EMERALD FINANCIAL A DVISERS

This is a summary of the original, full-version report which is for sales on

Research & Opinion
ResarchPool and available through this link:
14 October 2015

http://researchpool.com/report-detail/emerald-advisors/back-its-feet/66775

Roularta Media Group

ESTIMATED FAIR VALUE PER SHARE : 30

BELGIUM
Bloomberg: ROU:EN
Reuters: RLRT.BR

CLOSING PRICE (13/10/15): 18.42

Entrepreneurial multi-media business, back on its feet

Axel Funhoff
axel.funhoff@emerald-advisers.com
Arnaud W. Goossens
arnaud.goossens@emerald-advisers.com

Important Note
Emerald Financial Advisers has been
mandated by Roularta Media Group to
produce a neutral, fair, and elaborate equity
research report on the company with the
aim to increase the visibility/transparency
of its shares in financial markets. The
authors hereby declare that any views
expressed in this report represent our
personal opinion and that Roularta has
neither limited nor in any other way
influenced the content of this report. For
more information, please read the disclaimer
at the end of this report.
About Emerald Financial Advisers
Emerald Financial Advisers is a corporate
finance advisor specialised in connecting
investors and corporates. We offer bespoke
equity research, Investor Relations strategy,
fund raising for start-ups and scale-ups,
business valuation, M&A and management
coaching.
Please visit our website for more
information
www.emerald-advisers.com

Solid multi-media company, back on its feet

Following the exit of loss-making French business GER earlier this year, we expect Roularta to expand
ROCE to 14.3% by 2017e from an average of 4% since 2006, to improve its earnings power (we forecast
2015-17e EPS CAGR of 15%) and to significantly deleverage its balance sheet (we expect a net cash
position by 2017e). We see two value drivers going forward: (1) a rerating of the stock triggered by the
value of Roulartas 50% stake in Medialaan, Belgiums leading commercial TV broadcaster and (2) the
earnings growth potential from the core publishing activity through efficiency improvements, which
should fuel group earnings growth. As Medialaan weighs 78% of Roulartas net combined profits and
given that Free-to-Air TV broadcasters trade at substantially higher multiples than Roularta (EV/EBIT 16e
of 11.6x vs 5.7x for Roularta), we expect a strong rerating going forward. Although we see Medialaan as
the groups key value driver, we also expect Print Medias earnings to improve significantly from here.
Medialaan is substantially underestimated by the market
We value the 50% stake in Medialaan alone at 22.6 per share, above Roulartas current share price.
Medialaan is a formidable broadcasting business in the sweet spot of the growing Flemish TV and Radio
advertising market. Although the public broadcaster, VRT, is the overall (audience) market leader,
Medialaan is the leader within the commercially relevant age groups (18-44 and 18-54), with a 40%
audience market share. In fact, Medialaan generates c4x more advertising revenues than the VRT,
where advertising is restricted by law. The company also generates distribution revenues, allowing it to
monetize its content in parallel to linear TV broadcasting (OTT services). Medialaans online growth
initiative (VTM.be), launched in early 2015, is a major success with already 550k registered users and
over 2m in advertising EBITDA.
Fair Value Analysis
Roularta is trading at a 30-40% EV/EBIT discount to Print Media peers and at a 50% discount to Free-toAir broadcasters. Our benchmarking analysis suggest that a discount is unjustified in our view. We
estimate Roulartas fair value per share at 30, which we calculate on a multiples-based SOTP analysis,
valuing Medialaan at 10x EV/EBIT 16e (15% discount to peers) and Print Media at 9x (7% discount to
peers). Our DCF model suggests fair value of 27 per share, based on conservative assumptions such as
a terminal growth rate of -2% (from 2018) and a WACC of 8.9%.
Key financials
m
Sales
EBIT
Net profit
EPS ()
DPS ()
P/E (x)
Net yield (%)
Adj. EV/EBIT (x)

2010
711.6
57.0
31.0
2.45
0.50
7.5
2.7
6.2

2011
731.1
35.5
15.4
1.24
0.35
14.9
1.9
10.0

2012
712.0
4.7
-2.5
-0.20
0.00
na
0.0
53.4

Please refer to important disclosures

on the next page of this report
Source: Company data, Emerald Financial Advisers, FactSet

