Claranova — Increasing stake in PlanetArt

Claranova (PAR: CLA)

Last close As at 18/04/2024

EUR2.61

0.03 (0.97%)

Market capitalisation

EUR150m

More on this equity

Research: TMT

Claranova — Increasing stake in PlanetArt

Claranova has agreed to buy out a proportion of the 7.7% minority interest held in its PlanetArt subsidiary. The buy-out will be conducted in stages, with an initial purchase of 25% of the stake by March and up to a further 40% acquired over four six-monthly periods (linked to divisional EBITDA), reducing the minority interest stake to at least 2.7% for a cost of up to $38m/€33.5m. This follows the recent acquisition of the Avanquest minority interest and further simplifies the corporate structure.

Katherine Thompson

Written by

Katherine Thompson

Director

TMT

Claranova

Increasing stake in PlanetArt

Minority interest acquisition

Software & comp services

17 January 2022

Price

€6.15

Market cap

€281m

€1/US$1.13

Net cash (€m) at end FY21

25.3

Shares in issue

45.7m

Free float

80%

Code

CLA

Primary exchange

Euronext Paris

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

32.5

6.8

(13.1)

Rel (local)

27.9

0.8

(29.3)

52-week high/low

€8.81

€4.44

Business description

Claranova consists of three businesses focused on mobile and internet technologies: PlanetArt (digital photo printing; personalised gifts), Avanquest (consumer-focused software) and myDevices (internet of things/IoT). Its headquarters are in Paris and it has operations in Europe, the United States and Canada.

Next events

H122 revenue update

9 February

Analyst

Katherine Thompson

+44 (0)20 3077 5730

ClaranovaClaranova is a research client of Edison Investment Research Limited

Claranova has agreed to buy out a proportion of the 7.7% minority interest held in its PlanetArt subsidiary. The buy-out will be conducted in stages, with an initial purchase of 25% of the stake by March and up to a further 40% acquired over four six-monthly periods (linked to divisional EBITDA), reducing the minority interest stake to at least 2.7% for a cost of up to $38m/€33.5m. This follows the recent acquisition of the Avanquest minority interest and further simplifies the corporate structure.

Year end

Revenue (€m)

EBITDA*
(€m)

PBT**
(€m)

Diluted EPS**
(€)

DPS
(€)

P/E
(x)

06/20

409.1

17.4

11.3

0.20

0.0

30.8

06/21

471.9

34.2

25.5

0.40

0.0

15.4

06/22e

506.1

39.0

31.3

0.49

0.0

12.6

06/23e

561.1

46.4

37.6

0.63

0.0

9.8

Note: *Pre-IFRS 16. **PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Increasing ownership of PlanetArt

In 2017, Société Commune Européenne de Participation (part of the Riccobono printing group), invested $14m to buy a 7.7% stake in the PlanetArt business. This was structured as 671 preference shares (‘units’). Claranova has agreed to buy back up to 438 of these units at $85,840 each, equating to up to 65% of the minority interest. It will make the first payment by March, paying $14m for 168 units (25% of the minority interest). It will then acquire units to the value of 30% of PlanetArt EBITDA for H222, H123, H223 and H124. The company estimates this will cost up to $38m/€33.5m in total.

Earnings enhancing

Factoring in this agreement, our normalised EPS forecast increases by 0.3% in FY22 and 1.7% in FY23, assuming the minority interest has reduced to 4.4% by the end of FY23. We forecast net cash decreasing from €0.9m to net debt of €12.0m by the end of FY22 and net cash reducing from €35.6m to €13.9m by the end of FY23. Following the purchase of the Avanquest minority interest in November 2021, Claranova is simplifying its corporate structure, which should make it more attractive to investors and reduce obstacles to any possible spin-outs.

Valuation: Deal indicates higher PlanetArt valuation

Reflecting the different business models for each division, we continue to use a sum-of-the-parts approach to valuation. Using EV/sales multiples that reflect our views on divisional growth and profitability and are conservative compared to the peer group averages, we maintain our valuation of €10.46 per share. We note that the deal above values PlanetArt at $748m/€662m (1.6x FY22e revenue, 24x EBITDA), substantially higher than the valuation we use in our sum-of-parts calculation (0.9x and 14x respectively). Using this valuation would imply a per-share value of €16.19; a sustained resumption of growth in PlanetArt from Q222 will be the key trigger to drive the valuation of Claranova towards this level.

