Computer Software Group EPIC : CSW

Shares in Issue : 56.79m

Web Site : http://www.computersoftware.com/

E-Mail : investors@computersoftware.com

Broker Forecasts :

Seymour Pierce 28th Feb 2007 BUY

2007 PTP 8.3m
2007 EPS 9.7p

2008 PTP 9.6m
2008 EPS 10.7p



Company Overview

Computer Software Group (CS Group) has been delivering innovative business solutions for more than 30 years. With 13 offices in the UK we are a leading UK software house focusing on the development of fully-integrated solutions for British and International companies. Today CS Group helps over 2500 companies, including many market leaders, in a wide variety of industry sectors.

CS Group is listed on the London Stock Exchange (CSW) and our impressive client list includes: Blick UK, CBI, Cembre, Chesterfield Borough Council, Connaught, Electrolux UK, Manchester City FC, Morphy Richards, RNLI, Rocom and Thomas Plant among many others.

Why Computer Software Group?

There are many reasons why our customers choose Computer Software Group and our solutions:

-We are the leading UK IBM iSeries software house offering a completely integrated and vertically-focussed solution portfolio from the web and mobile-enabled front-office systems through to back-office accounting and payroll. CS Group solutions have successfully been deployed by more than 25% of the IBM UK iSeries installed base.
-30% of Premiership football clubs run their business with our software. Our leading-edge integration with smartcard technologies has extended our capabilities to include access control integrated with ticketing, CRM, websales, merchandising and corporate sales.
-Our acquisitions of Pinnacle, Advatech and Prolog position us as a leading solution vendor in the Field Service sector with more than 25% market share and with more than 1200 combined customers. Our rich solutions portfolio, extended with new capabilities, is able to address the needs of any service management company.
-We are a leading supplier of membership software and fund raising software to the Not For Profit sector, offering web-based solutions to professional bodies, trade associations, charities, unions, NGOs and sports governing bodies.
-Our acquisition of Transoft have extended our solutions suite to offer application modernization, integration and migration. These specialist products and expertise enable organisations to evolve new IT solutions from their existing ones, allowing companies to deliver improved business processes faster, with less risk and with lower costs.
-CS Group solutions can be purchased or rented on an applications on demand basis for a low, fixed monthly fee.

From this post at iii, CSW has been tipped :

Just been tipped - screwem

by T1ps.com as a buy with a one year target of 1.49p...very new to this share but thought you long term holders would be interested in this.

Nice write up in SCSW this weekend.

From AFN :

Welsheagle - 10 Jun'06 - 19:02

Mentioned in the Daily Mail today in the 'broker buys' section.
Seymour Pierce's recommendation is mentioned.

Nice moves today.

Post from AFN :

acumen - 22 Jun'06 - 10:17 - 23 of 23

Favourably mentioned in both Guardian and Times today.

Apparently a large US investment fund met CSW last week and were presumably impressed. They picked up 2m of CSW yesterday,their first investment in CSW.
Its the fact that they were happy to pay 10% above the mid-price, at a time of market uncertainty, that impresses me most.

Now,how many other insts will be looking to do similar having read through the recent results.

PapalPower - as it's just you here at the moment, thought I'd join in if only to say I have been watching this and looking to add.

Hi Greyhound, certainly looking healthy now on the price front after some large institutional buying to get rid of the overhang and seller.

http://www.investegate.co.uk/Article.aspx?id=200606260700391223F


Computer Software Group PLC
26 June 2006
Computer Software Group plc
Acquisition of Laserform International Limited for 4.8 million

Computer Software Group plc ('CS Group'), the AIM-listed niche IT software
consolidator, is pleased to announce the acquisition of the whole of the issued
share capital of Laserform International Limited ('Laserform'), a leading
provider of specialist documentation and practice management software, for a
total consideration of 4.8 million. This has been satisfied by 4.3 million of cash provided from an additional banking facility, and also by the issue of
474,712 ordinary shares in CS Group, credited as fully paid. On completion of
the acquisition, Laserform had cash reserves of 1.5million.

