Last close As at 05/08/2026
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Research: TMT
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%.
EQS Group |
Q1 regulatory stimulus |
Q1 Update |
Media |
23 May 2017 |
Share price performance
Business description
Next events
Analysts
EQS Group is a research client of Edison Investment Research Limited |
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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 |
Revenue (€m) |
EBITDA (€m) |
PBT* |
EPS* |
DPS |
P/E |
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
|
|
The interim figures show a mixed picture of head- and tailwinds, but with a definite improvement in Q217 over Q117, particularly in the events business. The loosening of the DMGT relationship is facilitating a faster implementation of the strategy to drive profit growth, with the benefit set to show more strongly in FY18. We have adjusted our forecasts to reflect the RISI acquisition in April, with underlying trading in line. The step-up in the dividend payout reflects the group’s strong underlying cash generation.