v2 Report
FIN Finzsoft Solutions Limited

Commentary: Finzsoft Solutions (FIN) provides software and support services to banks and financial institutions; FIN has an established position in the domestic market and has contracts with finance companies, credit unions, and building societies. The main product is the “Sovereign banking and finance software package”. Internationally FIN is looking to increase its presence with some initial progress e.g. St George Bank of Australia, and some minor contracts in Sri Lanka and Barbados.

Perhaps the most interesting recent event for FIN (aside from the full year announcement – but that will come next!) was the partial takeover offer received from Pi Capital Investments Ltd for 63.61% of the company. The takeover offer went unconditional on the 25^th of June. The implications of this event included a slight change in shareholder spread – however it remains a reasonably tightly held company, and thus suffers from a lack of liquidity. But the key change or spin put on it was that it would allow FIN greater access to capital, which was mentioned as important to expansion initiatives – especially globally.

International expansion is reasonably important given the amount of progress that has been made domestically – and the limits on further domestic expansion. However international expansion will no doubt provide many challenges and statements about investments being made and not yet paying off in the results announcements! However currently international projects contribute about 30% of revenues, so there certainly is a case for being more aggressive in this area.

Financially, the FY 07 result was a step back from FY 06, revenue remained fairly static, while costs increased causing NPAT to fall almost 80%. Thus obviously profitability ratios were adversely affected. However on a positive note liquidity and financial stability ratios were strong. The revenue patterns for this company are reasonably volatile as the payoffs from projects work through the system; however dividend payments have remained fairly constant. Going forward the key issues are volatility of earnings, and the success or otherwise of further international expansion. With the arrival of a new majority shareholder promising access to capital the company seems better positioned for future growth.

By Callum Thomas
1-September-2007

Website:  http://www.finzsoft.com/

Recent announcements: click here

IPOs and Investment Opportunities

Financials 
 

Statement of Financial Performance
	2007	2006	2005	2004
Revenue
Sales	7,399,650	7,825,803	7,043,617	5,472,467
Interest received	-	-	31,048	65,873
Other	86,383	46,408	228	13,086
Total Revenue	7,486,033	7,872,211	7,074,893	5,551,426
Expenses
Cost of sales	5,330,316	4,762,720	6,070,045	5,045,921
Other expenses	1,641,089	1,596,401	-	-
EBITDA	514,628	1,513,090	1,004,848	505,505
Depreciation	248,561	246,524	249,052	162,699
Amortisation	-	-	329,682	329,682
EBIT	266,067	1,266,566	426,114	13,124
Interest expense	25,704	25,115	39,625	24,513
Taxation	57,235	395,004	212,030	84,205
NPAT	183,128	846,447	174,459	(95,594)
Statement of Financial Position
	2007	2006	2005	2004
Assets
Current Assets
Bank and cash	1,701,150	1,838,636	1,070,267	794,518
Receivables	1,159,598	1,367,308	1,305,223	999,663
Inventory	-	-	-	-
Other	223,972	-	-	-
Total Current Assets	3,084,720	3,205,944	2,375,490	1,794,181
Non Current Assets
Property Plant & Equipment	284,407	446,786	356,938	460,977
Investments	-	-	-	-
Goodwill & Intangibles	1,671,427	1,671,427	1,671,427	2,001,107
Other	35,855	25,328	25,328	16,633
Total Non Current Assets	1,991,689	2,143,541	2,053,693	2,478,717
Total Assets	5,076,409	5,349,485	4,429,183	4,272,898
Liabilities
Current Liabilities
Payables	896,169	839,635	171,457	193,863
Short term borrowings	-	84,994	-	-
Other	180,477	303,146	789,157	671,452
Total Current Liabilities	1,076,646	1,227,775	960,614	865,315
Non Current Liabilities
Long-term Borrowings	-	-	-	-
Other	-	-	70,155	183,628
Total Non Current Liabilities	-	-	70,155	183,628
Total Liabilities	1,076,646	1,227,775	1,030,769	1,048,943
Net Assets	3,999,763	4,121,710	3,398,414	3,223,955
Statement of Cashflows
	2007	2006	2005	2004
Cash flows from operating activities
Operating revenues	7,704,444	7,837,378	6,772,006	4,929,040
Operating expenses	7,370,679	6,477,204	6,200,997	4,878,341
	333,765	1,360,174	571,009	50,699
Cash flows from investing activities
Inflows	5,000	-	-	-
Outflows	86,182	336,372	145,013	537,562
	(81,182)	(336,372)	(145,013)	(537,562)
Cash flows from financing activities
Inflows	-	-	-	333,508
Outflows	375,494	256,782	150,247	-
	(375,494)	(256,782)	(150,247)	333,508
Net Increase (decrease)	(122,911)	767,020	275,749	(153,355)
Opening cash	1,838,636	1,071,616	794,518	947,873
Closing cash	1,715,725	1,838,636	1,070,267	794,518
	Analysis
Per share figures
Dividend/shares	0.04	0.02	-	-
NPAT/shares (EPS)	0.02	0.10	0.02	(0.01)
EBITDA/shares	0.06	0.18	0.12	0.06
Net Assets/shares	0.48	0.50	0.41	0.39
Profitability
ROA	3.61%	15.82%	3.94%	-2.24%
Equity multiplier	1.3	1.3	1.3	1.3
ROE	4.58%	20.54%	5.13%	-2.97%
ROavgE	4.51%	22.51%	5.27%	-
Net profit margin	2.45%	10.75%	2.47%	-1.72%
Liquidity
Net working capital	2,008,074	1,978,169	1,414,876	928,866
Current ratio	2.87	2.61	2.47	2.07
Quick ratio	2.87	2.61	2.47	2.07
Working capital ratio	0.40	0.37	0.32	0.22
Capital structure
Debt to equity	0.27	0.30	0.30	0.33
Interest coverage	10.35	50.43	10.75	0.54
Shares	8,300,000	8,300,000	8,300,000	8,300,000
Dividends paid	290500	124500
Dividend payout ratio	159%	15%	0%	0%
Growth rates
Revenue	-4.91%	11.27%	27.44%
EBITDA	-65.99%	50.58%	98.78%
NPAT	-78.37%	385.18%	-282.50%
Total assets	-5.10%	20.78%	3.66%
Net assets	-2.96%	21.28%	5.41%
g = (ROE*(1-DPR))	-2.68%	17.52%	5.13%	-2.97%
Other
Share price (30-August-07)	$           1.00	Avg 4 yr growth rate (NPAT)		8.11%
Market cap	$   8,300,000	Cmpdg 4 yr growth rate (NPAT)		#NUM!
Enterprise value (EV)	$   9,376,646	Avg 4 yr growth rate (NA)		7.91%
EV/EBITDA	18.22	Cmpdg 4 yr growth rate (NA)		5.54%
P/E Ratio	45.32
P/NA ratio	2.08
Dividend yield	3.50%
Earnings yield (E/P)	2%

Trading over the last year

Other

Last updated: 14-11-2007

Company balance date: 31 March

Supplementary Information

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