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Expert System — Focus shifts to scaling up

Expert.ai (MI: EXAI)

Last close As at 21/11/2024

1.51

▲ −0.10 (−6.21%)

Market capitalisation

79m

More on this equity

Research: TMT

Expert System — Focus shifts to scaling up

The first year of Expert System’s five-year plan ‘Path to Lead’ was essentially a year of investment, and despite the disruption caused by the pandemic, the company made good progress meeting key funding, product, marketing and hiring milestones. Management is maintaining its financial projections for the plan for FY21–24, which calls for modest growth this year, followed by accelerating growth in FY22–24, and positive EBITDA from FY23. We have made small changes to our forecasts for FY21 and FY22 and introduce forecasts for FY23.

Katherine Thompson

Written by

Katherine Thompson

Director

TMT

Expert System

Focus shifts to scaling up

FY20 results

Software & comp services

1 April 2021

Price

€2.96

Market cap

€150m

Net cash (€m) at end FY20

20.8

Shares in issue

50.8m

Free float

73.5%

Code

EXSY

Primary exchange

AIM Italia

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(8.6)

16.2

39.0

Rel (local)

(15.3)

4.9

(3.7)

52-week high/low

€3.39

€2.00

Business description

Expert System has developed and patented an AI-based technology platform that extracts useful information from unstructured text using a unique mix of natural language understanding and machine learning algorithms and applies it to verticals such as enterprise search, customer experience management and big data analytics.

Next events

H121 results

28 September

Analyst

Katherine Thompson

+44 (0)20 3077 5730

Expert System is a research client of Edison Investment Research Limited

The first year of Expert System’s five-year plan ‘Path to Lead’ was essentially a year of investment, and despite the disruption caused by the pandemic, the company made good progress meeting key funding, product, marketing and hiring milestones. Management is maintaining its financial projections for the plan for FY21–24, which calls for modest growth this year, followed by accelerating growth in FY22–24, and positive EBITDA from FY23. We have made small changes to our forecasts for FY21 and FY22 and introduce forecasts for FY23.

Year end

Revenue (€m)

EBITDA*
(€m)

EPS*
(c)

DPS
(€)

P/E
(x)

EV/sales
(x)

12/19

33.7

5.5

(1.6)

0.0

N/A

3.8

12/20

30.6

(1.9)

(20.2)

0.0

N/A

4.2

12/21e

32.2

(7.2)

(26.6)

0.0

N/A

4.0

12/22e

45.5

(1.3)

(17.8)

0.0

N/A

2.8

12/23e

64.5

7.6

(4.5)

0.0

N/A

2.0

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

FY20 a year of investment

FY20 revenue declined 9% y-o-y, as the pandemic depressed perpetual licence sales and consulting services, and was 2% below our forecast. However, subscription licence revenue grew 8%, slightly ahead of plan, and now makes up 89% of licence revenue. The EBITDA loss of €1.9m was wider than our €0.4m forecast due to lower revenue combined with higher staff costs. Year-end net cash was €20.8m. Expert is focused on driving growth in the US, which made up 20% of sales in FY20 versus 13% in FY19 as a result of strong enterprise demand.

Management maintains growth targets for FY21–24

In our view, Expert has made a good start in its quest to become the reference platform for AI-based natural language understanding (NLU). The focus for FY21 is on scaling up the business through a combination of direct sales of vertical solutions to enterprise customers and growing adoption of Expert’s freemium NL API leading to conversions to commercial contracts. At this point, we continue to base our forecasts on the company’s targets, albeit we are slightly more conservative. We have reduced slightly our FY21 and FY22 revenue forecasts and increased our EBITDA loss forecasts for both years, based on the higher level of costs incurred in FY20; we introduce FY23 forecasts.

Valuation: Considerable upside if executed well

Expert currently trades at a discount to peers on an EV/sales basis in FY21 and FY22. As the full SaaS platform has only just been launched, it is unlikely to drive material revenue growth until FY22. Based on a DCF valuation, we estimate that successful execution of the plan could see the stock valued in the region of €4.9 per share. To monitor progress towards the revenue inflection, we look to track the number of users signing up to use the platform, length and frequency of platform usage, conversion rates to paid subscriptions, net dollar retention and contribution from channel partners.

