Venture Advisory Monthly Wrap - August 2019


Key takeaways from the Telecommunications & ICT, Media and Technology Sectors

During August 2019, Australia’s TMT space announced various acquisitions, partial sell-downs, indicative year-end performances as well as other announcements:


  • Macquarie Media’s recommended acceptance to Nine (NEC)’s announcement for the conditional takeover offer.

  • Nine Entertainment announced that through its wholly owned subsidiary Fairfax Media Limited a $1.46 per share all-cash off-market takeover offer to acquire all of the outstanding shares in Macquarie Media. The offer equates to an enterprise value of $275.4m, inclusive of MRN’s 30 June net debt of $22m and payments of its August 2019 dividend. The acquisition will be 100% financed from cash reserves and existing debt requires.

  • Speedcast announced changes to its board and management, both current and ongoing. John Mackay has resigned as Chairman, effective immediately but will remain on the board as a non-executive Director to ensure an orderly transition to the new Chairman. Stephe Wilkes has been appointed to the Board and elected Chairman, effective immediately. It is anticipated that another Director will retire from the board once a suitable appointment is made.

  • Bravura Solutions announced the acquisition of Midwinter for A$50m. Midwinter provides financial planning software, AdviceOS powers back office administration for financial advisers and drives online self-direct digital advice portals for superannuation funds in Australia. The total consideration is A$50m and will be funded by cash. The acquisition is expected to be EPS accretive in the first year of ownership.

  • Zip Co announced that it has entered into an agreement to acquire 100% of the shares in global instalment technology platform, PartPay Limited, providing exposure to four key geographies – New Zealand, United Kingdom, Unitied States and South Africa. Zip has concurrently agreed to acquire a direct strategic equity interest in New York based “buy now pay layer” provider, QuadPay Inc.

  • Zip Co announced that it has priced its first issuance from the Zip Master Trust. The deal, arranged by NAB was oversubscribed and closed at $500m. The issuance is the largest of its nature by a Fintech in Australia.


Telecommunications sector highlights:

The five best and worst performers for August 2019 were as follows:


Source: Factset, as at 31 August 2019


5G Networks (26 August) released their fully year results for 2019. Revenue for the full year increased to $51.2m up from $5.4m whilst EBIT increased from $0.2m to $0.3m. The net loss for the period increased to $4.2, from $0.3m. No dividend was declared.

ARQ Group (16 August) announced the appointment of Karl Siegling as a non-executive director of the board, effective 23 August 2019.

ARQ Group (22 August) announced its half year results for the period ending 30 June 2019. Revenue decreased by 19.1% to $90.9m and reported a loss of $0.6m. A final fully franked dividend of 4.5cps was declared.

amaysim (23 August) announced the resignation of Thorstem Kraemer as non executive director. Thorsten Kramer had been a non-executive director since 2019

amaysim (26 August) announced its full year results for the year ended 30 June 2019. It reported a decreased in revenue of 8% to $508.8m and reported a total net loss off $14.7m. Underlying profit after tax from continuing operations was $6.8m

Chorus NZ (12 August) announced the issue of further Crown Infrastructure Partners (CIP) securities at an issue price to NZ$1.00 per CIP(2) equity security. CIP2 equity securities are redeemable preference shares, with no voting rights and a preference repayment upon liquidiation. 16.1m CIP2 securities were issued which represent 25.09% of its total class. The proceeds of the issue will be used to fund the construction of the Ultra-Fast Broadband network in New Zealand.

Chorus NZ (26 August) announced that Kate McKenzie is to step down as CEO and Managing Director at the end of 2019. Ms. McKenzie does not anticipate taking any other executive roles.

Chorus (26 August) released their full year results for 2019. Operating revenue for the period was $670m and operating expenses were $334m. Depreciation and amortisation for the period was $393m, delivering earnings before interest and tax of $243m

DWS Limited (13 August) announced its full year results for 2019 delivering an increase in revenue to $163.5m, up 29.7%pcp and a decrease in NPAT of $10.3m down 35.3%pcp.

Macquarie Telecom Group (27 August) announced its full year results for the period ending 30 June 2019, where revenue increase up 5.6% to $246.6m 3.5% whilst net profit for the period decreased by 3.5% to $16.4m.