2013
677.1
-49.2
-57.9
-4.64
0.00
na
0.0
na

2014
300.1
3.9
-142.5
-11.41
0.00
na
0.0
17.9

2015e
288.9
12.1
25.3
2.03
0.00
9.1
0.0
7.1

2016e
290.1
15.0
29.3
2.34
0.33
7.9
1.8
5.7

2017e
292.0
17.8
33.6
2.69
0.77
6.8
4.2
4.2

Equity Research

Enterprise Value (m): 144

Market Cap. (m): 242
Free-float MCap (m): 61
2003 2004 2005 2006
Consolidated P&L (m)
Sales
299
344
332
435
EBITDA
61
65
56
78
EBIT
44
46
39
51
Pretax profit
41
45
37
49
Net profit
27
29
22
25
Combined P&L (m)
2003 2004 2005 2006
Sales
EBITDA
EBIT
Pretax profit
Net profit
Cash Flow (m)
2003 2004 2005 2006
Adj. EBITDA
60
65
56
72
WCR
-10
5
-1
22
Gros Op CF
49
70
55
95
FCF
31
52
39
69
Capex
-42
-28
1
-50
Net acq./(disp.)
-6
-4
-17 -214
Dividends
-4
-5
-7
-8
Equity issue
6
0
-1
51
Others
28
-26
13
334
Net Debt incr./(decr.)
15
-10
28
182
Balance Sheet (m)
2003 2004 2005 2006
WC
44
39
39
17
Capital Employed
224
237
296
660
Discontinued Assets
0
0
0
0
Cash & Equivalent
26
27
35
42
Gross Debt
48
39
75
263
Equity
177
200
216
285
Growth (%)
2003 2004 2005 2006
Sales
9
15
-3
31
EBITDA
30
7
-14
40
EBIT
64
3
-17
48
Net profit
249
10
-23
10
FCF
17
65
-25
78
NWC
31
-12
2
-57
Capital Employed
61
5
25
123
Shareholder Equity
44
13
8
32
Financial Ratios
2003 2004 2005 2006
Gross margin (%)
68
69
67
71
EBITDA margin (%)
14
13
11
13
EBIT margin (%)
10
9
8
9
Net margin (%)
6
6
5
4
Opex/Sales (%)
86
86
90
87
Depreciation/Sales (%)
3
3
3
3
Depreciation/EBITDA (%)
24
22
30
25
Tax rate (%)
37
38
40
48
Capex/Sales (%)
14
8
0
11
FCF/Sales (%)
11
15
12
16
WCR/Sales (%)
-3
2
0
5
WC/Sales (%)
10
8
8
3
Capital Employed/Sales (%)
75
69
89
152
Gearing (%)
12
6
17
74
Net Debt/EBITDA (x)
0.4
0.2
0.7
2.8
ROCE post-tax (%)
15
13
9
6
ROE (%)
18
16
11
10
Dividend Payout (%)
19
25
33
33
Valuation
2003 2004 2005 2006
Market Capitalisation (m)
270
453
517
579
+ Net Financial Debt ()
23
12
40
222
+ Restated Min. + others (m)
25
37
36
38
- Associates & Inv. (m)
18
23
17
16
= Enterprise Value (m)
300
480
576
824
Assoc. NFD (gr. share) (m)
0
0
0
0
EV/Sales (x)
1.0
1.4
1.7
1.9
EV/EBITDA (x)
4.9
7.4 10.3 10.5
EV/EBIT (x)
6.9 10.4 14.9 16.1
EV/FCF (x)
9.5
9.3 14.8 11.9
EV/Capital Employed (x)
1.3
2.0
1.9
1.2
P/E (x)
9.8 15.0 22.4 22.9
P/BVPS (x)
1.5
2.3
2.4
2.0
FCF yield (%)
11.6 11.4
7.5 11.9
Per share data
2003 2004 2005 2006
# of shares
9.88 9.93 9.96 11.01
# of avg sh. (FD, ex-treas.)
9.60 9.64 9.70 10.78
Share price
27.35 45.64 51.94 52.65
EPS
2.70 2.95 2.26 2.25
EPS FD
2.78 3.04 2.32 2.30
BVPS
17.93 20.15 21.65 25.88
DPS
0.50 0.75 0.75 0.75

Financial summary
2007
570
81
50
36
16
2007

2008
587
70
33
18
14
2008

2009
539
53
10
-3
-4
2009

2010
554
82
57
51
31
2010

2011
553
70
36
28
15
2011

2012
536
45
5
-4
-3
2012

2007
80
4
84
50
-38
-14
-8
-13
47
24
2007
13
689
0
32
278
284
2007
31
4
-11
-36
-27
-24
4
0
2007
74
11
7
2
89
3
29
55
7
9
1
2
121
83
3.0
3
6
52
2007
669
246
38
11
942
0
1.7
11.6
19.0
18.7
1.4
40.4
2.4
7.5
2007
11.04
10.62
60.61
1.44
1.50
25.70
0.75

2008
67
62
129
109
-35
4
-9
28
-178
-81
2008
-49
640
0
110
275
318
2008
3
-14
-31
-14
117
na
-7
12
2008
75
9
4
2
92
3
37
31
6
19
11
-6
109
50
2.4
3
5
0
2008
393
165
22
12
568
0
1.0
8.2
17.4
5.2
0.9
27.5
1.2
27.8
2008
13.13
12.62
29.96
1.05
1.09
24.22
0.00

2009
36
-10
26
12
-20
57
0
2
-89
-39
2009
-39
584
0
72
198
312
2009
-8
-24
-23
na
-89
-20
-9
-2
2009
76
8
4
-1
92
3
42
-84
4
2
-2
-6
108
39
2.4
3
-1
0
2009
184
127
15
10
316
0
0.6
5.9
30.9
27.4
0.5
-42.3
0.6
6.3
2009
13.13
12.62
14.02
-0.32
-0.33
23.75
0.00

2010
77
-19
58
33
-8
-9
0
0
-30
-15
2010
-20
602
0
44
155
345
2010
3
54
131
na
183
-49
3
11
2010
78
12
9
4
88
2
22
37
2
6
-3
-3
109
31
1.4
6
9
21
2010
248
111
17
11
365
0
0.7
4.5
6.4
11.2
0.6
7.7
0.7
13.2
2010
13.13
12.62
18.85
2.36
2.45
26.28
0.50

2011
63
4
66
47
0
1
-6
-3
-60
-22
2011
-24
581
0
35
124
351
2011
0
-15
-32
-50
44
19
-4
2
2011
76
10
6
2
91
2
22
43
0
8
1
-3
105
25
1.3
3
4
30
2011
275
89
16
12
369
0
0.7
5.3
10.4
7.9
0.6
16.9
0.8
17.0
2011
13.14
12.48
20.95
1.17
1.24
26.73
0.35

2012
39
17
56
48
-4
0
-4
0
-59
-20
2012
-41
549
0
79
148
345
2012
-3
-35
-73
na
2
72
-5
-2
2012
75
6
2
0
94
2
34
28
1
9
3
-6
102
19
1.5
1
-1
0
2012
185
70
14
14
254
0
0.5
5.6
53.7
5.3
0.5
-70.1
0.5
26.0
2012
13.14
12.48
14.06
-0.19
-0.20
26.23
0.00

2013
518
42
-49
-57
-58
2013
491
46
23
16
-58
2013
21
-16
5
-4
-6
1
0
0
16
7
2013
-25
511
0
51
127
287
2013
-3
-6
na
na
na
-38
-7
-17
2013
76
6
-4
-9
94
3
41
-3
1
-1
-3
-4
99
26
1.8
6
-18
0
2013
155
76
35
14
253
0
0.5
6.0
-5.1
-66.2
0.5
-2.5
0.5
-2.5
2013
13.14
12.48
11.81
-4.41
-4.64
21.84
0.00

2014
218
20
4
-3
-142
2014
477
48
33
26
-142
2014
17
4
21
34
-7
9
0
0
-30
6
2014
-51
221
152
34
116
143
2014
-58
-54
na
na
na
99
-57
-50
2014
72
7
2
-47
94
3
45
-89
3
16
2
-17
102
56
4.2
8
-66
0
2014
162
82
20
123
141
0
0.3
7.2
36.0
4.1
0.6
-1.1
1.1
21.0
2014
13.14
12.48
12.36
-10.84
-11.41
10.90
0.00

