Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Relx. We currently have 44 research reports from 3 professional analysts.
In line 9 months 2019 trading statement, reflecting a return to previous rates of organic revenue growth at the group level (+4%) after the slowdown registered in H1 (+3%). The FY19e guidance is reiterated, i.e. another year of underlying revenue, profit, and adjusted EPS at CER, as key business trends are in line with FY18.
RELX reported H1 19 results globally in line, although marred by lower than expected organic revenue growth (+3% instead of +4%), reflecting STM’s top-line slowdown. The group, nonetheless, still delivered an improving operating margin (31.9% versus 31.5%). Full-year guidance was reiterated and the interim dividend is raised by 10% to 13.6p. Minor adjustments are likely to our model (which already cautiously integrates a slightly declining profitability for STM with no top-line underlying growth improvement) and still a Buy & Hold case.
FY18 results were sound and in line with expectations. The group once again managed to improve its adjusted operating margin (31.3% from 31% a year earlier) on underlying revenue rising by 4%. RELX anticipates more or less the same positive trends over FY19e, while its top priority remains the transition towards analytics and decision tools. All in all, a satisfactory performance.
RELX reported robust figures in its H118 trading statement. The operating margin increased by 50bps led by cost adjustment while underlying revenue growth was +4%. The company expects the positive trends to continue in H2, while its top priority remains the transition towards analytics and decision Tools. All in all, a solid performance.
RELX reported a solid H1 18, which was in line with expectations for revenue and a tick higher in margins. Operating profit rose faster than sales, leading to a moderate margin expansion. All segments reported growth in revenues and in operating profits. Bolt-on aquisitions continued and visibility looks satisfactory for this high quality stock.
RELX produced satisfactory FY 17 results even if was a bit below consensus, with organic revenue growth positively reaching 4% (i.e. similar to FY16). Consolidated revenues reached £7,355m, up +7% after a total forex impact of +5% reflecting the stronger US$ and Euro against Sterling (only c.7.5% of sales in the UK). The adjusted OP amounted to £2,284m, up 6% organically, i.e. ahead of revenue growth and implying an improving margin at 31.1% from 30.7% in FY16, slightly above our 31% expectation. The adjusted EPS increased by 12% to 81p (AV: 82p) while the full-year dividend is raised 10% to 39.4p (AV at 40p). Regarding the FY18e guidance, management was as vague as usual, i.e. “delivering another year of underlying revenues, profit and earnings growth”. Note that another £700m of share buy-backs was announced for FY18e (£100m already completed) after £700m in FY17 and that the group is proposing to move from the current dual parent holding company structure to a single parent company.
RELX once again reported a positive 9 months 2017 trading statement, highlighting organic revenue performance of +4%, similar to the same period last year (+4%) and in line with H1 17 (+4%). The full-year outlook is confirmed for delivering “another year of underlying revenue, profit, and earnings growth”. This is not very precise, as usual, but these solid 9 months trends indicate low risk for any FY disappointment.
RELX produced slightly higher than expected H1 17 revenues at £3,718m (+£461m) and reflecting a solid +4% organic growth. Adjusted OP grew a bit faster, up +5% to £1,154m (+£151m), implying a 20bp margin improvement to 31% compared with 30.8% a year earlier. The adjusted EPS at CER rose by 8% and +19% in sterling and the interim dividend per share is raised by 14% to 11.70p. The group specified that the £500m share buy-back programme was completed and further £200m will be made in H2 (£40m completed over July), i.e. £700m for the full-year as previously announced. An update will be made on the FY18 buy-back plan (thus implying there will be another one) in February 2018. The FY17e guidance was reiterated, i.e. delivering “another year of underlying revenue, profit, and earnings growth in 2017”. This is as vague as usual but the solid H1 results and the current trends (in line with FY16) indicate that risk for disappointment remains very low at this stage for this very well-managed company.
