Claranova: The value of minority interests
Driven by strong organic (+33%) and absolute (+62%) sales growth, Claranova increased its EBITDA from EUR 1.5 million to EUR 13.1 million in its 06/2019 financial year. The French company should thus have been profitable again but unfortunately had to record an accounting loss of 44.5 million euros following the revaluation of the preferential shares held by minority shareholders in Avanquest. This non-cash loss could be considered as immaterial or even positive insofar as it is the result of a revaluation linked to the subsidiary's very good financial and operational performance. Unfortunately, it reflects a potential loss in the control of Avanquest that is greater than expected and leads us to revise downwards our estimates of group share of profits and our target price (from 16 euros to 14 euros).
Claranova SA, formerly Avanquest SA, is a France-based holding company engaged in the technology industry. The Company operates through three businesses including Avanquest Software, that develops, publishes and markets Personal Computer (PC) software products in several categories, including system utilities, home graphics, digital imaging and small business solutions; the PlanetArt business operates a print-on-demand platform, which features five brands covering both Website and mobile application technologies. Among its applications is FreePrints, a mobile photo printing solution for iOS and Android. The Company also operates through myDevices business, which enables enterprises to design, prototype and commercialize Internet of Things (IoT) solutions through Cayenne, a drag-and-drop IoT project builder. Claranova SA offers its products and services in approximately 100 countries worldwide.
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