MNF Group (14 August) announced that it has appointed David Steward as an independent non-executive director. David Steward has over 30 years in management and business leadership roles.

MNF Group (27 August) announced its full year results for the period ending 30 June 2019. Revenue decreased by 2.3% to $215.6m whilst profit after tax from ordinary activities are attributable to members decreased by 3.6% to $11.4m

Megaport (21 August) announced its full year results for the period ending 30 June 2019. Monthly recurring revenue increased 82% to $3.6m, whilst annualised revenue increased 82% to $43.3m Total number of customers increased by 44% to 1,490. Net loss for the year totalled $33.6, an increase of $24.5m from the prior period.

NEXTDC (29 August) released its results for the year ending 30 June 2019. Revenue increased to $179.3m, representing an increased of 12% and reported a loss of $9.8m. No dividend was declared for the period.

Over the Wire (15 August) reported is results for the period ending 30 June 2019, where it recorded revenue of $79.6m and a profit of $13.1m email for the year. A final fully franked dividend of 2cps was declared.

Speedcast (27 August) announced changes to its board and management, botht current and ongoing. John Mackay has resigned as Chairman, effective immediately but will remain on the board as a non-executive Director to ensure an orderly transition to the new Chairman. Stephe Wilkes has been appointed to the Board and elected Chairman, effective immediately. It is anticipated that another Director will retire from the board once a suitable appointment is made.

Speedcast (27 August) announced its half year results for the period ending 30 June 2019. Group revenue was up 17.3$ to $357.6m, whilst statutory NPAT loss of $175.5m including a small positive impact due to AASB 16 and a $154.8m negative impact from the impairment of goodwill relating to the performance of the non-Government operating segment.

Superloop (1 August) announced that it completed its network builds, with the INDIGO subsea cable now carrying live traffic and Australian national backbone network complete. This represents the completion of two major network projects that have been years in the making.

Superloop (27 August) announced its full year results for the period ending 30 June 2019. This included EBITDA of $8.5m on $119.8m of total group revenues, with core fibre connectivity revenues up 89% yoy to $35.2m. Superloop report a loss of $72.1m underpinned by an impairment of $50.7m for the retiring of the non-core, non-bandwidth services segment.

Spark NZ (6 August) announced the appointment of Heather Polglase as the new group Human Resources Director on the Spark leadership squad, effective immediately.

Spark NZ (21 August) recorded its half year results for the period ending 30 June 2019. Revenue from continuing operations was $3.5m whilst net profit increased 12.1%pcp to $0.4m.

Spirit Telecom (27 August) provided their full year results for the period ending 30 June 2019. Revenues from ordinary activities increased $7.5m whereas loss for the year increased 244.4% to $823.7m.

Telstra (15 August) delivered its full year results for the period ending 30 June 2019. Revenue for the period decreased 3.6% to $27.8bn, whilst profit for the year decreased by 39.4% to $2.1bn. A total final fully franked dividend was declared of 8cps. These results were in line with guidance and market expectations and demonstrated progress against the T22 strategy.

VitaGroup (23 August) released its full year results for the period ending 30 June 2019. Revenue increased 10.1% to $753.7m whilst net profit increased 10.6% to $24.3m A fully franked final dividend of 4cps was declared.

Vocus (22 August) announced its full year results for the period ending 30 June 2019. Reported revenue was $1.9bn whilst statutory NPAT after minority interests was $34.0m The VOcus board has made the decision not to declare a final dividend for the twelve months ending 30 June 2019, and as disclosed, Vocus has closed a new and increased syndicated debt facility with its lenders. The Syndicated Facility Agreement stipulates that dividends will not be paid until the Net Leverage Ratio is below 2.25x.


Forward EV / EBITDA Multiples Chart

The forward EV / EBITDA multiples for leading telco stocks at the end of the month is as follows:

Source: Factset, as at 31 August 2019


Media sector highlights:

The five best and worst performers for August 2019 were as follows:

Source: Factset, as at 31 August 2019


Carsales.com (21 August) released its full year results for the period ending 30 June 2019. Revenue from continuing operations increased by 10.8% to $417.5m whilst profit decreased by 54.5% to $85.6m

Domain Holdings (9 August) announced a opt-our share sale facility for shareholders who less than $500 worth of fully paid ordinary DHG shares, which as at market close is 179 shares or less. Te company will pay all brokerage and handling costs. Additionally, Domain makes no recommendation as to whether its shareholder should participate in the Facility.

