Record Net Income decreased on 4.2% in 2016 and Revenue showed almost no change
17 Jun 2016 • About Record (
$REC) • By InTwits
Record reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 33.7% in FY2016 vs. 34.4% in FY2015 vs. 34.5% in FY2012
- Record has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.3%.
- The company has highly profitable business model: ROIC is at 18.5%
- It operates with high leverage: Net Debt/EBITDA is -3.0x while industry average is -4.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Record ($REC) key annual financial indicators
| mln. £ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 20.535 | 18.552 | 19.922 | 21.057 | 21.134 | 0.4% |
| Gross Profit | 20.283 | 18.331 | 19.836 | 20.909 | 20.913 | 0.0% |
| SG&A | | | 13.412 | 13.373 | 14.123 | 5.6% |
| EBITDA | 7.082 | 6.251 | 6.885 | 7.242 | 7.128 | -1.6% |
| Net Income | 4.913 | 4.334 | 5.407 | 5.782 | 5.541 | -4.2% |
Balance Sheet
|
|---|
| Cash | 24.572 | 29.025 | 11.503 | 12.010 | 21.720 | 80.8% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.052 | 0.063 | 0.025 | 0.128 | 0.029 | -77.3% |
Ratios
|
|---|
| Revenue growth | -27.2% | -9.7% | 7.4% | 5.7% | 0.4% | |
| EBITDA growth | -43.5% | -11.7% | 10.1% | 5.2% | -1.6% | |
| Gross Margin | 98.8% | 98.8% | 99.6% | 99.3% | 99.0% | -0.3% |
| EBITDA Margin | 34.5% | 33.7% | 34.6% | 34.4% | 33.7% | -0.7% |
| Net Income Margin | 23.9% | 23.4% | 27.1% | 27.5% | 26.2% | -1.2% |
| SG&A, % of revenue | | | 67.3% | 63.5% | 66.8% | 3.3% |
| CAPEX, % of revenue | 0.3% | 0.3% | 0.1% | 0.6% | 0.1% | -0.5% |
| ROIC | 23.8% | 19.6% | 20.2% | 20.2% | 18.5% | -1.7% |
| ROE | 17.7% | 15.8% | 18.7% | 18.9% | 16.9% | -2.0% |
| Net Debt/EBITDA | -3.5x | -4.6x | -1.7x | -1.7x | -3.0x | -1.4x |
Revenue and profitability
The company's Revenue showed almost no change in FY2016. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 7.0 pp from 11.6% to 18.5% in FY2016.
Gross Margin showed almost no change in FY2016. SG&A as a % of Revenue increased on 3.3 pp from 63.5% to 66.8% in FY2016.
Net Income marign decreased slightly on 1.2 pp from 27.5% to 26.2% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 0.14% in FY2016. Record's CAPEX/Revenue showed almost no change from FY2013 to FY2016. Average CAPEX/Revenue for the last three years was 0.29%.
Return on investment
The company operates at good ROIC (18.55%) and ROE (16.89%). ROIC decreased slightly on 1.7 pp from 20.2% to 18.5% in FY2016. ROE decreased on 2.0 pp from 18.9% to 16.9% in FY2016.
Leverage (Debt)
The company has no debt. Cash surged on 80.8% in FY2016.
Valuation
Record's trades at EV/EBITDA 4.5x and P/E 9.8x while industy averages are 15.6x and 19.1x.
