InVision Software
InVision Software Hold
(old: Hold)
PT EUR 15.50
(old: 12.00)
Price
EUR 16.52
Bloomberg
IVX GR
Reuters
IVXG
Sector
Software
Strong figures InVision Software AG released preliminary figures for FY 2010 on January 31, 2011. Sales and earnings slightly exceeded expectations. As such, the company was well in the black again after two loss-making years in 2008 and 2009 and set a new sales record after the peak in 2006. The good balance sheet quality was also improved once more in 2010. The liquid funds rose from EUR 4.5m last year to EUR 5.7m in this year. InVision Software - Q4 2010 Q4/10
Q4/10e
SALES
5.3
E BIT m argin
1.1 21.0%
Figures in EUR m
Software solutions provider for the workforce management with typical sales split between licenses, services, maintenance
Q 4/09
yoy
2010
2010e
2009
yoy
5.1
2.8
91.2%
16.0
15.8
12.0
33.6%
1.1 21.5%
-2.6 -92.7%
-
1.0 5.9%
0.9 5.9%
-7.0 -58.4%
-
S ources: InVision So ftwar e (historical data), Warburg Research (estimat es)
§ Company indicates surprisingly good Q1: the company’s expectations of a good Q1 are another positive aspect. As Q1 is rather weak in the field of enterprise software for traditional reasons, this is a specific indication for continued strong business. The fact that strong investments are made into new workforce management solutions also in Q1 shows that the investment backlog of the last years (which became visible in 2008 and 2009) has really come to an end, leading to catch-up effects. This is expected to have a positive impact on 2011 as a whole.
Share data:
07.02.2011 / Closing price
Market cap:
EUR 36.9 m
Enterprise Value (EV):
EUR 29.8 m
Book value:
EUR 11.9 m
No. of shares:
2.2 m
Trading volume Ø:
EUR 27.6 th
Shareholders: InVision Holding GmbH Peter Bollenbeck Matthias Schroer Armand Zohari Free Float Günther Müller / ASC
22.9 % 17.0 % 17.0 % 17.0 % 14.7 % 11.4 %
Calendar: Figures 2010 Pre. figures Q1 Figures Q1 Pre. figures Q2
03/31/11 04/16/11 05/16/11 07/16/11
Change
2010E old Δ%
2011E old Δ%
Sales EBIT
15.8 0.9
1.3 1.3
17.2 4.7 18.2 20.9 2.7 11.4 3.3 27.6
EPS
0.33
3.0
0.85 27.1 1.04 45.2
Analysis:
2012E old Δ%
Warburg Research
Date of publication:
08.02.2011
Analyst: Felix Ellmann
+49 (0)40-309537-120 [email protected]
§ New product generation: more importantly, however, is that the company plans to release four new products in the course of the year and is set to develop new customer groups with their help in this year. This is remarkable since InVision has only published one product release in the last years while development costs continued to be high. These expenses were mainly spent on the new product generation mentioned above. The new product generation allows addressing much smaller customers in the field of call centres than has been economically reasonable on the basis of the former product. Whilst the company has so far primarily served call centre customers having several hundred of employees (focus on 1,000+), the new product generation will already be of interest for customers from 25 employees onwards. Accordingly, significantly broader market coverage will be possible from 2011/12. Nevertheless, the new product generation should also be attractive for existing customer groups. § Positive news flow in March: the company will provide more details on this product generation in March 2011. Comments on the specifications of the new product generation, its market volume and potential market penetration may result in positive news flow in this connection. In view of the above we are particularly raising the long-term estimates, while slightly reducing the expected tax rate owing to a favourable regional group structure. As a result, the PT is increased from EUR 12.00 to EUR 15.50. The Hold rating is reiterated.
Fiscal year ending: 31.12. in EUR m
Sales Change Sales yoy Gross profit Gross margin EBITDA EBITDA-margin EBIT EBIT-margin Net income EPS Free Cash Flow per share Dividend Dividend Yield EV/Sales EV/EBITDA EV/EBIT PER ROCE Adj. Free Cash Flow Yield
2006
2007
2008
2009
2010E
2011E
2012E
10.7 68.1 % 10.6 99.2 % 2.0 18.9 % 1.9 18.2 % 1.4 0.63 -0.16 0.00 n.a. 3.0 15.9 16.6 26.2 885.9 % 6.0 %
15.9 48.0 % 15.8 99.2 % 3.2 20.3 % 3.1 19.6 % 2.6 1.17 -1.80 0.00 n.a. 2.0 10.1 10.4 14.1 24.6 % 9.2 %
11.9 -24.9 % 11.5 96.4 % -8.7 -72.9 % -8.9 -74.3 % -7.8 -3.51 -2.05 0.00 n.a. 2.7 n.m. n.m. n.m. -44.3 % n.a.
12.0 0.4 % 11.9 99.3 % -6.8 -56.8 % -7.0 -58.4 % -4.7 -2.11 -3.36 0.00 n.a. 2.7 n.m. n.m. n.m. -51.8 % n.a.
16.0 33.6 % 15.8 99.0 % 1.1 7.0 % 1.0 5.9 % 0.8 0.34 0.54 0.00 n.a. 1.9 27.8 32.8 48.6 8.3 % 2.6 %
18.0 12.5 % 17.8 99.0 % 3.2 17.5 % 3.0 16.4 % 2.4 1.08 0.62 0.00 n.a. 1.7 9.4 10.1 15.3 22.7 % 9.5 %
22.0 22.2 % 21.8 99.0 % 4.4 20.0 % 4.2 18.9 % 3.4 1.51 0.89 0.00 n.a. 1.3 6.3 6.7 10.9 26.2 % 14.7 %
Warburg Research
1
InVision Software
Profile
Sales development
Company background
in EUR m 6,0
InVision Software AG was founded in 1995. The two members of the present executive board are also the company’s founders. The company is a pure play software provider with revenues that are typical for this sector: royalties, maintenance and services.
5,0 4,0 3,0 2,0 1,0
Q4/10
Q3/10
Q2/10
Q1/10
Q4/09
Q3/09
Q2/09
Q1/09
Q4/08
Q3/08
Q2/08
Q4/07
Q1/08
Q3/07
Q2/07
Q1/07
0,0
Source: InVision Software
EBIT development
As a product provider InVision offers a unique technology for the optimisation of corporate staff deployment. The core element is complex solution which can automatically produce rotas with a very high degree of optimisation using different optimisation procedures. The solutions are particularly valuable in sectors in which it is extremely important to optimise the work input with the help of concrete requirements and demand forecasts. As a result, InVision is active in a clear niche market enabling the company to generate high margins. Several top-class clients show that InVision is a leader in this niche market. Its clients include absolute blue chips like Deutsche Telekom, Vodafone, IKEA or freenet.
in EUR m 3,0 2,0 1,0
Competitive quality
0,0 -1,0 -2,0 -3,0
Q4/10
Q3/10
Q2/10
Q1/10
Q4/09
Q3/09
Q2/09
Q1/09
Q4/08
Q3/08
Q2/08
Q1/08
Q4/07
Q3/07
Q2/07
Q1/07
-4,0
Personnel planning is a traditional field of activity in the IT sector. Since this market is generally divided and the growth rates are only moderate in the industrialised nations, the only companies that can report strong growth are those that offer substantially superior solutions for highly specific areas of application. This applies in InVision’s case. § InVision specialises in a specific personnel planning segment, namely the (mathematical) optimisation of staff development. There is considerable costcutting potential in this area through the implementation of optimisation solutions. Clear evidence of this potential can be provided to competitors and potential clients, because the solution to the optimisation problems is a mathematical one, meaning that is very easy to justify potential cost savings. Large users can generally expect a ROI within 6 to 12 months.
Source: InVision Software
Sales by regions 2009
Rest of World 53,2%
§ InVision has a leading position on the European market in terms of its core competency: optimisation. It is unlikely that the company’s US competitors will gain a stronger foothold internationally and pose any real competitive threat to InVision in Europe, because they will be unable to build up comparable references in Europe in the short term, do not offer the multilingual service that is required within Europe and often lack fundamental, regional market knowledge.
Germany 46,8%
§ Optimisation offers considerable and, most importantly, measurable potential. More than 17 years of experience in the workforce management segment and an established, referenced solution that has allowed over 300 clients to generate a swift ROI are InVision’s main competitive strengths.