2015e
217
23
12
6
25
2015e
465
57
43
37
25
2015e
20
-6
14
27
-10
12
0
0
0
29
2015e
-45
276
0
63
116
173
2015e
0
19
129
na
-19
-12
25
21
2015e
75
8
5
9
91
3
39
40
5
13
-3
-15
127
30
2.2
12
16
0
2015e
242
53
20
171
144
-6
0.7
6.1
11.8
5.2
0.5
9.1
1.4
11.3
2015e
13.14
12.48
18.42
1.92
2.03
13.16
0.00

2016e
221
28
15
9
29
2016e
471
62
47
41
29
2016e
25
-3
22
36
-10
16
0
0
0
42
2016e
-42
263
0
105
116
202
2016e
2
18
19
16
29
-7
-5
17
2016e
76
10
6
10
91
3
35
30
5
16
-1
-14
119
5
0.4
12
16
15
2016e
242
11
20
155
118
-6
0.5
4.3
7.8
3.3
0.4
7.9
1.2
14.7
2016e
13.14
12.48
18.42
2.23
2.34
15.37
0.33

2017e
220
31
18
13
34
2017e
482
68
53
47
34
2017e
28
0
28
43
-10
16
-4
0
0
45
2017e
-42
247
0
150
116
231
2017e
0
11
15
15
22
1
-6
14
2017e
76
11
7
12
90
3
32
30
5
20
0
-14
112
-15
-1.1
14
16
30
2017e
242
-34
19
139
88
-6
0.4
2.9
5.0
2.0
0.4
6.8
1.0
17.9
2017e
13.14
12.48
18.42
2.56
2.69
17.58
0.77

CAGR CAGR
03-14 15-17e
-2.8
0.9
-9.8
14.3
-19.7
21.0
na
43.7
na
15.2
03-14 15-17e
1.8
9.3
10.4
13.1
15.2
03-14 15-17e
-10.8
16.5
na
na
-7.4
39.3
0.7
25.6
-14.5
0.0

03-14 15-17e
-0.1

-5.3

2.5
8.3
-1.9

54.0
0.0
15.6

03-14 15-17e
-4.5
0.0
12.4
-6.6

-21.7

03-14 15-17e
2.6
0.0
2.4
0.0
-7.0
0.0
na
15.2
na
15.2
-4.4
15.6

Source: Company data, Emerald Financial Advisers

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Equity Research

Financial summary
Company profile

Combined sales breakdown

Roularta is Belgium's leading media company offering (1) local weekly

free newspapers in Flanders (De Streekkant, De Zondag, Steps), (2)
audiovisusal free-to-air broadcasting in Flanders through its 50%
ownership of Medialaan (VTM, 2BE, QMusic, Joe FM), (3) nationwide
weekly news and business magazines (Knack, Le Vif L'Express, Trends,
Trends Tendance) and (4) internet (Digilocal, Proxistore, own websites).
Combined group sales are almost entirely generated in Belgium
through (1) TV and radio advertising (26% of group), (2) print media
advertsing (28%), (3) readers market which includes subscriptions
(18%), (4) third-party printing (11%) and (5) other sources of revenues
incluing internet and line extensions (16%). Roularta's consolidated
accounts include the full contribution of its print media activity with
advertising and readers market (ex-Bayard), its internet activity, line
extensions and third-party printing. The 50% stakes in Medialaan and
Bayard are equity-accounted. Medialaan's net contribution weighs 78%
of the group's combined net profit and 68% of combined EBIT. We
value the stake in Medialaan alone at EUR300m (EUR23/share), 74% of
the group's estimated equity value.
Roularta share price

Roularta P/E

30

30

25

25

20

20

15

15

10

10

0
Oct-12

Apr-13

Oct-13

Roularta

Apr-14

Free-to-Air

Oct-14

0
Jan-03

Apr-15

Print media & others

Jan-05

Jan-07

Roularta

Jan-09
Free-to-Air

Jan-11

Jan-13

Jan-15

Print Media & Others

Sum-of-the-parts valuation
(m)
Print media
Group enterprise value
- Net Financial Debt/(cash) (15F)
- Other liabilities
+ NPV tax asset (estimate over 10 years)
+ Equity value of Medialaan stake
+ Equity value of Bayard stake
= Estimated market value of equity
Total share outstanding (m)
Equity value per share

%
EV/EBIT
ownership EBIT 16e multiple 16e Net debt
100%

15.0

9.0

50%
50%

58.4
5.4

10.0
9.0

-9.3
-3.3

Value
135.3
135.3
-69.5
-16.8
25.9
296.9
26.2
397.8
13.1
30.3

Equity
value/sh. % of total
5.7

19%

22.6
2.0

75%
7%

Major events since IPO

Source: Company data, Emerald Financial Advisers

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Equity Research

TABLE OF CONTENTS (click to follow link in pdf)

Summary and Investment Case ..................................................................................... 5

Fair Value Analysis ......................................................................................................... 8
Benchmarking suggests that a discount is no longer justified................................... 8
Sum-of-the-parts points to 30/share (63% upside potential) ............................... 11
Important adjustments to Enterprise value (EV) calculations ................................. 13
Discounted cash flow reveals fair value of 27/share ............................................. 15
Investment Risks .......................................................................................................... 16
Company Description and Business Analysis............................................................... 18
Company description ............................................................................................... 18
Group Strategy ............................................................................................................ 28
Roulartas History ........................................................................................................ 30
Management Team and Shareholder Structure .......................................................... 31
Market Description, Trends, and Outlook ................................................................... 32
The Belgian Media landscape .................................................................................. 36
Advertising in Belgian Media ................................................................................... 38
Printed Media .......................................................................................................... 40
Television and Radio ................................................................................................ 43
Financial Analysis and forecasts .................................................................................. 44
Earnings Drivers ....................................................................................................... 46
Income Statement ................................................................................................... 48
Segment P&L reporting ........................................................................................... 52
Balance Sheet .......................................................................................................... 53
Cashflow Statement ................................................................................................ 55
Interim results ......................................................................................................... 57
Disclaimer .................................................................................................................... 58

