European Technology Update 16 March 2012 Member FINRA/SIPC Thierry Monjauze Managing Director 63 Brook Street London W1K 4HS United Kingdom Phone: +44 20 7518 8900 [email protected] Francois Morin Director 63 Brook Street London W1K 4HS United Kingdom Phone: +44 20 7518 8900 [email protected] This report has been prepared by Harris Williams & Co. Ltd a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is authorised and www.harriswilliams.com regulated by the Financial Services Authority (FRN #540892). Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business in the U.S. and Europe, respectively. Recent Developments Company Quest Software, the developer of enterprise systems management software, agreed to be acquired by Insight Specific Ventures Partners for approximately $2 billion News Ahold acquired bol.com, one of the most visited retail websites in the Netherlands, for €350 million SingTel acquired Amobee, the US-based provider of mobile advertising solutions, for $321 million PLATO Learning acquired Archipelago Learning, a provider of SaaS-based education products, for approximately $291 million General Atlantic invested €237 million for a 30% stake in Axel Springer Digital Classifieds, a business managing Axel Springer's French and German real estate and job portal Sopra Group acquired a majority stake in Callatay & Wouters, the Belgium-based company offering a portfolio of IT solutions for retail, private and corporate banking, for an estimated consideration of €100 million F5 Networks acquired Traffix Syystems, the Israel-based ppgrovider of next generation networks and diameter solutions for the telecommunication industry, for $130 million Aegis Group acquired Roundarch, the US digital agency, for $125 million Asseco agreed to acquire Sygnity, a Poland-based provider of IT solutions, consultancy services and software for the banking and financial sector, for $88 million Green Dot Corporation acquired Loopt, a developer of mobile location-based services, for $43 million Opera Software acquired Mobile Theory, a leading premium mobile advertising network focused on the US mobile advertising market, for $40 million Liv ing Soc ia l acquidired JOitJump On it, the Aus tra lia-base d on line da ily discount ed d eal company, f or $40 milli on Yammer, the leading provider of enterprise social networks, received an $85 million funding from DFJ Growth German music streaming service Simfy raised €30 million from various investors Pulsant, a UK-based managed hosting and cloud services provider, raised a £24 million funding from Bridgepoint Fluid, the digital commerce and SaaS-based software agency, received a $24 million growth equity investment from Goldman Sachs Asset Management Yelp shares surged 64% on their first day of trading to $24.58, having priced at $15 a share Online video service Brightcove’s share price closed at $14.30 after its first day of trading, up 30% from the company’s original price of $11 per share EPAM systems shares closed at $14 a share at the end of its first day of trading on the NYSE, up 16.7% from its public offering price of $12 Industry iPad had a 62% share of the