The top 20 companies using the CF Growth Profile beat the bottom 20 by 16% pa over last two years
As expected, RELX produced satisfactory FY 16 results, with organic revenue growth positively accelerating to +4% (FY15 at +3%). Consolidated revenues reached £6,895m (+15%) after a total forex impact of +11%, reflecting the weakness in sterling versus both the US dollar and euro (only 7.3% of sales in the UK). The group’s adjusted OP amounted to £2,114m, up 6% organically (+16% reported) and reflecting an improving margin to 30.7% from 30.5% in FY15, although slightly under our 31% expectation. The adjusted EPS increased by 8% at CER to 72.2p (AV: 71.8p). The full-year dividend is raised 21% to 35.95p (AV at 34.8p) after a final at 25.7p from 22.3p a year earlier (as a reminder, the group had announced in August a larger than usual interim dividend primarily due to end-period forex). RELX announced a new £700m share buy-back programme for FY17e (£100m completed so far) after £700m completed in FY16 and is confident to deliver in FY17e “another year of underlying revenues, profit and earnings growth”, a positive statement although as vague as usual.
RELX produced solid H1 16 results, with organic revenue growth positively accelerating to +4% (FY15 at +3%). Consolidated revenues reached £3,257m (+10% or +£293m) after a total forex impact of +5%, reflecting the sterling weakness versus both the US dollar and euro (only 7.6% of sales in the UK). Adjusted operating profit amounted to £1,003m, up 6% organically (+10% reported) and reflecting an improving 30.8% from 30.7% margin (cost control and continued process innovation impact). About £500m share buy-backs were completed over the period and a further £200m will be deployed by the end of the year. Adjusted EPS increased by 8% at CER. The interim dividend is raised 39% to 10.25p, nearly 26% above our forecasts, as the group announced a larger than usual interim dividend for RELX Plc primarily due to end-period forex. Note that the full-year dividend policy is unchanged, i.e. in line with adjusted EPS growth with a cover level at least 2x over the long term. Regarding the FY16e guidance, the statement is as vague as usual, i.e. “delivering another year of underlying revenues, profit and earnings growth”. CFO Nicolas Luff specified that, at current rates (i.e. with the dollar and the euro averaging between 10% and 11% stronger against sterling for the year as a whole), he would expect an 8% to 9% benefit to sterling-reported growth rates for the full year.
RELX produced solid FY15 results, globally in line with our forecasts, with revenues at £5,971m (+3%) after a total forex impact of only +1%, despite generating only 8% of its sales in the UK, as the strengthening US dollar versus sterling was offset by the weakening euro. The underlying revenues trend was similar to the 9-month period at +3%, once again supported by growth across the four businesses. Adjusted operating profit reached £1,822m, up 5% organically, and reflecting a solid 30.5% margin, in line with our expectations, up from 30.1% in FY14 and 90bp higher on an underlying basis. EPS rose by 7.9% and by 8% at CER to 60.5p, when we had forecast a slightly higher 63.5p. The full-year dividend per share is to be raised by 14.2% to 29.7p, while a further £700m share buy-back was announced for 2016 (coming after a £500m plan in 2015). Regarding the FY16 guidance, the statement is as vague as usual, i.e. “delivering another year of underlying revenues, profit and earnings growth”, with early FY16 trends being in line with those of FY15.
RELX produced solid first nine months trading results, similar to H1 15 trends. Underlying revenues improved by 3%, once again supported by growth across the four businesses. The group, which pursued its portfolio management over the period (14 content, data and exhibition assets acquired year to date for £91m and 11 assets disposed of for £72m) reaffirmed its FY guidance, although remaining as vague as usual, i.e. "delivering another year of underlying revenues, profit and earnings growth". Out of the £500m share buy-back plan announced for 2015, £425m has been completed so far with the remaining £75m to be deployed by year-end. It was specified that the Board will not make any decision on a 2016 share buy-back until February.
RELX Group once again produced solid results over H1 15, with revenues up 3% underlying (i.e. in line with the same period last year, excluding exhibition cycling), supported by growth across the four businesses. Profitability was further improved to 30.7% compared with 30.2% a year earlier (FY14 was 30.1%). Out of the £500m share buy-back programme announced for 2015, £300m has been completed over the period and the interim dividend will be raised by 6% to 7.40p for RELX Plc. As a reminder (please refer to our 1 July 2015 Latest), the new corporate structure, share listings, and entity name changes have been completed. Parent company boards were fully aligned on 21 July 2015. FY guidance was reiterated, although remaining as vague as usual, i.e. "delivering another year of underlying revenues, profit and earnings growth". Note that forex impact was broadly neutral over H1, the strengthening of the US$ against sterling (average rate: +10%) being partly offset by the euro weakness (average rate: -10%).