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Equity Research

TABLE OF FIGURES (click to follow link in pdf)

Figure 1.
Roularta and Print Media sector peers 12M Forward P/E. Roulartas P/E
premium/(discount) in % vs sector peers (right) .......................................................................... 8
Figure 2.
Peer group benchmarking table ............................................................................. 9
Figure 3.
Peer group valuation table ................................................................................... 10
Figure 4.
Roularta Sum-of-the-Parts Valuation ( millions)................................................. 11
Figure 5.
Peer group correlation between EBIT margins and EV/Sales ............................... 12
Figure 6.
Peer group correlation between EBIT margins and EV/Sales ............................... 13
Figure 7.
Discounted cash flow model ................................................................................ 15
Figure 8.
Assumptions used for our DCF model .................................................................. 15
Figure 9.
Digilocal.be screenshot ........................................................................................ 19
Figure 10.
Roulartas business exposure by sales on the basis of combined sales of 477m* .
.............................................................................................................................. 20
Figure 11.
Development of Medialaans Revenues and EBIT as per NBB accounts (m) ...... 23
Figure 12.
Market Share distribution in Flanders/Belgium, where Medialaan operates
(2014)
.............................................................................................................................. 24
Figure 13.
Radio market share distribution in Flanders, all age groups, 2013 ...................... 24
Figure 14.
Subscription rate of some of Roulartas major magazine brands, 2009-2014 ..... 26
Figure 15.
Roularta Magazine Titles ...................................................................................... 27
Figure 16.
Roularta strategy summarised ............................................................................. 28
Figure 17.
Time line of Roulartas group history, 1954-2015 ................................................ 30
Figure 18.
Roularta shareholder structure ............................................................................ 31
Figure 19.
Largest digital advertising revenue generators, 2014 (US$bn) ............................ 32
Figure 20.
US advertising spending, 2008-2018E .................................................................. 33
Figure 21.
Digital revenues as percentage of total revenues for a selection of the largest
European media companies, compared to Roularta, 2014/1H2015 .......................................... 33
Figure 22.
Global Retail e-commerce index, 2015................................................................. 35
Figure 23.
Ownership structure in the Belgian Media landscape: major media brands and
their key shareholding families (in brackets).............................................................................. 37
Figure 24.
Average media consumption pattern, Belgium, 2013 .......................................... 38
Figure 25.
Average media consumption pattern, The Netherlands, 2013 ............................ 39
Figure 26.
Advertising spending by media type in Belgium, 2009-2013 ............................... 39
Figure 27.
Key advertisers in Belgium (in millions), 2013 ...................................................... 40
Figure 28.
Traditional versus Digital media advertising revenues, US, 2012-2017E (US$bn) 41
Figure 29.
Global magazine publishing market consumer spending, US$ millions ............... 42
Figure 30.
Magazine advertising spending, Belgium, 2003-2013 (m).................................. 42
Figure 31.
Television advertising spending by region, 2002-2016E, US$ millions ................. 43
Figure 32.
Major events since IPO ......................................................................................... 44
Figure 33.
Roularta consolidate P&L ..................................................................................... 48
Figure 34.
Roularta combined P&L ........................................................................................ 49
Figure 35.
Medialaan P&L (100%) ......................................................................................... 51
Figure 36.
Bayard P&L (100%) ............................................................................................... 51
Figure 37.
Roularta Print Media segment P&L ...................................................................... 52
Figure 38.
Roularta Audiovisual segment P&L ...................................................................... 52
Figure 39.
Roularta consolidated Balance Sheet ................................................................... 53
Figure 40.
Returns moving back to historical highs ............................................................... 54
Figure 41.
De-leveraging balance sheet (m) ........................................................................ 54
Figure 43.
Dividends should be back on the shareholders agenda by 2016 (/share) ......... 56
Figure 42.
Roularta cash flow ................................................................................................ 55
Figure 44.
Roularta interim P&L ............................................................................................ 57

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Equity Research

SUMMARY AND INVESTMENT CASE

The market has yet to wake up to

Roulartas new reality

Shares of Roularta are significantly undervalued, in our view, as the equity story fell
out of favour with investors during the past few years, and the market has not yet
woken up to a new reality at Roularta. The key reason for Roularta being so low on
investors radar screens is that their earnings disappointed since the financial crisis,
given Roulartas unsuccessful acquisition in France.

Back to its roots

This French print business is, however, exited and as of now, Roularta is again a
mostly traditional (i.e. analogue) publishing business with promising digital and
business-related (e.g. events) entrepreneurial initiatives. A key asset remains a 50%
stake in Belgiums leading free-to-air TV and radio broadcaster, Medialaan, which
now weighs and is worth a much larger share of the business.

Two clearly defined value drivers

with improved visibility as a

trigger for liquidity

We estimate Roulartas fair value at 30/share based on a SOTP model, with two key
value drivers: (1) a rerating of the stock driven by the value of Medialaan, which we
estimate is worth nearly 600m (300m share of Roularta or 22.6 per share) and (2)
the potential margin enhancement and cash generation in Roulartas core publishing
business, driving the groups earnings growth. As Roulartas earnings are currently
more geared towards the commercial TV broadcasting than to print media, we would
expect the stock to rerate in the medium term beyond print media peer multiples.
Also, as a consequence of the recent changes, the stock should attract a wider range
of investors, including those seeking dividend yield, turnaround plays as well as
classical GARP profile. Stock liquidity remains, however, an issue which could be
solved, we believe, by improved visibility and investor knowledgeability.

Unlocking the value of Medialaan

Hidden value in a quality asset

Medialaan, the key business within Roularta Audiovisual Media, is a little-know

(outside of Belgium) but formidable Flemish commercial TV and Radio broadcaster
with solid growth and substantial earnings potential. The 50% stake is equity
accounted within Roularta, but contributes 32% of Roulartas (combined) sales and,
given its superior profitability, 64% of combined EBIT and 78% of combined profits.
Compared to European peers, Medialaan performs well with an EBIT margin of 19%
expected in 2015e (vs peer average of 18%) and a net margin of 13% (vs peers at
12%). With c300m in sales and c60m in expected EBIT during the next couple of
years, Medialaans fair value should, in our view, be around 600m (22.6 per share,
well above Roulartas current share price), valuing the activity at 10 EV/EBIT 2016e.