overall tablet market in 2011, with Samsung as the next closest competitor at 9% , Trends according to iSuppli Juniper Research forecasts that NFC will facilitate $74 billion worth of transactions globally by 2015 Twitter's user growth is expected to drop from 32% in 2011 to 21% in 2012 and to 14% in 2014 and Facebook's growth is expected to drop from 13% in 2011 to 7% in 2012 and 4% in 2014, according to eMarketer Global PC shipments for 2012 will increase by 4.4% y-o-y to 368 million units, according to Gartner Gartner estimates that mobile applications will influence $15.9 billion of end-user spending in 2012 Ad revenues by social networks worldwide are projected to climb from $5.2 billion in 2011 to $11.87 billion in 2014, with Facebook continuing to dominate, according to eMarketer Cloud content services will be integrated into 90% of the world's connected consumer devices before the end of 2013, according to research firm Gartner Gaming firms recorded £2 billion in VC backing in 2011, doubling investment value across 152 deals y-o-y, according to Digi-Capital US e-book revenues grew 117% last year to $969 million, according to the Association of American Publishers Digital music accounted for over a third of the UK music sales, amounting to £281.6 million, according to BPI Source: Various industry news outlets. 1 Public Market Trading Statistics Stock Last 30 Days Performance 10% 4.5% 5% 2.3% 2.1% 1.9% 0% 1.8% (()5%) 09 Feb 14 Feb 19 Feb 24 Feb 29 Feb 05 Mar DJ Stoxx 600 Technology Nasdaq Composite Software and IT Services Communications Internet and Digital Media Last Twelve Months 20% 15% 10% 5% 10.6% 0% (1.5% ) (5%) (5.4% ) (10%) (5.7% ) (15%) (12.0%) (20%) (25%) (30%) (35%) (40%) (45%) Mar 2011 Jun 2011 Sep 2011 Dec 2011 Mar 2012 DJ Stoxx 600 Technology Nasdaq Composite Software and IT Services Communications Internet and Digital Media Sources: Capital IQ, 9 March 2012; Brokers’ reports. Comparable CY2012E EV / Revenue EV / EBITDA P / E Trading EBITDA Margin Growth CY2012E CY2013E CY2012E CY2013E CY2012E CY2013E Summary Software and IT Services Enterprise Applications 15.0% 11.1% 2.7x 2.3x 11.6x 8.8x 13.8x 11.8x European Large Cap Software 31. 2% 57%5.7% 31x3.1x 29x2.9x 10. 1x 92x9.2x 16. 7x 14. 9x Financial Software 22.6% 4.1% 2.1x 2.0x 8.7x 7.9x 16.9x 14.5x Healthcare Software 23.1% 7.9% 2.2x 2.0x 8.7x 7.9x 21.1x 14.5x Large Cap IT Services 13.1% 9.2% 0.9x 0.8x 6.4x 5.9x 12.9x 11.4x Mid Cap IT Services 10.7% 3.6% 0.6x 0.6x 5.8x 5.3x 9.7x 8.6x Offshore IT Services 20.7% 21.2% 2.3x 2.0x 10.5x 9.5x 16.0x 14.3x Security Software 36.6% 6.6% 3.5x 3.2x 8.6x 7.7x 16.3x 14.4x Communications Digital Broadband 11.6% (2.1%) 0.5x 0.5x 4.2x 3.7x 10.7x 8.9x Diversified Communication Equipment 12. 0% 32%3.2% 10x1.0x 09x0.9x 77x7.7x 58x5.8x 22. 6x 12. 6x Mobile Content / Solutions Providers 19.2% 4.8% 1.4x 1.2x 7.1x 6.0x 19.7x 16.4x Mobile Infrastructure Software 14.1% 6.2% 2.2x 2.2x 11.9x 11.5x 18.2x 20.2x Internet and Digital Media Chinese Internet Leaders 23.0% 33.9% 4.4x 3.4x 11.3x 12.1x 18.2x 16.6x Online Classifieds 41.8% 12.5% 5.6x 5.0x 12.9x 12.4x 20.4x 16.1x Content Providers / Communities 19.7% 37.6% 3.1x 2.4x 9.3x 7.5x 24.2x 18.7x Ecommerce 17.7% 23.0% 3.0x 2.4x 17.4x 11.8x 30.0x 25.5x Global Internet Leaders 35.8% 32.8% 4.7x 3.8x 14.2x 11.0x 18.5x 14.9x IiEiInteractive Entertainment 18. 