THE WINNING COMPANIES 2017 Recognising the UK’S Best-Performing, Privately-Owned Technology Companies

THE WINNING COMPANIES 2017 Recognising the UK’s best-performing, privately-owned technology companies

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Megabuyte Award Series Identifying the best-performing companies in the UK technology sector

Looking beyond share price to identify Revealing the UK’s Top 50 Talent spotting the UK’s future the UK’s best-performing, publicly-listed best-performing, privately-owned, mid-market leaders among earlier stage mid-market technology companies. mid-market technology companies. public and privately-owned companies.

VIEW OUR AWARD SERIES, VISIT 2 www.megabuyte-awards.com Welcome & Contents

Glossary WELCOME TO THE Peer Group Acronyms megabuyte50 awards 2017 Software AES Accounting & Enterprise Software BIS Banking & Insurance Software GHS Government & Healthcare Software Celebrating the Megabuyte50 hat-trick SA Specialist Applications SIS Security & Infrastructure Software Welcome to the third annual Megabuyte50 Report, which celebrates the very best performing UK tech companies, as measured by the ICT Services CSI Consulting & Systems Integration Megabuyte Scorecard. Now in its third year, the Megabutye50 goes DCH Data Centre & Hosting Services from strength to strength and, in this report, you will find detailed IS Infrastructure Services MWS Mobile, Wireless & Satellite financial analysis of the top companies, who owns them, how value Ian Spence FOUNDER & CEO, MEGABUYTE TN Telecoms & Networks is being created and, crucially, which PE-backed companies are likely to exit in the coming year.

Report Acronyms For me, there are three stand-out elements from this and vibrant IT services sector with Logica, Admiral, year’s report, the first of which is the emergence of a Xansa and others at its head. However, over the next MBO Management Buyout number of very high-quality businesses at the smaller decade this sector first consolidated within itself SBO Secondary Buyout end of the Megabuyte50 size range. As a reminder, and was then sold to US or European buyers. When P2P Public to Private companies need to have revenues of at least £10m to I started Megabuyte in 2007, there was nothing left IPO Initial Public Offering be included in the rankings. Examples of these but a few very small players. However, the last five FPO Follow on Public Offering entrants include Xceptor, Pythagoras Communications years has seen a very welcome resurgence in and Mortgage Brain and I am greatly reassured that domestic IT services companies and this can clearly the sector is in good health when we see companies be seen in the 2017 Megabuyte50, with eight such as these breaking through into the mid-market. Consulting & Systems Integration companies in the My next key observation is on the valuation uplift in cohort, compared to just three last year. Congrats! the cohort over the last year. Our analysis shows that So those are my highlights, but please enjoy the class of 2017 are worth just under £12bn and much more detailed analysis in the report. Before moreover, the value of these companies has grown by I commend this report to you, I must first nearly two-thirds over the last 12 months. Tellingly, acknowledge the role of our sponsors in this three-quarters of this uplift has been delivered by important endeavour and would like to personally good old-fashioned profit improvement, while the thank all of our Megabuyte50 sponsors for their remaining quarter has been driven by a valuation support. I would particularly like to thank Rothschild uplift. This feels to me like an interesting data point for their ongoing engagement in this project, which indicating where we might be in the cycle. is sincerely appreciated. Last, but certainly not least, I note with interest the So, please enjoy the report and help us to celebrate ongoing resurgence of the UK IT services sector. the fantastic achievements of the UK’s leading When I arrived in the City in 1994, there was a large privately owned technology companies.

CONTENTS

Executive Summary 4

The Megabuyte Scorecard 6

The Megabuyte50 - Performance Overview 8

Published by the team at megabuyte The Megabuyte50 - Top 50 Rankings 10 The Blade, Abbey Square, Reading RG1 3BE +44 (0)118 948 5850 | [email protected] The Megabuyte50 - Individual Award Winners 12 www.megabuyte.com The Megabuyte50 - Top 10 Performing Companies 18 © megabuyte 2017 The Strongest Performing Peer Groups 22

Document Information Ownership Structure 24 All share prices, valuations and Scorecard data are quoted as at the close of business Corporate Activity 26 on 30 September 2017.

PUBLISHED IN CONJUNCTION WITH THE megabuyte50 awards and PRIVATE COMPANY SHOWCASE Conference 3 The DEFINITIVE LIST OF TOP PERFORMERS

Executive Summary

It is now just over three years since we launched the Megabuyte Scorecard, and, in that time, the interest in, and adoption of, the Scorecard as a true mid-market benchmarking tool continues to grow. The Scorecard is now fully ingrained into the Megabuyte research team workflow, and we use it on a daily basis as a core measure of performance for the companies we track. An extension of this is the Megabuyte50, which, once a year, gives us the chance to apply this tool to the private companies under coverage and come together to celebrate their success.

There are a myriad of award ceremonies out there these days but we see the Megabuyte50 as one of the most prestigious. It’s a good barometer of where we are in the market. We work extremely hard to be recognised by their credible analysts so it’s fantastic to appear in this year’s list. Lawrence Jones MBE Founder & CEO, UKFast

megabuyte50 2015 - Top 20 Company megabuyte50 2016 - Top 25 Company Best Performing Company 2017 (DCH)

Find out more about our awards and view all Megabuyte50 2017 winners at www.megabuyte-awards.com

4 The megabuyte50 awards THE WINNING COMPANIES 2017 Executive Summary

We’re very proud to continue to be placed in the Megabuyte50. It’s a valuable endorsement of our strategy as it reflects our achievements and gives us confidence for the future. It will also be welcome news to our new private equity investors who supported our summer 2016 refinancing. Ed Heale CEO, CSL

megabuyte50 2015 - Top 50 Company megabuyte50 2016 - Top 25 Company megabuyte50 2017 - Top 50 Company

CONTINUING MOMENTUM businesses remained consistent in 2017, although, from a sector We believe strongly at Megabuyte that the secret to a sustainable perspective, ICT Services maintained its majority with 28 business over the long term is robust financial performance, companies. It is also worth noting the change in blend including high levels of profitability and cash flow. This may seem of private equity representation. With over half of the 2017 like an obvious statement but, in the technology sector today, Megabuyte companies private equity-backed, there are now 20 some commentators seem to have forgotten the old adage different PE houses represented in the Megabuyte50, while the ‘revenue is vanity, but profit is sanity’. So, we created the league table of houses with two or more businesses has changed Megabuyte Scorecard as a consistent and completely completely from last year. HgCapital and the Business Growth independent way of measuring that performance. Full details Fund are the most populous, holding three companies each. of how the Scorecard works can be found on page 6. QUALITY OVER QUANTITY SOME OLD, SOME NEW It was a quieter year for corporate activity within the The companies comprising the Megabutye50, both incumbents Megabuyte50, with the cohort of 2016 carrying out fewer and new entrants, remain a cut above the rest. These companies transactions than their 2015 predecessors. However, some of the perform, on average, in the top quartile of almost all seven transactions that have taken place have been nothing short of Scorecard KPIs and the top 10 companies in the ranking all deliver transformational, including the much-touted IPO of Alfa Systems results at the very pinnacle of this group. On average, (2015 and 2016’s first place winner, then named CHP Consulting), Megabuyte50 companies grow their revenues at over 28% per the acquisition of HEG by GoDaddy, and strategic education annum organically, deliver EBITDA margins of around 27%, and acquisitions for IRIS Software. Private equity exits, of which there convert over 105% of that EBITDA into cash. were four, were also quite significant, including ITRS’s acquisition by TA Associates and Phlexglobal’s acquisition by Vitruvian Partners, which marked a solid return for Bridgepoint after just two years As we detail from page 9, while some sub-sectors are more invested. On the owner-managed front, in addition to Alfa’s IPO, prevalent than others, the group of 50 includes companies from other significant deals include PCA Predict’s acquisition by identity every part of the UK enterprise technology sector, from data intelligence specialist and Megabuyte Quoted25 company accounting software, to hosting companies and travel technology GB Group, and White Clarke Group’s MBO backed by Five Arrows vendors. 29 of the 2016 companies are recognised again in 2017, Principal Investments. while 21 are new entrants. We list the full 2017 cohort, call out those that have won an Outstanding Performance Award, and provide some detailed analysis of the Scorecard performance of In an interesting piece of new analysis, we also take a look at the top ten companies, from page 10. the valuation dynamics across the 2016 and 2017 Megabuyte50 cohorts, how these have developed and what factors are driving value creation. Now that we have three years of data, comparing previous Megabutye50 cohorts with this year’s class throws up some interesting trends. Looking at ownership, the split in the Megabuyte50 between owner-managed and private equity-backed

PUBLISHED IN CONJUNCTION WITH THE megabuyte50 awards and PRIVATE COMPANY SHOWCASE Conference 5 Our PROPRIETARY BENCHMARKING METHODOLOGY

An expert tool for companies and the investor and advisory communities seeking to understand companies’ performance relative to peers.