Domain Holdings (22 August) announced its results for the 53 week period ending 30 June 2019.Revenue increased 19.8% to $343.3m whilst reporting a net loss of $137.6m. A final fully franked dividend of 4cps was declared.

Event Hospitality and Entertainment (22 August) announced its full year results for the period ending 30 June 2019. Revenue and other income from continuing operations increased 2.8% to $1.0bn, whilst profit for the year attributable to members of the parent entity remain relatively flat at $11.9m. A fully franked final dividend of 31cps was declared.

Event Hospitality and Entertainment (27 August) announced the resignation of Ken Chapman as an independent non-executive director of the Company.

GTN (29 August) provided its full year results for the period ending 30 June 2019. It reported revenues of $185.0m whilst net profit increased 36.6% to $15.7m. A partially franked dividend of 3.2cps was declared.

iCarAsia (22 August) provided its half year results for the period ending 30 June 2019. Revenue increased to $6.0m, up from $5.0m pcp/

Macquarie Media (7 August) announced its full year results where revenue excluding discontinued operations were $131.8 million, a decrease of $4.5million or 3.3% against the prior year, and its Directors declared a final fully franked dividend for FY2019 of 2cents per share to be paid on 26 August 2019

Macquarie Media (12 August) responded in acceptance to Nine (NEC)’s announcement for the conditional takeover offer for all of the ordinary shares of MML that it does not already own at a price of $1.46 per share

The Independent Directors of MML (Independent Directors) have considered the Offer in consultation with MML’s advisers and recommend unanimously that MML shareholders ACCEPT the Offer, in the absence of a superior proposal and subject to an independent expert opining(and continuing to opine) that the Offer is reasonable

The Offer is subject to various conditions including:

  • Nine having a relevant interest in more than 90% of all MML shares on issue at the end of the Offer Period;

  • Entry into and delivery of a valid Deed of Restraint by John Singleton and his wholly-owned subsidiary company John Singleton Promotions Pty Ltd;

  • No action by public authority adversely affecting the Offer; and

  • No “material adverse change”, “prescribed occurrence” or prohibited actions by MML.

Nine Entertainment (12 August) announced that through its wholly owned subsidiary Fairfax Media Limited announced a $1.46 per share all-cash off-market takeover offer to acquire all of the outstanding shares in Macquarie Media. The Offer equates to an enterprise value of $275.4m, inclusive of MRN’s 30 June net debt of $22m and payments of its August 2019 dividend. The acquisition will be 100% financed from cash reserves and existing debt requires.

Nine Entertainment (22 August) announced its preliminary Final results for the year ended 30 June 2019. Revenue increased by 40%pcp to $1.9bn, whereas net profit increased by 6% to $221.3m


Hugh Marks, CEO of Nine said “The acquisition of Macquarie Media consolidates Nine’s position as a supplier of News and Current Affairs content across all of our key platforms – Television, Digital, Print and now Radio. Together, we are investing more than $400m per year providing premium News and editorial content, entrenching Nine as to go to place for all news needs, for All Australians. In addition to cost efficiency initiatives already underway at MRN, bringing the two businesses together will realise further annualised synergies of more than $10m

Nine Entertainment (22 August) provided its full year results for the period ending 30 June 2019. Revenue increased by 40% pcp to $1.8bn whilst net profit increased by 6% to $221.3m. A fully franked final dividend of 5cps was declared.

News Corporation (8 August) provided its full year results for the period ending 30 June 2019. Revenues increased by 12% pcp to $10.1bn, which reflected the consolidation of Foxtel for the full year and growth at the Digital Real Estate Services segment. Net income was positive, reporting $228m in comparison to a loss of $1.44bn in the prior year. News Corp will undertake a strategic review of News America Marketing.

oOH!Media (16 August) provided its half year results and FY19 guidance for the period ending 31 December 2019. oOH! Expects to report revenue of $304.8m for the first half ended 30 June 2019, an increase of 5% on a pro forma basis on the prior corresponding period, with Underlying EBITDA of $56.0m, down 2% on a pro forma basis for the half year. Gross margin has been impacted by the product mix.

oOH!Media (26 August) announced that it had increased its revenues from ordinary activities by 58.8% to $304.9m, whilst Underlying EBITDA (statutory) meaningfully increased to $134.9m

Pacific Star Network (29 August) announced its full year earnings for the period ending 30 June 2019. The result was in line with guidance, with revenue of $67m up 140% and underlying EBITDA of $9m was up 208% on the prior corresponding period.