3% 13. 4% 202.0x 161.6x 15. 2x 616.1x 16. 6x 15. 4x Intermediation and Comparison 16.4% 24.1% 3.8x 3.0x 15.3x 11.1x 25.7x 28.3x Online Gambling 27.0% 15.3% 2.0x 1.8x 6.8x 6.3x 13.0x 9.8x Online Marketing 17.4% 15.1% 1.7x 1.5x 9.1x 8.1x 16.1x 16.1x Online Travel 28.0% 13.1% 2.9x 2.5x 10.2x 8.1x 17.5x 13.4x 2 Software and IT Services Last 30 Days Performance Large Cap IT Services 6.8% Healthcare Software 27%2.7% Financial Software 2.4% 10% Mid Cap IT Services 2.2% European Large Cap Software 1.8% Offshore IT Services 1.3% Enterprise Applications 0.5% Security Software (1.1% ) 5% 0% (5%) 08 Feb 14 Feb 20 Feb 26 Feb 03 Mar 09 Mar European Large Cap Software Fina ncia l Softwa re Enterprise Applications Healthcare Softwa re Security Software Large Cap IT Services Mid Cap IT Services Offshore IT Services Last Twelve Months Performance European Large Cap Software 7.0% Security Software 5.4% Healthcare Software 4.0% Offshore IT Services (7.2% ) 20% Financial Software (7.4% ) Large Cap IT Services (8.1% ) Enterprise Applications (19.8%) Mid Cap IT Services (20.2% ) 10% 0% (10%) (20%) (30%) (40%) Mar 2011 Jun 2011 Sep 2011 Dec 2011 Mar 2012 European Large Cap Software Financial Software Enterprise Applications Healthcare Software Security Software Large Cap IT Services Mid Cap IT Services Offshore IT Services Source: Capital IQ, 9 March 2012. 3 Software and IT Services (Continued) Market Enterprise CY2012E EV / Revenue EV / EBITDA P / E Cap ($m) Value ($m) EBITDA Margin Growth CY2012E CY2013E CY2012E CY2013E CY2012E CY2013E European Large Cap Software SAP 82,161 80,166 35.1% 11.1% 3.9x 3.5x 11.0x 9.9x 16.9x 15.2x DlSDassault Systemes 10, 105 8, 653 32. 1% 10. 3% 343.4x 323.2x 10. 6x 959.5x 19. 6x 17. 7x Sage 6,071 6,089 28.9% 3.6% 2.8x 2.7x 9.7x 9.2x 14.3x 13.1x Software AG 3,173 3,362 28.0% (0.2%) 2.3x 2.2x 8.2x 7.5x 12.8x 11.5x Aveva 1,803 1,557 33.9% 11.2% 4.8x 4.3x 14.1x 12.3x 23.3x 19.9x Misys 1,712 1,945 25.1% 11.4% 2.8x 2.6x 11.0x 10.1x 16.6x 14.2x Micro Focus 1,166 1,136 40.0% (0.1%) 2.6x 2.6x 6.6x 6.5x 14.2x 13.8x Temenos 1,157 1,257 26.6% (1.3%) 2.6x 2.4x 9.9x 8.4x 15.8x 13.7x Mean 31.2% 5.7% 3.1x 2.9x 10.1x 9.2x 16.7x 14.9x Median 30.5% 6.9% 2.8x 2.7x 10.2x 9.4x 16.2x 14.0x Financial Software Intuit 17,155 17,195 37.6% 8.6% 3.9x 3.6x 10.4x 9.4x 19.2x 16.8x Misys 1,712 1,945 25.1% 11.4% 2.8x 2.6x 11.0x 10.1x 16.6x 14.2x Temenos 1,157 1,257 26.6% (1.3%) 2.6x 2.4x 9.9x 8.4x 15.8x 13.7x Fidessa 920 810 20.6% 3.2% 1.8x 1.7x 8.6x 8.1x 18.8x 17.8x SimCorp 751 689 25.2% 6.1% 2.6x 2.3x 10.1x 9.0x 16.2x 14.0x Innovation 294 247 13.1% 12.4% 0.8x 0.7x 5.9x 5.1x 16.5x 13.9x ORC 290 264 24.1% (3.4%) 2.0x 1.8x 8.2x 6.9x 24.8x 16.9x Microgen 185 143 13.2% 1.2% 2.4x 2.3x 8.7x 7.9x 15.2x 14.8x Linedata 157 158 21.2% 6.4% 0.8x 0.8x 3.8x 3.7x 8.8x 8.0x StatPro 84 92 19.2% (3.2%) 1.9x 1.9x 10.1x 10.0x 16.6x 14.9x Mean 22.6% 4.1% 2.1x 2.0x 8.7x 7.9x 16.9x 14.5x Median 22.6% 4.7% 2.2x 2.1x 9.3x 8.3x 16.6x 14.5x Enterprise