WHAT DOES A ‘GOOD’ TECH COMPANY LOOK LIKE? Whilst the need to build a position in a new market or technology may require a technology company to lose money during its formative years, we feel strongly that, once this stage is passed, high growth, high margin, cash generative businesses will always achieve better long term returns for investors. But how does one go about assessing which companies are performing better than others? The Megabuyte Scorecard provides technology companies, their investors and advisers a standardised methodology to help them benchmark their performance against similar companies.

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Keep track of the companies in the Megabuyte50 plus any other companies in the Megabuyte research universe via ‘Favourites’. Set your Favourites and we’ll alert you every time we publish news or reports on your companies. Visit megabuyte.com/set-favourites AVAILABLE TO NON-SUBSCRIBERS.

Find out more about our awards and view all Megabuyte50 2017 winners at www.megabuyte-awards.com

6 The megabuyte50 awards THE WINNING COMPANIES 2017 The Megabuyte Scorecard

HOW DOES IT WORK? The Megabuyte Scorecard is a proprietary benchmarking methodology developed by the research team at Megabuyte, pooling over 60 years of combined experience assessing the performance of software, IT and telecoms services companies. The methodology takes seven key measures: three for revenue and profit growth, one for margins and two for cash flow, as well as one for overall size. These measures are then weighted to provide what we feel is the optimum balance for mid-market and later-stage companies.

A Growth: In assessing a company’s revenue growth, we have A Cash conversion: A central tenet of our view of optimal struck a balance between our view that organic growth is financial performance is that as much as possible of reported preferable, whilst still acknowledging that acquisitions are an profit is converted to cash. We therefore give at least as important additionalThe UK’s best way-performing to grow. privately Growth-owned in EBITDAtech is also a much weighting to cash flow as profit, looking at two KPIs – key measurecompanies used in the Scorecard. operating cash flow (OCF) conversion and free cash flow (FCF) conversion. A Profitability: When evaluating profitability, we look at EBITDA margins as the optimal measure of P&L profitability. A Size: While size does not, in itself, mean that a company is good or bad, the law of large numbers does mean that it is harder to generate organic growth, in percentage terms, as a company gets larger. As a result, we feel that it is right to give some credit to larger companies. Whilst the need to build a position in a new market or technology may require a technology company to lose money during its formative years, we feel strongly that, once this stage is passed, high growth, high margin, cash generative businesses will always achieve better long term returns for IT’S ALL ABOUTinvestors. THE But QUARTILEShow does one go about assessing which companies are performing better than others? The Megabuyte Scorecard provides technology companies, their investors and advisers a Once we have assembled all the data, we group performance in will see a company’s primary score represented in our Quartile standardised methodology to help them benchmark their performance against similar companies. all seven categories into quartiles and apply a score to each of Radar charts, an example of which is shown in Figure 2. Each them – this gives each company a primary score. By segmenting company’s primary score is then weighted according to our performance in Thethis Megabuyte way, the Scorecardpotential is distortiona proprietary frombenchmarking outliers methodology is proprietary developed by themethodology, research and each company is ranked within team at Megabuyte, pooling over 60 years of combined experience assessing the performance of neutralised and software,it also gives IT and a telecoms clear view services of strongcompanies. areas, The andmethodology areas takesits seven quartile key measures to provide: three the final Megabuyte Scorecard rating. of improvementfor for revenue each andcompany. profit growth, Throughout one for margins the report,and two forreaders cash flow, as well as one for overall size. These measures are then weighted to provide what we feel is the optimum balance for mid-market and later-stage companies. FIGURE 1: Combining Factor Performance FIGURE 2:...To Generate a Score FIGURE 1: FIGURE 2:

1st Quartile 2nd Quartile Company Performance Size 3rd Quartile 4th Quartile Peer Group Average Size FCF 50% 120% Organic Conversion FCF Conversion Organic Growth 100% Growth 30% 80% 60% 40% OCF Revenue 10% 20% Conversion CAGR 0% OCF Conversion Revenue CAGR Adj. EBITDA -10% -20% EBITDA CAGR Source: Organic Revenue EBITDA Adj. EBITDA OCF FCF Margin ‒ Megabuyte Growth CAGR CAGR margin Conversion Conversion Adj. EBITDA margin EBITDA CAGR Source: – Megabuyte ‒ Growth: In assessing a company’s revenue growth, we have struck a balance between our view that organic growth is preferable, whilst still acknowledging that acquisitions are an important additional way to grow. Growth in EBITDA is also a key measure used in the Scorecard.

‒ Profitability: When evaluating profitability, we look at EBITDA margins as the optimal measure of P&L profitability.

The fact that‒ Cash theconversion: Megabuyte A central tenet of our viewScorecard of optimal financial addresses performance is that asgrowth, much as profit, and cash possible of reported profit is converted to cash. We therefore give at least as much weighting to generationcash when flow as profit, assessing looking at two KPIs financial – operating cash flowperformance (OCF) conversion and free makes cash it a much better (FCF) conversion. analysis of sustainable growth than other purely revenue-focused ‒ Size: While size does not, in itself, mean that a company is good or bad, the law of large numbers does mean that it is harder to generate organic growth, in percentage terms, as a company gets benchmarkinglarger. As alists. result, we As feel that such, it is right tobeing give some credit included to larger companies. in the Megabuyte50 for

another year is a great validation of the work we've put into ITRS to Once we have assembled all the data, we group performance in all seven categories into quartiles develop itsand applybusiness a score to each model of them – this givesand each product company a primary strategy. score. By segmenting performance in this way, the potential distortion from outliers is neutralised and it also gives a clear view of strong areas, and areas of improvement for each company. Throughout the report, readers Guy Warren will see a company’s primary score represented in our Quartile Radar charts, an example of which is CEO, ITRS shown in Figure [x]. Each company’s primary score is then weighted according to our proprietary megabuyte50 2016 - New Entrant & Top 25 Company megabuyte50 2017 - Top 50 Company

PUBLICATION DATE: 25/02/15 | 7

PUBLISHED IN CONJUNCTION WITH THE megabuyte50 awards and PRIVATE COMPANY SHOWCASE Conference 7 The MEGABUYTE50

Exceptional financial performance Megabuyte is now tracking well over 600 companies in the UK mid- market and over two thirds of those companies are privately owned. Of this cohort, 276 companies currently have a Scorecard rating.

Table 1 shows the quartile performance of the financial year of 24% (up from 22% in 2016) and entire Scorecard dataset. When we look at the average revenue CAGR over the last four years of Megabuyte50 companies in the context of the 28% (consistent with last year). The group has data, we can see that, on average, Megabuyte50 grown its EBITDA by an average of over 31% in companies produce financial metrics in the the last four years and generates average EBITDA top quartile, and often well above the margins of 27% (both in line with 2016). Generally, quartile boundary. this profit is converted into cash very effectively, with average operating cash conversion of 107% As a group, the 2017 Megabuyte50 companies (ahead of 106%) and free cash conversion of 86% delivered average organic growth in their last (in line).

Private owner-managed businesses are often left relatively in the dark as to how they are performing in comparison to others in their sector. The Megabuyte Scorecard therefore sheds valuable light on a business’ overall performance, while also pinpointing strengths and weaknesses that may not be obviously apparent, even to the owners of that business. Martin Taylor CMO, Redwood Technologies

megabuyte50 2017 - New Entrant & Top 15 Company

8 The UK’s best-performing privately-owned tech companies

Megabuyte is now tracking well over 600 companies in the UK mid-market and over two thirds of those companies are privately owned. Of this cohort, 276 companies currently have a Scorecard rating. The megabuyte50 awards The Megabuyte50 THE WINNING COMPANIESTable 2017 1 shows the quartile performance of the entire Scorecard dataset. WhenPerformance we look at theOverview Megabuyte50 companies in the context of the data, we can see that, on average, Megabuyte50 companies produce financial metrics in the top quartile, and often well above the quartile boundary.

As a group, the 2017 Megabuyte50 companies delivered average organic growth in their last financial year of 24% (up from 22% in 2016) and average revenue CAGR over the last four years of 28% (consistent with last year). The group has grown its EBITDA by an average of over 31% in the last four years and generates average EBITDA margins of 27% (both in line with 2016). Generally, this profit is converted into cash very effectively, with average operating cash conversion of 107% (ahead of 106%) and free cash conversion of 86% (in line).