Appendix 1: Peers in Financial Services
Below we provide Record benchmarking against other companies in Financial Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Volvere ($VLE) | -47.1% | 149.8% | -23.2% | 124.9% | |
| Real Estate Credit Investments Pcc ($RECP) | | 335.8% | -59.6% | 47.3% | -29.8% |
| Fairpoint Group ($FRP) | 32.7% | -17.5% | 35.1% | 41.2% | |
| Afh Financial Group ($AFHP) | | 49.9% | 39.3% | 39.5% | |
| Manx Financial Group ($MFX) | 5.6% | 33.3% | 22.0% | 28.2% | |
| |
|---|
| Median (30 companies) | 5.6% | 14.7% | 4.7% | 2.7% | 7.7% |
|---|
| Record ($REC) | | -9.7% | 7.4% | 5.7% | 0.4% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Panmure Gordon & Co ($PMR) | 95.2% | 95.0% | 95.3% | 95.2% | |
| First Property Group ($FPO) | 86.0% | 69.5% | 67.9% | 83.0% | 80.6% |
| Schroders ($SDRC) | 76.9% | 76.2% | 77.7% | 78.3% | |
| London Capital Group Hldgs ($LCG) | 64.2% | 70.5% | 73.6% | 67.9% | |
| Walker Crips Group ($WCW) | 71.8% | 58.0% | 68.2% | 66.7% | |
| |
|---|
| Median (15 companies) | 51.8% | 52.2% | 51.3% | 52.3% | 50.5% |
|---|
| Record ($REC) | 98.8% | 98.8% | 99.6% | 99.3% | 99.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Livermore Investments Group Ltd ($LIV) | 84.9% | 64.8% | 78.8% | 83.5% | |
| Real Estate Credit Investments Pcc ($RECP) | 58.6% | 89.3% | 77.0% | 80.3% | 79.3% |
| Manx Financial Group ($MFX) | 39.8% | 49.2% | 56.5% | 58.8% | |
| Hargreaves Lansdown ($HL.) | 64.1% | 66.4% | 58.7% | 51.2% | |
| Daishin Securities Co ($DSS) | 53.8% | 51.5% | 38.8% | 49.2% | |
| |
|---|
| Median (28 companies) | 11.7% | 15.6% | 14.4% | 15.9% | 32.3% |
|---|
| Record ($REC) | 34.5% | 33.7% | 34.6% | 34.4% | 33.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| London Capital Group Hldgs ($LCG) | 1.8% | 0.2% | 3.4% | 7.7% | |
| Daishin Securities Co ($DSS) | 6.0% | 24.7% | 15.0% | 6.5% | |
| Commercial Bank Of Qatar(The) ($CBQS) | 6.0% | 3.8% | 2.8% | 3.9% | |
| Nmbz Hldgs ($NMB) | 6.1% | 3.0% | 2.1% | 3.8% | |
| Afh Financial Group ($AFHP) | 1.6% | 1.5% | 0.7% | 3.8% | |
| |
|---|
| Median (29 companies) | 1.4% | 1.4% | 1.3% | 1.2% | 1.3% |
|---|
| Record ($REC) | 0.3% | 0.3% | 0.1% | 0.6% | 0.1% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Hargreaves Lansdown ($HL.) | 108.7% | 111.7% | 101.0% | 87.5% | |
| Manx Financial Group ($MFX) | 8.0% | 19.7% | 29.7% | 40.2% | |
| Impax Asset Management Group ($IPX) | -13.7% | 17.2% | 18.7% | 16.1% | |
| Lighthouse Group ($LGT) | 7.2% | -3.9% | 8.6% | 14.6% | |
| S & U ($46IE) | 17.6% | 19.1% | 19.7% | 13.9% | 14.5% |
| |
|---|
| Median (30 companies) | 5.2% | 6.0% | 8.9% | 7.3% | 7.8% |
|---|
| Record ($REC) | 23.8% | 19.6% | 20.2% | 20.2% | 18.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Private & Commercial Finance Group ($PCF) | 12.8x | 14.3x | 13.9x | 12.9x | 10.6x |
| First Property Group ($FPO) | 3.6x | 3.0x | 5.6x | 12.3x | 9.4x |
| Canaccord Genuity Group Inc ($CF.) | | | | 10.2x | |
| Daishin Securities Co ($DSS) | 1.5x | 2.4x | 10.7x | 8.0x | |
| S & U ($46IE) | 1.4x | 1.3x | 1.7x | 3.1x | 0.5x |
| |
|---|
| Median (25 companies) | -1.0x | -1.0x | -2.3x | -0.5x | 0.5x |
|---|
| Record ($REC) | -3.5x | -4.6x | -1.7x | -1.7x | -3.0x |
