1. Company Overview. 1.1 Group profile

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2 Summary 1. Company Overview Group profile Strategy and products Strategy Bluerating Private Forbes Investing Trading Forum Blue Advisor Gooruf results and estimates FY H estimates Economics & Financials Valuation The DCF model Comparables - multiples valuation

3 1. Company Overview 1.1 Group profile Founded in 1995 by Denis Masetti, Blue Financial Communication (BFC) is an independent publishing house with offices in Milan and London, specialized in the production of news related to personal business and financial products, with a particular focus on personal finance management and service distribution. The BFC Group employs 25 journalists, publishes three magazines and manages eight websites, with 1.5m monthly visits and over 200,000 registered users. Since its creation, BFC has been able to sustain the market trends that have radically changed the news and media markets, and has occasionally been the trendsetter itself. These include, in particular: the strong increase in online advertising; the growing online purchase of goods and services; the steady decrease in print advertising Against this background, the BFC management has adopted a strategy that can fully exploit the current trends. Today the BFC Group is the leading digital and print financial news provider in Italy. The BFC Group owns the BlueAdvisor Fintech platform (MIFID 2 compliant), combining finance and technology to support independent financial consultants. Furthermore, it boasts a unique and innovative financial social network: Gooruf (currently in its beta version). The professional service market niche where the BFC group operates is one of the few sectors characterised by rising advertising levels, bucking the general trend in the advertising market, which is only just recovering after the strong decline experienced in recent years. By basing its offer on the needs of investors, BFC is able to offer services targeting finance professionals operating in Italy, as well as retail customers. BFC s web based business is developed over an integrated system that can offer customized information on digital devices like tablets, smartphones and e-readers. The combination of finance and technology has shown significant growth potential in the last three years, which is explained by the growing digitalization of banking services and increasingly efficient performances on one hand, and by the scalability of the service on the other. In fact, 24m out of nearly 30m regular internet adult users in Italy, have at least one bank account (source: Digital Banking Index Italy Che Banca). The Group is currently reorganizing its production and placing greater focus on the most profitable products and services. Our offer will consist of the following three products: Bluerating, Private and Forbes. We will also launch the new MIFID 2-compliant BlueAdvisor platform, and support the development of the social platform Gooruf, connecting people to the world of financial services. We will maintain the IT Forum, the largest trading and investment event in Italy, with the launch of the Milan edition scheduled for the last quarter of the year. 3

4 A stronger focus on digital products and greater diversification of revenue sources are among the objectives of the BFC group. 4

5 2. Strategy and products 2.1 Strategy The BFC Group s strategy is to aggressively enter the potential market with a vertical, diversified approach over a qualified customer target. The ability to cross sell across the different operations enables a market approach that fulfils customers financial needs with all possible means. Fig. 1 The strategy approach ONLINE OFFLINE EVENTS Source: Integrae SIM 2.2 Bluerating Bluerating is the integrated information system (magazine, website, newsletter, events, awards) for asset management companies and financial service distributors. A leading source of information for financial consultants, private bankers, banks, asset management companies and private investors, Bluerating is distributed on a monthly basis to Italian news kiosks, as well as being delivered to over 2,500 financial consultants and 3,000 branches of the top banks in Italy. Bluerating s cover page and other parts can be customized for promotions that meet the specific need of management companies or financial product providers. Over 150 active customers today ensure the magazine s high advertising earnings, also fuelled by the exponential growth currently characterising the asset management sector. Furthermore, Bluerating s own website (Bluerating.com) boasts nearly 1m visited pages a month, with over 15,000 financial products updated daily, and a newsletter distributed to nearly 50,000 registered users. Finally, many finance-related events are promoted and sponsored by the brand (Bluerating AWARDS). 5