TABLE 1: How the Megabuyte Universe Performs TABLE 1: SizeSize OrganicOrganic Revenue Revenue RevenueRevenue EBITDAEBITDA EBITDAEBITDA OCFOCF FCF FCF (£m) Growth CAGR CAGR Margin Conversion Conversion Revenues (£m) Growth CAGR CAGR Margin Conversion Conversion 1st Quartile 1st Quartile Boundary 18 1.0% 4.9% 3.4% 7.9% 81.7% 46.6% Boundary 18 1.0% 4.9% 3.4% 7.9% 81.7% 46.6% 2nd2nd Quartile Quartile BoundaryBoundary 28 28 9.0% 9.0% 12.5%12.5% 12.0%12.0% 15.1%15.1% 94.5%94.5% 71.3% 71.3% 3rd3rd Quartile Quartile Source: BoundaryBoundary 56 56 16.9% 16.9% 23.2%23.2% 28.4%28.4% 23.4%23.4% 108.4%108.4% 89.1% 89.1% Source: ‒ Megabuyte 4th Quartile – Megabuyte 4th Quartile

CONTINUING SKEWIn TOWARDS 2015, the Megabuyte50 ICT SERVICES cohort was split evenly between our two main sectors, ICT Services and In 2015, the Megabuyte50 Software,cohort was which split evenly we saw between skew ourtowards ICTcompanies, Services creating in 2016, an interesting at 27 versus contrast 23. Thiswith theyear, Top the 10, skew two main sectors, ICT Serviceshas increased and Software, further, which with we saw28 companieswhich in the are Megabuyte50evenly split between sitting the in twoICT sectors.Services Speaking compared of the to 22 skew towards ICT ServicesSoftwa in 2016,re at companies, 27 versus 23. creatingThis year, anthe interesting Top 10, contrast last year’s with relatively the Top even 10, spread which between are evenly peer split groups between skew has increased further,the with two 28 se companiesctors. Speaking in the of the Top 10,has last shifted year’s significantly, relatively witheven AES spread taking between the top spot peer with groups three; has Megabuyte50 sitting in ICTshifted Services significantly compared ,to with 22 SoftwareAES taki ng theBIS, top CSI spot and with MWS three; taking BIS, two CSI each; and and MWS TN coming taking in two with each; one. and TN coming in with one. FIGURE 3: Composition of Top 50 by Sector FIGURE 4: Composition of Top 10 by Peer Group FIGURE 3: FIGURE 4:

2017 TN AES

22 MWS 2015 23 Software 25 27 25 ICT Services 28 SourceSource (left): (left): –‒ Megabuyte Source (right): Source (right): ‒ Megabuyte CSI BIS – Megabuyte

PUBLICATION DATE: 25/02/15 | 9

Find out more about our awards and view all Megabuyte50 2017 winners at www.megabuyte-awards.com

9 The MEGABUYTE50 2017 RANKINGS

Presenting the 2017 Megabuyte50! The tables in this section summarise the key data and Scorecard ratings of the class of 2017, as well as how the companies have moved relative to last year. We focus on the Award winners and the top ten companies in the next two sections but, here, it is interesting to look at some of the high-level dynamics of the group.

The Top 10 Performing Companies

Peer Revenue Prev Rank Trend Company Group Ownership Investor (£m) Score Rank CV Library 1 Overall Winner & Best Performing Company (AES)t AES Owner Managed – 25.2 90 12 White Clarke Group 2 Best Performing Company (BIS) BIS Private Equity Five Arrows Principal Investments 51.6 88 47 Xceptor 3 NEW Highest New Entrant (BIS) BIS Private Equity CBPE Capital 10.4 88 – Edenhouse 4 NEW Best Performing Company (CSI) CSI Private Equity ECI Partners 31.7 88 – Wireless Logic Group 5 Best Performing Company (MWS) MWS Private Equity CVC Capital Partners 37.5 87 3

6 NEW Pythagoras Communications AES Owner Managed – 10.3 87 –

M24Seven 7 Best Performing Company (TN) TN Private Equity Livingbridge 21.4 86 15

8 NEW Dotmatics AES Owner Managed – 12.8 84 –

9 NEW BJSS CSI Owner Managed – 83.2 82 –

10 Wireless Infrastructure Group MWS Private Equity Barings Alternatives, 3i 36.3 81 13

When we look at who’s in, who’s out, who’s up and who’s down, among the returners was White Clarke Group – climbing from it is clear that there has been plenty of movement. In addition 47th to 2nd place after an impressive all-round performance to 28 of 2016’s cohort returning to the Megabuyte50 in 2017, in fiscal 2016. there were 22 new additions, both from score improvements, There was also an interesting dynamic amongst the largest which have brought businesses into the Top 50 rankings, as well businesses in the class. The largest business in 2016 was HEG, as completely new additions to coverage. Of the 28 returners, which also qualified as the only company with revenues over nine have gained ground on last year, 18 have lost ground and £100m, and we note its acquisition by GoDaddy (amongst other one, travel software provider ATCORE Technology, remains in corporate activity within the Megabuyte50) later on. However, the exact same position. Of the new entrants, last year, cyber in this latest class, the number of £100m+ businesses include security specialist Avecto came straight into the Megabuyte50 multi-utility reseller Verastar, nearshore IT services providers at number two, and this year, the highest new entrant honour Endava and print solutions and services provider CCS Media, goes to provider of data automation software to the financial and international infrastructure services provider NSC Global; sector Xceptor, which jumped into 3rd place. The highest riser interestingly, all ICT Services businesses. 10 The megabuyte50 awards The Megabuyte50 THE WINNING COMPANIES 2017 Top 50 Rankings

Megabuyte50 companies 11-50

Rank Trend Company Peer Ownership Investor Revenue Score Prev Group (£m) Rank

11 Ask4 TN Private Equity Darwin Private Equity 13 81 34

12 Phlexglobal GHS Private Equity Vitruvian Partners 24.5 81 10 Higher Best Performing Company (GHS) 13 NEW Redwood Technologies AES Owner Managed – 18.9 80 – Lower 14 Blue Chip Customer Engineering IS Owner Managed – 45.4 80 4 Best Performing Company (IS) NEW New entrant 15 NEW Icon Solutions CSI Owner Managed – 14.2 80 – 16 Verastar TN Private Equity Vitruvian Partners 104.1 79 11 17 Access Technology Group AES Private Equity TA Associates 85.9 79 20 18 NEW Datix GHS Private Equity Five Arrows Principal Investments 14.3 79 – 19 Endava CSI Owner Managed – 115.4 79 7

20 NEW Foundry SA Private Equity HgCapital 39.1 78 – Best Performing Company (SA) 21 Acturis BIS Private Equity Summit Partners 55.3 78 5 22 NEW Numeric Futures TN Owner Managed – 21.7 78 – 23 Iris Software Group AES Private Equity HgCapital 98.1 77 19 24 Mobica CSI Private Equity Inflexion Private Equity 47.9 77 30 25 NEW Solid Solutions IS Private Equity Business Growth Fund 21.2 77 – 26 BigHand SA Private Equity Bridgepoint Development Capital 24.6 77 6

27 UKFast DCH Owner Managed – 39.6 77 21 Best Performing Company (DCH) 28 NEW Version 1 CSI Private Equity Volpi Capital 69.2 76 – 29 – Atcore Technology SA Private Equity LDC 26.2 76 29 30 IT Lab IS Private Equity ECI Partners 28.8 76 28 31 Exponential-E TN Owner Managed – 97.4 76 27 32 NEW Mortgage Brain BIS Private Equity Syndicate of Banks 10 76 – 33 Esendex MWS Private Equity HgCapital 26.6 76 26 34 NEW Scott Logic CSI Owner Managed – 15.6 75 – 35 Activpayroll AES Owner Managed – 13.1 75 38 36 CDL Group BIS Owner Managed – 47.2 75 50 37 Node4 DCH Private Equity Bowmark Capital 33 75 17

38 NEW Red Gate Software SIS Owner Managed – 32.1 75 – Best Performing Company (SIS) 39 NEW Bistech TN Owner Managed – 13.7 – 40 ITRS SIS Private Equity TA Associates 17.8 74 33 41 NEW Options Technology DCH Owner Managed – 36.5 74 – 42 NEW NSC Global IS Owner Managed – 159.6 74 – 43 UKCloud DCH Private Equity Business Growth Fund 32.1 74 32 44 NEW Resonate SA Owner Managed – 26.6 74 – Norland Capital, ICONIQ Capital, 45 CSL MWS Private Equity 20.5 74 25 RIT Capital Partners 46 NEW Roc Technologies CSI Private Equity Business Growth Fund 24.5 73 – 47 CCS Media IS Owner Managed – 153 73 44 48 The Phoenix Partnership GHS Owner Managed – 48.6 72 23 49 NEW Kerridge Commercial Systems AES Private Equity Accel-KKR 42.8 72 – 50 NEW Convergence Group TN Owner Managed – 37.9 72 –

PUBLISHED IN CONJUNCTION WITH THE megabuyte50 awards and PRIVATE COMPANY SHOWCASE Conference 11 MEGABUYTE50 Award Winners

Recognising the UK’s best-performing, privately-owned technology companies

In addition to the accolade of a Megabuyte50 ranking, we also recognise the leading companies in each of our 10 peer groups, the highest new entrant into the Megabutey50 and the highest company overall. Here we congratulate our 2017 award winners and provide some detail on their Scorecard performance.

