share-based payments

243

90

100

100

0

300

200

(33)

Adjusted EBITDA (Edison definition)

1,506

3,019

29

(1,130)

(3,936)

3,620

1,350

(63)

Operating costs before development costs (Edison)

(27,230)

(27,885)

(29,985)

(28,996)

(3)

(27,915)

(23,479)

(16)

Amortisation of acquired intangible assets

(1,640)

(1,718)

(1,750)

(1,750)

0

(1,750)

(1,750)

0

Amortisation of development costs

(1,187)

(1,598)

(1,843)

(1,843)

0

(1,885)

(1,855)

(2)

Capitalisation of development costs

1,967

1,555

2,158

2,009

(7)

1,899

2,362

24

Share based payments

(243)

(90)

(100)

(100)

0

(300)

(200)

(33)

Total operating costs (Brady)

(28,333)

(29,736)

(31,521)

(30,680)

(3)

(29,952)

(24,922)

(17)

Source: Brady (historicals), Edison Investment Research (forecasts

Valuation: Brady provides a rare opportunity to invest in E/CTRM software

The stock trades on 77.6x our FY18 earnings. Alternatively, the shares trade on 1.8x our FY18 sales and 31x EBITDA (Edison method). As the company is undergoing a transition, the shares do not look appealing on near-term traditional valuation metrics. However, there are a number of reasons why we think investors should take a longer-term view.

1.

The transition to microservices and the cloud, supported by the shift to a global functional team, will significantly improve the scaleability of the business.

2.

The latest restructuring of the cost base will add additional efficiencies to the business.

3.

The global E/CTRM end market is an attractive market, valued at c $1.65bn (source: ComTech Advisory 2016) and growing at mid-single digits. Brady has a strong market position, being the top in metals globally and the leading European ETRM (energy trading and risk management) player.

4.

Brady has a high-quality blue chip customer base that includes many household names.

5.

The sector remains in disarray after a swathe of private equity-funded deals in 2011-13. These deals were transacted at high sales multiples that make Brady look cheap. ION remains active in the space, having announced the acquisition of Aspect Enterprise Solutions, a global provider of cloud-based CTRM solutions, in October 2017.

Exhibit 2: Financial summary

£'000s

2013

2014

2015

2016

2017e

2018e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

29,355

31,015

27,374

30,269

27,000

23,732

EBITDA

 

 

3,122

5,592

1,506

3,019

(1,130)

1,350

Adjusted Operating Profit

 

 

2,470

5,019

924

2,341

(1,830)

760

Amortisation of acquired intangibles

(1,613)

(1,613)

(1,640)

(1,718)

(1,750)

(1,750)

Exceptionals items

355

(2,143)

(469)

(1,159)

(2,000)

0

Share based payments

(313)

(232)

(243)

(90)

(100)

(200)

Operating Profit

899

1,031

(1,428)

(626)

(5,680)

(1,190)

Net Interest

29

58

31

3

20

30

Profit Before Tax (norm)

 

 

2,499

5,077

955

2,344

(1,810)

790

Profit Before Tax (FRS 3)

 

 

928

1,089

(1,397)

(623)

(5,660)

(1,160)

Tax

189

(630)

(329)

(1,230)

326

(158)

Profit After Tax (norm)

2,249

4,315

813

1,992

(1,485)

632

Profit After Tax (FRS 3)

1,117

459

(1,726)

(1,853)

(5,335)

(1,318)

Average Number of Shares Outstanding (m)

80.9

81.3

82.7

83.0

83.3

83.8

EPS – normalised (p)

 

 

2.8

5.3

1.0

2.4

(1.8)

0.8

EPS – FRS 3 (p)

 

 

1.4

0.6

(2.1)

(2.2)

(6.4)

(1.6)

Dividend per share (p)

1.70

1.85

0.00

0.00

0.00

0.00

EBITDA Margin (%)

10.6

18.0

5.5

10.0

(4.2)

5.7

Adjusted Operating Margin (%)

8.4

16.2

3.4

7.7

(6.8)

3.2

BALANCE SHEET

Fixed Assets

 

 

39,137

32,614

31,461

37,035

35,237

29,278

Intangible Assets

37,519

30,996

29,831

35,999

34,415

28,571

Tangible Assets

983

1,076

1,147

978

764

649

Deferred tax

635

542

483

58

58

58

Current Assets

 

 

15,420

16,948

13,633

14,640

10,909

12,494

Stocks

0

0

0

0

0

0

Debtors

8,198

7,368

7,039

7,297

6,509

5,721

Cash

7,222

9,580

6,594

7,343

4,400

6,773

Current Liabilities

 

 

(11,200)

(10,545)

(10,804)

(12,669)

(11,915)

(10,757)

Creditors

(11,200)

(10,545)

(10,804)

(12,669)

(11,915)

(10,757)

Short-term borrowings

0

0

0

0

0

0

Long-Term Liabilities

 

 

(4,467)

(4,651)

(4,814)

(5,670)

(5,670)

(5,670)

Long-term borrowings

0

0

0

0

0

0

Other long-term liabilities

(4,467)

(4,651)

(4,814)

(5,670)

(5,670)

(5,670)

Net Assets

 

 

38,890

34,366

29,476

33,336

28,561

25,345

CASH FLOW

Operating Cash Flow

 

 

4,277

6,209

2,363

2,737

(193)

2,787

Net Interest

29

58

31

3

20

30

Tax

(378)

(420)

(416)

(428)

(400)

(842)

Capex

(2,442)

(2,419)

(2,591)

(2,167)

(2,495)

(2,837)

Acquisitions/disposals

(751)

0

(1,186)

(326)

(66)

3,234

Financing

125

338

469

47

190

0

Dividends

(1,296)

(1,378)

(1,524)

0

0

0

Net Cash Flow

(436)

2,388

(2,854)

(134)

(2,943)

2,373

Opening net debt/(cash)

 

 

(7,838)

(7,222)

(9,580)

(6,594)

(7,343)

(4,400)

Other

(180)

(30)

(132)

883

0

0

Closing net debt/(cash)

 

 

(7,222)

(9,580)

(6,594)

(7,343)

(4,400)

(6,773)

Source: Brady (historicals), Edison Investment Research (forecasts)

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. 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 Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Brady 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 Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. 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). 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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

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Germany

London +44 (0)20 3077 5700

280 High Holborn

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United Kingdom

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Sydney +61 (0)2 8249 8342

Level 12, Office 1205

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NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. 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 Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Brady 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 Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. 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 2018. “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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Euromoney Institutional Investor — Subscribing to growth

Euromoney’s AGM trading update indicates performance continuing in line with full year expectations, subject to currency which is now a headwind. Our forecasts are adjusted to take this, and recent M&A, into account. Q118 subscriptions and content are showing underlying growth of 2%. This masks the divergence between a strong showing from Pricing (+10%) and continued MiFID II-prompted drag from Asset Management (-6%). Portfolio changes (as well as strong cash conversion) have resulted in a marked reduction in net debt to £49.0m as at end December 2017, with the prospect of moving into net cash during FY19, subject to M&A.

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