Investors need comfort around Bravura costs: Wilson analysts

Bravura develops technology solutions for leading financial institutions. Picture: iStock

Wilson analysts say that investors will need to find comfort that Bravura’s cost base has peaked after it went cap in hand to investors on Monday for $80m and delivered a $191m half year loss.

Bravura on Monday emerged from voluntary suspension with a set of numbers that showed the group is under stress, with its revenue falling 11 per cent for the six months to December, its expenses increasing 17 per cent and it reported not only a $191m bottom line loss but a loss of $7m earnings before interest, tax, depreciation and amortisation.

After spending last week going cap in hand to investors through Macquarie Capital, the group, which has lost some key customers, announced it was raising $23m through a placement and $57m through an entitlement offer where shareholders would receive 1 share for every 1.73 that they hold.

With shares sold at 40c each, the raise was a 52.9 per cent discount to the last closing price of 85c.

Following the raise, the group will refinance its debt after receiving waivers from lenders for debt covenant breaches.

Bravura’s recently appointed chief executive Libby Roy has taken the clean sweep approach to the business, with key members of management replaced.

Wilsons said the proposed $80m capital raise will more than cover the expanded costs expected to be born in the second half of the 2023 financial year.

Wilsons had been forecasting half year revenue of $135m but it was $118m, while the group had about $28m at the end of last month and the cash position is expected to deteriorate by about $30m to $40m by June as part of its restructure.

Bravura has forecasted $240m to $245m of annual revenue, down from $270m to $275m as earlier predicted, while the group now expected to make $10m would now make a loss of up to $10m.

The financial services software company is facing delays and uncertainties surrounding its arrangement with Colonial First State, the trend of lower existing and new project work after the global pandemic and higher operating costs.