Market leader

Medialaan has a 30% market share in Flemish television, but generates nearly 4x
more advertising revenues than the overall audience market leader, VRT (the public
Flemish broadcaster). Note that Medialaan is the market leader (40%) in Flanders in
the commercially relevant age groups 18-44 and 18-54. Medialaan enjoys an
attractive regulatory environment in Belgium, where the company gets compensated
by the distributors for making Medialaans content also outside of the linear TV
broadcasting (decree on signal integrity of 2014).

Solid fundamentals

We do not anticipate a cyclical downturn in advertising income during the following

2-3 years, even though visibility is low, and revenue generators are highly
concentrated around FMCG advertisers as well as car manufacturers. However,
Medialaan has digested the sharp decline in banking advertising spending since 2009
and more than fully recovered from that crisis. Thanks to its very successful launch of
internet-based TV VTM.be (550k registered users since its launch in early 2015),
allowing for targeted, hence highly profitable, advertisement sales.

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Equity Research

Publishing is back on track

Belgian publisher of leading free
sheets and quality magazines

The Print Media activity (100% of consolidated sales and 67% of combined sales)
consists of (1) leadership positions in local weekly free newspapers in Flanders
(circulation of 4.6m), (2) leading nationwide weekly news and business magazines
(circulation of 250k with 85-90% of subscribers), (3) internet-related activities and (4)
printing for third party publishers. The Print Media activity has been a laggard in
terms of profitability for Roularta during the past few years, dragged down by the
weakness of the French activities (30% of group sales from 2006 to 2014).

Margins to expand and

The core Belgian business also suffered, but management has taken action with
stringent cost cutting. Going forward, we no longer expect the negative impact of
restructuring costs and we expect the business to show improved profitability, to
EBIT margins of 6% going forward from an average of close to 0% (2006-14).
Additional upside could come from margins going back to pre-2006 levels (ie. before
the French acquisition) of 9% (not yet reflected in our forecasts).

and more could be expected

We expect Roularta Printings EBIT to be boosted by 1.8m annually as of 2H 2017

and then by a further EBIT addition of 9m as of 2019 (outside of our explicit range
of forecast dates), on the back of the end of the sale-and-rent-back contract with
Econocom. While the usefulness of Roulartas physical printing business is disputed
amongst analyst and investors, given the cyclicality of and overcapacities in this
market, it is important to recognise that Roularta can fill 50% of its printing capacity
with its own publications across the cycle. This means that Roulartas cyclical
exposure is limited, while the business has access to paper and other material costs
at attractive prices. As a final point of interest, Roulartas printing equipment will be
fully written off by 2018/19 (after c10 years) although its economic life is c20 years,
meaning it should become a strong cash and profit machine for a decade to come.

The digital initiatives

Small but well-positioned and
growing

New digital and entrepreneurial initiatives (such as Digilocal businesses , events and
theme-related sales) are difficult to value, but management expects them to possibly
generate 5-10m in annual EBITDA within 3-5 years. Importantly, Roulartas
entrepreneurial spirit and its general risk aversion to significant acquisitions such as
its by now exited French acquisition in 2006 of GEE, convinces us that Roularta can
grow its core media business, while its traditional Print Media business structurally
declines by 1%+ p.a. due to digitisation. Roulartas new Digilocal initiatives and their
line extension business, could be worth several tens of millions of euros within 3-5
years, even though execution risks should not be underestimated. We also believe
that, in order to turn its Digilocal activities into a key earnings and value driver, the
company would most likely also still make some smaller bolt-on acquisitions.

Growing earnings and ROCE lifted well ahead of WACC

Growing again with 1H15 results
as proof-of-concept

We expect Roularta to return to earnings growth in 2015e for the first time since
2011, with most of the growth stemming from cost control and efficiency gains as
reflected in our expectations: 0.5% sales CAGR 2015-17e, 14% EBIT CAGR and 15%
EPS CAGR. Importantly, group returns should move back to the high end of the
historical range as from 2015e with 1H15 confirming this trend (ROE of 13% and
ROCE of 11%, well above group WACC of 8.9%).

Digilocal.be is a full service package for internet marketing including webdesign, email marketing, and
Proxistore, which allows local businesses to advertise and offer their products and services digitally rather
than in printed media. Please refer to Figure 9 for a screenshot of Digilocal.be.

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Equity Research

The return of dividends

We expect the company to re-introduce dividends as of 2016, although the Board
has not yet communicated a dividend policy. Our preference with respect to cash
generative media companies goes to a dividend policy striving to maintain dividends
at least flat year-on-year, even if the original pay-out ratio may be somewhat lower.
This allows yield investors to increase their trust in the companys payout reliability
over time, and it should serve as a supportive measurement for the share price
across the cycles. As such, we expect Roularta to start to pay a dividend as from
2016e (paid in 2017) with a DPS of 0.33, followed by 0.77 in 2017e, representing a
payout ratio of 15% and 30% respectively.

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Equity Research

Figure 2.

Peer group benchmarking table

PRINTING

FREE TV

PRINT & OTHER MEDIA

Company

Freefloat Liquidity
(%) 2015 (daily,m)

Impresa
Spir
Solocal
Gruppo Editoriale L'Esp.
Mondadori
RCS
Vocento
Telegraaf
Sanoma
Connect
Tarsus
Trinity Mirror
Wilmington
Independent News
Eniro
Axel Springer
PRINT MEDIA AVERAGE
PRINT MEDIA MEDIAN
Roularta (combined)
% prem./(disc.) vs median
Roularta (consolidated)
% prem./(disc.) vs median

50
32
100
40
38
76
79
7
57
100
84
73
67
55
83
40
61
62
25
-60
25
-60

0.08
0.03
3.82
0.52
0.40
2.29
0.16
0.07
1.46
0.39
0.30
0.43
0.28
0.34
0.55
8.91
1.25
0.39
0.08
-80.6
0.08
-80.6

TF1
M6
Mediaset
Mediaset Espaa
Atresmedia
RTL
Prosieben
ITV
FREE TV AVERAGE
FREE TV MEDIAN
Medialaan (*)
% prem./(disc.) vs median