6 2.3 Private Private magazine is the monthly magazine for the world of private banking. It is distributed to the banks that offer wealth management services in Italy, Switzerland, London, Luxembourg and Monte Carlo, to key family offices, venture capitalists and top solicitor firms, using an exclusive mailing list with over 5,000 addresses. Private is also distributed to news kiosks, airports and at private banking events. A dedicated section of this magazine promotes lifestyle products and services. Just like Bluerating, Private has its own website, PRIVATEBANKINGWEB.COM (it will be a section of BLUERATING.COM in the future), featuring daily news, events, advice and opportunities linked to the world of private banking. The Private brand is key to the promotion of many events, including the Private BANKING AWARDS, whose next edition is scheduled for 22 November 2017 at the Milan Stock Exchange. 2.4 Forbes Edited by Forbes media, Forbes is an economics and finance magazine founded in Forbes is the number one brand in the world for the business community, with over 1,200 journalists and 90 million visitors to the various websites across the world. On 27 April 2017, the BFC Group acquired the exclusive licence for the Italian edition of Forbes (Italy, Switzerland and Monte Carlo) until The licence agreement entitles BFC to use all the material produced by Forbes, including the translation and publication of news articles. Furthermore, it allows using the Forbes MEDIA web platform, thus reducing the digital start up costs to a minimum. The licensing agreement provides for payment of royalties on collected revenues and no fixed fee. Just like Bluerating, we plan to apply an integrated business model to this product: magazine production, the forbesitalia.com website and event organization (Forbes Live), enhanced by world-renowned guests and authoritative writers. Based on Forbes success in other countries, we can estimate that we will reach 1 million visitors per month and distribute 50,000 copies of the magazine by Investing Trading Forum IT Forum is the largest trading and investment event in Italy. ITE (the BFC Group company that manages it) is the leading organizer of trading and digital events in Italy. ITE has a database with over 30,000 traders, as well as over 100 active clients across its editions, and more than 5,000 visitors (in its Rimini event, which reached the eighteenth edition). The Milan edition of IT Forum is scheduled to launch on 23 November Its business model, like that of our other products, entails integrating event revenues (sponsorships, exhibition stand rentals) with advertising, digital, community and training revenues. New projects, international and domestic events are also in the pipeline. 6

7 2.6 Blue Advisor BlueAdvisor is the first Fintech application developed by the BFC Group; it combines finance and technology to serve independent financial consultants, with the aim of creating a platform for finance professionals that is consistent with Bluerating s target, has no advertising, and is compliant with the new regulation that will come into force on 3 January 2018 (MiFID 2). BlueAdvisor will manage customers accounts, contracts, and portfolios. It will provide customers quarterly reports and the archives for all their files. It will also enable customers to access their positions and create alerts. BlueAdvisor will be connected to any outside party authorized to place orders for the sale and purchase of shares or financial instruments, and/or any party authorized to perform asset management, provide asset allocation models, portfolios, robo advisors, optimizers. A special section will be devoted to training courses, updates, education and other services not requiring authorization. BlueAdvisor will be launched on the market as an easy and affordable instrument, with scalable costs customized on customer needs (free membership, consultant subscription 9/month, full subscription only 49/month and advisor subscription 139/month). 2.7 Gooruf Gooruf is the first and only social network connecting people with the world of financial services. Gooruf is designed to create brand reputation (like Tripadvisor and Google). Through a single platform, users can dialogue with their suppliers, find updates and news on the company s offers and customize the news they receive on the basis of their interests. This will be a community of investors, influencers and providers, animated by the journalists of Gooruf. Headquartered in London, this is an international project from the outset: we purchased web domains for the entire world. Soon, a Hong Kong office will also be launched, looking at options for developing the product in Asia with the involvement of venture capitalists. The Gooruf database currently lists over 1,100 financial service providers divided into 8 sections: banking, insurance, real estate, asset management, trading, consulting, comparing, crowd funding. The platform will not feature any advertising and the only source of revenue will be the providers performance based premium rather than fixed fees (pay-per-engagement). 7