Following the acquisition of AIM Group Holdings Limited in April 2006, this
transaction represents CS Group's second acquisition of a specialist software
company servicing the legal sector.

With offices in central London and Lymm in Cheshire, Laserform is a leading
provider of forms software to the legal sector. In an industry affected by ever changing regulations, its software is used widely in the legal sector.
Laserform has a client base of over 2,000 firms which includes 80 of the top 100 legal practices in the UK. Recurring revenues account for approximately 70% of total sales.

Laserform's subsidiary, LFM Partnership Solutions Ltd ('LPS'), supplies practice management software, and synergies are planned with AIM Group Holdings Limited,which operates in the same niche market.

Laserform's audited but not consolidated accounts to 30 September 2005, and
those of its subsidiary company LPS, recorded combined sales of 4.1 million and EBITA of 0.5 million. The combined net assets of Laserform and LPS as at 30 September 2005 were 0.4 million.

The Chairman and majority shareholder of Laserform, Barry Hawley-Green will
retire from the business upon acquisition. The remaining six executive directors will continue to be responsible for the day to day operations of Laserform.

Commenting on the acquisition, Vin Murria, Chief Executive of CS Group, said:
'I am delighted that we are announcing this acquisition less than two months
since we first entered the legal market. Laserform is a key component of our
strategy to establish a strong position in the legal software sector, which we
are well on the way to achieving. Laserform's products and services will enable us to maximise cross-selling opportunities across the legal sector and its practice management software will integrate well with our existing AIM Group business.'



- Ends -

Full article at : http://www.growthcompany.co.uk


Computer Software Group

STRONG BUY 27/06/2006

Niche IT software consolidator CSG one of Growth Company Investors picks for 2006 at 68p has made a further move into the legal sector through the acquisition of Laserform.............................
Companies: CSW

Another nice day

100p on the bid now :)

On todays free email from http://www.uk-analyst.com

Buy Computer Software Group at 100p

Says Tom Winnifrith of http://www.t1ps.com

I first encountered Computer Software (CSW) when I heard that it was trying to buy the company now known as Rivington Street Software, which builds the t1ps.com websites. Computer Software and its CEO Vin Murria seem to be hard cookies. They tried to knock the price down at the last moment and I am in no doubt that had they bought RSS they would have slashed costs (yes, staff) ruthlessly. As it happens, on that occasion Computer Software overplayed its hand and RSS found a more enlightened owner in t1ps. But a string of 11 acquisitions made since its August 2001 float show that Computer Software is THE consolidator in its sub-sectors of the IT market. There is no doubt that Vin has bought well and integrated skilfully and ruthlessly. And the company is - as recent results showed - growing organically and converting a very high percentage of profits into cash. Such a strong and consistent performance is not discounted in a February 2008 PE of less than 10. Even at my one year target price of 149p the stock would trade on a PEG of just 0.65 - hardly demanding.

The shares are a buy at 100p with a 149p one year target. Of course, if Computer Software had products and staff as good as those of Rivington Street Software my target would be even higher. Perhaps I am biased. But I am in no doubt that these shares are hugely undervalued.

The Business

As you might expect, the company has a half-decent website at http://www.computersoftware.com 30 years old and operating from 13 UK offices from which it services 2,500 clients it tackles certain niche parts of the IT solutions market providing completely integrated packages from web and mobile enabled front end systems through to complex back end payroll and membership systems. Whilst it cannot be said to dominate any given niche it has a very strong presence in certain areas notably soccer clubs (it serves a third of the Premiership), Field Systems and the Not For Profit (charity market). It is in this - highly fragmented and pretty much recession resilient market that Computer Software encountered RSS. Though it dwarfs it in size it must have been turned on by its cutting edge MRS system and will no doubt be equally wowed by the recently launched don@tion charity fund raising package. The company operates through three divisions: Business Solutions, Not for Profit and Field Systems.

