M6 had a fairly good Q3 20 with an increase in TV advertising and a positive revenue turnaround in Radio and Production/Audiovisual rights. The focus on cost control continued so that the EBITA jumped by 58%. There is uncertainty on TV advertising for the 2020 year end and the prospect of a second lockdown in France (announcement tonight on 28 October 20) is not reassuring.
Companies: Metropole Television SA
Group advertising revenue decreased by 26%, of which -28% organically for TV advertising revenue in H1 20, less than our estimates. The cost savings were significant (€92m) and represented 59% of the reduction in total revenue. M6 reiterated cost savings guidance of €100m in 2020 (vs €49m reached in H1 20).
TV advertising revenue decreased by 11.5% organically in Q1 20 and TV advertising time dropped by more than 30% in the second half of March 2020 due to ad cancellations. The lockdown led to a surge in average individual TV viewing time by above 20% in March 2020, to unpredecented levels. The problem is that it could not be monetised. Group EBITA collapsed (-29%). Cost cutting has been implemented to absorb half of the fall in revenue in Q2 20.
In 2019, TV advertising revenue was resilient. In the French TV advertising market which declined, M6 had stable organic TV advertising revenue despite a tough Q4 19 (-3.4% organically) affected by lower demand from advertisers due to the social unrest in France. The TV EBITA margin was stable (22% of revenue). In Radio and Production & Audiovisual rights, the contribution to group EBITA increased thanks to additional synergies in radio and a good year for the distribution of films.
M6 succeeded to limit the erosion of TV advertising. Advertising revenue from the free-to-air channels declined slightly by -0.3% organically (vs +0.7% in H1 19), reflecting a decrease in July and August 2019 that was almost offset by a rebound in September 2019. Regarding the operating performance, the EBITA margin improved to 11.6% of revenue (+0.5pt) thanks to the Television and Radio activities and despite the termination of the M6 mobile by Orange contract at the end of H1 19.
In H1 19, the good advertising revenue growth (+2.3%) reflected a very slight increase in advertising revenue from the free-to-air channels (+0.7%) and stronger advertising revenue from cab-sat channels, radio and internet (+8.6%). The EBITA margin declined slightly (-0.2pt to 20.7% of revenue) due to the investments in data and the technology in the 6play platform and an increase in the cost of programmes (+1.3%).
Q1 19 was satisfactory for advertising revenue. Group advertising revenue increased by +2.9%, o/w +2% for advertising revenue from the free-to-air channels. This was supported by a stable average audience share of the FTA channels at a high level (21.5%) on the WRP<50 segment. The EBITA margin improved (+0.7pt to 18.6% of revenue) thanks to additional synergies from the integration of the Radio business.
The audience shares remained solid in TV and radio in 2018. TV advertising revenue increased very slightly (+0.5%) in a difficult environment for TV advertising and Group RTL gained market share in advertising thanks to higher audience share. The EBITA margin improved moderately in the TV division (+0.2pt to 22.1% of revenue) while the Radio division brought in €28m (16.8% of revenue) on twelve months. M6 turned to a net cash position following the disposal of monAlbumPhoto and FCGB.
Although advertising in the free-to-air (FTA) channel M6 increased in Q3 18 (+0.4% vs +0.9% in H1 18) in a context marked by the Football World Cup in July 2018, it was a mixed performance compared to those of the competitor TF1. Regarding the diversification activities, the announcement of the disposal of the Football Club des Girondins de Bordeaux at a very high price (€100m) is very good news which will also remove huge off-balance sheet commitments (€122m).
M6 released a good set of figures in H1 18 considering the poor advertising market and the Football World Cup which benefited its competitor TF1. The operating losses of the Football Club Girondins de Bordeaux in the Diversification segment were significant. The perspective of a divestment of FCGB, currently under negotiation, is good news.
