Beta Systems Software’s (F:BSSG) FY17 results were towards to the middle of its guidance; strong licence sales in DCI and management’s efficiency drive resulted in a 70% increase in EBIT, a record for the group. While FY18 is expected to be a smaller year in terms of client renewals, management is making good progress delivering to its plan to restructure and modernise the group.
FY17: Strong uptick and proposed dividend
FY17 was a good year for licence renewals, with some of Beta’s largest clients renewing, upgrading and extending their contracts. This underpinned the 7% increase in sales to €49.8m. Mix effects and the group’s cost-savings programme enabled a 6.6pp expansion in EBIT margins to 18.1% and EBIT of €9.0m. Net cash was €44.1m (including €25m on deposit) and the group has reinstated a dividend of €0.41 per share (subject to approval), representing a yield of c 1.7%.
Outlook: M&A to feature more prominently
Management has made good progress against its strategy to restructure and modernise the group. FY17 was a record year for Beta in terms of profitability and a number of product enhancements were launched, which should support price increases in the years to come. Work remains to be done to diversify revenues beyond the mainframe environment; in this regard, despite its small size, we view the recent acquisition of an internet agency as strategically significant. A director of M&A was recently appointed and management is actively pursuing other targets.
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