Review of FY20 results

Exhibit 1: FY20 results highlights

€m

FY19

FY20e

FY20

diff

y-o-y

Sales

31.65

29.69

28.10

-5.4%

-11.2%

Grants and other income

2.06

1.50

2.52

67.9%

22.4%

Total revenue

33.71

31.19

30.62

-1.8%

-9.2%

Capitalised development costs

6.07

6.52

6.88

5.5%

13.3%

Changes in WIP

-0.05

0.00

-0.05

N/A

-5.5%

Total production value

39.73

37.71

37.45

-0.7%

-5.8%

Staff costs

18.79

21.80

23.66

8.5%

25.9%

Other costs

15.48

16.34

15.70

-3.9%

1.4%

EBITDA

5.46

(0.43)

(1.92)

350.7%

N/A

EBITDA margin

16.2%

-1.4%

-6.3%

-4.9%

N/A

Depreciation & amortisation - in-house

5.82

6.44

6.69

3.9%

15.0%

Normalised EBIT

(0.36)

(6.86)

(8.61)

25.4%

2303.5%

Normalised EBIT margin

-1.1%

-22.0%

-28.1%

-6.1%

-27.1%

Depreciation & amortisation - acquired

2.52

0.90

0.90

0.0%

-64.2%

EBIT

(2.88)

(7.77)

(9.51)

22.5%

230.5%

Net income

(0.98)

(3.09)

(5.42)

75.4%

451.8%

Net debt/(cash)

2.83

(21.30)

(20.83)

-2.2%

N/A

Source: Expert System, Edison Investment Research

Expert reported FY20 revenue that was slightly below our forecast. Grants and other income were €1m ahead of our forecast whereas sales revenue was €1.6m below. Offsetting this, the company capitalised a slightly higher level of development costs and other costs were 4% below our expectations. Staff costs were 9% ahead of our forecast, resulting in an EBITDA loss of €1.9m versus our €0.4m forecast. Net finance costs were €1.2m higher than expected (mainly due to unrealised FX losses of €1.6m), partially offset by a tax credit that was €0.6m higher than expected. Net cash was marginally lower than expected at year-end.

Exhibit 2: Revenue metrics

€m

FY19

FY20

y-o-y

Subscription licences

10.5

11.3

8%

Services

11.3

10.7

-5%

Perpetual licences, maintenance & other

9.9

6.1

-38%

Total sales

31.7

28.1

-11%

Subscription licences/total licences

76%

89%

Recurring revenues

49%

55%

Partner channel sales

3.0

4.0

32%

As % of sales

10%

14%

Source: Expert System

The table above shows the breakdown of sales by type. Subscription licence revenues increased 8% y-o-y to €11.3m, marginally ahead of the Path to Lead target for 7% growth. 44% of FY20 subscription revenues came from new customers. Services revenues declined 5% y-o-y, as implementation projects were delayed by the pandemic. The combination of perpetual licences, maintenance revenue and other revenue declined 38% y-o-y. The sale of perpetual licences declined by €2m y-o-y to €1.3m mainly because the company is focused on selling its solutions on a subscription basis as far as possible. In areas such as defence and intelligence, where perpetual licensing is preferred, the company saw spending drop off in the United States, Germany and Italy as governments focused their attention on dealing with the pandemic. Maintenance revenues declined by €0.7m to €4.2m, although some of this decline was due to shifting customers from maintenance to subscription contracts (c €0.4m of the decline). The combination of the growth in subscription licences and the fall in perpetual licences resulted in subscription licences making up 89% of licence revenues in the year, up from 76% in FY19. Recurring revenues (subscription licences plus maintenance revenues) moved over the 50% level in the year.

Revenues generated from partners (c 80 deals) increased 32% y-o-y, making up 14% of the total (FY19: 10%). This is an area of focus and the company has invested in training and certification of partners. Expert certified 85 partners as able to independently design and implement projects for clients. The company has strong partnerships with large partners such as Accenture, Deloitte, Capgemini and Atos as well as regional partners, and signed new deals with vertical BPOs1 and VARs.1

  BPO: business process outsourcer; VAR: value-added reseller.

The company noted that revenue from the US made up 20% of the total (FY19: 13%) and was flat year-on-year ; within that revenue from US corporates was up 39% y-o-y, new customers generated 52% of revenue and subscription revenue made up 60% of revenue. As part of its strategic plan, the company is targeting 60% of revenue to come from the US by FY24. As the majority of the investment in the US happened in H220 (headcount was up 58% over the year), we would expect this to have a bigger impact on growth from the US in FY21.

Contract wins highlight benefit of vertical specialism

The company continued to demonstrate its strength in the insurance sector, signing up Aegis and UTWIN in FY20 and HX, Le Conservateur, Patra and Reale Mutua since year-end. It also won a customer in another focus vertical, media, with the sign up of The Associated Press in the US post year-end.