Research Tree provides access to ongoing research coverage, media content and regulatory news on Relx. We currently have 44 research reports from 3 professional analysts.
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Future Plc’s FY results revealed the better than consensus growth noted in the trading update last week. Underlying group revenues grew 11% y/y, and 70% on a reported basis to reach £221.5m (FY’18: £130.1m), with organic Media revenue growth of 31% (reported: 134%) to £154.9m (FY’18: £66.3m). EBTIDA margins were 24.6% (FY’18: 15.9%) supported by increased scale and improving product mix. Regionally, US sales grew an organic 40% y/y with US ARPU still at a 38% discount to the UK (FY’18: 48%). EPS growth rose 95% y/y to 47.5p/share, whilst FCF rose >200% to £53.7m. Alongside FY results, management have announced the acquisition of Barcroft Studios (‘Barcroft’), a small independent studio that creates original video content for distribution across owned and operated social sites as well as mass media channels. Total consideration is £23.5m (9.4x LTM EBITDA), of which 40% will be satisfied in shares. Finally, management have also noted that, after a strong Q1, the Group now expects to be materially ahead of full year expectations. As joint broker to Future, we are restricted and can therefore provide factual comment only up to the conclusion of the General Meeting.
2019E should see the beginning of a recovery phase. Development effort into existing assets and diversification away from gambling should help reduce the volatility seen of late. The free cash flow yield is pricing in no recovery whatsoever.
Following continued delays of a Brexit agreement, few sectors within the UK market have remained attractive to investors despite low valuations. One sector which has continued to outperform despite the political drama has been the UK video gaming sector (henceforth UK gaming), which we are fans of. We believe a combination of sector-leading growth, strong cash conversion and timely cyclical positioning support our positive view on the UK video gaming sector.
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The decrease in total advertising revenue slowed in 9 months 19 (-3% vs -5% in H1 19), reflecting a positive trend in Q3 19 (+1%) and corresponding to the high range of guidance (-1/+1%). Online revenue grew significantly (+23% in 9 months 19 vs +18% in H1 19). As expected, ITV Studios benefited from high deliveries of programmes, in particular from ITV America. The 2019 guidance is confirmed and a dividend of at least 8.0p/share was reiterated.
This has been a good half, seeing growth in registrations, group revenue and renewals, assisted by a full six months of ICM. The increased sales at higher margin has meant H1 adj. EBITDA jumped over 300%; moreover, a key point is approached as renewal revenues now cover almost all costs: partner payments, cost of sales, and opex. Operationally, progress has also been made in resolving the legacy contract issues. MMX remains comfortably on track for our FY 2019 expectations, which remain unchanged. The company remains wary of giving FY 2020 guidance at this stage. However, looking ahead, this is a much more stable operation; a much better quality to the revenue stream, a controlled cost base, legacy issues addressed; and exciting and innovative growth opportunities.
Companies: Minds + Machines Group
XLMedia has announced a Tender Offer to buy back 9.5% of the current issued share capital at 80p per share. If passed at the forthcoming EGM and fully tendered, then the earnings accretion in 2020E will amount to a 12% increase in fully diluted EPS. The company has also confirmed that current trading is in line.
Future Plc has announced the completion of an accelerated book build undertaken at 1275p/share (a 6.25% discount to yesterday’s closing price). The announcement of the placing of 8,184,906 (raising £104.4m of gross proceeds) has been made alongside a proposed acquisition of TI Media, the UK-based, print-led consumer magazine and digital publisher. The consideration of £140m for TI Media will also be funded through drawdown of an additional £45m of debt. This acquisition of TI Media is conditional upon 1) shareholder approval; and 2) CMA clearance. Alongside the proposed acquisition and placing announcements is a brief trading update, with revenues expected by management to be at the top end of consensus, and in the region of £220m. As joint broker to Future, we are restricted and can therefore provide factual comment only.
By focusing on Publishing activities and reducing exposure to its Media interests, the announced strategic update should deliver a higher quality business. Investment in Publishing assets will continue and there will be a focus on growth opportunities in the US market. The progressive dividend policy is maintained including a pay-out ratio of 50%+ of net profits.