50
44
65
53
39
24
98
93
58
52

8.52
2.84
44.76
22.05
11.53
1.20
27.45
41.88
20.03
16.79

Depr/
EBITDA

Capex/
Sales

-20%
19%
28%
34%
na
78%
na
55%

1%
2%
7%
2%
0%
5%
1%
3%
3%

35%
32%
40%
37%
-23%
33%
29%
33%
25%
-25.2
39%
18.1
28%
37%
82%
6%
13%
17%
15%
13%
26%
16%
14%
-13.6

2015e

ND/EBITDA
2016e

2017e

3%
1%
3%
2%
5%
3%
3%
3%
2%
-31.8
5%
81.9

5.5
2.2
4.2
0.2
3.0
5.0
2.5
-1.4
2.8
2.1
1.4
-0.2
1.3
-1.0
3.5
1.6
2.0
2.1
0.8
-62.3
2.2
4.3

4.8
1.3
3.8
0.0
3.2
3.3
1.7
-1.3
2.5
1.7
1.9
-0.4
1.1
-1.6
3.6
1.3
1.7
1.7
0.1
-95.5
0.4
-76.4

4.0
0.9
3.5
-0.1
2.8
2.7
1.2
-0.9
2.2
1.4
1.1
-0.6
0.7
-2.2
4.0
1.0
1.4
1.2
-0.6
-151.2
-1.1
-196.3

13.4
0.9
28.7
10.7
6.9
8.1
9.4
2.6
17.8
3.9
33.7
21.2
23.0
13.4
19.5
17.4
14.4
13.4
12.3
-8.6
8.1
-39.6

13.7
2.5
29.6
11.8
7.3
10.5
10.8
2.8
19.6
4.3
32.6
21.9
23.5
13.9
19.4
18.2
15.1
13.8
13.1
-4.7
9.5
-31.1

15.0
3.6
29.6
12.1
7.7
11.1
11.0
9.1
20.9
4.5
34.7
22.6
23.9
13.8
17.4
18.9
16.0
14.4
14.2
-1.8
10.5
-27.2

11.4
-3.2
23.0
8.1
4.9
-1.1
5.0
-4.0
4.4
3.3
32.1
17.8
21.1
11.9
9.3
12.8
9.8
8.7
9.3
7.1
5.3
-39.6

11.8
-1.2
23.6
9.1
5.2
5.7
6.5
-3.0
6.6
3.6
30.1
18.4
21.6
11.9
8.7
13.7
10.8
8.9
10.0
12.2
6.2
-30.0

13.2
-0.2
23.4
9.3
5.7
6.6
6.8
3.3
7.6
3.8
33.1
19.7
22.1
12.0
8.5
14.7
11.8
8.9
11.0
22.9
7.1
-20.3

4.3
-2.5
6.7
4.8
1.2
-3.9
1.5
-4.2
0.2
1.2
14.1

5.3
-0.5
8.5
5.1
1.9
2.4
2.9
-4.2
3.2
2.1
10.9

8.1
24.9
-44.9
7.7
1.3
1.5
5.4
264.4
8.8
486.7

2%
9%
51%
21%
4%
3%
3%
1%
12%
4%
3%
-18.5

-3.2
-0.9
1.6
-1.1
0.7
0.5
1.8
0.3
0.0
0.4
-0.2
-140.7

-2.7
-0.9
0.8
-1.2
0.4
0.5
1.5
0.1
-0.2
0.3
-0.2
-160.5

-2.6
-0.9
0.3
-1.3
0.2
0.4
1.3
0.1
-0.3
0.2
-0.2
-198.0

11.0
23.4
13.0
23.6
18.3
22.6
28.7
30.1
21.3
23.0
22.0
-4.3

12.2
23.2
16.0
26.5
23.6
22.9
28.5
30.8
23.0
23.4
22.5
-3.8

13.9
24.3
19.1
28.1
26.0
23.6
28.2
31.9
24.4
25.2
23.5
-6.7

8.0
16.3
8.6
22.0
16.4
19.2
24.5
27.7
17.8
17.8
18.9
6.4

9.4
16.3
11.9
25.9
21.7
19.6
24.7
28.6
19.8
20.6
19.5
-5.5

11.2
17.5
14.8
29.2
24.2
20.2
24.7
29.9
21.5
22.2
20.6
-7.3

6.1
9.7
2.4
17.9
12.4
12.3
14.7
20.1
12.0
12.3
13.3
7.7

EBITDA margin (%)

2017e
2015e
2016e

EBIT margin (%)

2016e
2017e
2015e

Net margin (%)

2017e
2016e
2015e

2015e

ROE (%)
2016e

2017e

6.6
0.5
8.5
5.3
2.4
3.1
3.3
2.1
3.9
2.4
18.3

7.4
-12.1

8.5
-2.5

10.0
2.6

4.9
7.8
2.2
2.5
3.0
2.8
52.8

5.6
13.5
14.2
4.6
3.6
6.3
136.2
29.2

5.6
14.5
17.3
5.3
3.8
7.5
85.8
44.3

10.5
10.0
0.8
8.3
4.5
3.2
6.2
94.6
10.1
216.1

11.3
10.3
2.1
8.7
5.9
3.9
7.0
77.0
11.5
192.2

26.2
361.3
0.7
10.8
36.2
4.9
16.0
226.7
16.0
226.7

28.8
66.1
1.2
12.0
23.4
10.3
15.6
52.2
15.6
52.2

29.2
38.8

6.5
9.8
4.6
20.5
17.0
12.6
15.2
21.0
13.4
13.9
13.7
-1.6

7.7
10.6
6.1
22.7
18.7
12.9
15.5
22.0
14.5
14.2
14.4
1.8

6.7
20.9
3.6
14.7
26.6
24.9
60.7
56.3
26.8
22.9
19.5
-15.2

7.8
21.1
6.9
17.1
36.0
26.1
58.6
50.7
28.0
23.6
20.4
-13.4

2015-17F CAGR (%)

Sales
EBITDA
EPS

13.1
21.4
13.1
15.5
18.4
15.5
18.4

26.6
na
5.9
10.8
37.7
200.6
51.2
11.8
65.9
3.3
5.3
1.1
9.8
-2.1
na
11.5
31.4
11.1
15.2
36.8
15.2
36.8

