Bravura has launched a fully underwritten $23 million institutional placement and $57 million pro-rata accelerated non-renounceable entitlement offer to support its organisational change program.
In an ASX filing on Monday, Bravura said its fully underwritten equity raising of $80 million would result in the issue of some 200 million new shares, representing approximately 81 per cent of its current issued capital.
The use of proceeds are expected to fund investment in its operational change program, fund negative cashflow and transaction costs and provide balance sheet flexibility and working capital.
The equity raising is planned to be carried out through an offer of fully paid ordinary shares which will consist of two parts: an institutional placement aimed to raise approximately $23 million and a 1 for 1.73 accelerated non-renounceable entitlement offer intended to raise around $57 million.
Collectively, these two components are referred to as the “Offer”. The offer price of $0.40 per share represents a considerable discount of 38.4 per cent to the Theoretical Ex-Rights Price (“TERP”) of $0.65 based on the last closing price on 23 February 2023, as well as a significant 52.9 per cent discount to the last closing price of $0.85 on the same date.
The announced capital raise comes amid the company reporting a net loss of $190.9 million in the first half of FY23, down from a net profit after tax (NPAT) of $15.3 million in 1H22.
In its delayed results, which were originally set to be released last Tuesday (28 February), Bravura declared an adjusted NPAT loss of $14.2 million — representing a $30.3 million fall on the $16.1 million profit seen in 1H22 — along with an EBITDA loss of $7.0 million, down $32.3 million.
Revenue fell by 11 per cent to $118 million, while total expenses increased by 17 per cent to $125 million. Bravura noted that it had not declared a dividend “to provide cashflow support”.
“The first half was undoubtedly a difficult period with our performance impacted by a number of operational and market-related challenges,” commented Bravura chief executive officer Libby Roy.
“However, after conducting a wide-ranging strategic review of our business and having taken some tough but necessary decisions, I believe we now have a plan in place that will allow us to better manage and monetise our suite of high-quality, mission-critical products and build on our strong customer base.”
Wealth management revenue was reported to have decreased by 7 per cent to $77.3 million and EBITDA was down 84 per cent to $3.2 million. Bravura indicated that this was mainly attributable to the impact of foreign exchange and a decline in non-recurring licence fees.
Funds administration revenue fell 21 per cent to $41.1 million, alongside a 41 per cent drop in EBITDA to $15.0 million.
Bravura noted that its organisational change program will target approximately $25–30 million in annualised cost benefits when fully implemented. The costs associated with this program are said to be in the range of approximately $19–24 million.
The company also suggested that its plan to return to profitability is underpinned by “clearly defined business outcomes and financial targets”.
Stronger revenue is anticipated in the second half of the financial year, but still down from earlier expectations. The company warned that it was experiencing “delays and uncertainties” relating to two new material opportunities, including with Colonial First State.
Additionally, the trend of lower existing and new project work in Europe, the Middle East, and Africa regions seen post-COVID-19 is projected to continue and overall operating costs are expected to remain elevated.
Bravura provided guidance of revenue for FY23 of $240–245 million, down from its previous guidance of $270–275 million. An EBITDA loss of $5–10 million is anticipated, compared to a profit of $10–15 million, while an adjusted NPAT loss of $24–19 million is expected, versus the $0–5 million predicted previously.