But before we commend you to read this detail, first a word on our top company, CV Library. Much like last year’s top-performer CHP Consulting (now Alfa Systems), CV Library is the only private company to score in the 90s, driven by a solid operating model that generated organic growth of 34% in its latest year to £25.2m, supporting a broader three-year CAGR of 42%. At the same time, it has managed to grow profits ahead of revenues, at a CAGR of 48%, and maintained its stellar EBITDA margins of 50%. To top it off, on average, CV Library has converted around 101% of this EBITDA into operating cash, while relatively low capex requirements meant that free cash conversion has stuck at 97%. A truly remarkable performance.

The Megabuyte Scorecard is a thorough but easily digestible tool for benchmarking IRIS’ financial performance against our close peers and the wider market. Retaining our place in the Megabuyte50 again for 2017 provides respected and independent confirmation of the progress made over the last year. Kevin Dady CEO, IRIS Software Group

megabuyte50 2015 - Top 20 Company megabuyte50 2016 - Top 20 Company megabuyte50 2017 - Top 25 Company 12 The Megabuyte50 Individual Award Winners

OUTSTANDING PERFORMANCE AWARDS Recognising outperformance across the Megabuyte50 universe

Best Performing Company SPONSORED BY OVERALL

CV Library OWNERSHIP: Owner Managed

CV Library is an online job board offering CV searching and COMPANY SCORE job advertising functionality for employers and recruiters. Size

Megabuyte View: There is certainly a debate to be had as to FCF Conversion Organic Growth whether CV Library is a software or a technology-enabled services business, although nothing can be taken away from the company’s exemplary financial performance. Benefiting from a first-mover OCF Conversion Revenue CAGR advantage, CV Library achieves the rare feat of delivering both top- quartile organic revenue growth and EBITDA margin, all backed up by EBITDA Margin EBITDA CAGR stronger-than-average cash conversion.

Highest New Entrant SPONSORED BY OVERALL

Xceptor OWNERSHIP: Private Equity Backed

CBPE Capital-backed Xceptor provides financial institutions COMPANY SCORE with process and data automation software, enabling data Size capture and business process standardisation. FCF Conversion Organic Growth Megabuyte View: Xceptor’s ability to grow its relationships with a large global client base has helped drive impressive growth in recent OCF Conversion Revenue CAGR years, while a steady flow of new logos has also aided its expansion into other segments within the financial services industry. Combined with high profit margins and strong cash generation, this has made Xceptor a very strong debutant to the Megabuyte Scorecard. While investment in partnerships, particularly with RPA vendors, and overseas sales and operational teams is expected to have some short-term profit margin suppression, they are expected to remain high in the context of the peer group and Software sector, and supports a strong outlook for growth.

PUBLISHED IN CONJUNCTION WITH THE megabuyte50 awards and PRIVATE COMPANY SHOWCASE Conference 13 PEER GROUP AWARDS Recognising best-in-class performance within individual peer groups

Best Performing Company SPONSORED BY ACCOUNTING & ENTERPRISE SOFTWARE CV Library OWNERSHIP: Owner Managed

CV Library is an online job board offering CV searching and COMPANY SCORE job advertising functionality for employers and recruiters. Size

Megabuyte View: FCF Conversion Organic Growth There is certainly a debate to be had as to whether CV Library is a software or a technology-enabled services business, although nothing can be taken away from the company’s exemplary financial performance. OCF Conversion Revenue CAGR Benefiting from a first-mover advantage, CV Library achieves the rare feat of delivering both top-quartile organic revenue growth and EBITDA EBITDA Margin EBITDA CAGR margin, all backed up by stronger-than-average cash conversion.

Best Performing Company BANKING & INSURANCE SOFTWARE

White Clarke Group OWNERSHIP: Private Equity

Five Arrows-backed White Clarke Group provides end-to-end COMPANY SCORE solutions to the automotive and asset finance sector worldwide Size through its core CALMS platform. FCF Conversion Organic Growth Megabuyte View: White Clarke Group’s (WCG) momentum in delivering large scale implementations in the European auto finance OCF Conversion Revenue CAGR market, alongside strong SaaS progress in the US asset finance market, has driven strong growth, particularly in its latest year, yielding it an EBITDA Margin EBITDA CAGR impressive rise in the Scorecard rankings. Alongside this, WCG has shifted focus to growing recurring revenue streams, which now account for half the top line, providing a more stable footing for further expansion and investment into its core CALMS product.

Find out more about our awards and view all Megabuyte50 2017 winners at www.megabuyte-awards.com

14 The megabuyte50 awards The Megabuyte50 THE WINNING COMPANIES 2017 Individual Award Winners

Best Performing Company GOVERNMENT & HEALTHCARE SOFTWARE Phlexglobal OWNERSHIP: Private Equity

Phlexglobal is a specialist provider of technology-enabled Trial COMPANY SCORE Master File (TMF) document management solutions. Size

Megabuyte View: Phlexglobal’s technology-enabled services model FCF Conversion Organic Growth gives the business a unique position in its TMF niche, which is typically served by pure-play software providers and in-house processing resources. Phlexglobal’s EBITDA margin dipped in its latest financial year OCF Conversion Revenue CAGR but this was offset by another period of strong organic growth and cash conversion. It will be interesting to see whether momentum is EBITDA Margin EBITDA CAGR maintained following a change in private equity owner from Bridgepoint Development Capital to Vitruvian Partners in December 2016.

Best Performing Company SPONSORED BY SPECIALIST APPLICATIONS Foundry OWNERSHIP: Private Equity

Foundry provides computer graphics, visual effects and 3D design COMPANY SCORE software to the design, visualisation and entertainment Size industries. FCF Conversion Organic Growth Megabuyte View: Having been excluded from the Scorecard last year due to its HgCapital buyout-related part year period, Foundry has re- entered this year with a premium rating on the back of positive 2016 OCF Conversion Revenue CAGR results. The latter encompassed many of the financial traits we have seen in the past, balancing robust top line growth with high margins EBITDA Margin EBITDA CAGR and solid cash generation. Foundry’s progress highlights the group’s unique position in the visual effects industry, which only looks to be further consolidated under a renewed phase of investment focused on enhancing and extending its comprehensive product set, in addition to supporting expansion into the design industry.

Best Performing Company SPONSORED BY SECURITY & INFRASTRUCTURE SOFTWARE Red Gate Software OWNERSHIP: Owner Managed

Founded in 1999, Cambridge-headquartered, owner-managed COMPANY SCORE Red Gate Software provides around 40 database tools Size specialising in Microsoft, Oracle and MySQL stacks. FCF Conversion Organic Growth Megabuyte View: Following a deep-cutting restructuring, Red Gate has recovered quickly, streamlined the business focus, the product set and the international growth strategy. The company is now aiming to OCF Conversion Revenue CAGR pair a strong pipeline of further products to come, including a product that helps create and manage copies of production servers, with an EBITDA Margin EBITDA CAGR aggressive sales expansion strategy in the US, and a more “deliberate M&A strategy”: we suspect in more Microsoft Data Platform-focused technical capabilities and in some of the many start-ups Red Gate has provided early-stage funding to.

PUBLISHED IN CONJUNCTION WITH THE megabuyte50 awards and PRIVATE COMPANY SHOWCASE Conference 15 The megabuyte50 awards THE WINNING COMPANIES 2017

Best Performing Company SPONSORED BY CONSULTING & SYSTEMS INTEGRATION Edenhouse OWNERSHIP: Private Equity

Founded in 2008, Edenhouse provides software, project and COMPANY SCORE support services across the entire SAP on-premise and Cloud Size product portfolios, carrying out over 800 SAP projects to date. FCF Conversion Organic Growth Megabuyte View: Edenhouse’s impressive growth has come through the successful execution of a simple business model that focuses on OCF Conversion Revenue CAGR customers and staff, organic growth, and an onshore model. In the process, Edenhouse has established itself as a SAP one-stop shop, EBITDA Margin EBITDA CAGR attracting new customers, obtaining SAP clients from competitors and seeing existing customers spend more. And it appears that this simple but effective formula is unlikely to change as the company eyes further UK expansion and invests in support services and new technology.

Best Performing Company DATA CENTRE & HOSTING SERVICES UKFast OWNERSHIP: Owner Managed

UKFast provides data centre colocation and hosting services to a COMPANY SCORE broad range of UK businesses, ranging from SMEs to enterprises Size and public sector organisations. FCF Conversion Organic Growth Megabuyte View: UKFast’s financial track record is characterised by consistent double digit organic growth, strong margins and solid OCF Conversion Revenue CAGR operating cash conversion, with its Scorecard rating held back only by regular data centre investments. The company’s strong growth record EBITDA Margin EBITDA CAGR should be sustained by recent investments in its Cloud platform and entry into enterprise and public-sector markets.