Prime Media Group (23 August) released its result for the financial year ending 30 June 2019. Report revenue was down 4.7% on the prior year, of $191.8m whilst EBITDA was down 14.8% to $38.5m. Statutory profit after tax was up 160% to $7.3m

QMS Media (15 August) announced its wholly owned subsidiary had entered into an agreement of acquire TLA, with QMS reporting the successful completion of an institutional placement of $15m from the issue of 17.9m fully paid ordinary shares of $0.84 per share.

QMS Media (23 August) announced its half year results for the period ending 30 June 2019. Revenue increased to $128.9m, up 24% and NPAT up 65% to $16.5m. An interim fully franked dividend of 1.2cps was declared.

REA Group (9 August) announced its full year results for the period ending 30 June 2019. Revenue increased 8% to $874.9m whilst net profit $295.5m was up 6%. A full year dividend of 118.0cps was declared.

SEEK (20 August) provided its full year results for the period ending 30 June 2019, with total sales revenue up 18% to $1.5bn whilst net profit after tax increased by 120% to $198.4% A fully franked final dividend of 22 cps was declared.

SKY TV (16 August) announced that it acquired RugbyPass, the largest online rugby network in the world. The purchase price was US$40m with consideration of US$10m cash and issuance of new Sky shares of $20m at completion, with the remaining US$10m payable in cash during an agreed earn out period.

Sky TV (22 August) announced that its Chairman Peter Marcourt is stepping down effective 1 September 2019, and will resign from his position as director of the company at the AGM. Sky has appointed Philip Bowman as director, with effect 1 September 2019 to full a casual vacancy on the Board. MR Bowman has also been elected Sky’s Chairman with effect from 1 September 2019.

Sky TV (22 August) provided is result for the year ended 30 June 2019.Total revenue of $795.1m with a loss of $607m was announced. An unfranked dividend of 7.5cps was declared.

Southern Cross Australia (6 August) announced its outsourcing of transmission services to Broadcast Australia. Under the agreement, SCA will transfer transmission to BA, and BA will provide SCA with managed and maintenance services for over 500 radio and TV transmission services around Australia. The transaction will result in a non-cash loss $9.2m from the sale of SCA’s current broadcast transmission assets to BA, and this will be recorded in the 2019 financial year. BA will be responsible for all future operating costs and capital expenditure associated with SCA’s broadcast transmission requirements and the transaction is expected to deliver future cashflow savings to SCA.

Southern Cross Australia (22 August) announced its full year results for the period ended 30 June 2019). Reported revenue was $660.1m whilst net profit excluding significant items was $73.9m. SCA reported a net loss inclusive of significant items of $91.4m

Seven West Media (16 August) announced the appointment of James Warburton as MD and CEO of Seven West Media, succeeding Tim Worner. James will start as CEO of SWM effective immediately.

Seven West Media (20 August) lodged its full year results for the period ended 29 June 2019. Reported revenue was down 4.2%, to $1.6bn, whilst reporting a net loss of $444.5m. No dividend was declared.

Village Roadshow (29 August) announced that is has signed an agreement to sell its wholly owned promotional solutions agency, Edge Loyalty Systems Ltd for an enterprise value of A$32.3m to Blackhawk Network. Net proceeds will be used to reduce VRL group debt.

Village Roadshow (29 August) provided its full year results for the period ending 30 June 2019. EBITDA increased $124.9m, up 37% on prior year whilst its reduced its balance sheet with leveraged reduced to 1.76x, down from 3.72x. A fully franked final FY19 dividend of 5 cps was declared.

WPP AUNZ (16 August) announced an agreement to sell Kantur AUNZ at $168m, equivalent to a 8.2x FY19 EBITDA multiple.