Update on Path to Lead

In June last year, the company announced plans to accelerate growth with its Path to Lead strategy (see Five-year growth strategy unveiled). Since then, Expert has achieved the following milestones:

■

July 2020: launched the expert.ai natural language API (NL API);

■

August 2020: raised €25m from the issue of 9.26m shares; invested in the sales & marketing function in the US, including hiring a chief revenue officer, Colin Matthews, and a chief marketing officer, Keith C Lincoln;

■

October 2020: rebranded from Expert System to expert.ai; added enhanced features to the API;

■

November 2020: launched a new version of expert.ai Studio and launched the expert.ai Edge NL API, which enables developers and data scientists to run NLP applications built with Studio locally or on their private cloud;

■

January 2021: launched commercial options for the API; and

■

March 2021: launched a new NL user community and launched the full end-to-end SaaS platform in beta (early access programme). This platform will enable users to design, develop, test, deploy and monitor scalable NL-based solutions.

The next major milestone, due in June, will be the full launch of the SaaS platform.

The company is using the NL API freemium model for lead generation, giving developers and data scientists the opportunity to trial Expert’s software at no cost while not requiring use of Expert’s team of consultants. To date, more than 600 people have registered to use the API and there are 197 unique users. So far, one user has upgraded to a commercial contract with an annual contract value of €40k.

Outlook and changes to forecasts

Management is broadly maintaining its growth and profitability expectations as per the Path to Lead (see table below for original expectations). Management made the point that if growth starts to accelerate, it may take the opportunity to accelerate investment, which would have an impact on the EBITDA targets in the earlier years of the plan.

Exhibit 3: Path to Lead five-year growth targets

€m

FY20

FY21

FY22

FY23

FY24

Revenue

33.3

34.5

47.7

68.5

99.9

EBITDA

2.1

(4.8)

(0.5)

9.0

22.1

Source: Expert System

We have revised our forecasts to reflect FY20 results, with a small reduction in revenue for FY21 and FY22 and a slightly larger EBITDA loss in both years. We introduce FY23 forecasts, which are broadly in line with the company’s targets. Key metrics to evidence that the company is on track to hit its growth targets will include:

■

number of free users of the platform;

■

duration and frequency of platform use by free users;

■

conversion rates – from free to paid;

■

expansion rates (net dollar retention – NDR) for paid users;

■

new enterprise customers for vertical solutions; and

■

channel partner contribution to revenues.

Exhibit 4: Changes to forecasts

€m

FY21e old

FY21e new

Change

y-o-y

FY22e old

FY22e new

Change

y-o-y

FY23e new

y-o-y

Sales

31.0

30.7

(0.8%)

9.4%

44.2

44.0

(0.3%)

43.3%

63.0

43.1%

Other income & grants

1.5

1.5

0.0%

(40.4%)

1.5

1.5

0.0%

0.0%

1.5

0.0%

Total revenues

32.5

32.2

(0.8%)

5.3%

45.7

45.5

(0.3%)

41.3%

64.5

41.7%

Capitalised development costs & changes in WIP

8.0

8.0

0.0%

16.7%

10.3

10.3

0.0%

29.6%

12.0

15.9%

Production value

40.5

40.2

(0.6%)

7.3%

56.0

55.9

(0.3%)

39.0%

76.5

36.9%

EBITDA

(5.7)

(7.2)

26.9%

275.5%

(1.0)

(1.3)

32.2%

(82.3%)

7.6

N/A

EBITDA margin

(17.5%)

(22.4%)

(4.9%)

(16.1%)

(2.1%)

(2.8%)

(0.7%)

19.6%

11.8%

14.6%

D&A

(6.9)

(7.1)

2.5%

(7.9)

(8.1)

2.2%

(9.5)

Normalised operating profit

(12.6)

(14.3)

13.5%

66.0%

(8.8)

(9.3)

5.4%

(34.7%)

(1.9)

(80.0%)

Normalised operating margin

(38.8%)

(44.3%)

(5.6%)

(16.2%)

(19.4%)

(20.5%)

(1.1%)

23.9%

(2.9%)

17.6%

Amortisation of acquired intangibles

0.0

0.0

0.0%

N/A

0.0

0.0

N/A

0.0

N/A

Exceptional items

0.0

0.0

0.0%

N/A

0.0

0.0

N/A

0.0

N/A

Reported operating profit

(12.6)