Solid audience shares and the increase in advertising revenue characterised Q1 18, which included the contribution of the RTL Radio division. In addition, the renewal of the distribution contracts during the quarter secures the broadcast of M6’s pay-TV channels and the remuneration of the channels and related services. The picture was different on the EBITA side, considering higher losses from the Football Club Girondins de Bordeaux.
The company delivered an excellent FY17, beating the market’s expectations, and has started to consolidate RTL France which is on a good dynamic.
M6 released sound Q3 figures with revenues up 4% yoy to €272.4m, driven by an increase in advertising revenues (up 4.1%). The other divisions also improved with Production & Audio Rights up 1% and Diversifications up 5%.
The group posted an EBITA of €160m, up 32% yoy thanks to strong advertising revenues and the positive transfers’ balance of the FCGB.
All in all, M6’s financial situation improved with a positive cash position of €96.9m, a €33m rise compared to June 2017.
The company forecasts a slight growth in the French TV advertising market and still expects to gain market share during FY17e.
M6 reported satisfactory Q1 17 revenues, with advertising (65% total group) up 5.7% (Q1 16 was +3.7%) and slightly improving combined audience shares (+0.3% to 13.9% from 13.6% a year earlier). FTA advertising revenues (61% total group) rose by a solid +5.6% (after a +5.4% acceleration in Q4 16), enabling consolidated revenue to rise by 3.8% to €323.7m, despite flat non advertising sales (+0.5%; 35% total group).
The EBITA was up by only 2.9%, however, to €47.1m (compared to €45.8m), reflecting a flat margin of 14.6% versus 14.7% a year earlier (although the latter included a positive one-off impact from the football Club Girondins de Bordeaux), after rising programming costs.
On the whole, M6 Group produced rather satisfactory results for the first part of the year. Its consolidated revenue rose by 2.5% to €645.5m over H1 16, supported by a satisfactory +5.3% in advertising revenue (after a solid +6.3% in Q2 helped by good audience rates). This was, however, partly offset by declining non-advertising revenues (-2.7%) which suffered from a disappointing home shopping business (Ventadis’ sales down 8.6% to €76m amid declining volumes sold).
The EBITA solid improvement (+€33.4m, or +32.6% to €136m, i.e. a margin at 21.1% from 16.3%) mainly reflects a non-recurring €42.6m OP linked to the gradual stoppage of the M6 Mobile contract (a €50m contractual compensation less its automatic impact of €7.4m on operating expenses), while the TV business result was down by €10.1m (impacted by the Euro 2016 broadcast as well as investments in programmes for both FTA and pay-TV channels).
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Interims (six months to September) demonstrate resilient revenue of £4.4m, adjusted EBITDA profitability at £0.3m (especially impressive vs £0.5m for 15m to FY20), and cash of £1.2m. Current cash of £1.3m is reassuring, with end January expected to be the cash low point for the year. Despite COVID pressure on the customer base, AIM membership remained steady at 2,085 at 1 January (September 2020: 2,103, March 2020: 2,276) and preferred supplier numbers were unshaken at 175. Purchase orders processed through the system are regaining strength, returning to 70% of original management volume expectations, while AIM Capital Solutions, and the associated premium member benefits, gains momentum. While we are not yet free of COVID, the group demonstrated action and resilience in this key period from March to September where the pandemic’s impact was most novel and most brutal – and with the current cash balance, the trading update delivers optimism for the long term. Forecasts remains suspended, and we look forward to further updates.
Companies: Altitude Group plc
Kape has issued a trading update for what was a very productive year for the Group and in which it exhibited a strong trading performance. Revenue for FY 2020E is expected to be at the top end of the expected range while Adjusted EBITDA is ahead of guidance. We increase our estimates by 1% and 8% respectively to be in line with the anticipated outturn for the year. It now has around 2.5m paying subscribers across its core markets of North America and Europe. Kape also completed the integration of Private Internet Access (PIA) ahead of schedule and launched new products, including its privacy suite. Kape expects to increase R&D spending further in FY 2021E to build on the successful additions to its product range and customer experience. With good momentum going into FY 2021E, the Group continues to demonstrate its ability to drive customer numbers and retention through the execution of a clear strategy for meeting the growing demand from consumers for digital privacy and security solutions.