Source: InVision Software
Sales Split by categories in EUR m 10,0 9,0 8,0 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0,0 2005
2006 licence
2007 maintenance
2008
2009 services
Source: InVision Software
Warburg Research
2
InVision Software
Figures
Consolidated Profit & Loss InVision Software in EUR m Sales Increase / decrease in inventory Own work capitalised Total sales Material Expenses Gross profit Personnel expenses Other operating income Other operating expenses Unfrequent items EBITDA Depreciation of fixed assets EBITA Amortisation of intangible fixed assets Impairment charges and amortisation of goodwill EBIT Interest income Interest expenses Financial result Recurring pretax income from cont. operations Extraordinary income/loss EBT Taxes total Net income from continuing operations Income from discontinued operations (net of tax) Net income before minorities Minority interest Net income Sources: InVision Software (historical data), Warburg Research (forecasts)
2006
2007
2008
2009
2010E
2011E
2012E
10.7 0.0 0.0 10.7 0.1 10.6 5.7 0.1 3.0 0.0 2.0 0.1 2.0 0.0 0.0 1.9 0.0 0.1 -0.1 1.9 0.0 1.9 0.5 1.4 0.0 1.4 0.0 1.4
15.9 0.0 0.0 15.9 0.1 15.8 8.4 0.1 4.2 0.0 3.2 0.1 3.1 0.0 0.0 3.1 0.4 0.1 0.1 3.2 0.0 3.2 0.6 2.6 0.0 2.6 0.0 2.6
11.9 0.0 0.0 11.9 0.4 11.5 12.5 0.2 7.9 0.0 -8.7 0.1 -8.8 0.0 0.0 -8.9 0.6 0.1 1.0 -7.8 0.0 -7.8 0.0 -7.8 0.0 -7.8 0.0 -7.8
12.0 0.0 0.0 12.0 0.1 11.9 12.6 0.4 6.5 0.0 -6.8 0.2 -7.0 0.0 0.0 -7.0 0.1 0.1 -0.1 -7.1 0.0 -7.1 -2.3 -4.8 0.0 -4.8 -0.1 -4.7
16.0 0.0 0.0 16.0 0.2 15.8 11.2 0.2 3.7 0.0 1.1 0.1 1.0 0.1 0.0 1.0 0.1 0.0 0.1 1.0 0.0 1.0 0.3 0.8 0.0 0.8 0.0 0.8
18.0 0.0 0.0 18.0 0.2 17.8 11.2 0.2 3.7 0.0 3.2 0.1 3.1 0.1 0.0 3.0 0.1 0.0 0.1 3.0 0.0 3.0 0.6 2.4 0.0 2.4 0.0 2.4
22.0 0.0 0.0 22.0 0.2 21.8 13.2 0.2 4.4 0.0 4.4 0.1 4.3 0.1 0.0 4.2 0.1 0.0 0.1 4.2 0.0 4.2 0.8 3.4 0.0 3.4 0.0 3.4
Consolidated Profit & Loss InVision Software in % of Sales Sales Increase / decrease in inventory Own work capitalised Total sales Material Expenses Gross profit Personnel expenses Other operating income Other operating expenses Unfrequent items EBITDA Depreciation of fixed assets EBITA Amortisation of intangible fixed assets Impairment charges and amortisation of goodwill EBIT Interest income Interest expenses Financial result Recurring pretax income from cont. operations Extraordinary income/loss EBT Taxes total Net income from continuing operations Income from discontinued operations (net of tax) Net income before minorities Minority interest Net income Sources: InVision Software (historical data), Warburg Research (forecasts)
2006
2007
2008
2009
2010E
2011E
2012E
100.0 % 0.0 % 0.0 % 100.0 % 0.8 % 99.2 % 53.5 % 1.3 % 28.1 % 0.0 % 18.9 % 0.5 % 18.4 % 0.2 % 0.0 % 18.2 % 0.1 % 0.9 % -0.6 %
100.0 % 0.0 % 0.0 % 100.0 % 0.8 % 99.2 % 52.9 % 0.6 % 26.6 % 0.0 % 20.3 % 0.5 % 19.7 % 0.2 % 0.0 % 19.6 % 2.5 % 0.8 % 0.9 %
100.0 % 0.0 % 0.0 % 100.0 % 3.6 % 96.4 % 105.1 % 1.6 % 65.8 % 0.0 % -72.9 % 1.1 % -74.0 % 0.4 % 0.0 % -74.3 % 4.7 % 0.5 % 8.7 %
100.0 % 0.0 % 0.0 % 100.0 % 0.7 % 99.3 % 105.4 % 3.6 % 54.4 % 0.0 % -56.8 % 1.3 % -58.1 % 0.3 % 0.0 % -58.4 % 0.7 % 0.6 % -0.8 %
100.0 % 0.0 % 0.0 % 100.0 % 1.0 % 99.0 % 70.0 % 1.0 % 23.0 % 0.0 % 7.0 % 0.5 % 6.5 % 0.6 % 0.0 % 5.9 % 0.3 % 0.0 % 0.3 %
100.0 % 0.0 % 0.0 % 100.0 % 1.0 % 99.0 % 62.0 % 1.0 % 20.5 % 0.0 % 17.5 % 0.5 % 17.0 % 0.6 % 0.0 % 16.4 % 0.3 % 0.0 % 0.3 %
100.0 % 0.0 % 0.0 % 100.0 % 1.0 % 99.0 % 60.0 % 1.0 % 20.0 % 0.0 % 20.0 % 0.5 % 19.5 % 0.6 % 0.0 % 18.9 % 0.2 % 0.0 % 0.2 %
17.5 % 0.0 % 17.5 % 4.2 % 13.3 % 0.0 % 13.3 % 0.1 % 13.2 %
20.4 % 0.0 % 20.4 % 4.0 % 16.4 % 0.0 % 16.4 % 0.0 % 16.4 %
-65.6 % 0.0 % -65.6 % 0.1 % -65.7 % 0.0 % -65.7 % 0.0 % -65.7 %
-59.3 % 0.0 % -59.3 % -19.2 % -40.1 % 0.0 % -40.1 % -0.6 % -39.5 %
6.3 % 0.0 % 6.3 % 1.6 % 4.7 % 0.0 % 4.7 % 0.0 % 4.7 %
16.7 % 0.0 % 16.7 % 3.3 % 13.4 % 0.0 % 13.4 % 0.0 % 13.4 %
19.2 % 0.0 % 19.2 % 3.8 % 15.3 % 0.0 % 15.3 % 0.0 % 15.3 %
Warburg Research
3
InVision Software
Figures
Balance sheet InVision Software in EUR m
2006
2007
2008
2009
2010E
2011E
2012E
0.0 0.0 0.0 0.1 0.0 0.1 0.0 3.7 1.7 0.1 5.6 5.7
0.1 0.1 0.0 0.2 0.0 0.3 0.0 8.2 2.7 16.8 27.7 28.0
0.1 0.1 0.0 0.4 0.0 0.5 0.0 4.9 3.8 12.2 20.9 21.4
0.1 0.1 0.0 0.4 0.0 0.5 0.0 5.5 6.0 4.5 16.1 16.6
0.1 0.1 0.0 0.5 0.0 0.6 0.0 5.2 6.0 5.7 17.0 17.6
0.2 0.2 0.0 0.6 0.0 0.8 0.0 6.2 6.0 7.1 19.3 20.1
0.2 0.2 0.0 0.7 0.0 0.9 0.0 7.8 6.0 9.1 22.9 23.8
Subscribed capital 0.4 Additional paid-in capital 0.0 Surplus capital 1.3 Other equity components -1.5 Book value 0.2 Minority Interest 0.0 Total equity 0.2 Provision for pensions and similar obligations 0.0 Provisions 1.3 Financial liabilities 0.9 Accounts payable 0.7 Other liabilities 2.7 Liabilities 5.5 Total liabilities and shareholders' equity 5.7 Sources: InVision Software (historical data), Warburg Research (forecasts)
2.2 20.6 1.4 -0.2 24.1 0.0 24.1 0.0 1.4 0.1 0.5 1.9 3.9 28.0
2.2 20.6 1.4 -8.6 15.7 0.0 15.7 0.0 3.0 0.2 0.8 1.7 5.7 21.4
2.2 20.6 1.4 -13.1 11.2 -0.1 11.1 0.0 1.3 0.0 0.8 3.3 5.5 16.6
2.2 20.6 2.2 -13.1 11.9 -0.1 11.8 0.0 1.3 0.0 1.1 3.3 5.8 17.6
2.2 20.6 4.6 -13.1 14.3 -0.1 14.2 0.0 1.3 0.0 1.2 3.3 5.9 20.1
2.2 20.6 7.9 -13.1 17.7 -0.1 17.6 0.0 1.3 0.0 1.5 3.3 6.2 23.8
2006
2007
2008
2009
2010E
2011E
2012E
0.8 % 0.8 % 0.0 % 1.7 % 0.0 % 2.5 % 0.0 % 64.9 % 30.3 % 2.5 % 97.7 % 100.0 %
0.3 % 0.3 % 0.0 % 0.8 % 0.0 % 1.0 % 0.0 % 29.2 % 9.8 % 60.0 % 99.0 % 100.0 %
0.3 % 0.3 % 0.0 % 2.0 % 0.0 % 2.3 % 0.0 % 22.8 % 17.8 % 57.1 % 97.7 % 100.0 %
0.7 % 0.7 % 0.0 % 2.3 % 0.0 % 3.0 % 0.0 % 33.3 % 36.4 % 27.2 % 96.9 % 100.0 %
0.9 % 0.9 % 0.0 % 2.8 % 0.0 % 3.7 % 0.0 % 29.6 % 34.3 % 32.5 % 96.3 % 100.0 %
0.8 % 0.8 % 0.0 % 3.0 % 0.0 % 3.9 % 0.0 % 30.9 % 30.0 % 35.3 % 96.2 % 100.0 %
0.7 % 0.7 % 0.0 % 2.9 % 0.0 % 3.6 % 0.0 % 32.8 % 25.4 % 38.2 % 96.3 % 100.0 %
Subscribed capital 6.7 % Additional paid-in capital 0.0 % Surplus capital 23.4 % Other equity components -25.9 % Book value 4.2 % Minority Interest 0.2 % Total equity 4.3 % Provision for pensions and similar obligations 0.0 % Provisions 22.2 % Financial liabilities 15.4 % Accounts payable 11.5 % Other liabilities 46.8 % Liabilities 95.9 % Total liabilities and shareholders' equity 100.0 % Sources: InVision Software (historical data), Warburg Research (forecasts)