(14.3)

13.5%

N/A

(8.8)

(9.3)

5.4%

N/A

(1.9)

N/A

Normalised net income

(12.1)

(13.5)

11.4%

49.1%

(8.7)

(9.0)

N/A

N/A

N/A

Reported net income

(12.1)

(13.5)

11.4%

(148.6%)

(8.7)

(9.0)

N/A

(2.3)

N/A

Diluted normalised EPS (c)

(24.0)

(26.6)

10.5%

(31.4%)

(17.3)

(17.8)

2.4%

N/A

(4.5)

N/A

Net debt/(cash)

(7.1)

(5.3)

-26.1%

(74.8%)

4.0

6.6

67.0%

N/A

10.2

53.4%

Source: Edison Investment Research

Valuation

Exhibit 5: Peer financial and valuation metrics

Market

Quoted

EV/sales

EV/EBITDA

P/E

EBIT margin

EBITDA margin

Sales growth

EPS growth

cap (m)

ccy

CY

NY

CY

NY

CY

NY

CY

NY

CY

NY

CY

NY

CY

NY

Expert System

150

EUR

4.0

2.8

N/A

N/A

N/A

N/A

-44.3%

-20.5%

-22.4%

-2.8%

5.3%

41.3%

N/A

N/A

Natural Language Understanding, Big Data Analytics, Enterprise Search & Info Management

