After a year of strong growth for PlanetArt and myDevices combined with further restructuring for Avanquest, Claranova reported EBITDA profitability on a group basis. With further growth expected in PlanetArt, acquisitions doubling the size of Avanquest, and operator contracts increasing their contribution to myDevices, we maintain our revenue and EBITDA margin growth forecasts for FY19 and FY20. PlanetArt’s launch in India and recent distribution agreements signed by myDevices both have scope to contribute materially to revenues in the longer term.
Claranova had previously reported FY18 revenues of €161.6m (+24% y-o-y, +32% constant currency). FY18 EBITDA of €3.9m was ahead of our €3.4m forecast with all divisions slightly ahead; both PlanetArt and Avanquest reported positive EBITDA and myDevices reduced the loss compared to the prior year. Normalised operating profit of €3.4m was ahead of our €2.9m forecast, as a result of slightly lower costs in each division. After exceptional items totalling €2.4m and share-based payments of €7.1m the company reported operating profit of –€6.1m, compared to -€10.1m a year ago. Net cash of €37.5m at year-end was €5m higher than our forecast.
We maintain our recently introduced forecasts for revenue and EBITDA in FY19 and FY20. PlanetArt recently launched the FreePrints service in India. We expect the business to fine-tune the service and customer acquisition process over the next quarter or so, with meaningful adoption of the service unlikely before FY20. However, considering the addressable market of more than 300m smartphone users and a relatively fragmented competitive environment, we see scope for India to add material revenues in the longer term.
Reflecting the different business models and minority interests for each division, we use a sum-of-the-parts approach to valuation. Based purely on peer group averages per division, we calculate a fair value of €0.95 per share. However, once multiples are adjusted to reflect our views on the growth and profitability of each division, this increases to €1.10 per share. Milestones that could provide upside to our forecasts include: successful adoption of FreePrints in India; growth of the acquired Adaware business; and recently signed distributors reselling the myDevices platform in the US and China.