Companies: Kape Technologies Plc
A strong exit for FOUR from Q4-20 is a key message we are drawing from its trading update this morning, with excellent momentum during the closing months of the year reflecting that the underlying model remains extremely healthy. The data points are weekly order intake lifting from a touch over 60% of the prior year in October to an average of 70% for the whole quarter and hence implicitly suggesting a c.75% level in the latter part of the quarter. Revenues at $US560m are 65% of the prior year – again, a positive number in the context of the pandemic and, taking account of two strong months at the start of FY2020E prior to the onset of the pandemic, also reflect the accelerating progress of the business in the second half. We note the strong recovery in Apparel which was apparent when the company last reported to the market, at which point this sector was operating at close to 2019 levels, with the distribution hub 100% utilised, and no doubt this will have contributed to the overall picture.
Companies: 4imprint Group plc
4imprint’s trading update indicates that order intake in Q4 was a little better than we had anticipated. Unaudited FY20 revenue was reported at c $560m, or 5% above our prior forecast. We remain circumspect around trading prospects for FY21, given the impact of the pandemic on corporate America and leave our forecast unchanged for now. The indicated year-end net cash balance at $39.8m (excluding lease debt) was well ahead of our projected figure ($22.5m in our modelling), and close to the $40.1m reported in October, implying that cash collections have held up strongly. We continue to view 4imprint as a high-quality investment proposition.
The MISSION’s trading update indicates the group had a comfortably better Q4 than expected, with the full-year PBT over £1m, against our forecast £0.5m. Cash performance was significantly ahead, with a year-end net debt position of £1.3m allowing the payment of the delayed final 1.53p dividend from FY19. We will update our FY20 numbers with the full results in April. We have trimmed our FY21 forecast revenue by 7.5% to reflect the ongoing impact of the pandemic in H121, reducing PBT from £9.0m to £7.1m. We also publish our first thoughts on FY22, on an improving trend. The shares remain priced at a significant discount to peers on earnings multiples.
Companies: Mission Group Plc
4imprint’s year-end update highlights a continued recovery in weekly order intake from 60% of 2019 in October to 70% in Q4 overall. FY 2020 sales are expected to be c.$560m, down -35% on 2019, and adj. PBT in line with the Board’s expectations. FY 2020 sales are, hence, 4% ahead of our previous forecast. We assume short-term marketing costs have also increased as the opportunity is taken to win market share, but upgrade FY 2020 adj. PBT from $0.8m to $2.8m. We leave our FY 2021 and onwards forecasts unchanged subject to further evidence on the shape and pace of a recovery. Net cash of c.$40m at December 2020 is ahead of our forecast $29m, suggesting a very strong working capital performance. We reiterate our view that the timing and pace of a recovery is very hard to predict, but we believe history will repeat, and that 4imprint will accelerate market share gains and profits can return to pre-COVID levels in 2023.
