Murgitroyd Group revenue increased on 6.1% in 2016 and EBITDA Margin showed almost no change

12 Sep 2016 • About Murgitroyd Group ($MUR) • By InTwits

Murgitroyd Group reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:

• Murgitroyd Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.6%.
• The company has highly profitable business model: ROIC is at 14.2%

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Murgitroyd Group ($MUR) key annual financial indicators

mln. £	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	35.699	35.969	38.353	39.819	42.231	6.1%
Gross Profit	20.863	22.087	22.085	22.069	22.666	2.7%
SG&A				17.887	18.372	2.7%
EBITDA	5.465	6.276	5.823	4.519	4.589	1.5%
Net Income	3.142	3.326	2.950	3.124	3.166	1.3%
Balance Sheet
Cash	1.208	0.989	1.457	1.617	3.298	104.0%
Short Term Debt	1.204	1.005	0.795	0.304	0.185	-39.1%
Long Term Debt	2.895	1.893	1.045	0.607	0.361	-40.5%
Cash flow
Capex	0.163	0.280	0.320	0.150	0.165	10.0%
Ratios
Revenue growth	7.5%	0.8%	6.6%	3.8%	6.1%
EBITDA growth	25.8%	14.8%	-7.2%	-22.4%	1.5%
Gross Margin	58.4%	61.4%	57.6%	55.4%	53.7%	-1.8%
EBITDA Margin	15.3%	17.4%	15.2%	11.3%	10.9%	-0.5%
Net Income Margin	8.8%	9.2%	7.7%	7.8%	7.5%	-0.3%
SG&A, % of revenue				44.9%	43.5%	-1.4%
CAPEX, % of revenue	0.5%	0.8%	0.8%	0.4%	0.4%	0.0%
ROIC	21.1%	22.9%	19.9%	14.6%	14.2%	-0.3%
ROE	15.6%	14.6%	11.6%	11.4%	10.8%	-0.7%
Net Debt/EBITDA	0.5x	0.3x	0.1x	-0.2x	-0.6x	-0.4x

Revenue and profitability

Murgitroyd Group's Revenue increased on 6.1% in FY2016. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 0.54 pp from 7.8% to 7.2% in FY2016.

Gross Margin decreased slightly on 1.8 pp from 55.4% to 53.7% in FY2016. SG&A as a % of Revenue decreased slightly on 1.4 pp from 44.9% to 43.5% in FY2016.

Net Income marign showed almost no change in FY2016.

Capital expenditures (CAPEX) and working capital investments

Murgitroyd Group's CAPEX/Revenue was 0.39% in FY2016. The company's CAPEX/Revenue showed almost no change from FY2013 to FY2016. It's average CAPEX/Revenue for the last three years was 0.53%.

Return on investment

The company operates at good ROIC (14.24%) while ROE is low (10.77%). ROIC showed almost no change in FY2016. ROE decreased slightly on 0.65 pp from 11.4% to 10.8% in FY2016.

Leverage (Debt)

Company's Net Debt / EBITDA is -0.6x and Debt / EBITDA is 0.1x. Net Debt / EBITDA dropped on 0.4x from -0.2x to -0.6x in FY2016. Debt dropped on 40.1% in FY2016 while cash jumped on 104% in FY2016.

Valuation

Murgitroyd Group's trades at EV/EBITDA 9.0x and P/E 14.0x while industy averages are 15.6x and 19.1x.

Appendix 1: Peers in Support Services

Below you can find Murgitroyd Group benchmarking vs. other companies in Support Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Camco Clean Energy ($CCE)		88.0%	-54.7%	99.4%
Optimal Payments ($OPAY)	39.9%	41.5%	44.0%	68.1%
Inspired Energy ($INSE)	83.8%	44.8%	42.2%	40.2%
21St Century Technology ($C21)	0.1%	-22.8%	-16.6%	35.5%
Ibex Global Solutions ($IBEX)	7.4%	35.7%	30.0%	29.8%
Median (55 companies)	2.4%	8.0%	4.7%	6.9%	0.9%
Murgitroyd Group ($MUR)		0.8%	6.6%	3.8%	6.1%

Top companies by Gross margin, %

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Inspired Energy ($INSE)	94.6%	86.8%	78.7%	76.2%
Ienergizer Ltd ($IBPO)	56.2%	78.4%	76.8%	72.7%	71.3%
Grafenia ($GRA)	53.4%	54.3%	56.1%	70.8%	66.3%
Vianet Group ($VNET)	53.3%	51.3%	58.8%	69.2%	70.1%
Prime People ($PRP)	63.4%	58.3%	57.7%	61.4%	59.2%
Median (49 companies)	28.2%	28.5%	29.2%	28.4%	28.3%
Murgitroyd Group ($MUR)	58.4%	61.4%	57.6%	55.4%	53.7%

Top companies by EBITDA margin, %

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
21St Century Technology ($C21)	13.4%	-0.2%	36.0%	44.8%
Northgate ($67GX)	41.2%	40.4%	40.6%	39.4%	38.3%
Inspired Energy ($INSE)	46.2%	48.5%	1.5%	35.4%
Vianet Group ($VNET)	18.6%	17.3%	19.7%	27.1%	22.1%
Vp ($VP.)	23.9%	24.5%	24.2%	26.2%	28.4%
Median (55 companies)	6.7%	6.3%	6.8%	6.9%	9.4%
Murgitroyd Group ($MUR)	15.3%	17.4%	15.2%	11.3%	10.9%

Top companies by CAPEX/Revenue, %

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Vp ($VP.)	21.4%	17.7%	21.6%	25.7%	24.1%
Sagentia Group ($SAG)	1.9%	1.4%	1.5%	25.2%
Nature Group ($NGR)	14.3%	7.2%	5.6%	22.9%
Augean ($AUG)	9.8%	15.9%	12.3%	12.3%
Falkland Islands Hldgs ($FKL)	3.7%	6.8%	12.9%	11.9%	4.8%
Median (55 companies)	1.1%	1.1%	1.1%	1.1%	1.1%
Murgitroyd Group ($MUR)	0.5%	0.8%	0.8%	0.4%	0.4%

Top companies by ROIC, %

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
21St Century Technology ($C21)	20.3%	-2.9%	45.6%	111.0%
Inspired Energy ($INSE)	63.9%	65.5%	-7.5%	28.0%
Petards Group ($PEG)	35.5%	-78.0%	24.7%	23.9%
Servoca ($SVCA)	1.0%	7.8%	14.9%	22.3%
Rtc Group ($RTC)	14.6%	17.6%	19.9%	22.2%
Median (55 companies)	9.5%	7.8%	9.3%	10.2%	8.6%
Murgitroyd Group ($MUR)	21.1%	22.9%	19.9%	14.6%	14.2%

Top companies by Net Debt / EBITDA

Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Redhall Group ($RHL)	22.8x	5.8x	6.6x	16.8x
Mitsubishi Corp ($MBC)	9.9x	15.9x	14.3x	12.5x	25.0x
Ienergizer Ltd ($IBPO)	6.3x	2.8x	3.0x	4.0x	2.4x
Ceps ($CEPS)		3.0x	6.6x	3.8x
Kellan Group(The ($KLN)			6.5x	3.6x
Median (51 companies)	0.8x	0.7x	0.6x	0.4x	0.1x
Murgitroyd Group ($MUR)	0.5x	0.3x	0.1x	-0.2x	-0.6x

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