8 results and estimates 3.1 FY16 In the 2016 financial year, the value of production amounted to 2.93m ( 1.72m in FY15), due to the new editorial and digital initiatives and the acquisitions. In the course of 2016, the BFC Group management worked to create the right conditions for future growth, opening its first London office and moving the Milan headquarters to a new rented location with the capacity to host the 30- strong editorial team of staff and free-lancers. Ebitda totalled 0.27m ( 0.41m in FY15), despite the decision to fully finance developing costs and the creation of new projects. Ebitda levels reflected the choice to invest a share of the resources collected through the IPO in the development of new publishing ventures in house, particularly in the digital space, with a view to creating a balanced and diversified structure by combining the right mix of products (events, print and digital advertising, subscription services to ensure recurring revenues and performance related services) with a fully scalable, global project. Several investments were made in In particular: magazine and printing. BLUERATING, the monthly magazine for financial consultants and asset managers, consolidated its leading position in 2016: according to a recent GFK survey, it is the industry s leading source of information, with nearly 70% penetration of its reference target. PRIVATE, a monthly magazine on private banking, also gained ground in the course of the year, as well as ifinance, a publication dedicated to digital finance, with an Englishlanguage insert, FINTECHAGE, covering the world of fintech. The magazines had over 100 advertisers and over 600 advertising pages published in The future objective is to strengthen our market position in the area of finance and economic news; digital products: the websites that complement our publishing offer have been upgraded and optimized (bluerating.com, privatebankingweb.com, ifinanceweb.com; fintechage.com; soldiweb.com and itfnews.com). Browsing has been made more efficient and each website more responsive to displaying on a range of devices. The editorial team curated over 30,000 original news items. Towards the end of 2016, Blue Financial Communication launched Gooruf, the social network for the financial service industry that brings together the investor community with financial service providers and market influencers. Gooruf will initially develop in Italy and, by the second quarter of 2017, also in Great Britain, aiming to become a world reference (especially in Asia) in the near future. Its revenue model is the pay-per-engagement scheme that has been so successful for the social network business model. The entire project has been built and financed in house, hence both its algorithm and its database are proprietary. In the wake of these developments, the management decided to enter the world of fintech, exploiting its growing technological skills and its knowledge of the financial services industry to create a new system that targets financial consultants, whose work will be revolutionized by the introduction of the new set of rules known as Mifid 2. The BLUEADVISOR project, currently in its launching phase, consists of a paying platform for finance professionals, which can also support their compliance with the new rules: 8

9 events and educational: The third development area for the BFC group is event organizing. In 2016, we acquired the majority share of Spring Eventi Srl (later renamed INVESTMENT & TRADING EVENTS), a leading company in the field of traders information that has been organizing events like ITFORUM for over a decade, bringing together tens of thousands of professionals H17 The Group s results for the first semester only marginally incorporate the results we expect from our strategy of renovating our editorial offer as described in the F Strategy Plan (communicated to the market last 13 July), but we think they can support our estimates for FY17. In particular, total revenues amounted to 1.8m, while Ebitda reached 0.2m, with 11% Ebitda margin (9.1% in FY16). Net invested capital, totalling 1.1m, consisted of 0.6m intangible fixed assets and 0.5m net working capital. This was funded by 1.9m net equity and 0.8m cash and cash equivalents estimates On 13 July, BFC approved the Strategy Plan which launched Forbes, Blueadvisor and Gooruf (see the press release). The key 2021 targets match our estimates: 9.2m turnover (CAGR F +25.6%), 3.3m Ebitda (CAGR F +65.2%). BFC will go to market with its new products by 4Q17, given the agreement with Forbes and the launch of BlueAdvisor, eliminating and/or incorporating all the low margin products. The product lines will be as follows: Fig. 2 Product lines Source: BFC The company s strategic growth plan is based on the development of combined editorial initiatives aimed at financial service providers and distributors, offering a mix of traditional and innovative products: print magazines, digital media, events and educational products. Considering how difficult it is to find good potential acquisitions at a fair price, BFC has decided to invest its resources on new projects developed in house, with a special focus on digital. Ours is an international project, as highlighted by the opening of ifinance Media LTD in London and by the purchase of Spring Eventi Srl, renamed INVESTMENT & TRADING EVENTS. The overarching 9