8.0 % 73.6 % 5.1 % -0.6 % 86.1 % 0.0 % 86.1 % 0.0 % 5.1 % 0.3 % 1.7 % 6.9 % 14.0 % 100.0 %
10.4 % 96.3 % 6.6 % -40.1 % 73.3 % 0.0 % 73.3 % 0.0 % 13.8 % 1.0 % 3.7 % 8.2 % 26.7 % 100.0 %
13.5 % 124.2 % 8.5 % -79.0 % 67.2 % -0.4 % 66.8 % 0.0 % 8.0 % 0.1 % 5.0 % 20.1 % 33.1 % 100.0 %
12.7 % 117.1 % 12.3 % -74.5 % 67.6 % -0.4 % 67.2 % 0.0 % 7.5 % 0.1 % 6.3 % 19.0 % 32.8 % 100.0 %
11.1 % 102.6 % 22.7 % -65.3 % 71.2 % -0.4 % 70.8 % 0.0 % 6.6 % 0.0 % 6.0 % 16.6 % 29.2 % 100.0 %
9.4 % 86.6 % 33.4 % -55.1 % 74.3 % -0.3 % 74.0 % 0.0 % 5.6 % 0.0 % 6.3 % 14.1 % 25.9 % 100.0 %
Assets Intangible assets thereof other intangible assets thereof Goodwill Property, plant and equipment Financial assets Fixed assets Inventories Accounts receivable Other Assets Liquid assets Current assets Total assets Liabilities and shareholders' equity
Balance sheet InVision Software in % of Balance Sheet Total Assets Intangible assets thereof other intangible assets thereof Goodwill Property, plant and equipment Financial assets Fixed assets Inventories Accounts receivable Other Assets Liquid assets Current assets Total assets Liabilities and shareholders' equity
Warburg Research
4
InVision Software
Figures
Statement of Cash Flows InVision Software in EUR m Net income Depreciation of fixed assets Amortisation of goodwill Amortisation of intangible assets Increase/decrease in long-term provisions Other costs affecting income / expenses Cash Flow Increase / decrease in inventory Increase / decrease in accounts receivable Increase / decrease in accounts payable Increase / decrease in other working capital positions Increase / decrease in working capital Cash flow from operating activities CAPEX Payments for acquisitions Financial investments Income from asset disposals Cash flow from investing activities Change in financial liabilities Dividends paid Purchase of own shares Capital measures Others Cash flow from financing activities Change in liquid funds Effects of exchange rate changes on cash Liquid assets at end of period Sources: InVision Software (historical data), Warburg Research (forecasts)
2006
2007
2008
2009
2010E
2011E
2012E
1.4 0.1 0.0 0.0 0.1 0.4 2.0 0.0 -2.7 -0.2 0.7 -2.3 -0.3 -0.1 0.0 0.0 0.0 -0.1 0.4 0.0 0.0 0.0 0.0 0.4 0.1 0.0 0.1
2.6 0.1 0.0 0.0 0.3 -1.0 2.1 0.0 -4.5 -0.2 -1.2 -5.8 -3.8 -0.3 0.0 -13.0 0.0 -13.3 -0.9 0.0 0.0 21.3 0.0 20.5 3.4 0.0 3.6
-7.8 0.1 0.0 0.0 0.9 -0.7 -7.5 0.0 3.3 0.3 -0.3 3.3 -4.2 -0.4 0.0 -3.0 14.9 11.5 0.0 0.0 0.0 0.0 0.0 0.0 7.3 0.0 24.1
-4.7 0.2 0.0 0.0 -0.4 -3.3 -8.2 0.0 -0.7 0.0 1.6 0.9 -7.3 -0.2 0.0 -11.2 11.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -7.4 0.0 4.9
0.8 0.1 0.0 0.1 0.0 0.0 0.9 0.0 0.3 0.3 0.0 0.6 1.5 -0.3 0.0 0.0 0.0 -0.3 0.0 0.0 0.0 0.0 0.0 0.0 1.2 0.0 5.7
2.4 0.1 0.0 0.1 0.0 0.0 2.6 0.0 -1.0 0.1 0.0 -0.9 1.7 -0.3 0.0 0.0 0.0 -0.3 0.0 0.0 0.0 0.0 0.0 0.0 1.4 0.0 7.1
3.4 0.1 0.0 0.1 0.0 0.0 3.6 0.0 -1.6 0.3 0.0 -1.3 2.3 -0.3 0.0 0.0 0.0 -0.3 0.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 9.1
Warburg Research
5
InVision Software
Figures
Financial Ratios InVision Software 2006 Operational Efficiency Total Operating Costs / Sales 81.1 % Sales per Employee 100,308 EBITDA per Employee 18,963 EBIT-margin 18.2 % EBITDA / Operating Assets 64.6 % ROA 1013.6 % Efficiency of Capital Employment Plant Turnover 113 Operating Assets Turnover 3.4 Capital Employed Turnover 9.5 Return on Capital ROCE 885.9 % EBITDA / Avg. Capital Employed 922.3 % ROE 574.5 % Net Profit / Avg. Equity -323.2 % Recurring Net Profit / Avg. Equity -325.1 % ROIC 57.4 % Solvency Net Debt 0.7 Net Gearing 298.4 % Book Value of Equity / Book Value of Debt 28.1 % Current ratio 1.3 Acid Test Ratio 1.0 EBITDA / Interest Paid 20.7 Interest Cover 21.0 Cash Flow Free Cash Flow -0.4 Free Cash Flow / Sales -3.4 % Adj. Free Cash Flow 2.0 Adj. Free Cash Flow / Sales 9.8 % Free Cash Flow / Net Profit -25.5 % Interest Received / Avg. Cash 4.6 % Interest Paid / Avg. Debt 14.9 % Dividend Payout Ratio 0.0 % Fund Management Investment ratio 0.6 % Maint. Capex / Sales 0.6 % Capex / Dep 82.5 % Avg. Working Capital / Sales 14.8 % Trade Creditors / Trade Debtors 566.6 % Inventory turnover (days) n.a. Receivables collection period (DSOs) 126 Payables collection period (days) 22.2 Cash conversion cycle (days) n.a. Valuation Dividend Yield n.a. P/B 149.4 EV/sales 3.0 EV/EBITDA 15.9 EV/EBIT 16.6 EV/FCF n.m. P/E 26.2 P/CF 18.6 Adj. Free Cash Flow Yield 6.2 % Sources: InVision Software (historical data), Warburg Research (forecasts)
2007
2008
2009
2010E
2011E
2012E
79.7 % 108,767 22,027 19.6 % 40.7 % 893.8 %
172.9 % 53,022 -38,634 -74.3 % -192.4 % -1567.8 %
156.8 % 53,686 -30,516 -58.4 % -133.7 % -952.4 %
93.0 % 71,749 5,022 5.9 % 24.4 % 115.9 %
82.5 % 80,718 14,126 16.4 % 56.2 % 309.6 %
80.0 % 98,655 19,731 18.9 % 62.9 % 389.8 %
71.2 2.0 0.7
27.5 2.6 0.8
31.7 2.4 1.1
32.1 3.5 1.4
29.6 3.2 1.3
31.5 3.1 1.2
24.6 % 25.4 % 10.8 % 21.4 % 21.4 % 10.1 %
-44.3 % -43.4 % -50.0 % -39.4 % -39.4 % -41.1 %
-51.8 % -50.4 % -42.6 % -35.3 % -35.9 % -38.2 %
8.3 % 9.8 % 6.3 % 6.5 % 6.5 % 5.6 %
22.7 % 24.2 % 16.9 % 18.5 % 18.5 % 15.4 %
26.2 % 27.6 % 19.2 % 21.2 % 21.2 % 17.7 %
-16.7 -69.4 % 500.0 % 11.1 7.1 24.9 n.a.
-12.0 -76.5 % 500.0 % 7.6 3.7 0.0 n.a.
-4.5 -40.6 % 500.0 % 3.9 2.9 0.0 n.a.
-5.7 -48.3 % 500.0 % 3.8 2.9 n.a. n.a.
-7.1 -49.8 % 500.0 % 4.2 3.3 n.a. n.a.
-9.1 -51.5 % 500.0 % 4.7 3.7 n.a. n.a.
-4.0 -25.3 % 3.0 14.5 % -153.8 % 4.6 % 26.8 % 0.0 %
-4.6 -38.5 % -9.1 -84.9 % 58.5 % 3.9 % 43.6 % 0.0 %
-7.5 -62.7 % -6.9 -57.6 % 158.9 % 1.0 % 60.0 % 0.0 %
1.2 7.6 % 0.8 3.4 % 161.1 % 1.0 % 0.0 % 0.0 %
1.4 7.7 % 2.8 12.4 % 57.2 % 0.8 % 0.0 % 0.0 %
2.0 9.0 % 4.1 14.7 % 58.9 % 0.6 % 0.0 % 0.0 %
83.5 % 1.6 % 12516.0 % 33.8 % 1701.7 % n.a. 188 11.0 n.a.
28.4 % 3.2 % 1923.3 % 49.3 % 613.8 % n.a. 149 24.3 n.a.
95.1 % 1.5 % 5993.7 % 36.7 % 673.0 % n.a. 169 25.1 n.a.
2.0 % 2.0 % 189.3 % 27.5 % 472.7 % 0.0 118 25.1 93.0
1.8 % 1.8 % 168.2 % 25.3 % 516.7 % 0.0 125 25.1 100
1.5 % 1.5 % 137.7 % 25.7 % 520.0 % 0.0 130 25.1 105
n.a. 1.5 2.0 10.1 10.4 n.m. 14.1 17.8 6.4 %
n.a. 2.4 2.7 n.m. n.m. n.m. n.m. neg, n.a.
n.a. 3.3 2.7 n.m. n.m. n.m. n.m. neg, n.a.