Tremor has announced that December trading materially exceeded its prior estimates, as its platform’s momentum has continued to accelerate since its last update on 30 November. Tremor now expects FY20 revenue and EBITDA to be in the range of $404-408m for revenue (from $390-400m), and $58-60m for EBITDA (from $50-52m). This leads us to upgrade our FY20 and FY21 revenue forecasts by +2-3% to $406m and $479m, and upgrade our FY20 and FY21 EBITDA by +16% and +10% to $59m and $68m. As Tremor’s platform benefits from strong operational gearing, this drives upgrades to EPS of +28% in FY20 and +16% in FY21. Our net cash then increases by $11m in FY20 to $96m, and despite including $10m of buyback in FY21, our FY21 net cash increases by $12m to $117m as we partially unwind conservative working capital assumptions. This is the fourth upgrade to our Tremor forecasts since COVID-19 impacted the advertising market and Tremor in Q2 20, and Tremor subsequently adopted a prudent approach to its FY20 guidance. We continue to mirror this conservatism in our FY21 EBITDA of $68m, which compares with H2 20 EBITDA of $57m, and our FY21 EBITDA includes additional investment as Tremor looks to gain share within a market growing at over 20% pa. From p9 we also highlight that Tremor is demonstrating the same trends as its US ad tech peers Magnite, PubMatic, and The Trade Desk, with each forecasted to see +15-35% organic revenue growth and +10-60% organic EBITDA growth in FY21, as they focus on expanding in connected TV. However, Tremor is trading at a major discount to its US peers on all metrics, such as FY21 EV/EBITDA of 9x vs 41x, 29x and 104x, and at a discount to the finnCap Tech 40 on 17x with +9% EBITDA growth. As Tremor continues to deliver and exceed expectations, we do not expect that its current valuation will be sustainable due to market or external interest, and we upgrade our target price to 800p based on 20x FY21 EBITDA.
Companies: Tremor International Ltd.
CentralNic has made a small acquisition of SafeBrands, an online brand protection software provider and corporate ISP based in Paris, for a cash consideration of up to €3.6m (0.9x FY19 revenue). €3m is payable upfront and €0.6m will be paid subject to meeting FY20 performance objectives. SafeBrands operated at close to break-even in FY19. Separately, CentralNic has also reorganised its Corporate division, rebranding it as the Enterprise division. Based on our estimates, the company trades on an FY21e P/E multiple of 15.8x and 9.8x FY21e EV/adjusted EBITDA. We expect earnings-accretive M&A to bring multiples down further as CentralNic consolidates a globally fragmented market of sub-scale, cash-generative businesses.
Companies: CentralNic Group Plc
Centaur’s trading update highlights revenues and EBITDA in-line with guidance. Revenue from continuing operations declined 16% y/y to c.£32m, encouraging in the context of CV19 impact to events sales and retail and fashion end-markets. Premium content has remained resilient, with Mini-MBA growth (H1: >100% y/y) a stand-out for the Group during FY’20E, whilst renewals in The Lawyer were also positive (105% net renewal rate). The Group exits 2020 with a healthy net cash position (£8.3m) and resilient FY’20E performance giving management the confidence to introduce its MAP23 strategy, targeting 23% EBITDA and “at least” £45m of sales by FY’23E. Reintroduced N1S forecasts generate £45.3m of sales and £10.5m of adj EBITDA, with FY’23E FCF of £6.5m representing a 24% FCF yield.
Companies: Centaur Media plc
Future today released an update highlighting FY’20E adj EBITDA which is trading towards the top-end of consensus (£86.3m-£91.0m; N1Se: £88.5m). Strong performance has been supported by acceleration of the consumer shift to digital, positive cost control and cost synergy extraction from the TI Media acquisition (c.£9m annualised savings delivered so far). Migration of TI Media sites to the Group’s Vanilla platform are underway, whilst Hawk (price comparison platform) has been successfully deployed on three key existing TI Media websites. TI Media represents a significant opportunity to drive strong EBITDA growth in the medium-term as the portfolio transitions to digital, whilst the Group also has a number of additional levers to drive outperformance against conservative consensus forecasts. We leave forecasts unchanged for now, although upside risk is building. Future offers a 7% FY’21E FCF yield on N1Se forecasts, peers offer closer to 4%.