Best Performing Company INFRASTRUCTURE SERVICES Blue Chip Customer Engineering OWNERSHIP: Owner Managed

Founded in 1987, Blue Chip started out as a provider of IBM COMPANY SCORE hardware maintenance, later moving into services, with a Size progressively greater focus on Cloud services in recent years. FCF Conversion Organic Growth Megabuyte View: Blue Chip Customer Engineering has been at the forefront of the managed services transition curve ever since the OCF Conversion Revenue CAGR business shed the majority of its reselling activities in 2005. Since then, and leveraging its position as the largest IBM system maintainer in the EBITDA Margin EBITDA CAGR UK outside of Big Blue itself, the business has grown strongly, posts peer group-leading margins and solid cash generation. Now, as the market catches up, the business is investing heavily in the automation of base level service tasks in order to leave technical staff to the real value-add work, lift margins, and help scale further.

VIEW OUR AWARD SERIES, VISIT 16 www.megabuyte-awards.com The megabuyte50 awards The Megabuyte50 THE WINNING COMPANIES 2017 Individual Award Winners

Best Performing Company MOBILE, WIRELESS & SATELLITE Wireless Logic Group OWNERSHIP: Private Equity

Wireless Logic provides connectivity and platform service COMPANY SCORE management for mobile machine to machine (m2m) services for Size enterprises, primarily in the UK but also with a growing presence in mainland Europe. FCF Conversion Organic Growth

Megabuyte View: Wireless Logic has achieved consistent organic OCF Conversion Revenue CAGR revenue growth, expanding EBITDA margins, excellent operating cash conversion and high FCF generation from selling airtime and related EBITDA Margin EBITDA CAGR m2m services to enterprises, resulting in it being a constant feature near the top of the Megabuyte50. This impressive record was rewarded in a 6.1x return for ECI Partners after less than four years’ ownership, following the February 2015 estimated £150m buyout by CVC’s Growth Fund.

Best Performing Company SPONSORED BY TELECOMS & NETWORKS M24Seven OWNERSHIP: Private Equity

M24Seven (formerly Metronet) provides connectivity and data COMPANY SCORE centre colocation and hosting services to UK businesses, with a Size focus on wireless connectivity. FCF Conversion Organic Growth Megabuyte View: M24Seven started life as an ISP, and as Metronet, pioneering wireless technology to deliver cost effective and OCF Conversion Revenue CAGR differentiated connectivity services to the UK, generating strong organic growth, profitability and cash flow. The October 2016 acquisition of EBITDA Margin EBITDA CAGR M247 added significant data centre services whilst the March 2017 Venus acquisition gave it a London foothold, which should sustain continued strong growth.

A Megabuyte50 ranking independently validates the strength of Roc Technologies' business model and strategy to our board, employees, customers and investors. Matt Franklin CEO, ROC Technologies

megabuyte50 2017 - New Entrant

17 The TOP 10 PERFORMING COMPANIES

Having recognised the overall Award winners, as well as peer group top-performers, we also like to take the time to recognise other leading companies in the Megabutye50.

Top-line performance seems to be the order of the day, with almost all of the Top 10 generating fourth/ top quartile performances across both organic and three-year revenue growth. However, profit and cash generation metrics varied from company to company. Some, such as UK business ISP M24Seven, make up for significant capex requirements (that have hit free cash conversion) with stellar revenue and profit growth, and solid margins, although, in another example, capex isn’t an issue for automotive finance software provider White Clarke Group, which used strong cash generation metrics to make up for tighter margins.

In this section, we drill into the Scorecard KPIs of the top ten companies. All of these companies score over 80, but, much like last year, one can see from the radar charts that they have achieved this result in different ways.

Whatever the details of how they achieved their top 10 ranking, we congratulate them all.

Free Company Monitoring Service

18 The megabuyte50 awards The Megabuyte50 THE WINNING COMPANIES 2017 Top 10 Performing Companies

RANK 1st CV Library OWNERSHIP: Owner Managed

CV Library is an online job board offering CV searching and COMPANY SCORE job advertising functionality for employers and recruiters. Size

Megabuyte View: There is certainly a debate to be had as to FCF Conversion Organic Growth whether CV Library is a software or a technology-enabled services business, although nothing can be taken away from the company’s Award: exemplary financial performance. Benefiting from a first-mover OCF Conversion Revenue CAGR Overall Winner & advantage, CV Library achieves the rare feat of delivering both Best Performing Company EBITDA Margin EBITDA CAGR ACCOUNTING & ENTERPRISE SOFTWARE top-quartile organic revenue growth and EBITDA margin, all backed up by stronger-than-average cash conversion.

RANK 2nd White Clarke Group OWNERSHIP: Private Equity INVESTOR: Five Arrows Principal Investments

Five Arrows-backed White Clarke Group provides COMPANY SCORE end-to-end solutions to the automotive and asset finance Size sector worldwide through its core CALMS platform. FCF Conversion Organic Growth Megabuyte View: White Clarke Group’s (WCG) momentum in delivering large scale implementations in the European auto OCF Conversion Revenue CAGR finance market, alongside strong SaaS progress in the US asset finance market, has driven strong growth, particularly in its latest EBITDA Margin EBITDA CAGR year, yielding it an impressive rise in the Scorecard rankings. Award: Alongside this, WCG has shifted focus to growing recurring Best Performing Company revenue streams, which now account for half the top line, BANKING & INSURANCE SOFTWARE providing a more stable footing for further expansion and investment into its core CALMS product.

RANK 3rd Xceptor OWNERSHIP: Private Equity INVESTOR: CBPE Capital

CBPE Capital-backed Xceptor provides financial institutions COMPANY SCORE with process and data automation software, enabling data Size capture and business process standardisation. FCF Conversion Organic Growth Megabuyte View: Xceptor’s ability to grow its relationships with a large global client base has helped drive impressive growth in OCF Conversion Revenue CAGR recent years, while a steady flow of new logos has also aided its expansion into other segments within the financial services industry. EBITDA Margin EBITDA CAGR Combined with high profit margins and strong cash generation, this has made Xceptor a very strong debutant to the Megabuyte Scorecard. While investment in partnerships, particularly with RPA Award: vendors, and overseas sales and operational teams is expected to Highest New Entrant have some short-term profit margin suppression, they are expected OVERALL to remain high in the context of the peer group and Software sector, and supports a strong outlook for growth.

PUBLISHED IN CONJUNCTION WITH THE megabuyte50 awards and PRIVATE COMPANY SHOWCASE Conference 19 The megabuyte50 awards THE WINNING COMPANIES 2017

RANK 4th Edenhouse OWNERSHIP: Private Equity INVESTOR: ECI Partners

Megabuyte View: Edenhouse’s impressive growth has come OCF Conversion Revenue CAGR through the successful execution of a simple business model that focuses on customers and staff, organic growth, and an onshore EBITDA Margin EBITDA CAGR model. In the process, Edenhouse has established itself as a SAP one-stop shop, attracting new customers, obtaining SAP clients from Award: competitors and seeing existing customers spend more. And it appears that this simple but effective formula is unlikely to change Best Performing Company CONSULTING & SYSTEMS INTEGRATION as the company eyes further UK expansion and invests in support services and new technology.

RANK 5th Wireless Logic Group OWNERSHIP: Private Equity INVESTOR: CVC Capital Partners

Wireless Logic provides connectivity and platform service COMPANY SCORE management for mobile machine to machine (m2m) services Size for enterprises, primarily in the UK but also with a growing presence in mainland Europe. FCF Conversion Organic Growth

Megabuyte View: Wireless Logic has achieved consistent OCF Conversion Revenue CAGR organic revenue growth, expanding EBITDA margins, excellent operating cash conversion and high FCF generation from selling EBITDA Margin EBITDA CAGR airtime and related m2m services to enterprises, resulting in it Award: being a constant feature near the top of the Megabuyte50. This impressive record was rewarded in a 6.1x return for ECI Partners Best Performing Company MOBILE, WIRELESS AND SATELLITE after less than four years’ ownership, following the February 2015 estimated £150m buyout by CVC’s Growth Fund.

RANK 6th Pythagoras Communications OWNERSHIP: Owner Managed

Owner-managed Pythagoras Communications is a COMPANY SCORE Microsoft Gold Partner, delivering front office services and Size solutions across Microsoft Azure, Dynamics 365, Office 365 and PowerBI. FCF Conversion Organic Growth

Megabuyte View: Pythagoras is this year’s third highest new entrant in the Megabuyte50, only outdone by CBPE-backed Xceptor OCF Conversion Revenue CAGR and ECI-backed Edenhouse. It’s interesting that two of three EBITDA Margin EBITDA CAGR strongest new entrants are focused on automation, with Pythagoras specifically targeting verticals that have inefficient front office functions. The business scores in the top quartile for growth, profitability and cash conversion metrics.

