EQS Group — Q1 regulatory stimulus

EQS Group (SCALE: EQS)

Last close As at 28/03/2024

40.80

−0.40 (−0.97%)

Market capitalisation

409m

More on this equity

Research: TMT

EQS Group — Q1 regulatory stimulus

EQS has produced strong Q117 figures, with revenues up 49% on the prior year, boosted by the consolidation of ARIVA, with organic growth at 13%. This performance is largely attributable to demand stimulated by regulatory changes, as built into our forecasts which are unchanged on these results. The mid-2016 introduction of the European Market Abuse Regulation greatly added to the compliance burden, while the impending PRIIP regulations for packaged products provide a fertile backdrop for ARIVA. Good share price performance (and underperformance by peers) has narrowed the discount to under 10%.

Fiona Orford-Williams

Written by

Fiona Orford-Williams

Director, TMT

TMT

EQS Group

Q1 regulatory stimulus

Q1 Update

Media

23 May 2017

Price

€52.75

Market cap

€69m

Net debt (€m) at 31 March 17

4.1

Shares in issue

1.3m

Free float

55%

Code

EQS

Primary exchange

FRA

Secondary exchange

MUN

Share price performance

%

1m

3m

12m

Abs

7.3

19.2

67.5

Rel (local)

2.5

13.3

31.6

52-week high/low

€56.0

€31.4

Business description

The EQS Group is a leading international technology provider for Digital Investor Relations. It has more than 8,000 client companies worldwide who use its products and services to securely, efficiently, and simultaneously fulfil complex national and international information obligations to the global investment community.

Next events

Half year results

14 August 2017

Q3 statement

15 November 2017

Analysts

Fiona Orford-Williams

+44 (0)20 3077 5739

Bridie Barrett

+44 (0)20 3077 5700

EQS Group is a research client of Edison Investment Research Limited

EQS has produced strong Q117 figures, with revenues up 49% on the prior year, boosted by the consolidation of ARIVA, with organic growth at 13%. This performance is largely attributable to demand stimulated by regulatory changes, as built into our forecasts which are unchanged on these results. The mid-2016 introduction of the European Market Abuse Regulation greatly added to the compliance burden, while the impending PRIIP regulations for packaged products provide a fertile backdrop for ARIVA. Good share price performance (and underperformance by peers) has narrowed the discount to under 10%.

Year
end

Revenue (€m)

EBITDA (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/15

18.4

3.5

3.1

1.20

0.75

44.0

1.4

12/16

26.1

4.2

2.4

0.96

0.75

54.9

1.4

12/17e

32.3

4.7

3.6

1.45

0.80

36.4

1.5

12/18e

36.8

5.6

4.5

1.86

0.85

28.4

1.6

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

Germany driving

Having focused on the potential for expansion in international markets and cross-marketing, the thrust of growth in this reporting period came from the domestic German market, where revenues were 68% higher than the prior year. Part of this is the mechanistic inclusion of ARIVA (67.5%-owned), where revenues were up 41%. Also encouraging was the growth in sales of INSIDER MANAGER, which helped push underlying domestic sales up by around 14%, despite lower bond and equity issuance. Our forecasts for FY17 and FY18 are unchanged on the back of these figures, as is company guidance.

Costs of scaling up

Margins in the Regulatory Information and News segment were held back by continuing infrastructure investment to grow internationally and in building additional software modules, while the non-IFRS EBIT loss in the Products & Services segment narrowed. This segment also saw continuing investment costs, including the development of a new delivery platform for Legal Entity Identifier, where the group is currently seeking accreditation. Currency moves in the reporting period were unhelpful and taxes rose sharply as deferred expenses came through.

Valuation: Discount narrowed

EQS’s share price has increased by 66% over the last year as the concept and the promise has translated into financial performance. The investment to scale up and internationalise held back results in FY16, but earnings are set to strengthen from the current year. Our valuation methodology uses blended historic and forward multiples to revenue and EBITDA. EQS still trades at a discount to peers, but that has narrowed to under 10%, possibly reflecting the development risk. The potential for faster growth and improving ROI should enable further outperformance.

Exhibit 1: Financial summary

€'000s

2013

2014

2015

2016

2017e

2018e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

15,829

16,390

18,377

26,061

32,300

36,800

Cost of Sales

0

0

0

0

0

0

Gross Profit

15,829

16,390

18,377

26,061

32,300

36,800

EBITDA

 

 

3,572

3,660

3,485

4,175

4,719

5,585

Operating Profit (before amort. and except.)