Future Plc has announced better than expected performance in its FY’19E pre-close trading update driven by a mix of Amazon Prime Day activity and positive underlying momentum in US operations, supported in part by a strong dollar. Integration of recent acquisitions has further increased capacity, supplementing already positive organic audience growth and benefitting margin performance. Top-line outperformance means full year EBITDA is now expected to be materially ahead of current market expectations, and leads us to upgrade forecasts for the second time since July. Revenue expectations for FY’19E are raised 6% to £210m, with EBITDA upgraded to £53.2m (up 10%). We prudently leave FY’20E and FY’21E sales forecasts broadly unchanged for now, although we raise our EBITDA margin expectations by +80bps and +50bps for FY’20E and FY’21E respectively. EPS expectations rise 11%, 4% and 2% for FY’19E, FY’20E and FY’21E respectively. An FY’20E intrinsic value of 1,356p/share offers an attractive 14% upside from current levels, although we now see potential headroom in FY’20E forecasts.
Kape Technologies has reported first half revenue a touch ahead of the guidance given in July’s trading update with Adjusted EBITDA in line with the suggested $5.8 million. The results show strong progress in growing SaaS revenues with the number of subscription users increasing by 24% to over 1 million and the retention rate improving again to a very healthy level. The first half also saw further investment in customer acquisition paying off with ZenMate and Intego – now both fully integrated into the Group - benefitting. New product launches and high-profile successes by Intego’s macOS security analyst team helped augment Kape’s market positioning. We note that this business model continues to enhance Kape’s ongoing revenue visibility and that Kape is growing market share. We make no change to our numbers as the Board expresses confidence in meeting stretching market growth estimates.
Companies: Kape Technologies
Microsoft unveiled the new Surface Duo, which runs on Android, at its annual hardware event on Wednesday. The folding phone features two side-by-side 5.6-inch displays that are connected by a 360-degree hinge. Microsoft said it partnered with Google to “bring the best of Android” to the device, while incorporating elements of Windows 10X, a new operating system meant for hybrid devices. It can also run two different apps at the same time. Specifically, the Surface Neo will rely on a new "Expression" of its Windows 10 operating system called Windows 10X.
Companies: KAPE EYE IMO
Future Plc has today announced the achievement of accelerated earn-out payments related to the acquisition of Mobile Nations in March’19. Deferred consideration of $55m (50% cash/ 50% new shares) becomes payable, with management assuming the achievement of an $11.5m EBITDA contribution from Mobile Nation operations to March’20. Mobile Nations management team will continue to work within Future within the newly created Future Labs, tasked with driving additional organic growth by integrating new initiatives, businesses, tools and processes once they reach a suitable maturity level. Future management continue a strong record quickly bedding down new acquisitions. The modest outperformance in Mobile Nations performance is largely offset by a marginally bigger than expected share base increase. We make no changes to our forecasts however at this time.
YouGov’s final results to end July showed strong revenue growth (+10% underlying) and a 200bp increase in operating margins. The continuing drive is on growing Data Products and Services and focusing Custom Research on more profitable business. The ambitious targets to improve profitability set in the original five-year plan have been met. The new five-year plan to FY23 targets doubling both revenue and adjusted operating profit margin, as well as achieving a 30% CAGR in EPS (25% EPS CAGR in the earlier plan). In this context, the valuation premium to slower-growing peers looks well underpinned.
Two former AIM companies could be in the FTSE 100 index in the near future following the successful bids by Melrose Industries for GKN and GVC for Ladbrokes Coral. Melrose has been on the brink of the FTSE 100 for a while and if a constituent company of the FTSE 100 is acquired than it can be replaced by the acquirer when it is eligible. Melrose is already on the reserve list for inclusion in the FTSE 100, following the March 2018 quarterly review.
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We are introducing our Best Ideas for 2019 and also review the performance of last year’s picks. We suggest ten solidly financed stocks with good business dynamics that ought to be considered for core portfolio holdings and six UK domestically focused stocks that our analysts believe should perform strongly in the event that uncertainties unwind. We also introduce a new style of research from N+1 Singer which presents a Company’s dynamics and metrics in a clear and concise manner and concentrates on the pivotal issues affecting that Company and an investment decision.
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