10 objective is the achievement of a well diversified revenue mix, with strong growth potential and great scalability. The strategic objectives of the BFC Group entail greater focus on digital products, which we estimate to reach 25.2% in 2017F and then gradually increase to 55% in 2021F, while we expect revenues from events and magazines to grow only slightly. Fig. 3 Sales breakdown by business line 120,0% 100,0% 80,0% 27,1% 17,2% 15,2% 13,1% 12,8% 60,0% 25,1% 35,8% 44,9% 52,4% 53,8% 40,0% 20,0% 47,7% 47,0% 39,9% 34,5% 33,5% 0,0% Magazine Digital Events Source: BFC We believe that a significant share of our revenues will be driven by Forbes, BlueAdvisor and Gooruf, so that Group revenues will be trebled by 2021F (25.6% CAGR in ). Fig. 4 Sales breakdown by products Gooruf; 15% Blue advisor; 22% Bluerating; 19% IT-Forum; 11% Private; 9% Forbes; 24% Source: Integrae SIM estimates 10

11 We estimate Ebitda margins to grow more than turnover, increasing from 9.1% in 2016 to 35.9% in 2021F, thanks to the contribution of Gooruf, digital investments, and the greater focus on high value added products. Our strategic assumptions are as follows: consolidating the market position of Bluerating, Private and IT Forum; launching Forbes between 2017 and 2018 (2016 revenues come from ifinance, which will become part of Forbes); gradually developing Gooruf; launching BlueAdvisor in 2018 (when Mifid 2 will come into force); a slight increase in fixed costs (hiring 6 more staff) to support developing and launching new products, given the Groups significant economies of scope. maintaining the same variable cost structure (excluding one off commission costs for BlueAdvisor); growing amortisations, calculated on the basis of current and future fixed assets. The increase in fixed assets is linked to the investments we expect to make to support new product development, which we expect to total 2.2m; a prudent estimate of 60-day DSO and 50-day DPO (as recorded in 2016), even though advance payment is expected in Gooruf s and BlueAdvisor s business plans; other payables/receivables include payables for the acquisition of IT-Forum, which are expected to be fully cleared by the second quarter of 2018 (as provided in the sales agreement); payments on the fixed rate 48-month mortgage from Intesa and BPM banks (amounting to 150k and 350k, respectively). 4. Economics & Financials Fig. 5 P&L Source: BFC e Integrae SIM estimates 11

12 Fig. 6 A&L Source: BFC Integrae SIM estimates Fig. 7 Cash Flow Source: BFC Integrae SIM estimates 12

13 5. Valuation We assessed the equity value of BFC using the DCF method and comparable companies approach. Each valuation model correctly assesses one or more features of a company life: income, assets, cash flows, or comparing similar listed companies. We believe that the right mix of valuations can best estimate the right fair value range of a company like BFC and its peculiarities (cash flows, management quality, editorial products, etc.). 5.1 The DCF model When using the DCF model to calculate a company s equity value, results are strongly dependent on the estimates made. The quality of results, which is a function of many variables, including the visibility of the business, is a significant element when comparing results, as is the equity value. In the case of BFC, visibility enables us to stretch our forecast period until 2021F. This is why we believe that the DCF model can describe some of the company features that the comparison with other companies could not accurately estimate. Input data are as follows Fig. 8 Main input data Source: Integrae SIM estimates We used the parameters reported in the table above under the following assumptions: the risk free rate is based on the Rendistato index (Banca d Italia) average gross yields of 4- year and 7- month bonds and 6-year and 6-month bonds in the period between September 2016 August 2017; the market premium was estimated by Prof. A. Damodaran to be 7.95% for Italy (July 2017 update); the unlevered Beta was calculated using the average 5-year Beta from the same comparable share sample used to estimate equity value with the comparables method, and its leveraged value is 1.05x, the g growth rate used to calculate Terminal Value was conservatively assumed to be 1.0%; 13

