SNP Schneider (DE:SHFG): Growth slowed in Q1, as the group focused its attention on delivering its strong backlog. Nevertheless, business remains healthy and management affirmed its guidance. Activity remained busy in Q1, including the issuing of €40m of loan notes, repayment of a corporate bond, a reshaping of the group structure and the creation of a third training academy in Berlin. Separately, SNP said it is close to acquiring a European SAP consulting and IT company. Given SNP’s strong market position in software-based transformation projects and assuming a sustained high level of activity, we believe the shares remain attractive on c 21x our FY19 earnings.
Q1 results: Book-to-bill ratio remained healthy at 1.13
Group revenue grew by 17% to €21.6m, representing 9% organic growth and c €1.5m from Harlex, which was acquired in late 2016. Professional services revenues rose 23%, including 13% organic growth. This figure is probably a better guide to the group’s underlying growth, as lumpier, higher-margin, licence revenue fell by 22%. While incoming orders dipped 7% to €24.4m, the book-to-bill ratio remained healthy at 1.13. The EBITDA loss was €1.8m and the EBIT loss was €2.4m. After taking into account one-off costs the EBITDA margin was c 4% and the EBIT margin was c 1%. The group ended the period with €53.9m in cash and €41.7m debt, of which €39.6m is long-term, for net cash of €12.2m. Outstanding acquisition liabilities and a pension deficit take adjusted net cash to €2.3m.
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