n.a. 3.1 1.9 27.8 32.8 25.7 48.6 40.1 3.0 %
n.a. 2.6 1.7 9.4 10.1 21.6 15.3 14.2 8.7 %
n.a. 2.1 1.3 6.3 6.7 14.0 10.9 10.2 13.0 %
Warburg Research
6
InVision Software
Figures
Free Cash Flow Yield - InVision Software Figures in EUR m
+ + +
Net Income Depreciation + Amortisation Net Interest Income Taxes Maintenance Capex Others
= Adjusted Free Cash Flow
2006
2007
2008
2009
2010e
2011e
2012e
1.4 0.1 -0.1 0.5 0.1 0.0
2.6 0.1 0.1 0.6 0.3 0.0
-7.8 0.2 1.0 0.0 0.4 0.0
-4.7 0.2 -0.1 -2.3 0.2 0.0
0.8 0.2 0.1 0.3 0.3 0.0
2.4 0.2 0.1 0.6 0.3 0.0
3.4 0.2 0.1 0.8 0.3 0.0
2.0
3.0
-9.1
-6.9
0.8
2.8
4.1
6.0% 10.0%
9.1% 10.0%
-28.0% 10.0%
-21.3% 10.0%
2.6% 10.0%
9.5% 10.0%
14.7% 10.0%
= Enterprise Value
32.4
32.4
32.4
32.4
31.2
29.8
27.8
= Fair Enterprise Value
19.6
29.6
-
-
8.0
28.3
40.8
- Net Debt (Cash) - Pension Liabilities - Others
-4.5 0.0 -0.1
-4.5 0.0 -0.1
-4.5 0.0 -0.1
-4.5 0.0 -0.1
-5.7 0.0 -0.1
-7.1 0.0 -0.1
-9.1 0.0 -0.1
= Fair Market Capitalisation
24.1
34.2
-
-
13.8
35.4
49.9
2.2
2.2
2.2
2.2
2.2
2.2
2.2
Adjusted Free Cash Flow Yield Hurdle rate
No. of shares (m) = Fair value per share (EUR) premium (-) / discount (+) in %
10.79
15.30
-
-
6.16
15.86
22.34
-34.6%
-7.3%
-
-
-62.7%
-4.0%
35.3%
8.77 9.34 10.00 10.79 11.77 12.98 14.54
12.24 13.09 14.10 15.30 16.78 18.62 20.99
-
-
5.34 5.57 5.84 6.16 6.56 7.06 7.69
12.94 13.75 14.71 15.86 17.27 19.03 21.29
18.13 19.30 20.68 22.34 24.37 26.90 30.16
Sensitivity Fair value per Share (EUR)
Hurdle rate
13.0% 12.0% 11.0% 10.0% 9.0% 8.0% 7.0%
Sources: InVision Software (historical data), Warburg Research (forecasts)
Warburg Research
7
InVision Software
Figures
DCF Model - InVision Software 2010e
2011e
2012e
2013e
2014e
2015e
2016e
2017e
2018e
2019e
2020e
2021e
2022e
2023e
16.0 33.6%
18.0 12.5%
22.0 22.2%
23.8 8.0%
25.4 7.0%
27.2 7.0%
28.3 4.0%
29.4 4.0%
30.3 3.0%
31.2 3.0%
32.2 3.0%
33.1 3.0%
33.8 2.0%
34.5 2.0%
1.0 5.9%
3.0 16.4%
4.2 18.9%
4.5 19.0%
4.8 19.0%
5.2 19.0%
5.4 19.0%
5.6 19.0%
5.8 19.0%
5.9 19.0%
6.1 19.0%
6.3 19.0%
6.4 19.0%
6.5 19.0%
Tax rate
25.0%
20.0%
20.0%
25.0%
25.0%
25.0%
25.0%
25.0%
25.0%
25.0%
35.0%
35.0%
35.0%
35.0%
NOPAT
0.7
2.4
3.3
3.4
3.6
3.9
4.0
4.2
4.3
4.4
4.0
4.1
4.2
4.3
Depreciation in % of Sales
0.2 1.1%
0.2 1.1%
0.2 1.1%
0.2 1.0%
0.3 1.0%
0.3 1.0%
0.3 1.0%
0.3 1.0%
0.3 1.0%
0.3 1.0%
0.3 1.0%
0.3 1.0%
0.3 1.0%
0.3 1.0%
Change in Liquidity from - Working Capital - Capex Capex in % of Sales
0.6 -0.3 2.0%
-0.9 -0.3 1.8%
-1.3 -0.3 1.5%
-1.8 -0.5 2.0%
-0.1 -0.3 1.0%
0.0 -0.3 1.0%
-0.3 -0.3 1.0%
-0.3 -0.3 1.0%
-0.3 -0.3 1.0%
-0.3 -0.3 1.0%
-0.3 -0.3 1.0%
-0.3 -0.3 1.0%
-0.2 -0.3 1.0%
-0.2 -0.3 1.0%
Other
0.0
0.0
0.0
0.0
-0.1
-0.1
-0.1
-0.1
-0.1
-0.1
-0.1
-0.1
-0.1
0.0
Free Cash Flow (WACC-Model)
1.2
1.3
1.9
1.3
3.5
3.8
3.6
3.8
4.0
4.1
3.6
3.7
3.9
4.0
Figures in EUR m Sales Change EBIT EBIT-Margin
Model parameter Debt ratio Costs of Debt Market return Risk free rate
Valuation (mln) 0.00% n.a. 9.00% 4.25%
Beta WACC
1.50 11.38%
Terminal Growth
Present values 2023e Terminal Value Liabilities Liquidity Equity Value
2.00%
19.9 10.2 0.0 4.5 34.6
No. of shares (mln) Value per share (EUR)
2.24 15.49
Sensitivity Value per Share (EUR) Terminal Growth WACC 1.25% 12.38% 13.84 11.88% 14.46 11.63% 14.80 11.38% 15.16 11.13% 15.53 10.88% 15.92 10.38% 16.77
1.50% 13.91 14.56 14.90 15.26 15.64 16.05 16.92
1.75% 14.00 14.65 15.00 15.38 15.77 16.18 17.08
2.00% 14.08 14.75 15.11 15.49 15.90 16.32 17.25
2.25% 14.17 14.86 15.23 15.62 16.03 16.47 17.42
2.50% 14.27 14.97 15.35 15.75 16.18 16.63 17.61
2.75% 14.37 15.09 15.48 15.89 16.33 16.79 17.81
Delta EBIT-margin WACC -1.5 pp 12.38% 12.91 11.88% 13.52 11.63% 13.85 11.38% 14.20 11.13% 14.57 10.88% 14.96 10.38% 15.80
-1.0 pp 13.30 13.93 14.27 14.63 15.01 15.41 16.29
-0.5 pp 13.69 14.34 14.69 15.06 15.45 15.87 16.77
0.0 14.08 14.75 15.11 15.49 15.90 16.32 17.25
+0.5 pp 14.47 15.16 15.53 15.92 16.34 16.77 17.73
+1.0 pp 14.86 15.57 15.95 16.35 16.78 17.23 18.21
+1.5 pp 15.25 15.98 16.37 16.79 17.22 17.68 18.69
Source: Warburg Research
Warburg Research
8
InVision Software
Figures
CAPEX and Cash Flow - InVision Software EUR m 4,0
2006 CAPEX 0,1 2,0 Maintenance CAPEX 0,1 Cash Flow -0,3 0,0 2006
2007 0,3 0,3 -3,8
2007
2008 0,4 0,4 -4,2
2008
2009 0,2 0,2 -7,3
2009
Balance Sheet Quality - InVision Software
2010e 0,3 0,3 1,5
2010e
2011e 0,3 0,3 1,7 2011e
2012e 0,3 0,3 2,3 2012e
-2,0
EUR m 30,0
2006 25,0 Net Debt 0,7 20,0 Book value of Equity 0,2 Net Gearing298,4% 15,0
2007 -16,7 24,1 -69,4%
2008 -12,0 15,7 -76,5%
2009 -4,5 11,2 -40,6%
350,0% 2011e 2012e 300,0% -7,1 -9,1 14,3 250,0% 17,7 -49,8% 200,0% -51,5%
2010e -5,7 11,9 -48,3%
10,0
150,0%
5,0
100,0%
0,0 -4,0
50,0% 2006
-5,0
-6,0 -8,0 CAPEX
Maintenance CAPEX
2007
2008
2009
2010e
2011e
-50,0%
-15,0
-100,0%
-20,0
-150,0% Net Debt
Book value of Equity
Net Gearing
Sources: InVision Software (historical data), Warburg Research (forecasts)
Sources: InVision Software (historical data), Warburg Research (forecasts)
§ Capex and maintenance capex can be neglected § Cash flow mainly determined by operating development § Positiver cash flow expected in 2010
§ IPO in 2007 resulted in high cash § Equity also significantly increased as a consequence § Net gearing thus is negative
Free Cash Flow Generation - InVision Software
Working Capital - InVision Software
2006 2007 Free Cash Flow -0,4 -4,0 2,0 Free Cash Flow -3,4% / Sales -25,3%
2008 -4,6 -38,5%
2009 -7,5 -62,7%
2010e 1,2 7,6%
2009
2010e
2011e
2011e 1,4 7,7%
0,0
20,0% 2012e 10,0% 2,0 9,0% 0,0% -10,0%
2006
2007
2008
2012e
-2,0
-20,0% -30,0%
-4,0 -6,0 -8,0 Free Cash Flow
EUR m 9,0 2006 2007 8,0 Working Capital 3,0 7,7 7,0 Working Capital 28,4% / Sales 48,4% 6,0
2008 4,1 34,2%
2009 4,7 39,3%
2010e 4,1 25,6%
2011e 5,0 27,8%
5,0
3,0 2,0
-50,0%
1,0
-60,0%
0,0
60,0% 2012e 50,0% 6,3 28,6% 40,0% 30,0%
4,0
-40,0%
-70,0%
0,0%
-10,0
Cash Flow
EUR m 4,0
2012e
20,0% 10,0% 0,0% 2006
2007
2008
2009
Working Capital
Free Cash Flow / Sales
2010e
2011e
2012e
Working Capital / Sales
Sources: InVision Software (historical data), Warburg Research (forecasts)
Sources: InVision Software (historical data), Warburg Research (forecasts)
§ Cash flow in 2007 negative due to high receivables § No improvement in 2008/09 owing to high losses § Turnaround in 2010
§ Significant business expansion also increased the working capital in 2007 § Stringent receivables management in 2008 and reduction of working capital § However, working capital is basically high in relation to sales
Operating Leverage - InVision Software
ROCE Development - InVision Software
30,0 2006 20,0 Operating Leverage10,0 OPEX / Sales81,1% 0,0 -10,0
2006
2007
2007 1,2 79,7% 2008
2008 172,9% 2009
2009 -59,9 156,8% 2010e
2010e 93,0%
2011e 16,9 82,5%
200,0% 2012e 180,0% 1,8 160,0% 80,0% 140,0%
2011e
2012e
120,0%
-20,0
100,0%
-30,0
80,0%
-40,0
60,0%
-50,0
40,0%
-60,0
20,0%
-70,0
0,0% Operating Leverage
OPEX / Sales
1000,0% 2006 2007 ROCE 885,9% 24,6% 800,0% EBIT-margin 18,2% 19,6% Capital Employed9,5 Turnover 0,7 600,0%
2008 -44,3% -74,3% 0,8
2009 -51,8% -58,4% 1,1
2010e 8,3% 5,9% 1,4
2011e 22,7% 16,4% 1,3
12,0 2012e 10,0 26,2% 18,9% 8,01,2 6,0
400,0% 4,0 200,0%
2,0
0,0%
0,0 2006
2007
2008
2009
2010e
2011e
2012e
-200,0%
-2,0 ROCE
EBIT-margin
Capital Employed Turnover
Sources: InVision Software (historical data), Warburg Research (forecasts)
Sources: InVision Software (historical data), Warburg Research (forecasts)
§ Earnings highly volatile in dependence of sales § This is due to the high dependence on licence revenues § Opex cannot be covered by far in 2008
§ Capital employed very low in 2005/2006, ROCE therefore has no significance § Capital employed significantly increased after IPO (2007) § ROCE and EBIT margin clearly negative in 2008
Warburg Research
9
InVision Software
Disclaimer
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Warburg Research
10
InVision Software
Disclaimer
Investment recommendation: expected direction of the share price development for equity security up to the given Target price in the opinion of the analyst who covers the issue. B H S “-“
Buy: Hold: Sell: Rating suspended:
The price of the analysed equity security is expected to rise over the next 12 months. The price of the analysed equity security is expected to remain mostly flat over the next 12 months. The price of the analysed equity security is expected to fall over the next 12 months. The available information does not currently permit an evaluation of the company.
M.M.Warburg & CO KGaA and Warburg Research GmbH research universe by rating: Rating
Number of stocks
% of Universe
Buy
101
56%
Hold
59
33%
Sell
9
5%
Rating suspended
12
7%
Total
181
M.M.Warburg & CO KGaA and Warburg Research GmbH research universe by rating, looking only at companies for which a disclosure according to section 34b German Securities Trading Act has to be made:
Rating
Number of stocks
% of Universe
Buy
71
68%
Hold
28
27%
Sell
4
4%
Rating suspended
2
2%
Total
105
The charts have markings if Warburg Research GmbH changed its rating in the last 12 months. Every marking represents the date and closing price on the day of the rating change.
