FEBRUARY 2015 MEDIA SECTOR REPORT Executive Summary The Digital Media Sector closed up 1.0% at the end of February 2015. Corporate Travel Management (33.2%) and Webjet (33.6%) were the stand out performers. STW Communications continued to lose ground, down 23.4% for the month. Average EV/EBITDA multiples finished down from January (16.6x) at 15.7x M&A Summary Melbourne IT Ltd. Signed a share purchase agreement for Uber Global Xero Limited announced that is has entered into a private placement with Accel Partners and Matrix Capital Management to raise NZD 147.2m The Technology Services sector closed up 40.35% with Xero leading the way at 63.7% off the back of a NZD147.2m private placement. Average EV/EBITDA multiples finished at 17.1x LTM EBITDA. INDEXED SHARE PRICE PERFORMANCE 45.00% 40.00% Last Month 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 5.00% 02 Feb 15 09 Feb 15 16 Feb 15 23 Feb 15 30.00% Last Twelve Months 20.00% 10.00% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% Feb 14 Apr 14 Jun 14 Aug 14 Oct 14 Dec 14 Feb 15 VALUATION PERSPECTIVES (EV/EBITDA) 19.0x Last Month 21.0x Last Twelve Months 17.0x 19.0x 15.0x 17.0x 13.0x 15.0x 13.0x 11.0x 11.0x 9.0x 9.0x 7.0x 02 Feb 15 09 Feb 15 16 Feb 15 23 Feb 15 7.0x Feb 14 Apr 14 Jun 14 Aug 14 Oct 14 Dec 14 Feb 15 EAC Partners has constructed a market capitalisation weighted index for the Mining and Oil & Gas Services, Construction and Maintenance and Engineering and Construction Management sub sectors: The charts shown are the indexed share price performance for the constituent companies of the EAC coverage group and the ASX200 Industrials Index. ASX 200 Media (Industry Group) Digital Media Sector Technology Services 1
CONSTITUENTS Digital Media Sector Ticker Closing Price Monthly Movement Beyond International Limited BYI 1.41 19.5% carsales.com Limited CAR 10.01 (2.8%) Corporate Travel Management Limited CTD 13.00 33.2% Flight Centre Travel Group Limited FLT 41.26 9.1% Melbourne IT Ltd. MLB 1.34 (2.2%) Mobile Embrace Limited MBE 0.17 (10.8%) Moko Social Media Limited MKB 0.15 (3.2%) REA Group Limited REA 49.01 (1.1%) SEEK Limited SEK 17.29 (3.1%) STW Communications Group Ltd. SGN 0.71 (23.4%) Webjet Ltd. WEB 3.90 33.6% Market Cap (AUD) EV (AUD) EV / EBITDA (LTM) EV / EBITDA (NTM) P / E P / E (Forward) ND / EBITDA Div Yield 86.5 80.2 7.8x NM 10.4x NM NM 7.1% 2,392.4 2,594.0 17.2x 15.5x 24.4x 21.5x 1.1x 3.2% 1,260.9 1,188.7 32.2x 21.9x 59.7x 36.8x NM 0.9% 4,156.5 3,085.6 7.4x 7.0x 21.1x 15.2x NM 3.7% 124.5 107.1 6.7x 6.3x 186.1x 14.0x NM 1.5% 63.0 52.6 20.3x 9.6x 25.6x 14.3x NM NM 90.9 80.6 NM NM NM NM NM NM 6,455.3 6,414.0 26.1x 19.0x 33.0x 29.2x NM 1.2% 5,918.9 7,071.8 21.6x 17.2x 22.6x 26.2x 0.3x 2.2% 287.3 549.6 5.6x 5.2x 6.4x 6.2x 2.4x 9.6% 313.6 284.3 12.3x 9.2x 16.1x 15.3x NM 3.5% Average 4.4% 15.7x 12.3x 40.5x 19.9x 1.3x 3.7% Technological Services Reckon Ltd. RKN 1.91 (0.3%) TechnologyOne Limited TNE 3.82 15.1% Xero Limited. NZSE:XRO 23.90 63.7% 212.1 253.3 9.6x 6.4x 13.5x 12.2x 1.6x 4.7% 1,181.2 1,104.6 24.7x 22.5x 38.7x 33.2x NM 1.6% 3,049.1 2,883.8 NM NM NM NM NM NM Average 26.2% 17.1x 14.4x 26.1x 22.7x 1.6x 3.2% ASX Media Average 15.9x 12.7x 38.1x 20.4x 1.3x 3.6% Coverage Group Average 9.1% 15.9x 12.7x 38.1x 20.4x 1.3x 3.6% 2
KEY DEVELOPMENTS Beyond International Limited reported consolidated earnings results for the six months ended Dec. 31, 2014. For the period, the company reported operating revenue of $48.567 million compared to $46.201 million a year ago. EBIT was $4.776 million compared to $5.007 million a year ago. carsales.com Limited reported consolidated earnings results for the half year ended December 31, 2014. Total revenue was AUD 151,304,000 compared to AUD 112,490,000 a year ago. EBITDA was AUD 72.9 million compared to AUD 63.5 million a year ago. Corporate Travel Management Limited reported group earnings results for the six months ended December 31, 2014. For the six months, the company reported revenue and other income of AUD 83.8 million against AUD 43.3 million a year ago. Statutory EBITDA was AUD 19.1 million against AUD 9.3 million a year ago. Flight Centre Travel Group Limited announced earnings results for the six months ended December 31, 2014. The company reported underlying profit before tax of $137.6 million against $146.3 million a year ago. icarasia Limited announced consolidated audited earnings results for the year ended December 31, 2014. For the year, the company reported revenue of AUD 2,814,000 compared to AUD 1,446,000 a year ago. Net loss after tax was AUD 16,700,000 compared to AUD 6,902,000 