Changes to forecasts

Exhibit 1: Forecast changes

€m

FY22e

FY22e

FY23e

FY23e

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Revenues

506.1

506.1

0.0%

7.2%

561.1

561.1

0.0%

10.9%

EBITDA

42.6

42.6

0.0%

12.7%

50.0

50.0

0.0%

17.3%

EBITDA margin

8.4%

8.4%

0.0%

0.4%

8.9%

8.9%

0.0%

0.5%

EBITDA - pre IFRS 16

39.0

39.0

0.0%

14.1%

46.4

46.4

0.0%

18.9%

EBITDA margin - pre IFRS 16

7.7%

7.7%

0.0%

0.5%

8.3%

8.3%

0.0%

0.6%

Normalised operating profit

37.1

37.1

0.0%

14.9%

44.6

44.6

0.0%

20.1%

Normalised operating profit margin

7.3%

7.3%

0.0%

0.5%

7.9%

7.9%

0.0%

0.6%

Reported operating profit

34.0

34.0

0.0%

37.1%

41.5

41.5

0.0%

22.0%

Reported operating margin

6.7%

6.7%

0.0%

1.5%

7.4%

7.4%

0.0%

0.7%

Normalised PBT

31.3

31.3

0.0%

22.9%

37.6

37.6

0.0%

20.0%

Reported PBT

28.2

28.2

0.0%

56.8%

34.5

34.5

0.0%

22.2%

Normalised net income

22.4

22.5

0.3%

41.8%

28.5

29.0

1.7%

29.0%

Reported net income

20.0

20.1

0.4%

92.8%

26.1

26.6

1.8%

32.5%

Normalised basic EPS (€)

0.50

0.50

0.3%

24.1%

0.62

0.63

1.7%

26.8%

Normalised diluted EPS (€)

0.49

0.49

0.3%

24.3%

0.62

0.63

1.7%

26.8%

Reported basic EPS (€)

0.44

0.45

0.4%

68.7%

0.57

0.58

1.8%

30.2%

Net debt/(cash)

(0.9)

12.0

N/A

N/A

(35.6)

(13.9)

(60.8%)

N/A

Divisional revenues

PlanetArt

401.4

401.4

0.0%

5.5%

441.9

441.9

0.0%

10.1%

Avanquest

100.8

100.8

0.0%

14.9%

115.2

115.2

0.0%

14.3%

myDevices

3.9

3.9

0.0%

1.8%

4.0

4.0

0.0%

2.0%

Total

506.1

506.1

0.0%

7.2%

561.1

561.1

0.0%

10.9%

Divisional EBITDA

PlanetArt

27.2

27.2

0.0%

4.6%

31.1

31.1

0.0%

14.3%

Avanquest

15.1

15.1

0.0%

38.5%

18.5

18.5

0.0%

22.5%

myDevices

(3.3)

(3.3)

0.0%

21.5%

(3.2)

(3.2)

0.0%

(2.4%)

Total EBITDA - pre IFRS 16

39.0

39.0

0.0%

14.1%

46.4

46.4

0.0%

18.9%

Source: Edison Investment Research

Exhibit 2: Financial summary

€'m

2017

2018

2019

2020

2021

2022e

2023e

30-June

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

130.2

161.5

262.3

409.1

471.9

506.1

561.1

EBITDA

 

 

(5.0)

3.9

16.0

20.6

37.8

42.6

50.0

Company adjusted EBITDA

 

 

(5.0)

3.9

16.0

17.4

34.2

39.0

46.4

Normalised operating profit

 

 

(5.8)

3.4

15.5

15.8

32.3

37.1

44.6

Amortisation of acquired intangibles

0.0

0.0

(1.5)

(2.4)

(3.1)

(3.1)

(3.1)

Exceptionals

0.4

(2.4)

(2.9)

(5.6)

(4.4)

0.0

0.0

Share-based payments

(4.8)

(7.1)

0.3

0.0

0.0

0.0

0.0

Reported operating profit

(10.1)

(6.1)

11.4

7.8

24.8

34.0

41.5

Net Interest

(0.9)

(0.3)

(3.5)

(4.5)

(6.8)

(5.8)

(7.0)

Joint ventures & associates (post tax)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

(45.6)

0.0

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

(6.6)

3.1

12.0

11.3

25.5

31.3

37.6

Profit Before Tax (reported)

 

 

(11.0)

(6.4)

(37.7)

3.3

18.0

28.2

34.5

Reported tax

(0.4)

(1.8)

(3.7)

(2.1)

(3.8)

(6.5)

(7.9)

Profit After Tax (norm)

(7.0)

2.4

9.2

8.7

19.6

24.1

29.0

Profit After Tax (reported)

(11.4)

(8.2)

(41.4)

1.2

14.2

21.7

26.6

Minority interests

0.3

0.2

0.6

(0.7)

(3.8)

(1.7)

0.0

Discontinued operations

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

(6.7)

2.6

9.8

8.0

15.8

22.5

29.0

Net income (reported)

(11.0)

(7.9)

(40.8)

0.5

10.4

20.1

26.6

Basic ave. number of shares outstanding (m)