Each part of the business has been built by a combination of organic growth and acquisition. In buying a rival IT firm the clear aim is to bolt its support contracts and other almost guaranteed income onto your top line but to support those contracts largely using your existing workforce and infrastructure. Occasionally a purchase will bring significant new products to your portfolio but if you have those support contracts that may not be needed. It is worth noting that as things stand more than 40% of the forecast sales for this current year comes from annual support contracts which most clients tend to renew usually with a price increase which, at least, maintains the real value of the contract. Another 40% of the forecast comes from repeat business from existing clients.

The IT services market, especially in the NFP niche, is highly fragmented with many small private companies still in the game. Such private companies can usually be bought for pretty modest multiples meaning that the deals can be earnings enhancing from day one. The issue for Computer is that as it grows in size, acquisitions have to b e larger to be meaningful and larger prey may be both more expensive and also more difficult to integrate and to subsume. The most recent large acquisitions (the Care Group and AIM Group) set Computer Software back 8.2 million pounds. Those deals dwarf the transactions of a few years ago. Then just last week it snapped up Laserform. If one strips out the cash in that business Computer paid 3.3 million pounds for a business making an EBITDA of 500,000 pounds but once Vin has slashed costs this will be shown as yet another low PE deal.

Growth

Most existing clients of Computer Software will have ongoing needs for system upgrades and modifications which fall outside the terms of the annual support contract. And moreover every half decade or so most organisations will look at a major upgrade of their IT infrastructure. Unless the incumbent has goofed in a big way or there is some other special factor at play then they must be favourite to undertake that upgrade. Thus there is a really very high degree of visibility of the revenues from support contracts but also from repeat business with existing customers. So where does the growth come from? The launch of new products helps. And there is always scope to sell more products to existing clients - Computer Software is good at that and recent management appointments suggest that its sales focus will grow stronger over the coming year. But there is also an industry dynamic which favours companies such as Computer Software. Just as the IT services providers are fragmented so too are customers, especially in the charity sector but increasingly the larger and medium sized customers will seek out suppliers who can offer complete solutions and that has to freeze out smaller players.

Last year half of Computer Software's growth was organic. The rest came from acquisitions. This year acquisitions will be the main driver of growth. the purchase of AIM gave Computer Software a foothold in the legal sector while Care Business strengthened its NFP presence. There will be other acquisitions. Computer Software ended the year to February 28th with net debt of 200,000 pounds but the two acquisitions made in May were cash funded. However cash flow broadly matches profits which means that if the company meets my forecasts then by the end of the current financial year it will have net debt of just 1 million pounds. It is pretty obvious that Computer Software could borrow significant sums to do further acquisitions. In the current year its operating profits will be 8 million pounds so if one assumes that it could borrow at 6% it could happily take on 30 million pounds of debt and still enjoy interest cover of more than 3 times even if the cash was simply poured down a drain. I am not suggesting that such a large acquisition is on the cards merely stating that the company could do such a deal.

Management

Vin Murria, the CEO was formerly COO of Kewill and has been with Computer Software since 2002 ands is the key figure in the company's growth. But she has able support. The chairman is Michael Jackson who is also chairman of Sage and CFO Barbara Firth has over a quarter of a century of accounting experience. I have not found the Computer Software management getting their PR firm to badger me which is a good job as I regard the firm they use to put out their results as a resting home for posh young buffoons. My point is that this is not a management team which is overly obsessed about the share price, instead it gets on with the real job of driving the business forward.

Forecasts and Valuation

In the current year to February 28th 2007 sales should rise from 25.2 million pounds to 35.5 million pounds with 39 million pounds on the cards for the following year. These forecasts assume that Murria et al manage not to do any more bolt-on acquisitions, a scenario which I find very hard to imagine. But I am being conservative in my assumptions. I expect that pre-tax profits, excluding goodwill amortization, will increase from 5.1 million pounds last time to 7.5 million pounds this year and that they should hit 8.6 million pounds next time. That equates to earnings of 9.1p this year, up from 7.8p; despite the tax rate more or less doubling to 28%. Next year (to February 2008) I assume that earnings will hit 10.3p. Computer Software will not pay a dividend, arguing, correctly, that the cash it generates is better reinvested on acquisitions.