VIEW OUR AWARD SERIES, VISIT 20 www.megabuyte-awards.com The megabuyte50 awards The Megabuyte50 THE WINNING COMPANIES 2017 Top 10 Performing Companies

RANK 7th M24Seven OWNERSHIP: Private Equity INVESTOR: Livingbridge

M24Seven (formerly Metronet) provides connectivity and data COMPANY SCORE centre colocation and hosting services to UK businesses, with Size a focus on wireless connectivity. FCF Conversion Organic Growth Megabuyte View: M24Seven started life as an ISP, and as Metronet, pioneering wireless technology to deliver cost effective and differentiated connectivity services to the UK, generating strong OCF Conversion Revenue CAGR Award: organic growth, profitability and cash flow. The October 2016 Best Performing Company acquisition of M247 added significant data centre services whilst EBITDA Margin EBITDA CAGR TELECOMS & NETWORKS the March 2017 Venus acquisition gave it a London foothold, which should sustain continued strong growth.

RANK 8th Dotmatics OWNERSHIP: Owner Managed

Dotmatics provides scientific informatics software solutions COMPANY SCORE for the management, query and visualisation of chemistry Size and biology data. FCF Conversion Organic Growth Megabuyte View: Having featured in the Megabuyte Emerging Stars awards earlier this year, Dotmatics has quickly earned its place as a top 10 Megabuyte50 business after filing another set of strong results for OCF Conversion Revenue CAGR calendar 2016. Dotmatics enters the Scorecard with top quartile growth and cash conversation with its adjusted EBITDA margin also placed in EBITDA Margin EBITDA CAGR the above average third quartile. Encouragingly, there remains plenty of room for growth, particularly in well-funded emerging countries.

RANK 9th BJSS OWNERSHIP: Owner Managed

Founded in 1993, BJSS started out as a pure-play software COMPANY SCORE services provider and today provides a wide range of testing, Size business analysis, data analytics, outsource development and system integration services; both on-site and off-site. FCF Conversion Organic Growth

Megabuyte View: BJSS continues to build its reputation in the IT services space, with investments of previous years now bearing fruit OCF Conversion Revenue CAGR as it gains traction in new verticals (e.g. retail and media), geographies (e.g. USA) and services (e.g. Cloud). Furthermore, the success of BJSS's EBITDA Margin EBITDA CAGR business model and focus on areas such as service delivery, customer management and efficiency reflect the growing demand for nearshore/ onshore resourcing services, with the benefits of using offshore delivery (e.g. cost) no longer sufficient to offset the additional management and service delivery complexities.

RANK 10th Wireless Infrastructure Group OWNERSHIP: Private Equity INVESTOR: Barings Alternatives and 3i

Wireless Infrastructure Group is the largest independent pure-play COMPANY SCORE provider of wireless sites and towers in the UK, with over 1,000 Size sites, with a growing presence in mainland Europe. FCF Conversion Organic Growth Megabuyte View: WIG is very much an infrastructure play, supporting the needs of mobile network operators on long term contracts, with growth currently from 4G upgrades, whilst also building green field wireless OCF Conversion Revenue CAGR infrastructure to support newer small cells/smart cities/5G networks. There are also growth opportunities from buying existing wireless tower EBITDA Margin EBITDA CAGR networks from mobile network operators, following US trends, though the company has made slower progress than expected in this regard.

PUBLISHED IN CONJUNCTION WITH THE megabuyte50 awards and PRIVATE COMPANY SHOWCASE Conference 21 The megabuyte50 awards THE WINNING COMPANIES 2017

THE STRONGEST PERFORMING PEER GROUPS

The tables below show the top-performing companies in each of the Megabuyte peer groups, as well as the average scores for each peer group. Looking at the peer group trends, Banking & Insurance Software (BIS) and Accounting & Enterprise Software (AES) continue to dominate, continuing their top-scoring streak by delivering averages of 69 and 67 respectively. The Software sector as a whole continues to outperform ICT Services with an average of 60 versus 57, although leading peer groups in the latter aren’t far behind AES and BIS, namely Mobile, Wireless & Satellite, and Data Centres & Hosting, at averages of 65 and 64 respectively.

There were some significant swings further down the list. Security & Infrastructure Software had a tough year, with several very poor performers in the cohort downgrading the average of a relatively small peer group. Interestingly, Consulting & Systems Integration (one of the fastest growing peer groups in the year) remained steady at an average of 60, with new additions to the cohort varying more widely in performance, even within similar specialisations. We’ve recognised the top performers in each peer group with an award, but it’s also good to see strong scores from new additions, such as Xceptor (BIS), Pythagoras Communications (AES), Mortgage Brain (BIS), Solid Solutions (IS), Options Technology (DCH) and Numeric Futures (TN).

Despite significant change in our core market, Blue Chip continues to leverage its strong differentiation, technical capabilities, and, increasingly, automation to stay ahead of the pack. As such, it's great to have this hard work recognised by again being ranked in the Megabuyte50. Brian Meredith CEO, Blue Chip Customer Engineering

Best Performing Company 2016 (IS) Best Performing Company 2017 (IS)

22 Strongest Performing Peer Groups

Software ICT Services

ACCOUNTING & ENTERPRISE SOFTWARE CONSULTING & SYSTEMS INTEGRATION PEER GROUP AVERAGE: 67 PEER GROUP AVERAGE: 60 Score Rank Score Rank

CV Library Edenhouse Award: Overall Winner & Best Performing Company 90 1 Award: Best Performing Company 88 4

Pythagoras Communications 87 6 BJSS 82 9 Dotmatics 84 8 Icon Solutions 80 15 Redwood Technologies 80 13 Endava 79 19 Access Technology Group 79 17 Mobica 77 24

BANKING & INSURANCE SOFTWARE DATA CENTRE & HOSTING SERVICES PEER GROUP AVERAGE: 69 PEER GROUP AVERAGE: 64 Score Rank Score Rank White Clarke Group 88 2 UKFast 77 27 Awards: Best Performing Company Award: Best Performing Company Xceptor 88 3 Node4 75 37 Award: Highest New Entrant Options Technology 74 41 Acturis 78 21 UKCloud 74 43 Mortgage Brain 76 32 CDL Group 75 36 INFRASTRUCTURE SERVICES PEER GROUP AVERAGE: 50 GOVERNMENT & HEALTHCARE SOFTWARE Score Rank PEER GROUP AVERAGE: 57 Blue Chip Customer Engineering 80 14 Score Rank Award: Best Performing Company

Phlexglobal IT Lab 78 30 Award: Best Performing Company 81 12 Solid Solutions 77 25 Datix 79 18 NSC Global 74 42 The Phoenix Partnership 72 48 CCS Media 73 47

SECURITY & INFRASTRUCTURE SERVICES MOBILE, WIRELESS & SATELLITE PEER GROUP AVERAGE: 53 PEER GROUP AVERAGE: 65 Score Rank Score Rank

Red Gate Software Wireless Logic Group Award: Best Performing Company 75 38 Award: Best Performing Company 87 5

ITRS 74 40 Wireless Infrastructure Group 81 10 Esendex 76 33

SPECIALIST APPLICATIONS CSL Dualcom 74 45 PEER GROUP AVERAGE: 55 Score Rank TELECOMS & NETWORKS Foundry PEER GROUP AVERAGE: 60 78 20 Award: Best Performing Company Score Rank

BigHand 77 26 M24Seven Award: Best Performing Company 86 7 ATCORE Technology 76 29 Ask4 81 11 Resonate 74 44 Source: Verastar 79 16 – Megabuyte Numeric Futures 78 22 Exponential-E 76 31

PUBLISHED IN CONJUNCTION WITH THE megabuyte50 awards and PRIVATE COMPANY SHOWCASE Conference 23 Ownership STRUCTURE

Within the Megabuyte50 class of 2017, private equity remains the better represented ownership type, at 29 versus 21. Looking back at previous classes, we saw the number of owner-managed businesses in the Megabuyte50 increase from 18 in 2015 to 21 in 2016, although this number stayed constant in 2017. It’s interesting to tie this in with the growth in ICT Services sector, which, as mentioned before, increased from 25 in 2015 to 28 in 2017. Across the three years of the Scorecard, the number of owner-managed ICT Services companies has remained at 12, while private equity-backed businesses increased from 13 to 16.