38

39

39

39

39

45

46

EPS - basic normalised (€)

 

 

(0.18)

0.07

0.25

0.20

0.40

0.50

0.63

EPS - diluted normalised (€)

 

 

(0.18)

0.06

0.25

0.20

0.40

0.49

0.63

EPS - basic reported (€)

 

 

(0.29)

(0.20)

(1.04)

0.01

0.26

0.45

0.58

Dividend (€)

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

10.9

24.0

62.4

56.0

15.4

7.2

10.9

EBITDA Margin (%)

-3.8

2.4

6.1

5.0

8.0

8.4

8.9

Company adjusted EBITDA margin (%)

-3.8

2.4

6.1

4.3

7.2

7.7

8.3

Normalised Operating Margin

-4.4

2.1

5.9

3.9

6.8

7.3

7.9

BALANCE SHEET

Fixed Assets

 

 

2.0

1.3

75.1

93.7

96.4

191.0

187.1

Intangible Assets

0.9

0.5

69.9

70.5

77.5

172.9

169.8

Tangible Assets

0.3

0.2

1.4

15.7

12.2

11.4

10.6

Investments & other

0.7

0.6

3.8

7.5

6.7

6.7

6.7

Current Assets

 

 

28.1

79.1

100.9

116.3

128.4

166.6

195.4

Stocks

3.7

3.7

4.8

14.4

16.1

17.3

19.1

Debtors

4.3

4.9

11.6

9.9

9.2

9.9

10.9

Cash & cash equivalents

17.1

65.7

75.4

82.8

90.4

126.7

152.6

Other

2.9

4.8

9.1

9.2

12.7

12.7

12.7

Current Liabilities

 

 

(28.1)

(37.2)

(60.5)

(74.6)

(75.4)

(83.3)

(90.5)

Creditors

(26.6)

(35.4)

(54.8)

(64.3)

(62.5)

(70.4)

(77.6)

Tax and social security

(0.3)

(1.7)

(3.0)

(1.2)

(2.0)

(2.0)

(2.0)

Short term borrowings

(1.1)

(0.1)

(2.7)

(6.1)

(7.7)

(7.7)

(7.7)

Other

0.0

0.0

0.0

(3.0)

(3.2)

(3.2)

(3.2)

Long Term Liabilities

 

 

(0.7)

(29.0)

(52.0)

(73.1)

(66.3)

(139.9)

(139.9)

Long term borrowings

0.0

(28.1)

(49.1)

(62.8)

(57.4)

(131.0)

(131.0)

Other long-term liabilities

(0.7)

(0.9)

(2.9)

(10.3)

(8.9)

(8.9)

(8.9)

Net Assets

 

 

1.3

14.2

63.6

62.3

83.1

134.4

152.2

Minority interests

(0.1)

(1.8)

(11.0)

(11.7)

(16.2)

(3.8)

5.0

Shareholders' equity

 

 

1.2

12.5

52.6

50.6

66.9

130.6

157.2

CASH FLOW

Op Cash Flow before WC and tax

(5.0)

3.9

16.0

20.6

37.8

42.6

50.0

Working capital

6.8

7.9

(4.1)

22.5

(4.4)

6.0

4.2

Exceptional & other

(2.2)

(5.7)

(5.2)

(6.3)

(8.9)

0.0

0.0

Tax

(0.0)

(1.2)

(3.8)

(6.8)

(5.1)

(6.5)

(7.9)

Net operating cash flow

 

 

(0.4)

5.0

3.0

30.0

19.4

42.2

46.3

Capex

(0.2)

(0.1)

(2.5)

(1.2)

(3.8)

(1.0)

(1.0)

Acquisitions/disposals

3.6

14.2

(13.3)

(31.9)

(3.8)

(60.5)

(8.8)

Net interest

(0.0)

(0.3)

0.0

(0.5)

(0.7)

(5.8)

(7.0)

Equity financing

1.9

2.0

(1.4)

0.0

2.4

15.0

0.0

Dividends

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

0.1

(0.6)

0.0

0.4

(2.6)

(3.6)

(3.6)

Net Cash Flow

5.0

20.1

(14.2)

(3.2)

11.1

(13.7)

25.9

Opening net debt/(cash)

 

 

(9.8)

(16.0)

(37.5)

(23.6)

(13.9)

(25.3)

12.0

FX

(0.6)

0.4

0.3

(0.8)

1.8

0.0

0.0

Other non-cash movements

1.8

1.1

0.0

(5.7)

(1.4)

(23.6)

0.0

Closing net debt/(cash)

 

 

(16.0)

(37.5)

(23.6)

(13.9)

(25.3)

12.0

(13.9)

Source: Claranova, Edison Investment Research

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

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Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Claranova and prepared and issued by Edison, in consideration of a fee payable by Claranova. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

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The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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