14 Alfa is the additional specific risk characterising equity investments in small companies. Given our small size, the additional small cap risk is assumed to be 2.5%. Based on our estimates and the assumptions above, WACC is 9.7%. Fig. 9 DCF Model Source: Integrae SIM The equity value of BFC is 14.4m Fig. 10 Sensitivity analysis Source: Integrae SIM 14

15 5.2 Comparables - multiples valuation Our sample consists of companies operating in the same industries as BFC, but with higher capitalization and different organizational structures. The following are the companies with multiples for the F period (source: Infinancials), which were also used to calculate Beta. Figure 11 Comparables from the publishing and online markets Source: Integrae SIM To calculate the equity value, we computed a weighted average of the multiples, using as weight each year s share of total turnover accounted by online turnover. The equity value calculated with the comparables approach is 16.9m. We applied a 25% discount on this value, and obtained 12.7m, which is slightly lower than the value obtained with the DCF approach ( 14.4m). BFC s fair value, obtained as arithmetic mean of the two values above, is 13.5m, or 4.26 per share (compared to 2.82 in our note dated 29 September 2016). Our buy rating and risk medium remain unchanged, while our target price grew from 4.26 to 2.82 per share. 15

16 Disclosure Pursuant to Article 69 Et seq. of Consob (Italian Securities Exchange Commission) Regulation No /1999 Analyst/s certification The analyst(s) which has/have produced the following analyses hereby certifies/certify that the opinions expressed herein reflect their own opinions, and that no direct and/or indirect remuneration has been, nor shall be received by the analyst(s) as a result of the above opinions or shall be correlated to the success of investment banking operations. INTEGRAE SPA is comprised of the following analysts who have gained significant experience working for INTEGRAE and other intermediaries: Antonio Tognoli. Neither the analysts nor any of their relatives hold administration, management or advising roles for the Issuer. Antonio Tognoli is Integrae SIM s current Deputy Chairman and Head of Research, Board Member of AIAF - Associazione Italiana Analisti Finanziari, Vice President of Associazione Nazionale Private and Investment Banking ANPIB, member of Organismo Italiano di Valutazione OIV, member of Organismo Italiano di Contabilità - OIC, international account working group and Journalists guilt. Disclaimer This publication was produced by INTEGRAE SIM SpA. INTEGRAE SIM SpA is licensed to provide investment services pursuant to Italian Legislative Decree n. 58/1998, released by Consob, with Resolution n of March 29th INTEGRAE SIM SpA performs the role of corporate broker for the financial instruments issued by the company covered in this report. INTEGRAE SIM SpA is distributing this report in Italian and in English, starting from the date indicated on the document, to approximately 300 qualified institutional investors by post and/or via electronic media, and to non-qualified investors through the Borsa Italiana website and through the leading press agencies. Unless otherwise indicated, the prices of the financial instruments shown in this report are the prices referring to the day prior to publication of the report. INTEGRAE SIM SpA will continue to cover this share on a continuing basis, according to a schedule which depends on the circumstances considered important (corporate events, changes in recommendations, etc.), or useful to its role as specialist. The table below, shows INTEGRAE SIM s recommendation, target price and risk issued during the last 12 months: Date Price Recommendation Target Price Risk Comment 10/05/16 - Buy 2,82 Medium Initiation of coverage 23/09/16 Buy 2,82 Medum 1H16 Results The list of all recommendations on any financial instrument or issuer produced by Integrae SIM Research Department and distributed during the preceding 12-month period is available on the Integrae SIM website. The information and opinions contained herein are based on sources considered reliable. INTEGRAE SIM SpA also declares that it takes all reasonable steps to ensure the correctness of the sources considered reliable; however, INTEGRAE SIM SpA shall not be directly and/or indirectly held liable for the correctness or completeness of said sources. The most commonly used sources are the periodic publications of the company (financial statements and consolidated financial statements, interim and quarterly reports, press releases and periodic presentations). INTEGRAE SIM SpA also makes use of instruments provided by several service companies (Bloomberg, Reuters, JCF), daily newspapers and press in general, both national and international. INTEGRAE SIM SpA generally submits a draft of the analysis to the Investor Relator Department of the company being analyzed, exclusively for the purpose of verifying the correctness of the information contained therein, not the correctness of the assessment. INTEGRAE SIM SpA has adopted internal procedures able to assure the independence of its financial analysts and that establish appropriate rules of conduct for them. Integrae SIM S.p.A. has formalised a set of principles and procedures for dealing with conflicts of interest. The Conflicts Management Policy is clearly explained in the relevant section of Integrae SIM s web site ( This document is provided for information purposes only. Therefore, it does not constitute a contractual proposal, offer and/or solicitation to purchase and/or sell financial instruments or, in general, solicitation of investment, nor does it constitute advice regarding financial instruments. INTEGRAE SIM SpA does not provide any guarantee that any of the forecasts and/or estimates contained herein will be reached. The information and/or opinions contained herein may change without any consequent obligation of INTEGRAE SIM SpA to communicate such changes. Therefore, neither INTEGRAE SIM SpA, nor its directors, employees or contractors, may be held liable (due to negligence or other causes) for damages deriving from the use of this document 16