8.5
95.8
0.8
6.5
12.5
18.7
9.6
81.0
7.7
6.5
5.3
0.4
9.6
1.0
-11.7
7.9
16.3
7.8
9.3
18.9
14.3
84.0

2.8
0.2
-0.7
0.4
6.4
1.4
1.4
-2.3
-0.5
-0.6
3.8
-2.7
7.7
-0.5
-6.6
3.4
0.9
0.3
1.8
488.5
0.5
71.7

9.3
22.7
9.4
19.3
40.0
27.1
53.5
42.7
28.0
24.9
22.2
-10.9

18.6
7.4
69.1
22.9
32.0
5.0
9.9
8.4
21.7
14.2
6.8
-51.9

14.2
4.4
28.3
17.2
27.7
4.8
7.1
8.4
14.0
11.3
5.9
-47.4

1.6
2.4
5.9
7.3
6.9
2.6
8.0
5.3
5.0
5.6
2.5
-55.4

4.2
4.5
24.9
31.5
5.6
5.8
12.5
12.7
10.2
10.2
10.4
1.6
1.5
1.2
0.9
12.7
St Ives
100
0.29
58%
2%
6.3
-4.9
3.5
1.0
1.2
1.3
3.8
4.5
4.1
3.0
10.5
10.2
10.0
3.7
3.7
3.57
71%
3%
2.6
2.5
QuadGraphics
51
3.1
2.1
2.3
2.5
2.9
3.2
3.5
11.5
8.7
8.8
9.0
3.7
4.0
4.4
Dai Nippon Printing
84
16.44
56%
4%
7.8
1.3
6.1
1.6
2.6
2.8
3.3
10.9
13.0
1.9
10.6
10.5
10.6
5.9
6.0
PRINTING AVERAGE
78
6.77
62%
3%
2.0
1.8
4.1
6.3
3.1
4.4
1.6
2.3
2.5
3.3
4.5
1.8
1.9
10.5
10.2
10.0
3.7
4.0
PRINTING MEDIAN
84
3.57
58%
3%
2.0
15.6
15.5
15.2
9.3
10.0
11.0
5.4
6.2
7.0
16.0
0.8
0.1
-0.6
12.3
13.1
14.2
9.3
Roularta (combined)
25
0.08
25%
2%
141.0
198.9
41.8
153.5
146.1
148.9
237.2
171.0
174.7
378.8
243.1
276.8
-57.3
-39.6
-60.2
-95.9
-130.7
17.1
28.7
% prem./(disc.) vs median
-70
-97.9
Source: EFA estimates, Factset
(*) Roularta has joint-control of Medialaan with 50%-ownership; the stake is equity-accounted. Based on Medialaan's consolidated accounts in Roularta's reporting. For capex/sales, depreciation is a capex proxy. For ROE, "net asset vaue" is an Equity proxy.

5.8
-2.5
1.1
1.4
1.1
1.8
69.7

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Equity Research

PRINTING

FREE TV

PRINT & OTHER MEDIA

Figure 3.

Peer group valuation table

Price
(local)

MCap
(local m)

Company

Country

Impresa
Spir
Solocal
Gruppo Editoriale L'Esp.
Mondadori
RCS
Vocento
Telegraaf
Sanoma
Connect
Tarsus
Trinity Mirror
Wilmington
Independent News
Eniro
Axel Springer
PRINT MEDIA AVERAGE
PRINT MEDIA MEDIAN
Roularta (combined)
% prem./(disc.) vs median
Roularta (consolidated)
% prem./(disc.) vs median

PORTUGAL
FRANCE
FRANCE
ITALY
ITALY
ITALY
SPAIN
NETHERLANDS
FINLAND
UNITED KINGDOM
UNITED KINGDOM
UNITED KINGDOM
UNITED KINGDOM
IRELAND
SWEDEN
GERMANY

0.70
9.79
0.29
0.94
1.05
0.76
1.76
4.23
3.56
1.48
2.20
1.52
2.76
0.16
0.86
48.47

118
60
338
369
274
393
213
196
580
362
224
390
238
225
365
4,795

BELGIUM

18.42

242

BELGIUM

18.42

242

FRANCE
FRANCE
ITALY
SPAIN
SPAIN
LUXEMBOURG
GERMANY
UNITED KINGDOM

12.71
17.49
4.38
10.37
11.98
74.90
44.12
2.43

2,693
2,209
4,980
3,750
2,702
11,503
9,429
9,766

BELGIUM

18.42

242

1.90
13.02
1,201.00

249
646
763,506

18.42

242

TF1
M6
Mediaset
Mediaset Espaa
Atresmedia
RTL
Prosieben
ITV
FREE TV AVERAGE
FREE TV MEDIAN
Roularta (combined)
% prem./(disc.) vs median

St Ives
UNITED KINGDOM
QuadGraphics
UNITED STATES
Dai Nippon Printing
JAPAN
PRINTING AVERAGE
PRINTING MEDIAN
Roularta (combined)
BELGIUM
% prem./(disc.) vs median
Source: EFA estimates, Factset

2015e

P/E
2016e

2017e

2015e

EV/Sales
2016e

2017e

2015e

EV/EBITDA
2016e

2017e

2015e

EV/EBIT
2016e

2017e

2015e

P/B
2016e

2017e

2015e

DYield
2016e

11.2

8.9

2017e

7.0
29.3
4.2
10.9
8.5
9.3
13.2
20.8
8.5
7.5
9.9
4.7
14.1
7.0

1.1
0.2
1.5
0.6
0.4
0.7
0.6
0.4
0.8
0.3
4.2
0.6
2.5
0.5
0.9
1.7
1.1
0.7
0.6
-13.3
0.5
-18.5

1.1
0.2
1.4
0.6
0.4
0.6
0.6
0.4
0.8
0.3
2.8
0.6
2.3
0.4
0.9
1.6
0.9
0.6
0.5
-25.7
0.4
-35.3

9.1
17.6
5.5
6.1
6.5
9.0
7.4
14.0
4.7
7.0
9.1
3.0
12.2
4.3
4.3
10.1
8.1
7.2
5.4
-24.7
6.1
-14.6

8.3
7.0
5.1
5.3
6.1
6.3
5.9
13.9
4.2
6.2
12.8
2.8
10.7
3.6
4.5
9.2
7.0
6.1
4.3
-29.9
4.3
-30.5