So what should such a business be valued at? At 100p the stock trades on a current year PE of 10.9, falling to 9.7. For a company delivering such strong organic and in organic top line growth, such strong bottom line growth, which is generating cash and which has such a high degree of earnings visibility that is far too low. I am pretty certain that over the next 12 months my earnings estimates will be increased but even on the basis of my current numbers I expect a re-rating. In a year's time as the market looks forward to 2008 earnings of 10.3p, is a PEG of 0.65 for such a company really that demanding? I think not and thus my target price is 149p. And at100p - with the company valued at 57 million pounds - the stock is a buy.

Could be a blue day ahead on CSW methinks ;)

1 August 2006
Computer Software Group plc
Acquisition of Videss Limited for £7.07 million

Computer Software Group plc ('CS Group'), the AIM-listed niche IT software
consolidator, is pleased to announce the acquisition of the whole of the issued
share capital of Videss Limited ('Videss') for a total consideration of £7.07
million. The consideration was satisfied by a payment in cash of £6.57m,
provided by an additional banking facility, and the issue of 518,135 ordinary
shares in CS Group, credited as fully paid. At completion, Videss had cash
resources of approximately£2.80 million.

This transaction, following the acquisitions of the AIM Group in April 2006 and
Laserform in June 2006, represents CS Group's third acquisition in the
specialist software market servicing the legal sector.

With offices in Leeds and Swindon, Videss is a provider of software and related
services to over 180 medium to large firms in the legal sector. Within this
client base Videss software is accessed by over 10,000 users and the value of
annual support contracts exceeds £2.0m.

Videss's audited accounts to 31 March 2006 recorded sales of £4.97 million and
profit before taxation of £0.43 million. The net assets of Videss at 31 March
2006 were £1.77 million.

The founder and chief executive of Videss, Paul Sanderson, together with his
wife Sonja, currently finance director, will retire from the business on
acquisition. Chris Rose (48), who has been with the business for over 22 years,
will continue in his role as sales director.

Commenting on the acquisition, Vin Murria, Chief Executive of CS Group, said:

'Videss joins recent acquisitions AIM Group and Laserform in our Professional
Solutions division to enable us to build a strong position in the legal software market. We now have a range of software products and services that can service both large and small members of the legal sector. '

Application has been made for the consideration shares to be admitted to trading on AIM and admission is expected to commence on 7 August 2006.

- Ends -
Contact:
Computer Software Group plc 020 8879 3939
Vin Murria, CEO
Barbara Firth, CFO

Financial Dynamics 020 7831 3113
Giles Sanderson / Juliet Clarke / Hannah Sloane

Another attempt at breaking through the 100p level and staying above :) ?

Looks like some news coming, or as CSW been tipped somewhere ? or will be tipped somewhere ?

Looking very good, we could/should finish a bit ahead of forecasts then :)

Computer Software Group PLC
04 September 2006
Computer Software Group plc
AGM Statement
Computer Software Group plc ('CS Group' or the 'Company'), the AIM-listed niche IT software consolidator, announces that at the Annual General Meeting of the Company, which was held today, all resolutions proposed at the meeting were duly
passed.

At the meeting, Michael Jackson, Chairman, made the following statement to shareholders:

'Trading has been satisfactory during the first half year and we are well on the way to successfully integrating our four latest acquisitions. Full year results look set to be comfortably in line with market expectations.'

- Ends -

Getting some more interest again :) It should, given the forecasts and the AGM statement.

Getting some more interest again :) It should, given the forecasts and the AGM statement.

Broker target price of now 150p and upgrades aplenty.

Looking very strong.