3,418

3,311

2,983

3,282

3,719

4,545

Intangible Amortisation

(140)

(280)

(351)

(619)

(680)

(680)

Exceptionals

0

(211)

(268)

0

0

0

Other

28

177

165

(874)

0

0

Operating Profit

3,306

2,997

2,529

1,788

3,039

3,865

Net Interest

(29)

(52)

(59)

(14)

(89)

(75)

Profit Before Tax (norm)

 

 

3,418

3,436

3,090

2,393

3,630

4,470

Profit Before Tax (FRS 3)

 

 

3,278

2,945

2,471

1,774

2,950

3,790

Tax

(1,096)

(1,105)

(1,372)

(960)

(1,397)

(1,676)

Profit After Tax (norm)

2,283

2,148

1,407

1,144

1,903

2,432

Profit After Tax (FRS 3)

2,182

1,841

1,099

814

1,552

2,114

Average Number of Shares Outstanding (m)

1.19

1.17

1.17

1.19

1.31

1.31

EPS - normalised (c)

 

 

191.0

182.9

120.1

96.1

145.3

185.6

EPS - (IFRS) (c)

 

 

183.3

156.8

93.8

68.4

118.5

161.3

Dividend per share (c)

75.0

75.0

75.0

75.0

80.0

85.0

Gross Margin (%)

100.0

100.0

100.0

100.0

100.0

100.0

EBITDA Margin (%)

22.6

22.3

19.0

16.0

14.6

15.2

Operating Margin (before GW and except.) (%)

21.6

20.2

16.2

12.6

11.5

12.4

BALANCE SHEET

Fixed Assets

 

 

13,658

19,383

22,777

30,389

30,889

30,669

Intangible Assets

10,524

15,827

17,850

26,314

26,314

25,634

Tangible Assets

1,032

1,468

2,796

4,075

4,575

5,035

Investments

2,103

2,088

2,131

0

0

0

Current Assets

 

 

6,055

4,750

6,972

12,014

11,846

12,592

Stocks

0

0

0

0

0

0

Debtors

2,971

3,282

3,215

4,562

5,654

6,442

Cash

2,980

1,370

3,607

6,610

5,350

5,308

Other

104

98

150

842

842

842

Current Liabilities

 

 

(3,274)

(4,380)

(5,325)

(9,942)

(8,977)

(8,927)

Creditors

(2,273)

(2,689)

(3,359)

(5,791)

(7,177)

(8,177)

Short term borrowings

(1,001)

(1,691)

(1,967)

(4,151)

(1,800)

(750)

Long Term Liabilities

 

 

(1,070)

(3,882)

(7,276)

(7,237)

(7,164)

(6,664)

Long term borrowings

(982)

(2,500)

(6,357)

(5,073)

(5,000)

(4,500)

Other long term liabilities

(88)

(1,382)

(919)

(2,164)

(2,164)

(2,164)

Net Assets

 

 

15,369

15,870

17,148

25,224

26,594

27,669

CASH FLOW

Operating Cash Flow

 

 

2,476

4,050

4,688

4,802

5,150

5,600

Net Interest

(29)

(52)

(56)

(27)

(89)

(75)

Tax

(1,096)

(1,105)

(995)

(1,302)

(1,069)

(1,467)

Capex

(3,088)

(1,041)

(1,978)

787

(1,500)

(1,500)

Acquisitions/disposals

0

(3,669)

(1,046)

(3,731)

(325)

0

Equity Financing

(202)

(100)

(1,138)

2,435

0

0

Dividends

(892)

(1,623)

(883)

(877)

(1,008)

(1,070)

Net Cash Flow

(2,831)

(3,540)

(1,408)

2,087

1,159

1,488

Opening net debt/(cash)

 

 

(3,827)

(996)

2,821

4,716

2,614

1,450

HP finance leases initiated

0

0

0

0

0

0

Other

0

(277)

(487)

15

5

20

Closing net debt/(cash)

 

 

(996)

2,821

4,716

2,614

1,450

(58)

Source: Company accounts, Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by EQS Group and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. 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. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

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Germany

London +44 (0)20 3077 5700

280 High Holborn

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United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

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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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by EQS Group and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. 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. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, 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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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