Warburg Research
11
InVision Software
Contact
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Warburg Research
12
(old: Hold)
PT EUR 15.50
(old: 12.00)
Price
EUR 16.52
Bloomberg
IVX GR
Reuters
IVXG
Sector
Software
Strong figures InVision Software AG released preliminary figures for FY 2010 on January 31, 2011. Sales and earnings slightly exceeded expectations. As such, the company was well in the black again after two loss-making years in 2008 and 2009 and set a new sales record after the peak in 2006. The good balance sheet quality was also improved once more in 2010. The liquid funds rose from EUR 4.5m last year to EUR 5.7m in this year. InVision Software - Q4 2010 Q4/10
Q4/10e
SALES
5.3
E BIT m argin
1.1 21.0%
Figures in EUR m
Software solutions provider for the workforce management with typical sales split between licenses, services, maintenance
Q 4/09
yoy
2010
2010e
2009
yoy
5.1
2.8
91.2%
16.0
15.8
12.0
33.6%
1.1 21.5%
-2.6 -92.7%
-
1.0 5.9%
0.9 5.9%
-7.0 -58.4%
-
S ources: InVision So ftwar e (historical data), Warburg Research (estimat es)
§ Company indicates surprisingly good Q1: the company’s expectations of a good Q1 are another positive aspect. As Q1 is rather weak in the field of enterprise software for traditional reasons, this is a specific indication for continued strong business. The fact that strong investments are made into new workforce management solutions also in Q1 shows that the investment backlog of the last years (which became visible in 2008 and 2009) has really come to an end, leading to catch-up effects. This is expected to have a positive impact on 2011 as a whole.
Share data:
07.02.2011 / Closing price
Market cap:
EUR 36.9 m
Enterprise Value (EV):
EUR 29.8 m
Book value:
EUR 11.9 m
No. of shares:
2.2 m
Trading volume Ø:
EUR 27.6 th
Shareholders: InVision Holding GmbH Peter Bollenbeck Matthias Schroer Armand Zohari Free Float Günther Müller / ASC
22.9 % 17.0 % 17.0 % 17.0 % 14.7 % 11.4 %
Calendar: Figures 2010 Pre. figures Q1 Figures Q1 Pre. figures Q2
03/31/11 04/16/11 05/16/11 07/16/11
Change
2010E old Δ%
2011E old Δ%
Sales EBIT
15.8 0.9
1.3 1.3
17.2 4.7 18.2 20.9 2.7 11.4 3.3 27.6
EPS
0.33
3.0
0.85 27.1 1.04 45.2
Analysis:
2012E old Δ%
Warburg Research
Date of publication:
08.02.2011
Analyst: Felix Ellmann
+49 (0)40-309537-120 [email protected]
§ New product generation: more importantly, however, is that the company plans to release four new products in the course of the year and is set to develop new customer groups with their help in this year. This is remarkable since InVision has only published one product release in the last years while development costs continued to be high. These expenses were mainly spent on the new product generation mentioned above. The new product generation allows addressing much smaller customers in the field of call centres than has been economically reasonable on the basis of the former product. Whilst the company has so far primarily served call centre customers having several hundred of employees (focus on 1,000+), the new product generation will already be of interest for customers from 25 employees onwards. Accordingly, significantly broader market coverage will be possible from 2011/12. Nevertheless, the new product generation should also be attractive for existing customer groups. § Positive news flow in March: the company will provide more details on this product generation in March 2011. Comments on the specifications of the new product generation, its market volume and potential market penetration may result in positive news flow in this connection. In view of the above we are particularly raising the long-term estimates, while slightly reducing the expected tax rate owing to a favourable regional group structure. As a result, the PT is increased from EUR 12.00 to EUR 15.50. The Hold rating is reiterated.
Fiscal year ending: 31.12. in EUR m
Sales Change Sales yoy Gross profit Gross margin EBITDA EBITDA-margin EBIT EBIT-margin Net income EPS Free Cash Flow per share Dividend Dividend Yield EV/Sales EV/EBITDA EV/EBIT PER ROCE Adj. Free Cash Flow Yield
2006
2007
2008
2009
2010E
2011E
2012E
10.7 68.1 % 10.6 99.2 % 2.0 18.9 % 1.9 18.2 % 1.4 0.63 -0.16 0.00 n.a. 3.0 15.9 16.6 26.2 885.9 % 6.0 %
15.9 48.0 % 15.8 99.2 % 3.2 20.3 % 3.1 19.6 % 2.6 1.17 -1.80 0.00 n.a. 2.0 10.1 10.4 14.1 24.6 % 9.2 %
11.9 -24.9 % 11.5 96.4 % -8.7 -72.9 % -8.9 -74.3 % -7.8 -3.51 -2.05 0.00 n.a. 2.7 n.m. n.m. n.m. -44.3 % n.a.
12.0 0.4 % 11.9 99.3 % -6.8 -56.8 % -7.0 -58.4 % -4.7 -2.11 -3.36 0.00 n.a. 2.7 n.m. n.m. n.m. -51.8 % n.a.
16.0 33.6 % 15.8 99.0 % 1.1 7.0 % 1.0 5.9 % 0.8 0.34 0.54 0.00 n.a. 1.9 27.8 32.8 48.6 8.3 % 2.6 %
18.0 12.5 % 17.8 99.0 % 3.2 17.5 % 3.0 16.4 % 2.4 1.08 0.62 0.00 n.a. 1.7 9.4 10.1 15.3 22.7 % 9.5 %
22.0 22.2 % 21.8 99.0 % 4.4 20.0 % 4.2 18.9 % 3.4 1.51 0.89 0.00 n.a. 1.3 6.3 6.7 10.9 26.2 % 14.7 %
Warburg Research
1
InVision Software
Profile
Sales development
Company background
in EUR m 6,0
InVision Software AG was founded in 1995. The two members of the present executive board are also the company’s founders. The company is a pure play software provider with revenues that are typical for this sector: royalties, maintenance and services.
5,0 4,0 3,0 2,0 1,0
Q4/10
Q3/10
Q2/10
Q1/10
Q4/09
Q3/09
Q2/09
Q1/09
Q4/08
Q3/08
Q2/08
Q4/07
Q1/08
Q3/07
Q2/07
Q1/07
0,0
Source: InVision Software
EBIT development
As a product provider InVision offers a unique technology for the optimisation of corporate staff deployment. The core element is complex solution which can automatically produce rotas with a very high degree of optimisation using different optimisation procedures. The solutions are particularly valuable in sectors in which it is extremely important to optimise the work input with the help of concrete requirements and demand forecasts. As a result, InVision is active in a clear niche market enabling the company to generate high margins. Several top-class clients show that InVision is a leader in this niche market. Its clients include absolute blue chips like Deutsche Telekom, Vodafone, IKEA or freenet.
in EUR m 3,0 2,0 1,0
Competitive quality
0,0 -1,0 -2,0 -3,0
Q4/10
Q3/10
Q2/10
Q1/10
Q4/09
Q3/09
Q2/09
Q1/09
Q4/08
Q3/08
Q2/08
Q1/08
Q4/07
Q3/07
Q2/07
Q1/07
-4,0
Personnel planning is a traditional field of activity in the IT sector. Since this market is generally divided and the growth rates are only moderate in the industrialised nations, the only companies that can report strong growth are those that offer substantially superior solutions for highly specific areas of application. This applies in InVision’s case. § InVision specialises in a specific personnel planning segment, namely the (mathematical) optimisation of staff development. There is considerable costcutting potential in this area through the implementation of optimisation solutions. Clear evidence of this potential can be provided to competitors and potential clients, because the solution to the optimisation problems is a mathematical one, meaning that is very easy to justify potential cost savings. Large users can generally expect a ROI within 6 to 12 months.
Source: InVision Software
Sales by regions 2009
Rest of World 53,2%
§ InVision has a leading position on the European market in terms of its core competency: optimisation. It is unlikely that the company’s US competitors will gain a stronger foothold internationally and pose any real competitive threat to InVision in Europe, because they will be unable to build up comparable references in Europe in the short term, do not offer the multilingual service that is required within Europe and often lack fundamental, regional market knowledge.
Germany 46,8%
§ Optimisation offers considerable and, most importantly, measurable potential. More than 17 years of experience in the workforce management segment and an established, referenced solution that has allowed over 300 clients to generate a swift ROI are InVision’s main competitive strengths.