C3Ai

6,530

USD

29.8

22.5

N/A

N/A

N/A

N/A

-27.5%

-45.9%

-25.0%

-43.6%

N/A

32.2%

N/A

84%

Commvault Systems

3,042

USD

3.7

3.5

18.2

15.5

32.2

26.8

18.1%

20.2%

20.4%

22.6%

6.5%

6.1%

39%

20%

Elastic

9,958

USD

16.2

12.9

N/A

N/A

N/A

N/A

-3.2%

-5.4%

-1.1%

-3.4%

37.9%

26.0%

-82%

183%

Livechat Software

3,044

PLN

17.1

14.4

25.3

21.7

29.0

24.9

62.3%

61.3%

67.6%

66.3%

33.6%

18.8%

38%

16%

Nuance Comms

12,292

USD

9.8

9.2

34.9

30.5

58.0

51.6

25.6%

26.5%

28.2%

30.0%

-7.3%

7.1%

-10%

12%

Open Text Corp

16,441

CAD

4.6

4.5

12.0

11.6

14.7

14.1

35.2%

31.6%

38.2%

38.6%

6.1%

2.4%

13%

4%

Splunk

21,863

USD

8.8

7.1

N/A

91.2

N/A

535.0

-5.2%

2.2%

-0.6%

7.8%

14.3%

22.9%

30%

-135%

Talend

2,033

USD

6.1

5.3

N/A

N/A

N/A

N/A

-7.4%

-2.8%

-5.6%

0.3%

14.6%

15.6%

35%

-74%

Teradata

4,385

USD

2.4

2.2

11.0

10.6

25.4

20.9

13.9%

15.3%

21.5%

21.1%

2.7%

5.1%

20%

21%

Veritone

759

USD

8.2

6.6

N/A

N/A

N/A

N/A

-20.3%

-13.7%

-32.5%

-23.3%

36.1%

24.1%

-33%

-21%

Average

10.7

8.8

20.3

18.0

31.9

27.7

9.2%

8.9%

11.1%

11.6%

16.1%

16.0%

5%

11%

SaaS/subscription software companies

Adobe

224,847

USD

14.5

12.7

29.1

25.5

39.6

34.3

44.5%

45.0%

49.8%

49.6%

20.2%

14.4%

17%

15%

Atlassian

53,248

USD

14.5

12.7

124.6

100

190.3

154.6

21.1%

21.2%

21.7%

23.1%

20.5%

17.0%

-3%

23%

Salesforce.Com

192,572

USD

27.0

23.1

24.0

19.9

61.0

50.5

17.6%

18.6%

29.7%

30.1%

21.1%

18.7%

-30%

21%

Workday

60,667

USD

7.1

6.0

50.5

41.6

88.8

71.9

17.1%

18.4%

23.4%

24.1%

15.6%

18.1%

-4%

23%

Average

15.8

13.6

57.0

46.7

94.9

77.8

25.1%

25.8%

31.1%

31.7%

19.4%

17.0%

-5%

21%

Italian software & services

TXT e solutions

100

EUR

0.9

0.9

7.4

6.6

16.7

14.4

8.7%

8.4%

12.4%

13.0%

0.5%

24.1%

21%

16%

Piteco

207

EUR

8.3

7.6

17.9

16.3

22.2

19.1

34.7%

36.1%

46.3%

46.8%

0.5%

34.4%

N/A

16%

Reply

4,015

EUR

2.7

2.5

16.5

15.0

30.4

27.3

13.0%

13.4%

16.2%

16.4%

3.9%

15.4%

7%

11%

Average

4.0

3.6

13.9

12.6

23.1

20.3

18.8%

19.3%

25.0%

25.4%

1.7%

24.6%

14%

14%

Source: Edison Investment Research, Refinitiv (as at 29 March)

The table above shows Expert’s valuation and financial metrics compared to three different peer groups:

■

software companies providing natural language understanding, big data analytics, enterprise search and/or information management applications;

■

software companies selling on a SaaS or subscription basis; and

■

Italy-listed companies providing software and/or IT services.

As Expert is a loss-making company, we look at EV/sales metrics and sales growth rates as the primary metrics for comparison. Based on the average EV/sales multiple for the first group (most relevant due to the applications), Expert is trading at a large discount to peers. Over the two-year forecast period, its average sales growth of 23% compares to 16% for the peer group. Expert also trades at a discount to subscription software companies, which are growing at an average of 18% over the next two years. Compared to Italian peers, it is trading in line for the current year and at a discount next year, with higher forecast revenue growth. As evidence emerges that the company is tracking the revenue growth and margins targeted in the five-year plan, we would expect the valuation to move more in the direction of the first two peer groups.

Fund-raising for AI platforms

Recent fund-raisings in the private market highlight the popularity of data analytics and AI-related software companies:

■

DataRobot: raised $320m in November/December 2020, giving the company a valuation of $2.8bn. At that time, the company noted that it had well over $100m in annual recurring revenue and is seeing high double-digit growth.

■

Databricks: not an AI platform, but a platform for data analytics that can be used for all data-driven use cases, including AI. Raised $1bn in February this year, giving a company valuation of $28bn. At that time, the company had more than $425m in annual recurring revenue, growing more than 75% y-o-y.

■

H20.ai: raised $72.5m in August 2019, giving the company a valuation of $400m.

On a smaller scale, Almawave recently listed on AIM Italia (first day of trading 11 March) and has a market cap of €115m. Almawave is active in the natural language understanding market, offering speech recognition solutions and a platform for text analytics and customer interaction. In 2019, Almawave generated revenue of €21.3m and EBITDA of €6.2m, and revenues for 9M20 of €18.0m grew 33% y-o-y. Forecasts are not yet available, but annualising 9M20 revenues would imply a price/sales multiple of c 4.8x FY20e.

DCF valuation

We have performed a discounted cash flow analysis based on our forecasts to FY24 (which essentially follow the company’s plan) and for the following six years, trending revenue growth down to 5% by FY30, trending EBITDA margins up to 30% (which results in an EBIT margin of 20%) and reducing capex/sales to 9% by FY30 (compared to 24% in FY20 and 15% in FY24). We have included the FY20–23 share grant and option grant plans, which add 5m additional shares to the existing 50.8m outstanding shares.

Using a WACC of 9% and a long-term growth rate of 3%, we arrive at a per share value of €4.93. We note that this valuation assumes perfect execution of the plan, and we would expect the share price to move towards this value as progress according to the plan becomes evident. This valuation would equate to an EV/sales multiple of 2.7x and an EV/EBITDA multiple of 12.3x in FY24.

A 1pp increase/decrease in the WACC results in a per share value of €4.01/€6.23.

Exhibit 6: Financial summary

€'000s

2017

2018

2019

2020

2021e

2022e

2023e

Year end 31 December

IT GAAP

IT GAAP

IT GAAP

IT GAAP

IT GAAP

IT GAAP

IT GAAP

PROFIT & LOSS

Revenue

 

 

27,783

30,457

33,712

30,617

32,226

45,539

64,523

EBITDA

 

 

1,711

4,638

5,459

(1,919)

(7,206)

(1,273)

7,592

Operating Profit (before amort. and except.)

