Moneysupermarket and 4BaseBio

Moneysupermarket.com (MONY.L, FTSE Mid 250 Index. Market Cap £1630m, 303p, 1.8% of JIC Portfolio)
Results for the six months ended 30th June 2020

Conclusion: It’s no surprise that COVID is impacting performance and although June showed some recovery, it is clear in the last sentence of the outlook statement, that we far from returning to business as usual. Having said that, the resilience of the business shines through in terms of operating cash flow and its net cash position. It’s good to see the dividend is maintained.  Forecasts are for a 6.0% cut for the year. I guess how H2 turns out will determine whether it maintains the dividend or cuts a little. On current forecasts, the yield is 3.6%. I have it as Medium Risk/Medium Reward =2.0% target. I’m happy with that. I think it should be able to achieve a 10-20% return over the next year but more than that might be pushing it. The outlook statement might lead to weakness today, but I remain a Happy Holder!

Main points:

6 months ended 30 June 2020 2019 Growth %
Group revenue £183.2m £199.4m (8)
Adjusted EBITDA * £62.8m £72.9m (14)
Profit after tax £40.6m £50.2m (19)
Adjusted basic EPS * 7.9p 9.4p (15)
Basic EPS 7.6p 9.4p (19)
Operating cashflow £41.7m £51.4m (19)
Net cash/(debt) * £7.5m £(12.6)m n.m.
Interim dividend 3.1p 3.1p -

Revenue was up 2.0% in Q1 before taking a hit as lockdown came into force during March.

Insurance was hit hard during April and May before improving in June.
Money was heavily impacted during Q2 and Home Services saw strong growth during the H1.

Robust cash conversion led to operating cash flow of £41.7m and net cash at 30th June of £7.5m v net debt of £12.6m a year ago.

This means it can maintain its 3.1p interim dividend which is well covered by earnings and cash flow.

Mark Lewis, CEO of Moneysupermarket Group, said:
“I’m pleased the Group has been able to help our users save over £1bn already this year when so many households are facing unprecedented financial strain.
“COVID-19 and the lockdown measures have significantly impacted our core markets, but our brands MoneySavingExpert and MoneySuperMarket have risen to the challenge providing useful advice and savings tips to millions.
“Our business model has proved resilient, generating good cash flow throughout the crisis and giving us confidence for the future.”

“Recent performance and outlook
Motor and home insurance have recovered to year-on-year growth, which may moderate as pent-up demand runs its course. Life insurance remains below 2019 levels and we have not seen any significant recovery in travel insurance (or TravelSupermarket) despite some relaxation of travel restrictions. 
Money performance remains highly suppressed with tight lending criteria and virtually no promotional banking products. We are not expecting provider credit appetite to improve until there is greater visibility of underlying macroeconomic trends. 
Home Services continues to trade well, though the anticipated price cap reduction in the autumn may dampen the level of customer savings. 
We remain committed to plans for an additional £5m marketing investment, which will be second-half weighted. 
Operating expenditure will continue to be well controlled with admin costs in H2 slightly ahead of H1.
While the uncertainty now inherent in some of our markets makes it difficult to provide financial guidance, we believe we are likely to face greater earnings pressure in H2 than in H1, given our good Q1 performance and the phasing of costs through the year.”

 

Screenshot 2020-07-28 at 07.40.22

 

4BaseBio AG (4BSB.D. Market Cap £74m, €2.08, 2.2% of JIC Portfolio)

4BaseBio announces that Sparta AG intends to submit a takeover bid at 2 € per share. 

The final terms and conditions will be provided with a complete offer document and then the management board and supervisory board of 4baseBio will submit a statement on the offer.

Conclusion: Looks like they bare trying to get it on the cheap. Hopefully, the Board will be robust in its defence and in at least trying to get a higher price. Do nothing but cross one’s fingers!

 

Screenshot 2020-07-28 at 07.54.44