Source: InVision Software
Sales Split by categories in EUR m 10,0 9,0 8,0 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0,0 2005
2006 licence
2007 maintenance
2008
2009 services
Source: InVision Software
Warburg Research
2
InVision Software
Figures
Consolidated Profit & Loss InVision Software in EUR m Sales Increase / decrease in inventory Own work capitalised Total sales Material Expenses Gross profit Personnel expenses Other operating income Other operating expenses Unfrequent items EBITDA Depreciation of fixed assets EBITA Amortisation of intangible fixed assets Impairment charges and amortisation of goodwill EBIT Interest income Interest expenses Financial result Recurring pretax income from cont. operations Extraordinary income/loss EBT Taxes total Net income from continuing operations Income from discontinued operations (net of tax) Net income before minorities Minority interest Net income Sources: InVision Software (historical data), Warburg Research (forecasts)
2006
2007
2008
2009
2010E
2011E
2012E
10.7 0.0 0.0 10.7 0.1 10.6 5.7 0.1 3.0 0.0 2.0 0.1 2.0 0.0 0.0 1.9 0.0 0.1 -0.1 1.9 0.0 1.9 0.5 1.4 0.0 1.4 0.0 1.4
15.9 0.0 0.0 15.9 0.1 15.8 8.4 0.1 4.2 0.0 3.2 0.1 3.1 0.0 0.0 3.1 0.4 0.1 0.1 3.2 0.0 3.2 0.6 2.6 0.0 2.6 0.0 2.6
11.9 0.0 0.0 11.9 0.4 11.5 12.5 0.2 7.9 0.0 -8.7 0.1 -8.8 0.0 0.0 -8.9 0.6 0.1 1.0 -7.8 0.0 -7.8 0.0 -7.8 0.0 -7.8 0.0 -7.8
12.0 0.0 0.0 12.0 0.1 11.9 12.6 0.4 6.5 0.0 -6.8 0.2 -7.0 0.0 0.0 -7.0 0.1 0.1 -0.1 -7.1 0.0 -7.1 -2.3 -4.8 0.0 -4.8 -0.1 -4.7
16.0 0.0 0.0 16.0 0.2 15.8 11.2 0.2 3.7 0.0 1.1 0.1 1.0 0.1 0.0 1.0 0.1 0.0 0.1 1.0 0.0 1.0 0.3 0.8 0.0 0.8 0.0 0.8
18.0 0.0 0.0 18.0 0.2 17.8 11.2 0.2 3.7 0.0 3.2 0.1 3.1 0.1 0.0 3.0 0.1 0.0 0.1 3.0 0.0 3.0 0.6 2.4 0.0 2.4 0.0 2.4
22.0 0.0 0.0 22.0 0.2 21.8 13.2 0.2 4.4 0.0 4.4 0.1 4.3 0.1 0.0 4.2 0.1 0.0 0.1 4.2 0.0 4.2 0.8 3.4 0.0 3.4 0.0 3.4
Consolidated Profit & Loss InVision Software in % of Sales Sales Increase / decrease in inventory Own work capitalised Total sales Material Expenses Gross profit Personnel expenses Other operating income Other operating expenses Unfrequent items EBITDA Depreciation of fixed assets EBITA Amortisation of intangible fixed assets Impairment charges and amortisation of goodwill EBIT Interest income Interest expenses Financial result Recurring pretax income from cont. operations Extraordinary income/loss EBT Taxes total Net income from continuing operations Income from discontinued operations (net of tax) Net income before minorities Minority interest Net income Sources: InVision Software (historical data), Warburg Research (forecasts)
2006
2007
2008
2009
2010E
2011E
2012E
100.0 % 0.0 % 0.0 % 100.0 % 0.8 % 99.2 % 53.5 % 1.3 % 28.1 % 0.0 % 18.9 % 0.5 % 18.4 % 0.2 % 0.0 % 18.2 % 0.1 % 0.9 % -0.6 %
100.0 % 0.0 % 0.0 % 100.0 % 0.8 % 99.2 % 52.9 % 0.6 % 26.6 % 0.0 % 20.3 % 0.5 % 19.7 % 0.2 % 0.0 % 19.6 % 2.5 % 0.8 % 0.9 %
100.0 % 0.0 % 0.0 % 100.0 % 3.6 % 96.4 % 105.1 % 1.6 % 65.8 % 0.0 % -72.9 % 1.1 % -74.0 % 0.4 % 0.0 % -74.3 % 4.7 % 0.5 % 8.7 %
100.0 % 0.0 % 0.0 % 100.0 % 0.7 % 99.3 % 105.4 % 3.6 % 54.4 % 0.0 % -56.8 % 1.3 % -58.1 % 0.3 % 0.0 % -58.4 % 0.7 % 0.6 % -0.8 %
100.0 % 0.0 % 0.0 % 100.0 % 1.0 % 99.0 % 70.0 % 1.0 % 23.0 % 0.0 % 7.0 % 0.5 % 6.5 % 0.6 % 0.0 % 5.9 % 0.3 % 0.0 % 0.3 %
100.0 % 0.0 % 0.0 % 100.0 % 1.0 % 99.0 % 62.0 % 1.0 % 20.5 % 0.0 % 17.5 % 0.5 % 17.0 % 0.6 % 0.0 % 16.4 % 0.3 % 0.0 % 0.3 %
100.0 % 0.0 % 0.0 % 100.0 % 1.0 % 99.0 % 60.0 % 1.0 % 20.0 % 0.0 % 20.0 % 0.5 % 19.5 % 0.6 % 0.0 % 18.9 % 0.2 % 0.0 % 0.2 %
17.5 % 0.0 % 17.5 % 4.2 % 13.3 % 0.0 % 13.3 % 0.1 % 13.2 %
20.4 % 0.0 % 20.4 % 4.0 % 16.4 % 0.0 % 16.4 % 0.0 % 16.4 %
-65.6 % 0.0 % -65.6 % 0.1 % -65.7 % 0.0 % -65.7 % 0.0 % -65.7 %
-59.3 % 0.0 % -59.3 % -19.2 % -40.1 % 0.0 % -40.1 % -0.6 % -39.5 %
6.3 % 0.0 % 6.3 % 1.6 % 4.7 % 0.0 % 4.7 % 0.0 % 4.7 %
16.7 % 0.0 % 16.7 % 3.3 % 13.4 % 0.0 % 13.4 % 0.0 % 13.4 %
19.2 % 0.0 % 19.2 % 3.8 % 15.3 % 0.0 % 15.3 % 0.0 % 15.3 %
Warburg Research
3
InVision Software
Figures
Balance sheet InVision Software in EUR m
2006
2007
2008
2009
2010E
2011E
2012E
0.0 0.0 0.0 0.1 0.0 0.1 0.0 3.7 1.7 0.1 5.6 5.7
0.1 0.1 0.0 0.2 0.0 0.3 0.0 8.2 2.7 16.8 27.7 28.0
0.1 0.1 0.0 0.4 0.0 0.5 0.0 4.9 3.8 12.2 20.9 21.4
0.1 0.1 0.0 0.4 0.0 0.5 0.0 5.5 6.0 4.5 16.1 16.6
0.1 0.1 0.0 0.5 0.0 0.6 0.0 5.2 6.0 5.7 17.0 17.6
0.2 0.2 0.0 0.6 0.0 0.8 0.0 6.2 6.0 7.1 19.3 20.1
0.2 0.2 0.0 0.7 0.0 0.9 0.0 7.8 6.0 9.1 22.9 23.8
Subscribed capital 0.4 Additional paid-in capital 0.0 Surplus capital 1.3 Other equity components -1.5 Book value 0.2 Minority Interest 0.0 Total equity 0.2 Provision for pensions and similar obligations 0.0 Provisions 1.3 Financial liabilities 0.9 Accounts payable 0.7 Other liabilities 2.7 Liabilities 5.5 Total liabilities and shareholders' equity 5.7 Sources: InVision Software (historical data), Warburg Research (forecasts)
2.2 20.6 1.4 -0.2 24.1 0.0 24.1 0.0 1.4 0.1 0.5 1.9 3.9 28.0
2.2 20.6 1.4 -8.6 15.7 0.0 15.7 0.0 3.0 0.2 0.8 1.7 5.7 21.4
2.2 20.6 1.4 -13.1 11.2 -0.1 11.1 0.0 1.3 0.0 0.8 3.3 5.5 16.6
2.2 20.6 2.2 -13.1 11.9 -0.1 11.8 0.0 1.3 0.0 1.1 3.3 5.8 17.6
2.2 20.6 4.6 -13.1 14.3 -0.1 14.2 0.0 1.3 0.0 1.2 3.3 5.9 20.1
2.2 20.6 7.9 -13.1 17.7 -0.1 17.6 0.0 1.3 0.0 1.5 3.3 6.2 23.8
2006
2007
2008
2009
2010E
2011E
2012E
0.8 % 0.8 % 0.0 % 1.7 % 0.0 % 2.5 % 0.0 % 64.9 % 30.3 % 2.5 % 97.7 % 100.0 %
0.3 % 0.3 % 0.0 % 0.8 % 0.0 % 1.0 % 0.0 % 29.2 % 9.8 % 60.0 % 99.0 % 100.0 %
0.3 % 0.3 % 0.0 % 2.0 % 0.0 % 2.3 % 0.0 % 22.8 % 17.8 % 57.1 % 97.7 % 100.0 %
0.7 % 0.7 % 0.0 % 2.3 % 0.0 % 3.0 % 0.0 % 33.3 % 36.4 % 27.2 % 96.9 % 100.0 %
0.9 % 0.9 % 0.0 % 2.8 % 0.0 % 3.7 % 0.0 % 29.6 % 34.3 % 32.5 % 96.3 % 100.0 %
0.8 % 0.8 % 0.0 % 3.0 % 0.0 % 3.9 % 0.0 % 30.9 % 30.0 % 35.3 % 96.2 % 100.0 %
0.7 % 0.7 % 0.0 % 2.9 % 0.0 % 3.6 % 0.0 % 32.8 % 25.4 % 38.2 % 96.3 % 100.0 %
Subscribed capital 6.7 % Additional paid-in capital 0.0 % Surplus capital 23.4 % Other equity components -25.9 % Book value 4.2 % Minority Interest 0.2 % Total equity 4.3 % Provision for pensions and similar obligations 0.0 % Provisions 22.2 % Financial liabilities 15.4 % Accounts payable 11.5 % Other liabilities 46.8 % Liabilities 95.9 % Total liabilities and shareholders' equity 100.0 % Sources: InVision Software (historical data), Warburg Research (forecasts)