FIGURE 5: Megabuyte50 by Ownership FIGURE 6: ICT Services Ownership Focus

Source (left): – Megabuyte

Source (right): – Megabuyte

TOP PRIVATE EQUITY BACKED COMPANIES As the top company in the Megabuyte50 is owner managed, the year, although, just as interesting were completely new entrants leading private equity-backed company is White Clarke Group, Xceptor and Edenhouse (CBPE and ECI backed respectively). backed by Five Arrows, which saw a dramatic jump in its Again, ICT Services continued to improve, with six of the top 10 Scorecard rating after a strong set of 2016 results. Previous and three out of the top five belonging to the sector, compared top-performers Wireless Logic Group, M24Seven and Wireless to just one last year (Wireless Logic). Infrastructure Group put in another strong performance this

FIGURE 7: Top 10 Private Equity-backed Companies

Revenue EBITDA £m £m White Clarke Group 51.6 8.9 Xceptor 10.4 4.5 Edenhouse 31.7 6.0 Wireless Logic Group 37.5 12.9 M24Seven 21.4 6.2 Wireless Infrastructure Group 36.3 20.3 Ask4 13.0 3.4 Phlexglobal 24.5 5.6 Verastar 104.1 33.1 Source: Access Technology Group 85.9 23.1 – Megabuyte – Company Accounts

VIEW OUR AWARD SERIES, VISIT 24 www.megabuyte-awards.com The megabuyte50 awards THE WINNING COMPANIES 2017 Ownership Structure

LEADING PRIVATE EQUITY INVESTORS Drilling further into the private equity-backed companies in and, as detailed in Figure 8 and 9 below, this league table the cohort, we see that 20 private equity houses are invested has completely changed from 2016. Last year, LDC held three in Megabuyte50 companies, which compares to 23 in 2016. businesses in the Megabuyte50, but this year, HgCapital and While the total number of firms has reduced, the number of BGF took that honour, holding five ICT Services and one these with more than one holding increased from five to six, Software company between them.

FIGURE 8: 2016 Private Equity League Table FIGURE 9: 2017 Private Equity League Table

Investor Megabuyte50 Investments Investor Megabuyte50 Investments ATCORE Technology Foundry Stroma IRIS Software Group Esendex SSP Holdings Solid Solutions Big Hand UKCloud Phlexglobal Roc Technologies White Clarke Group Group IMD Datix Mobica Edenhouse IT Lab Metronet Southern Communications Phlexglobal Verastar

Esendex Access Group Ask4 ITRS Source: – Megabuyte

TOP OWNER MANAGED COMPANIES Turning our attention to the top 10 owner-managed businesses Engineering, Endava and UKFast. New entrants include several in the list, the mix is again more weighted towards ICT Services interesting businesses from both sectors, including Microsoft companies, of which there are six, although, interestingly, of the Cloud specialist Pythagoras Communications, R&D workflow four Software companies, all belong to the Accounting & software provider Dotmatics, IT payment consultancy and Enterprise Software peer group. CV Library leads the list, technology services provider Icon Solutions, and telecoms although other incumbents include Blue Chip Customer managed services provider Numeric Futures.

FIGURE 10: Top 10 Owner Managed Companies

Revenue EBITDA £m £m CV Library 25.2 12.6 Pythagoras Communications 10.3 2.6 Dotmatics 12.8 3.0 BJSS 83.2 19.9 Redwood Technologies 18.9 4.2 Blue Chip Customer Engineering 45.4 12.8 Icon Solutions 14.2 2.4 Endava 115.4 22.6 Numeric Futures 21.7 6.4

Source: UKFast 39.6 16.4 – Megabuyte – Company Accounts

PUBLISHED IN CONJUNCTION WITH THE megabuyte50 awards and PRIVATE COMPANY SHOWCASE Conference 25 CORPORATE ACTIVITY

A review of the Megabuyte50 class of 2016 In this section, we take a detailed look at the corporate activity of the 2016 Megabuyte50 class. While the number of transactions was less than 2015, there was a wide mix of deal types, with several private equity-backed businesses changing hands, owner-managed businesses being acquired, as well as a much-heralded IPO. We also highlight some interesting valuation analysis on last year’s Megabuyte50 versus this year’s cohort. The 2016 companies themselves were also active in the M&A market, as we highlight on the next page.

QUIETER PERIOD FOR PRIVATE EQUITY EXITS Of the 2016 Megabtuye50 winners, four of the private equity-backed subsequently merged with Mobyt to create a pan-European player. companies have undertaken some kind of exit. Our analysis of these On the software side, TA Associates seemingly pre-empted a process transactions is summarised in Figure 11, which shows that, of the four, for real-time monitoring and analytics specialist ITRS, having just three were acquired by other private equity firms and one exited to navigated a period of restructuring and refocusing under Carlyle. trade, the latter being HEG’s acquisition by GoDaddy following a Electronic Trial Master File Systems provider Phlexglobal had a short heated bidding war with United Internet. Of the secondary buyouts, tenure under Bridgepoint Development Capital, which nonetheless mobile messaging specialist Esendex was acquired by HgCapital, and came off with a handsome estimated return after just two years.

FIGURE 11: MB50 2016 Private Equity-backed Businesses... Where are they now?

Company Peer 2016 Exit Previous Investor Current Investor Deal Source: Group Ranking Type EV* – Megabuyte – Company Phlexglobal GHS 10 SBO Bridgepoint Development Capital Vitruvian Partners £100m announcements HEG DCH 18 Acquired Cinven GoDaddy £1,408m NB: – * Phlexglobal, Esendex MWS 26 SBO Darwin Private Equity HGCapital £50m Essendex and ITRS deal values are ITRS SIS 33 SBO The Carlyle Group TA Associates £150m Megabuyte estimates

VIEW OUR AWARD SERIES, VISIT 26 www.megabuyte-awards.com Corporate Activity

SIGNIFICANT TRANSACTIONS FOR OWNER-MANAGED BUSINESSES There was also some notable activity amongst the 2016 the latter’s technology-led acquisition strategy. Interestingly, Megabuyte50 owner-managed businesses. The most prominent the deal highlights the coming together of a Quoted25 and was Alfa Systems’ IPO (formerly CHP Consulting), which came to Megabuyte50 company. In terms of private equity involvement market in May 2017 and has since seen its market capitalisation with owner-managed businesses, the only transaction in the year increase considerably to £1.5bn. Less prominent, but just as notable was White Clarke Group’s acquisition by Rothschild’s private equity was the acquisition of Cloud-based data validation software PCA arm Five Arrows Principal Investments, which should support the Predict by data intelligence services provider GB Group as part of business as it enters its next growth phase.

FIGURE 12: Quoted25 12-month fundraising timeline

Source: – Megabuyte Company Peer 2016 Transaction Type Current Investor Deal – Company Group Ranking EV* announcements Alfa Systems BIS 1 IPO Public £975m NB: – * White Clarke PCA Predict AES 9 Acquired GB Group £74m Group deal values are Megabuyte White Clarke Group BIS 47 MBO Five Arrows Principal Investments £65m estimates

In total therefore, seven of the Megabuyte50 companies from 2016 have undertaken a change of ownership of one form or another. Although less than the 2015 cohort, most of these deals are no less significant.

The independence and rigour of the Megabuyte Scorecard provides great external validation of the strength of our business and we are delighted to be a Megabuyte50 company once again in 2017. As we expand in Europe with the support of M&A, the Scorecard has helped us quantify both our organic and acquisitive progress in a single measure of financial performance. Theo Duchen Co-CEO, Acturis

megabuyte50 Top Performing Company 2015 megabuyte50 2016 - Top 5 Company megabuyte50 2017 - Top 25 Company

PUBLISHED IN CONJUNCTION WITH THE megabuyte50 awards and PRIVATE COMPANY SHOWCASE Conference 27

The UK’s best-performing privately-owned tech companies

As with exits, M&A deal flow for the class of 2016 was quieter, with a total of 19 deals. Nonetheless, MEGABUYTE50 2016for ACQUISITION some, acquisitions ACTIVITY were highly strategic. In the Software sector, this was especially true for IRIS As with exits, M&A deal flowSoftware, for the class which of 2016built was out quieter, an education with divisionWithin the with Banking the acquisition& Insurance Software of PS Financials, peer group, OpenSAAF Software, a total of 19 deals. Nonetheless, for some, acquisitions were highly International accelerated its broking product development roadmap Results Squared and ParentMail, while Access Group’s acquisition of Safe Computing was its strategic. In the Software sector, this was especially true for IRIS by several years with its acquisition of TGSL, while Acturis’s acquisition largest yet. Within Banking & Insurance Software peer group, Open International accelerated its Software, which built out an education division with the acquisition of Lutronik expanded its footprint in the German market as part of a broking product development roadmap by several years with its acquisition of TGSL, while Acturis’s of PS Financials, SAAF Software,broking Results product Squared development and ParentMail, roadmap while bybroader several European years growth with itsstrategy. acquisition of TGSL, while Acturis’s Access Group’s acquisitionacquisition of Safe Computing of Lutronik was its expanded largest yet. its footprint in the German market as part of a broader European growth strategy. FIGURE 13: Megabuyte50 2016: Software M&A Timeline FIGURE 18:

Undisclosed Disclosed Acquisition EV Acquisition EV

Open International Group - TGSL, £40.0m IRIS Software - PS IRIS Software - Financials, £40.0m Results Squared Acturis - Lutronik IRIS Software - ParentMail

Aug-16 Nov-16 Feb-17 May-17 Sep-17 Dec-17

Source: ‒ Megabuyte Access Group - Safe ‒ MegabuyteSource: Access Group - Safe Access Group - Computing, £42.5m IRIS Software - SAAF ‒ Company– Megabuyte Computing, £42.5m IRIS Software - SAAF Selima, £15.0m Software, £0.5m announceme– Company Software, £0.5m ntsannouncements

The ICT services sector wasThe much ICT more services active, sector with the was 2016 much cohort more clocking active in, 12with acquisitions. the 2016 Again, cohort Figure clocking 14 summarises in 12 acquisition them all, buts. highlights include Metronet’sAgain, acquisition Figure of[x] M247,summarises which doubled them itsall, profits, but highlights extended include Metronet’s Metronet’s reach from acquisition the desktop of to M247, the which datacentre and supporteddoubled a rebrand its to profits, M24Seven. extended It followed Metronet’s up with areach bolt-on from acquisition the desktop of Venus to theBusiness datacentre Comms, and while supported Node4 a added key database management skills through the purchase of Onomi. rebrand to M24Seven. It followed up with a bolt-on acquisition of Venus Business Comms, while Node4 added key database management skills through the purchase of Onomi.