7.1
4.9
4.8
5.1
5.5
5.6
5.3
3.9
3.8
5.8
8.1
2.6
9.8
3.0
5.1
8.3
5.5
5.2
3.2
-37.5
2.9
-44.6

10.7

9.7

8.0

6.8
8.1
9.1

0.7
0.7

18.7
8.3
9.5
3.5
13.3
4.9
8.9
13.7
10.0
9.1
7.1
-21.6
11.8
30.6

12.4
7.4
13.8
3.4
11.6
4.2
10.0
12.2
9.2
9.7
5.7
-41.6
7.8
-19.6

6.0
6.6
7.5
9.5
8.5
10.7
10.3
6.9
8.5
3.0
10.6
3.5
10.3
10.7
8.0
8.5
4.2
-50.6
5.0
-41.4

0.7
0.8

13.8

6.4
6.9
8.6
11.6
9.8

0.8
0.7
0.6
1.4
2.1
0.7
0.8
0.7
13.7
5.0

0.6
1.3
1.8
0.7
0.8
0.7
8.7
4.6

0.6
1.2
1.5
0.7
0.8
0.6
5.1
4.2

4.5
6.6
0.3
2.2
2.9
1.1
1.4
24.4
1.4
24.4

4.3
3.4
0.3
2.2
2.2
1.0
1.2
14.3
1.2
14.3

4.0
2.3
0.3
2.2
1.8
1.0
1.0
7.6
1.0
7.6

0.0
0.0
0.0
3.4
0.0
0.0
0.0
0.0
3.6
6.0
3.7
3.3
2.8
0.0

0.0
0.0
0.0
4.3
0.0
0.0
0.0
1.6
4.4
6.3
4.0
3.8
2.9
0.0

0.0
0.0
1.0
4.4
1.5
0.9
0.0
1.7
5.8
6.4
4.1
4.4
3.0
0.0

17.0
11.5
9.3
6.8
-26.2
6.8
-26.2

1.2
0.2
1.6
0.7
0.4
0.7
0.7
0.4
0.8
0.3
3.1
0.6
2.8
0.6
0.8
1.8
1.0
0.7
0.7
-6.9
0.7
-6.9

4.7
13.4
16.1
83.9
30.2
26.0
23.5
8.0
11.0
4.8
17.0
6.8
21.4
21.1
19.9
16.1
9.1
-43.6
9.1
-43.6

4.2
11.3
10.0
13.3
15.4
22.3
10.5
7.8
16.5
4.8
15.3
6.8
28.5
18.8
13.0
11.3
7.9
-30.7
7.9
-30.7

3.8
1.8
0.0
0.0
na
0.0
na

4.0
2.1
1.6
1.8
15.7
0.8
-48.0

4.2
2.5
1.7
4.2
147.7
1.6
-3.1

22.6
17.9
60.7
20.7
22.1
15.8
19.6
15.2
24.3
20.2
9.1
-55.0

19.4
17.3
30.0
16.2
14.9
15.1
17.6
13.8
18.0
16.8
7.9
-53.1

16.1
15.5
21.2
13.7
12.7
14.4
16.3
12.9
15.3
14.9
6.8
-54.2

1.0
1.5
1.7
3.6
2.9
2.1
3.5
3.4
2.5
2.5
0.7
-73.3

1.0
1.5
1.5
3.2
2.7
2.0
3.2
3.2
2.3
2.3
0.6
-75.8

0.9
1.5
1.4
3.0
2.5
1.9
3.0
3.0
2.1
2.2
0.5
-79.3

8.7
6.6
12.7
15.1
15.8
9.2
12.3
11.3
11.5
11.8
5.4
-54.4

8.0
6.5
9.2
12.2
11.3
8.8
11.3
10.3
9.7
9.7
4.3
-55.8

6.6
6.0
7.1
10.5
9.5
8.3
10.5
9.5
8.5
8.9
3.2
-63.6

12.0
9.5
19.2
16.2
17.7
10.8
14.4
12.3
14.0
13.4
7.1
-46.8

10.3
9.2
12.4
12.5
12.3
10.3
13.0
11.0
11.4
11.6
5.7
-51.2

8.2
8.3
9.1
10.1
10.2
9.7
12.0
10.1
9.7
9.9
4.2
-57.7

1.5
3.7
2.1
2.9
5.5
4.0
11.1
8.1
4.9
3.8
1.4
-63.5

1.5
3.6
2.0
2.6
5.2
3.9
9.6
6.2
4.3
3.8
1.2
-68.1

1.5
3.5
2.0
2.7
4.9
3.9
7.9
5.0
3.9
3.7
1.0
-71.4

3.9
5.0
1.2
4.3
3.8
6.1
4.1
2.4
3.9
4.0
0.0
-100.0

4.1
5.1
2.3
5.4
5.6
6.4
4.6
3.0
4.6
4.9
1.8
-62.7

4.5
5.6
3.3
5.9
6.9
5.8
4.9
3.6
5.1
5.2
4.2
-20.6

9.6
12.3
24.6
15.5
12.3
9.1
-26.2

9.2
9.8
22.1
13.7
9.8
7.9
-19.8

8.6
10.9
19.8
13.1
10.9
6.8
-37.1

0.9
0.4

0.8
0.4

0.8
0.4

7.2
3.9

6.5
3.8

6.0
4.4

8.9
11.1

7.9
10.5

7.2
12.4

0.7
0.7
0.7
0.9

0.6
0.6
0.6
-5.9

0.6
0.6
0.5
-23.3

5.5
5.5
5.4
-2.2

5.2
5.2
4.3
-16.5

5.2
5.2
3.2
-37.6

10.0
10.0
7.1
-28.8

9.2
9.2
5.7
-38.4

9.8
9.8
4.2
-57.5

2.1
0.5
0.7
1.1
0.7
1.4
99.1

2.5
0.4
0.7
1.2
0.7
1.2
72.7

3.0
0.5
0.7
1.4
0.7
1.0
53.5

4.1
9.2
2.7
5.3
4.1
0.0
-100.0

4.2
9.2
2.7
5.4
4.2
1.8
-57.0

4.5
9.2
2.7
5.5
4.5
4.2
-7.9

10/58

Equity Research

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58/58