8.0 % 73.6 % 5.1 % -0.6 % 86.1 % 0.0 % 86.1 % 0.0 % 5.1 % 0.3 % 1.7 % 6.9 % 14.0 % 100.0 %
10.4 % 96.3 % 6.6 % -40.1 % 73.3 % 0.0 % 73.3 % 0.0 % 13.8 % 1.0 % 3.7 % 8.2 % 26.7 % 100.0 %
13.5 % 124.2 % 8.5 % -79.0 % 67.2 % -0.4 % 66.8 % 0.0 % 8.0 % 0.1 % 5.0 % 20.1 % 33.1 % 100.0 %
12.7 % 117.1 % 12.3 % -74.5 % 67.6 % -0.4 % 67.2 % 0.0 % 7.5 % 0.1 % 6.3 % 19.0 % 32.8 % 100.0 %
11.1 % 102.6 % 22.7 % -65.3 % 71.2 % -0.4 % 70.8 % 0.0 % 6.6 % 0.0 % 6.0 % 16.6 % 29.2 % 100.0 %
9.4 % 86.6 % 33.4 % -55.1 % 74.3 % -0.3 % 74.0 % 0.0 % 5.6 % 0.0 % 6.3 % 14.1 % 25.9 % 100.0 %
Assets Intangible assets thereof other intangible assets thereof Goodwill Property, plant and equipment Financial assets Fixed assets Inventories Accounts receivable Other Assets Liquid assets Current assets Total assets Liabilities and shareholders' equity
Balance sheet InVision Software in % of Balance Sheet Total Assets Intangible assets thereof other intangible assets thereof Goodwill Property, plant and equipment Financial assets Fixed assets Inventories Accounts receivable Other Assets Liquid assets Current assets Total assets Liabilities and shareholders' equity
Warburg Research
4
InVision Software
Figures
Statement of Cash Flows InVision Software in EUR m Net income Depreciation of fixed assets Amortisation of goodwill Amortisation of intangible assets Increase/decrease in long-term provisions Other costs affecting income / expenses Cash Flow Increase / decrease in inventory Increase / decrease in accounts receivable Increase / decrease in accounts payable Increase / decrease in other working capital positions Increase / decrease in working capital Cash flow from operating activities CAPEX Payments for acquisitions Financial investments Income from asset disposals Cash flow from investing activities Change in financial liabilities Dividends paid Purchase of own shares Capital measures Others Cash flow from financing activities Change in liquid funds Effects of exchange rate changes on cash Liquid assets at end of period Sources: InVision Software (historical data), Warburg Research (forecasts)
2006
2007
2008
2009
2010E
2011E
2012E
1.4 0.1 0.0 0.0 0.1 0.4 2.0 0.0 -2.7 -0.2 0.7 -2.3 -0.3 -0.1 0.0 0.0 0.0 -0.1 0.4 0.0 0.0 0.0 0.0 0.4 0.1 0.0 0.1
2.6 0.1 0.0 0.0 0.3 -1.0 2.1 0.0 -4.5 -0.2 -1.2 -5.8 -3.8 -0.3 0.0 -13.0 0.0 -13.3 -0.9 0.0 0.0 21.3 0.0 20.5 3.4 0.0 3.6
-7.8 0.1 0.0 0.0 0.9 -0.7 -7.5 0.0 3.3 0.3 -0.3 3.3 -4.2 -0.4 0.0 -3.0 14.9 11.5 0.0 0.0 0.0 0.0 0.0 0.0 7.3 0.0 24.1
-4.7 0.2 0.0 0.0 -0.4 -3.3 -8.2 0.0 -0.7 0.0 1.6 0.9 -7.3 -0.2 0.0 -11.2 11.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -7.4 0.0 4.9
0.8 0.1 0.0 0.1 0.0 0.0 0.9 0.0 0.3 0.3 0.0 0.6 1.5 -0.3 0.0 0.0 0.0 -0.3 0.0 0.0 0.0 0.0 0.0 0.0 1.2 0.0 5.7
2.4 0.1 0.0 0.1 0.0 0.0 2.6 0.0 -1.0 0.1 0.0 -0.9 1.7 -0.3 0.0 0.0 0.0 -0.3 0.0 0.0 0.0 0.0 0.0 0.0 1.4 0.0 7.1
3.4 0.1 0.0 0.1 0.0 0.0 3.6 0.0 -1.6 0.3 0.0 -1.3 2.3 -0.3 0.0 0.0 0.0 -0.3 0.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 9.1
Warburg Research
5
InVision Software
Figures
Financial Ratios InVision Software 2006 Operational Efficiency Total Operating Costs / Sales 81.1 % Sales per Employee 100,308 EBITDA per Employee 18,963 EBIT-margin 18.2 % EBITDA / Operating Assets 64.6 % ROA 1013.6 % Efficiency of Capital Employment Plant Turnover 113 Operating Assets Turnover 3.4 Capital Employed Turnover 9.5 Return on Capital ROCE 885.9 % EBITDA / Avg. Capital Employed 922.3 % ROE 574.5 % Net Profit / Avg. Equity -323.2 % Recurring Net Profit / Avg. Equity -325.1 % ROIC 57.4 % Solvency Net Debt 0.7 Net Gearing 298.4 % Book Value of Equity / Book Value of Debt 28.1 % Current ratio 1.3 Acid Test Ratio 1.0 EBITDA / Interest Paid 20.7 Interest Cover 21.0 Cash Flow Free Cash Flow -0.4 Free Cash Flow / Sales -3.4 % Adj. Free Cash Flow 2.0 Adj. Free Cash Flow / Sales 9.8 % Free Cash Flow / Net Profit -25.5 % Interest Received / Avg. Cash 4.6 % Interest Paid / Avg. Debt 14.9 % Dividend Payout Ratio 0.0 % Fund Management Investment ratio 0.6 % Maint. Capex / Sales 0.6 % Capex / Dep 82.5 % Avg. Working Capital / Sales 14.8 % Trade Creditors / Trade Debtors 566.6 % Inventory turnover (days) n.a. Receivables collection period (DSOs) 126 Payables collection period (days) 22.2 Cash conversion cycle (days) n.a. Valuation Dividend Yield n.a. P/B 149.4 EV/sales 3.0 EV/EBITDA 15.9 EV/EBIT 16.6 EV/FCF n.m. P/E 26.2 P/CF 18.6 Adj. Free Cash Flow Yield 6.2 % Sources: InVision Software (historical data), Warburg Research (forecasts)
2007
2008
2009
2010E
2011E
2012E
79.7 % 108,767 22,027 19.6 % 40.7 % 893.8 %
172.9 % 53,022 -38,634 -74.3 % -192.4 % -1567.8 %
156.8 % 53,686 -30,516 -58.4 % -133.7 % -952.4 %
93.0 % 71,749 5,022 5.9 % 24.4 % 115.9 %
82.5 % 80,718 14,126 16.4 % 56.2 % 309.6 %
80.0 % 98,655 19,731 18.9 % 62.9 % 389.8 %
71.2 2.0 0.7
27.5 2.6 0.8
31.7 2.4 1.1
32.1 3.5 1.4
29.6 3.2 1.3
31.5 3.1 1.2
24.6 % 25.4 % 10.8 % 21.4 % 21.4 % 10.1 %
-44.3 % -43.4 % -50.0 % -39.4 % -39.4 % -41.1 %
-51.8 % -50.4 % -42.6 % -35.3 % -35.9 % -38.2 %
8.3 % 9.8 % 6.3 % 6.5 % 6.5 % 5.6 %
22.7 % 24.2 % 16.9 % 18.5 % 18.5 % 15.4 %
26.2 % 27.6 % 19.2 % 21.2 % 21.2 % 17.7 %
-16.7 -69.4 % 500.0 % 11.1 7.1 24.9 n.a.
-12.0 -76.5 % 500.0 % 7.6 3.7 0.0 n.a.
-4.5 -40.6 % 500.0 % 3.9 2.9 0.0 n.a.
-5.7 -48.3 % 500.0 % 3.8 2.9 n.a. n.a.
-7.1 -49.8 % 500.0 % 4.2 3.3 n.a. n.a.
-9.1 -51.5 % 500.0 % 4.7 3.7 n.a. n.a.
-4.0 -25.3 % 3.0 14.5 % -153.8 % 4.6 % 26.8 % 0.0 %
-4.6 -38.5 % -9.1 -84.9 % 58.5 % 3.9 % 43.6 % 0.0 %
-7.5 -62.7 % -6.9 -57.6 % 158.9 % 1.0 % 60.0 % 0.0 %
1.2 7.6 % 0.8 3.4 % 161.1 % 1.0 % 0.0 % 0.0 %
1.4 7.7 % 2.8 12.4 % 57.2 % 0.8 % 0.0 % 0.0 %
2.0 9.0 % 4.1 14.7 % 58.9 % 0.6 % 0.0 % 0.0 %
83.5 % 1.6 % 12516.0 % 33.8 % 1701.7 % n.a. 188 11.0 n.a.
28.4 % 3.2 % 1923.3 % 49.3 % 613.8 % n.a. 149 24.3 n.a.
95.1 % 1.5 % 5993.7 % 36.7 % 673.0 % n.a. 169 25.1 n.a.
2.0 % 2.0 % 189.3 % 27.5 % 472.7 % 0.0 118 25.1 93.0
1.8 % 1.8 % 168.2 % 25.3 % 516.7 % 0.0 125 25.1 100
1.5 % 1.5 % 137.7 % 25.7 % 520.0 % 0.0 130 25.1 105
n.a. 1.5 2.0 10.1 10.4 n.m. 14.1 17.8 6.4 %
n.a. 2.4 2.7 n.m. n.m. n.m. n.m. neg, n.a.
n.a. 3.3 2.7 n.m. n.m. n.m. n.m. neg, n.a.