a year ago. Melbourne IT Ltd. signed Share Purchase Agreement for Uber Global Pty Ltd for AUD 20.5 million on February 25, 2015. The deal value comprises AUD 15.5 million cash and an earn out payment if normalised EBITDA for 2015 exceeds AUD 2.1 million, capped at AUD 5 million. The transaction is expected to complete by April 30 2015 and accretive to earnings. Melbourne IT Ltd. reported unaudited consolidated earnings results for the year ended December 31, 2014. The company reported revenue of AUD 124,706,000 against AUD 103,412,000 a year ago. Profit before tax from continuing operations was AUD 290,000 against AUD 5,864,000 a year ago. Mobile Embrace Limited provided revenue guidance for the fiscal 2015. For the period, the company expects revenue of $30.8 million. Mobile Embrace Limited reported consolidated earnings results for the first half year ended December 31, 2014. For the period, revenue was AUD 14,072,654 against AUD 9,537,547 for the same period a year ago. Profit before income tax was AUD 1,430,721 against AUD 1,569,133 for the same period a year ago. Moko Social Media Limited reported consolidated earnings results for the half year ended December 31, 2014. The company has posted revenue from continuing operations of AUD 3,909,042 against AUD 4,166,343 a year ago. Loss before income tax expense from continuing operations was AUD 9,732,337 against AUD 6,315,092 a year ago. REA Group Limited reported consolidated earnings results for the half year ended 31 December 2014. For the period, the company's revenue was AUD 261.5 million compared to AUD 209.4 million a year ago. EBITDA was AUD 175.45 million compared to AUD 106.8 million a year ago. Reckon Ltd. reported consolidated earnings results for the year ended December 31, 2014. For the year, the company reported revenue of AUD 100,795,000 compared to AUD 98,125,000 a year ago. Profit for the year was AUD 17,568,000 compared to AUD 18,161,000 a year ago. STW Communications Group Ltd. announced consolidated earnings results for the year ended December 31, 2014. For the period, the company reported revenue of AUD 452,613,000 compared to AUD 406,188,000 a year ago. EBITDA was AUD 93,668,000 compared to AUD 95,525,000 a year ago. Source: ASX, Company Websites, Capital IQ, Reuters, Bloomberg 3
KEY DEVELOPMENTS Seek Limited announced unaudited consolidated earnings results for the half year ended December 31, 2014. For the period, the company reported revenue from continuing operations of AUD 401.6 million compared to AUD 343.3 million a year ago. Profit before income tax from continuing operations was AUD 229.6 million compared to AUD 124.2 million a year ago. Webjet Limited reported earnings results for the half year ended December 31, 2014. For the period, the company reported revenue of AUD 58.2 million, up 11.5% compared to a year ago. EBITDA was AUD 14.4 million, up 17.3% compared to a year ago. Xero Limited. announced that it has entered into a subscription agreement for a private placement of 7,360,000 common shares at NZD 20 per share for gross proceeds of NZD 147,200,000 on February 25, 2015. The transaction will include participation from new investor, Accel Partners for NZD 132,900,000 and existing investor, Matrix Capital Management Company, LLC for NZD 14,300,000. 4
EAC PARTNERS EAC Partners is an independent corporate advisory firm based in Sydney. Our services include Mergers and Acquisitions, Divestments, Corporate Finance and Capital Raisings. Below is a brief snapshot of our recent experience: Sibelco: Advised on the acquisition of an industrial minerals producer Enviropacific Services: Advised on the divestment of 44% of the shares to Adexum Capital Adani: Advised on the AUD1.25Bn refinance of Adani Abbot Point Terminal Advised on its USD150m maiden USPP issue Advised on its AUD100m 6 year AMTN issue Holcim: Strategic review of two noncore assets Freemantle Media: Advised on the takeover of a listed media business Moko: Advised in relation to an acquisition and capital raise EAC Awards EAC Partners received the 2014 award for Best Boutique Advisory Firm Australia EAC Partners received the 2014 Award for Divestment Advisory Firm of the Year Australia Contact Details: Greg Quinn Managing Director +61 2 9210 9996 greg.quinn@eacpartners.com.au Robbie Singh Director +61 2 9210 9995 robbie.singh@eacpartners.com.au Greg Green Associate +61 2 9210 9998 greg,green@eacpartners.com.au EAC Partners Pty Limited Level 8, 56 Pitt St Sydney NSW 2000 Australia www.eacpartners.com.au info@eacpartners.com.au ABN: 28 133 170 733 AFSL: 341 332 5