Companies: Future plc
Mirada plc* (MIRA.L, 85p/£7.6m) | Two Shields Investments/BrandShield plc (TSI.L, 0.11p/£4.9m - pre-proposed placing, acquisition and share consolidation)
Companies: Mirada PLC (MIRA:LON)BrandShield Systems plc (BRSD:LON)
Reach plc today provides a strong Q4 trading update highlighting upgraded FY’20E AOP expectations of £130m-£135m ahead of consensus (cons: £124.3m) and record growth in Digital. Digital sales growth has recovered strongly since Q2, accelerating to 25% y/y (Q3: +13%; H1: -1%) benefitting from both higher traffic through implementation of Group engagement initiatives and yield recovery as advertisers in CV19 impacted verticals return. Print circulation revenue decline moderated to 11.7% y/y in Q4 (Q3: -12.6%), a significant deceleration from the -18.2% y/y in H2 and modestly better than our H2 forecasts. Continued focus on audience engagement, the quality of audience data and insights, and further extension of locally focused digital content we see driving further gains online, with Digital sales still on track to double on a four year view. We are upgrading forecasts, increasing FY’20E sales, AOP and adj FCF by 2%, 6% and 5% respectively, with upgrades filtering into future periods. A 17% FY’21E FCF yield sits well in advance of global peers (3%-7%), with a 10% FCF yield generating an intrinsic valuation of 315p/share.
Companies: Reach plc
Upon Admission to AIM, Nightcap will acquire The London Cocktail Club Limited (the "London Cocktail Club"), which is an award winning independent operator of ten individually themed cocktail bars in nine London locations and one location in Bristol. Offer TBC. HSS Hire Group, HSS.L transfer from Main to Aim. Mkt Cap c. £70m. Recently raised £52.6m. Leading supplier of tool and equipment for hire in the United Kingdom and Ireland and has provided equipment hire services in the United Kingdom for more than 60 years, primarily focusing on the B2B market. VH Global Sustainable Energy Opportunities plc, a closed-ended investment Company focused on making sustainable energy infrastructure investments, today announces intends to launch an initial public offering of shares on the Official List (Premium) of the Main Market of the London Stock Exchange.
Companies: PMI RMM SUN BOIL ITM TRMR MLVN 88E IME ANP
Further media reports that Dr Martens, the British Boot brand is planning an IPO on the LSE. It is currently owned by PE group, Permira who is expected to sell down its stake at the IPO. March 2020 YE the group had revenues of £672m and EBITDA of £184m. Deal size TBC. Upon Admission to AIM, Nightcap will acquire The London Cocktail Club Limited (the "London Cocktail Club"), which is an award winning independent operator of ten individually themed cocktail bars in nine London locations and one location in Bristol. Offer TBC Due mid Jan. HSS Hire Group, HSS.L transfer from Main to Aim. Mkt Cap c. £70m. Recently raised £52.6m. Leading supplier of tool and equipment for hire in the United Kingdom and Ireland and has provided equipment hire services in the United Kingdom for more than 60 years, primarily focusing on the B2B market. Due 14 Jan. VH Global Sustainable Energy Opportunities plc, a closed-ended investment Company focused on making sustainable energy infrastructure investments, today announces intends to launch an initial public offering of shares on the Official List (Premium) of the Main Market of the London Stock Exchange. Due by Early Feb.
Companies: IUG CBP KAT APP RST DIS NICL BOKU CNIC HE1
Cornish Metals (TSX-V: CUSN) intends to list on AIM. The Company is proposing to raise £5 million by way of private placement of new Common Shares (the "Fundraising") to advance the United Downs copper-tin project. The Company expects that Admission will become effective in February 2021. The Company's Common Shares will continue to be listed and trade on the TSX-V in Canada. Further media reports that Dr Martens, the British Boot brand is planning an IPO on the LSE. It is currently owned by PE group, Permira who is expected to sell down its stake at the IPO. March 2020 YE the group had revenues of £672m and EBITDA of £184m. Deal size TBC. VH Global Sustainable Energy Opportunities plc, a closed-ended investment Company focused on making sustainable energy infrastructure investments, today announces intends to launch an initial public offering of shares on the Official List (Premium) of the Main Market of the London Stock Exchange. Due by Early Feb. Moonpig, the digital greeting card company, is planning an IPO with a potential valuation of £1bln, according to multiple media reports. Further details expected to be announced over the next two weeks.
Companies: ZPHR PANR PRSM SENS CYAN G4M ITX CRCL FEN ZIN