WPP AUNZ (23 August) provided is half year results for the period ending 30 June 2019. Revenue was down 0.4% to $509.2m whilst net profit meaningfully decreased to a loss of $253.6m. An interim fully franked dividend of 2.3 cps was declared.


Forward EV / EBITDA Multiples Chart

The forward EV / EBITDA multiples for leading media stocks at the end of the month is as follows:

Source: Factset, as at 31 August 2019


Technology sector highlights:

The five best and worst performers for July 2019 were as follows:

Source: Factset, as at 31 August 2019


3P Learning (22 August) announced its results for the full financial year, where group revenue was down 1m on pcp to $54.4m, and underlying core EBITDA declined $1.3m to $17.7m and statutory NPAT was $5.9m. No dividend was declared.

Altium (19 August) released its preliminary final report, where it stated an increase in revenue to US$172.8m, EBIT of $US$56.9m and NPAT attributable to shareholders of $52.9m. A final dividend of 18 cents per share for the year ended 30 Jun 2019.

Afterpay Touch Group (28 August) announced its full year results to 30 June 19, where total income increased 86% from 142.3m to $264.1m. Its growth was primarily underpinned by the first full year performance of the Afterpay US business and continued strong growth in the Australian and New Zealand Afterpay businesses. EBITDA (excluding significant items) decreased 18% to $28.7m, and EBITDA post significant items declined 159% to ($9.3m). The overall loss before tax was $42.8m for the period.

Appen (29 August) released its half year results for the period ending 30 June 19. Revenue increased 60% pcp to $245.1m, and underlying EBITDA of $46.2m.

Bravura Solutions (23 August) announced the acquisition of Midwinter for A$50m. Midwinter provides financial planning software, AdviceOS powers back office administration for financial advisers and drives online self-direct digital advice portals for superannuation funds in Australia. The total consideration is A$50m and will be funded by cash. The acquisition is expected to be EPS accretive in the first year of ownership.

Bravura Solutions (23 August) provided its full year results for the period ending 30 June 2019. Report revenue increased 16.4% to 257.7m, and NPAT attributable to members increase 21.4% to $32.8m. Bravura Solutions declared a final dividend of 4.8 cents with a record date of 4 September 2019.

Catapult Group (16 August) announced that it has now signed over 1,000 teams in north America, with 11 of its top 15 clients globally are in North America, including 29 of 32 NFL teams and all 31 National Hockey League (NHL) teams.

Catapult Group (22 August) announced its full year statutory accounts, detailed a 24.2% increase in revenue to $95.4m, and net loss of $12.6m, an improve of 27.5% on the prior corresponding period.

Citadel Group (20 August) released its full year results, stating a decrease of 6.9% pcp for total revenue, of $99.2m. Net profit attributable to members decreased by 45% to 7.9m. Citadel Group declared a fully franked dividend of 6.0 cents per share

Class (20 August) released its final results for the period ending 30 June 2019. Operating revenue increase 13% to $38.3m, and EBITDA also increased 13% to $17.9m. NPAT increased by 3% to $9.0m. Class announced a dividend of 2.5 cents per share.

Crowd Media (29 August) announced a strategic investment and partnership, where a European investment consortium has agreed to invest up to A$3.7m into the company across two tranches. The consortium believes that they have identified significant opportunities to leverage Crowd Media’s proprietary technology and knowhow into new geographies, channels and revenue streams. It is expected that this will result in Crowd entering into JV’s that will complement businesses and/or brands already associated with the Consortium, with the ultimate goal of Crowd gaining a larger share of the retail price when goods are sold. The first tranche will allow Crowd to complete its organisational restructure and repay the VWAP Obsidian Convertible note facility that it had in place.

Crowd Media (30 August) announced a its preliminary annual results for the year ending 30 June 2019. Revenues were down 38.0% to $23.9m, whilst loss for the year were down 81.6%, to ($4.8m) There were no dividends paid, recommended or declared during the current financial period.

Computershare (14 August) released its annual results for the year ending 30 June 2019. Revenue increased by 4.8% to $2,441.4m and EBITDA increased by 10.2% to $685.9m Computershare declared a final dividend of 23 cents per share, an incr