17 or the contents thereof. Thus, Integrae SIM does not guarantee any specific resuit as regards the information contained in the present publication, and accepts no responsibility or liability for the outcome of the transactions recommended therein or for the results produced by such transactions. Each and every investment/divestiture decision is the sole responsibility of the party receiving the advice and recommendations, who is free to decide whether or not to implement them. Therefore, Integrae SIM and/or the author of the present publication cannot in any way be held liable for any losses, damage or lower earnings that the party using the publication might suffer following execution of transactions on the basis of the information and/or recommendations contained therein. This document is intended for distribution only to professional clients and qualified counterparties as defined in Consob Regulation no of , as subsequently amended and supplemented, either as a printed document and/or in electronic form. Rating system (long term horizon: 12 months) The BUY, HOLD and SELL ratings are based on the expected total return (ETR absolute performance in the 12 months following the publication of the analysis, including the ordinary dividend paid by the company), and the risk associated to the share analyzed. The degree of risk is based on the liquidity and volatility of the share, and on the rating provided by the analyst and contained in the report. Due to daily fluctuations in share prices, the expected total return may temporarily fall outside the proposed range Equity Total Return (ETR) for different risk categories Rating Low Risk Medium Risk High Risk BUY ETR >= 22.5% ETR >= 25% ETR >= 30% HOLD -20% < ETR < 22,5% -20% < ETR < 25% -15% < ETR < 30% SELL ETR <= -25% ETR <= -20% ETR <= -15% U.R. N.R. Rating e/o target price Under Review Stock Not Rated Valuation methodologies (long term horizon: 12 months) The methods that INTEGRAE SIM SpA prefers to use for value the company under analysis are those which are generally used, such as the market multiples method which compares average multiples (P/E, EV/EBITDA, and other) of similar shares and/or sectors, and the traditional financial methods (RIM, DCF, DDM, EVA etc). For financial securities (banks and insurance companies) Integrae SIM SpA tends to use methods based on comparison of the ROE and the cost of capital (embedded value for insurance companies). The estimates and opinions expressed in the publication may be subject to change without notice. Any copying and/or redistribution, in full or in part, directly or directly, of this document are prohibited, unless expressly authorized. Conflict of interest In order to disclose its possible interest conflict Integrae SIM states that: Integrae SIM S.p.A. It operates or has operated in the past 12 months as the entity responsible for carrying out the activities BFC S.p.A.; Integrae SIM S.p.A. It pays, or has paid in the past 12 months inside of the engagement of specialist, research services in favor of BFC S.p.A.; Integrae SIM S.p.A. He plays, or has played in the last 12 months, role of specialist financial instruments issued by BFC S.p.A. At the Integrae SIM website you can find the archive the last 12 months of the conflicts of interest between Integrae SIM and issuers of financial instruments, and their group companies, and referred to in research products produced by analysts at Integrae SIM. 17