FIGURE 14: Megabuyte50 2016: ICT Services M&A Timeline FIGURE 19:

Undisclosed Disclosed Acquisition EV Acquisition EV Wireless Logic Group - Nucleus Networks SecureData - Cygnia Metronet - SecureData - Cygnia M247, £47.5m M247, £47.5m Metronet - Venus Esendex - Sabio - Datapoint Europe Business Comms, £8.0m Mobyt

Verastar - Aimera

Aug-16 Nov-16 Feb-17 May-17 Sep-17 Dec-17

Node4 - Onomi, Source: Sabio - Rapport CSL - Emizon Source: £1.9m ‒ Megabuyte Networks Source: Verastar - OVO Energy ‒ Company– Megabuyte Verastar - OVO Energy Chess - Foursys announceme– Company ntsannouncements

VIEW OUR AWARD SERIES, VISIT 28 www.megabuyte-awards.com PUBLICATION DATE: 25/02/15 | 25

The megabuyte50 awards THE WINNING COMPANIES 2017 Corporate Activity

THE VALUE OF THE MEGABUYTE50 Here we estimate the total market value of the 2016 and 2017 The result of this analysis, as shown in Figure 15, is that, Megabuyte50 utilising the Megabuyte Scorecard and public at today’s market prices, the estimated total value of this year’s company valuations. The philosophy being that a company’s Megabuyte50, at £11.9bn is around $4bn less than the current potential valuation multiple, in this case EV/EBITDA, should be market value of last year’s cohort. Interestingly, however, while proportional to its Megabuyte Scorecard rating when the estimated value of both cohorts are up by more than 60% benchmarked against its peer group. For example, if a company’s from a year ago, for the 2017 Megabuyte50 businesses, most of Scorecard is 30% above the average for its peer group, then it the value creation has been driven by EBITDA growth, whereas should be valued at 30% above the group average. market pricing has had a greater impact on the value of 2016 Megabuyte50 businesses.

FIGURE 15: Megabuyte50 Estimated Enterprise Value

Source: – Megabuyte – Company accounts FIGURE 13: Quoted25 12-month M&A timeline

In greater detail, the increase in value for the 2016 cohort over the last 12 months has been 45% driven by EBITDA growth and 55% by higher market prices. By contrast, the split for the 2017 cohort is 70/30%. The main difference is amongst software businesses and, in particular, the impact that the Alfa IPO has had on the average quoted company valuation for the Banking & Insurance Software peer group. The effect of this is inflated further by the number of Banking & Insurance Software businesses within the Megabuyte50 reducing from seven to four between 2016 and 2017.

Find out more about our awards and view all Megabuyte50 2017 winners at www.megabuyte-awards.com

29 The megabuyte50 awards THE WINNING COMPANIES 2017 Corporate Activity

UPCOMING EXITS Following a quieter period for private equity exits, it’s all the more interesting to see which of the Megabuyte50 are likely to be up next. Figures 16 and 17 highlight the private equity-backed businesses that, based on the ownership period, look the most likely to exit in the short term. Software Sector

Within Software, Acturis remains high up the list of businesses which is over the five-year mark under Bridgepoint; patient that we would expect to go through some kind of liquidity safety software provider Datix, which has passed the four-year event in the not too distant future, having been held by Summit mark under Five Arrows; and tour operator software provider Partners for over seven years now. Additional candidates include ATCORE, which is reaching three and a half years under LDC. workflow productivity software solutions provider BigHand,

FIGURE 16: Most Likely Software Private Equity Exits in the Next 12 Months Years under ownership Company Investor Acturis Summit Partners BigHand Bridgepoint Development Capital Datix Five Arrows Principal Investments Atcore Technology LDC Access Technology Group TA Associates Kerridge Commercial Systems Accel-KKR Foundry HgCapital Iris Software Group Hg Capital

Source: White Clarke Group Five Arrows Principal Investments – Megabuyte Phlexglobal Vitruvian Partners – Company announcements Typical exit period ICT Services Sector

On the ICT Services side, if IPO rumours of multi-utility respectively, albeit both having just completed pretty rigorous reseller Verastar come to pass, this would mark more than six strategy shifts - Ask4’s transition to services, and Metronet’s years under Vitruvian. Meanwhile, Ask4 and M24Seven are major acquisition of M247. approaching the fouryear mark under Darwin and Livingbridge

FIGURE 17: Most Likely ICT Services Private Equity Exits in the Next 12 Months

Years under ownership Company Investor Verastar Vitruvian Partners UKCloud Business Growth Fund Ask4 Darwin Private Equity M24Seven Livingbridge Wireless Logic Group CVC Capital Partners Mobica Inflexion Private Equity Solid Solutions Business Growth Fund IT Lab ECI Partners Source: CSL Norland Cap, ICONIQ Cap, RIT Cap Ptns – Megabuyte Node4 Bowmark Capital – Company announcements Typical exit period

VIEW OUR AWARD SERIES, VISIT 30 www.megabuyte-awards.com Disclaimer

DISCLAIMER IS Research Ltd will not accept any liability to any third party who for any reason or by any means obtains access or otherwise relies on this report. IS Research Ltd has itself relied on information provided to it by third parties or which is publicly available in preparing this report. While IS Research Ltd has used reasonable care and skill in preparing this report, IS Research Ltd does not guarantee the completeness or accuracy of the information contained in it and the report solely reflects the opinions of IS Research Ltd. The information provided by IS Research Ltd should not be regarded as an offer to buy or sell securities and should not be regarded as an offer or solicitation to conduct investment business as defined by The Financial Services and Markets Act 2000 (“the Act”) nor does it constitute a recommendation. Opinions expressed do not constitute investment advice. Any information on the past performance of an investment is not necessarily a guide to future performance. IS Research Ltd operates outside the scope of any regulated activities defined by the Act. If you require investment advice we recommend that you contact an independent adviser who is authorised by the Act to conduct such services. IS Research Ltd does not have any direct investments in any companies contained in the report and has compiled this report on an independent basis. 31 The megabuyte Forum The megabuyte50 Showcase Conference is a Megabuyte Forum event. With around 1000 members, the Megabuyte Forum is unique to the technology sector and offers unparalleled CXO peer networking. Forum membership is open to CXOs of UK-headquartered technology companies; you do not have to be a Megabuyte subscriber. Investor and adviser involvement with the Megabuyte Forum is restricted to Megabuyte subscribers and, for enhanced Forum access, on a sponsorship basis. www.megabuyte.com/forum

About megabuyte Megabuyte is an independent research provider servicing the UK’s leading technology sector CXOs, investors and advisers. We deliver expert, independent and strategically actionable insights addressing the financial and corporate affairs of some 600 of the UK’s key public and private technology companies in the ICT Services and Software sectors. A combination of our proprietary content, rigorous analytics and deep domain experience make our research and opinions highly sought after by those seeking incisive and unvarnished intelligence and insights. Our research is available on-line, through subscription or pay-as-you-go, or on a retained or ad-hoc consultancy basis. www.megabuyte.com

About megabuyte awards We run three awards, each focused on different categories of UK technology companies and at different stages of their development. Together, they are designed to identify the Top 100 companies in the Megabuyte coverage universe of Software and ICT Services companies. The Megabuyte award series grew out of our daily research activities, specifically scoring companies’ financial performance against peers using our proprietary Megabuyte Scorecard methodology. If we know who the best-of-the-best are, why would we not share that information more widely within the industry? Our mid-market focused awards – the Megabuyte50 and Megabuyte Quoted25 – focus on privately-owned and publicly-listed companies respectively. Our Megabuyte Emerging Stars awards focus on smaller companies who are mid-market leaders of the future. These awards incorporate both private and public companies. www.megabuyte-awards.com

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