n.a. 3.1 1.9 27.8 32.8 25.7 48.6 40.1 3.0 %
n.a. 2.6 1.7 9.4 10.1 21.6 15.3 14.2 8.7 %
n.a. 2.1 1.3 6.3 6.7 14.0 10.9 10.2 13.0 %
Warburg Research
6
InVision Software
Figures
Free Cash Flow Yield - InVision Software Figures in EUR m
+ + +
Net Income Depreciation + Amortisation Net Interest Income Taxes Maintenance Capex Others
= Adjusted Free Cash Flow
2006
2007
2008
2009
2010e
2011e
2012e
1.4 0.1 -0.1 0.5 0.1 0.0
2.6 0.1 0.1 0.6 0.3 0.0
-7.8 0.2 1.0 0.0 0.4 0.0
-4.7 0.2 -0.1 -2.3 0.2 0.0
0.8 0.2 0.1 0.3 0.3 0.0
2.4 0.2 0.1 0.6 0.3 0.0
3.4 0.2 0.1 0.8 0.3 0.0
2.0
3.0
-9.1
-6.9
0.8
2.8
4.1
6.0% 10.0%
9.1% 10.0%
-28.0% 10.0%
-21.3% 10.0%
2.6% 10.0%
9.5% 10.0%
14.7% 10.0%
= Enterprise Value
32.4
32.4
32.4
32.4
31.2
29.8
27.8
= Fair Enterprise Value
19.6
29.6
-
-
8.0
28.3
40.8
- Net Debt (Cash) - Pension Liabilities - Others
-4.5 0.0 -0.1
-4.5 0.0 -0.1
-4.5 0.0 -0.1
-4.5 0.0 -0.1
-5.7 0.0 -0.1
-7.1 0.0 -0.1
-9.1 0.0 -0.1
= Fair Market Capitalisation
24.1
34.2
-
-
13.8
35.4
49.9
2.2
2.2
2.2
2.2
2.2
2.2
2.2
Adjusted Free Cash Flow Yield Hurdle rate
No. of shares (m) = Fair value per share (EUR) premium (-) / discount (+) in %
10.79
15.30
-
-
6.16
15.86
22.34
-34.6%
-7.3%
-
-
-62.7%
-4.0%
35.3%
8.77 9.34 10.00 10.79 11.77 12.98 14.54
12.24 13.09 14.10 15.30 16.78 18.62 20.99
-
-
5.34 5.57 5.84 6.16 6.56 7.06 7.69
12.94 13.75 14.71 15.86 17.27 19.03 21.29
18.13 19.30 20.68 22.34 24.37 26.90 30.16
Sensitivity Fair value per Share (EUR)
Hurdle rate
13.0% 12.0% 11.0% 10.0% 9.0% 8.0% 7.0%
Sources: InVision Software (historical data), Warburg Research (forecasts)
Warburg Research
7
InVision Software
Figures
DCF Model - InVision Software 2010e
2011e
2012e
2013e
2014e
2015e
2016e
2017e
2018e
2019e
2020e
2021e
2022e
2023e
16.0 33.6%
18.0 12.5%
22.0 22.2%
23.8 8.0%
25.4 7.0%
27.2 7.0%
28.3 4.0%
29.4 4.0%
30.3 3.0%
31.2 3.0%
32.2 3.0%
33.1 3.0%
33.8 2.0%
34.5 2.0%
1.0 5.9%
3.0 16.4%
4.2 18.9%
4.5 19.0%
4.8 19.0%
5.2 19.0%
5.4 19.0%
5.6 19.0%
5.8 19.0%
5.9 19.0%
6.1 19.0%
6.3 19.0%
6.4 19.0%
6.5 19.0%
Tax rate
25.0%
20.0%
20.0%
25.0%
25.0%
25.0%
25.0%
25.0%
25.0%
25.0%
35.0%
35.0%
35.0%
35.0%
NOPAT
0.7
2.4
3.3
3.4
3.6
3.9
4.0
4.2
4.3
4.4
4.0
4.1
4.2
4.3
Depreciation in % of Sales
0.2 1.1%
0.2 1.1%
0.2 1.1%
0.2 1.0%
0.3 1.0%
0.3 1.0%
0.3 1.0%
0.3 1.0%
0.3 1.0%
0.3 1.0%
0.3 1.0%
0.3 1.0%
0.3 1.0%
0.3 1.0%
Change in Liquidity from - Working Capital - Capex Capex in % of Sales
0.6 -0.3 2.0%
-0.9 -0.3 1.8%
-1.3 -0.3 1.5%
-1.8 -0.5 2.0%
-0.1 -0.3 1.0%
0.0 -0.3 1.0%
-0.3 -0.3 1.0%
-0.3 -0.3 1.0%
-0.3 -0.3 1.0%
-0.3 -0.3 1.0%
-0.3 -0.3 1.0%
-0.3 -0.3 1.0%
-0.2 -0.3 1.0%
-0.2 -0.3 1.0%
Other
0.0
0.0
0.0
0.0
-0.1
-0.1
-0.1
-0.1
-0.1
-0.1
-0.1
-0.1
-0.1
0.0
Free Cash Flow (WACC-Model)
1.2
1.3
1.9
1.3
3.5
3.8
3.6
3.8
4.0
4.1
3.6
3.7
3.9
4.0
Figures in EUR m Sales Change EBIT EBIT-Margin
Model parameter Debt ratio Costs of Debt Market return Risk free rate
Valuation (mln) 0.00% n.a. 9.00% 4.25%
Beta WACC
1.50 11.38%
Terminal Growth
Present values 2023e Terminal Value Liabilities Liquidity Equity Value
2.00%
19.9 10.2 0.0 4.5 34.6
No. of shares (mln) Value per share (EUR)
2.24 15.49
Sensitivity Value per Share (EUR) Terminal Growth WACC 1.25% 12.38% 13.84 11.88% 14.46 11.63% 14.80 11.38% 15.16 11.13% 15.53 10.88% 15.92 10.38% 16.77
1.50% 13.91 14.56 14.90 15.26 15.64 16.05 16.92
1.75% 14.00 14.65 15.00 15.38 15.77 16.18 17.08
2.00% 14.08 14.75 15.11 15.49 15.90 16.32 17.25
2.25% 14.17 14.86 15.23 15.62 16.03 16.47 17.42
2.50% 14.27 14.97 15.35 15.75 16.18 16.63 17.61
2.75% 14.37 15.09 15.48 15.89 16.33 16.79 17.81
Delta EBIT-margin WACC -1.5 pp 12.38% 12.91 11.88% 13.52 11.63% 13.85 11.38% 14.20 11.13% 14.57 10.88% 14.96 10.38% 15.80
-1.0 pp 13.30 13.93 14.27 14.63 15.01 15.41 16.29
-0.5 pp 13.69 14.34 14.69 15.06 15.45 15.87 16.77
0.0 14.08 14.75 15.11 15.49 15.90 16.32 17.25
+0.5 pp 14.47 15.16 15.53 15.92 16.34 16.77 17.73
+1.0 pp 14.86 15.57 15.95 16.35 16.78 17.23 18.21
+1.5 pp 15.25 15.98 16.37 16.79 17.22 17.68 18.69
Source: Warburg Research
Warburg Research
8
InVision Software
Figures
CAPEX and Cash Flow - InVision Software EUR m 4,0
2006 CAPEX 0,1 2,0 Maintenance CAPEX 0,1 Cash Flow -0,3 0,0 2006
2007 0,3 0,3 -3,8
2007
2008 0,4 0,4 -4,2
2008
2009 0,2 0,2 -7,3
2009
Balance Sheet Quality - InVision Software
2010e 0,3 0,3 1,5
2010e
2011e 0,3 0,3 1,7 2011e
2012e 0,3 0,3 2,3 2012e
-2,0
EUR m 30,0
2006 25,0 Net Debt 0,7 20,0 Book value of Equity 0,2 Net Gearing298,4% 15,0
2007 -16,7 24,1 -69,4%
2008 -12,0 15,7 -76,5%
2009 -4,5 11,2 -40,6%
350,0% 2011e 2012e 300,0% -7,1 -9,1 14,3 250,0% 17,7 -49,8% 200,0% -51,5%
2010e -5,7 11,9 -48,3%
10,0
150,0%
5,0
100,0%
0,0 -4,0
50,0% 2006
-5,0
-6,0 -8,0 CAPEX
Maintenance CAPEX
2007
2008
2009
2010e
2011e
-50,0%
-15,0
-100,0%
-20,0
-150,0% Net Debt
Book value of Equity
Net Gearing
Sources: InVision Software (historical data), Warburg Research (forecasts)
Sources: InVision Software (historical data), Warburg Research (forecasts)
§ Capex and maintenance capex can be neglected § Cash flow mainly determined by operating development § Positiver cash flow expected in 2010
§ IPO in 2007 resulted in high cash § Equity also significantly increased as a consequence § Net gearing thus is negative
Free Cash Flow Generation - InVision Software
Working Capital - InVision Software
2006 2007 Free Cash Flow -0,4 -4,0 2,0 Free Cash Flow -3,4% / Sales -25,3%
2008 -4,6 -38,5%
2009 -7,5 -62,7%
2010e 1,2 7,6%
2009
2010e
2011e
2011e 1,4 7,7%
0,0
20,0% 2012e 10,0% 2,0 9,0% 0,0% -10,0%
2006
2007
2008
2012e
-2,0
-20,0% -30,0%
-4,0 -6,0 -8,0 Free Cash Flow
EUR m 9,0 2006 2007 8,0 Working Capital 3,0 7,7 7,0 Working Capital 28,4% / Sales 48,4% 6,0
2008 4,1 34,2%
2009 4,7 39,3%
2010e 4,1 25,6%
2011e 5,0 27,8%
5,0
3,0 2,0
-50,0%
1,0
-60,0%
0,0
60,0% 2012e 50,0% 6,3 28,6% 40,0% 30,0%
4,0
-40,0%
-70,0%
0,0%
-10,0
Cash Flow
EUR m 4,0
2012e
20,0% 10,0% 0,0% 2006
2007
2008
2009
Working Capital
Free Cash Flow / Sales
2010e
2011e
2012e
Working Capital / Sales
Sources: InVision Software (historical data), Warburg Research (forecasts)
Sources: InVision Software (historical data), Warburg Research (forecasts)
§ Cash flow in 2007 negative due to high receivables § No improvement in 2008/09 owing to high losses § Turnaround in 2010
§ Significant business expansion also increased the working capital in 2007 § Stringent receivables management in 2008 and reduction of working capital § However, working capital is basically high in relation to sales
Operating Leverage - InVision Software
ROCE Development - InVision Software
30,0 2006 20,0 Operating Leverage10,0 OPEX / Sales81,1% 0,0 -10,0
2006
2007
2007 1,2 79,7% 2008
2008 172,9% 2009
2009 -59,9 156,8% 2010e
2010e 93,0%
2011e 16,9 82,5%
200,0% 2012e 180,0% 1,8 160,0% 80,0% 140,0%
2011e
2012e
120,0%
-20,0
100,0%
-30,0
80,0%
-40,0
60,0%
-50,0
40,0%
-60,0
20,0%
-70,0
0,0% Operating Leverage
OPEX / Sales
1000,0% 2006 2007 ROCE 885,9% 24,6% 800,0% EBIT-margin 18,2% 19,6% Capital Employed9,5 Turnover 0,7 600,0%
2008 -44,3% -74,3% 0,8
2009 -51,8% -58,4% 1,1
2010e 8,3% 5,9% 1,4
2011e 22,7% 16,4% 1,3
12,0 2012e 10,0 26,2% 18,9% 8,01,2 6,0
400,0% 4,0 200,0%
2,0
0,0%
0,0 2006
2007
2008
2009
2010e
2011e
2012e
-200,0%
-2,0 ROCE
EBIT-margin
Capital Employed Turnover
Sources: InVision Software (historical data), Warburg Research (forecasts)
Sources: InVision Software (historical data), Warburg Research (forecasts)
§ Earnings highly volatile in dependence of sales § This is due to the high dependence on licence revenues § Opex cannot be covered by far in 2008
§ Capital employed very low in 2005/2006, ROCE therefore has no significance § Capital employed significantly increased after IPO (2007) § ROCE and EBIT margin clearly negative in 2008
Warburg Research
9
InVision Software
Disclaimer
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Warburg Research
10
InVision Software
Disclaimer
Investment recommendation: expected direction of the share price development for equity security up to the given Target price in the opinion of the analyst who covers the issue. B H S “-“
Buy: Hold: Sell: Rating suspended:
The price of the analysed equity security is expected to rise over the next 12 months. The price of the analysed equity security is expected to remain mostly flat over the next 12 months. The price of the analysed equity security is expected to fall over the next 12 months. The available information does not currently permit an evaluation of the company.
M.M.Warburg & CO KGaA and Warburg Research GmbH research universe by rating: Rating
Number of stocks
% of Universe
Buy
101
56%
Hold
59
33%
Sell
9
5%
Rating suspended
12
7%
Total
181
M.M.Warburg & CO KGaA and Warburg Research GmbH research universe by rating, looking only at companies for which a disclosure according to section 34b German Securities Trading Act has to be made:
Rating
Number of stocks
% of Universe
Buy
71
68%
Hold
28
27%
Sell
4
4%
Rating suspended
2
2%
Total
105
The charts have markings if Warburg Research GmbH changed its rating in the last 12 months. Every marking represents the date and closing price on the day of the rating change.
Warburg Research
11
InVision Software
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