(3,189)

(662)

(358)

(8,610)

(14,291)

(9,329)

(1,864)

Intangible Amortisation

(2,608)

(2,567)

(2,520)

(902)

0

0

0

Exceptionals

(700)

0

0

0

0

0

0

Other

0

0

0

0

0

0

0

Operating Profit

(6,496)

(3,229)

(2,878)

(9,511)

(14,291)

(9,329)

(1,864)

Net Interest

(2,191)

97

(123)

(2,011)

(689)

(689)

(689)

Profit Before Tax (norm)

 

 

(5,380)

(565)

(481)

(10,621)

(14,981)

(10,019)

(2,553)

Profit Before Tax (reported)

 

 

(8,687)

(3,131)

(780)

(6,373)

(14,981)

(10,019)

(2,553)

Tax

348

(650)

(203)

948

1,498

1,002

255

Profit After Tax (norm)

(5,164)

(508)

(607)

(9,041)

(13,483)

(9,017)

(2,298)

Profit After Tax (reported)

(8,339)

(3,781)

(983)

(5,424)

(13,483)

(9,017)

(2,298)

Average Number of Shares Outstanding (m)

28.1

35.8

38.6

44.7

50.8

50.8

50.8

EPS - normalised (c)

 

 

(18.3)

(1.4)

(1.6)

(20.2)

(26.6)

(17.8)

(4.5)

EPS - normalised and fully diluted (c)

 

(18.3)

(1.4)

(1.6)

(20.2)

(26.6)

(17.8)

(4.5)

EPS - (IFRS) (c)

 

 

(29.6)

(10.6)

(2.5)

(12.1)

(26.6)

(17.8)

(4.5)

Dividend per share (c)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

EBITDA Margin (%)

6.2

15.2

16.2

-6.3

-22.4

-2.8

11.8

Adj Operating Margin (%)

-11.5

-2.2

-1.1

-28.1

-44.3

-20.5

-2.9

BALANCE SHEET

Fixed Assets

 

 

18,864

16,655

14,761

15,071

16,457

19,231

22,245

Intangible Assets

16,944

14,734

13,092

13,635

15,054

17,875

20,951

Tangible Assets

792

715

702

719

687

639

577

Investments

1,128

1,206

968

716

716

716

716

Current Assets

 

 

37,634

38,004

51,442

83,149

69,065

61,723

62,584

Stocks

99

109

59

11

11

11

11

Debtors

12,384

15,792

20,447

20,861

20,861

24,407

28,556

Cash

11,235

7,883

21,647

53,978

38,396

26,506

22,962

Other

13,916

14,220

9,289

8,299

9,797

10,799

11,054

Current Liabilities

 

 

(19,480)

(21,170)

(22,839)

(21,748)

(22,533)

(26,982)

(33,155)

Creditors

(14,104)

(15,511)

(16,945)

(16,280)

(17,065)

(21,513)

(27,686)

Short term borrowings

(5,376)

(5,659)

(5,893)

(5,469)

(5,469)

(5,469)

(5,469)

Long Term Liabilities

 

 

(17,742)

(18,411)

(22,464)

(31,902)

(31,902)

(31,902)

(31,902)

Long term borrowings

(14,683)

(14,811)

(18,588)

(27,675)

(27,675)

(27,675)

(27,675)

Other long term liabilities

(3,060)

(3,600)

(3,876)

(4,227)

(4,227)

(4,227)

(4,227)

Net Assets

 

 

19,276

15,077

20,901

44,570

31,087

22,070

19,772

CASH FLOW

Operating Cash Flow

 

 

(1,921)

2,583

2,479

(1,045)

(6,421)

(371)

9,616

Net Interest

(626)

(441)

(558)

(501)

(689)

(689)

(689)

Tax

0

0

0

0

0

0

0

Capex

(6,321)

(5,830)

(6,749)

(7,378)

(8,472)

(10,830)

(12,470)

Acquisitions/disposals

1,275

(76)

7,496

5,492

0

0

0

Financing

11,178

0

7,084

27,100

0

0

0

Dividends

0

0

0

0

0

0

0

Net Cash Flow

3,585

(3,764)

9,753

23,669

(15,582)

(11,890)

(3,544)

Opening net debt/(cash)

 

 

12,408

8,824

12,587

2,834

(20,835)

(5,253)

6,637

HP finance leases initiated

0

0

0

0

0

0

0

Other

0

0

0

0

0

0

0

Closing net debt/(cash)

 

 

8,824

12,587

2,834

(20,835)

(5,253)

6,637

10,181

Source: Expert System accounts, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Expert System and prepared and issued by Edison, in consideration of a fee payable by Expert System. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, 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 securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, 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

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Expert System and prepared and issued by Edison, in consideration of a fee payable by Expert System. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, 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 securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, 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

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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