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7Digital Group EBITDA dropped on 282% in 2016 and EBITDA Margin dropped on 62.5 pp from 24.1% to -38.3%

10 Mar 2017 • About 7Digital Group ($7DIG) • By InTwits

7Digital Group reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • 7Digital Group doesn't have a profitable business model yet: FY2016 ROIC is -281.2%
  • The company operates at negative EBITDA Margin: -38.3%
  • 7Digital Group motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 was 0.0%. On average EBITDA Margin was -15.8% for the sames years0
  • 7Digital Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.6%. At the same time it's a lot of higher than industry average of 2.4%.
  • CAPEX is quite volatile: 0.45 in FY2016, 0.85 in FY2015, 0.35 in FY2014, 0.010 in FY2013, 0.071 in FY2012
  • The company has unprofitable business model: ROIC is at -281.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

7Digital Group ($7DIG) key annual financial indicators

mln. £201220132014201520162016/2015
P&L
Revenue3.2253.76110.21310.36511.89914.8%
Gross Profit0.5310.5226.0247.0578.44819.7%
SG&A2.7971.02510.52811.25014.15225.8%
EBITDA-0.272-0.409-3.4972.503-4.560-282.2%
Net Income-3.618-1.082-2.629-7.913-5.169-34.7%
Balance Sheet
Cash3.4942.5665.3121.6560.838-49.4%
Short Term Debt0.0000.0000.0000.0000.000
Long Term Debt0.0000.0000.0000.0001.519
Cash flow
Capex0.0710.0100.3450.8480.447-47.3%
Ratios
Revenue growth-27.7%16.6%171.6%1.5%14.8%
EBITDA growth-57.1%50.4%755.0%-171.6%-282.2%
Gross Margin16.5%13.9%59.0%68.1%71.0%2.9%
EBITDA Margin-8.4%-10.9%-34.2%24.1%-38.3%-62.5%
Net Income Margin-112.2%-28.8%-25.7%-76.3%-43.4%32.9%
SG&A, % of revenue86.7%27.3%103.1%108.5%118.9%10.4%
CAPEX, % of revenue2.2%0.3%3.4%8.2%3.8%-4.4%
ROIC-7.7%-11.3%-51.2%22.2%-281.2%-303.3%
ROE-49.5%-22.3%-33.8%-109.2%109.2%
Net Debt/EBITDA-0.7x0.7x

Revenue and profitability


7Digital Group's Revenue jumped on 14.8% in FY2016. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 45.7 pp from -71.9% to -26.2% in FY2016.

Gross Margin increased on 2.9 pp from 68.1% to 71.0% in FY2016. SG&A as a % of Revenue jumped on 10.4 pp from 109% to 119% in FY2016.

Net Income marign jumped on 32.9 pp from -76.3% to -43.4% in FY2016.

Capital expenditures (CAPEX) and working capital investments


7Digital Group's CAPEX/Revenue was 3.8% in FY2016. 7Digital Group showed CAPEX/Revenue growth of 3.5 pp from 0.27% in FY2013 to 3.8% in FY2016. For the last three years the average CAPEX/Revenue was 5.1%.

Leverage (Debt)


Company's Net Debt / EBITDA is -0.3x and Debt / EBITDA is . Net Debt / EBITDA jumped on 0.7x from -0.7x to in FY2016. Debt jumped while cash dropped on 49.4% in FY2016.

Appendix 1: Peers in General Retailers


Below you can find 7Digital Group benchmarking vs. other companies in General Retailers industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Just Eat ($JE.)57.7%51.7%
AO World ($AO.)31.3%40.0%23.8%25.7%
Signet Jewelers Ltd ($SIG)6.2%5.7%36.3%14.2%
Caffyns ($78GL)-3.1%17.1%8.9%10.5%
Mysale Group ($MYSL)62.1%23.4%5.1%7.0%
 
Median (9 companies)36.5%6.2%3.1%7.3%7.0%
7Digital Group ($7DIG)16.6%171.6%1.5%14.8%


Top companies by Gross margin, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Just Eat ($JE.)89.7%90.2%90.6%
Aa ($AA.)60.4%63.9%64.7%64.8%64.3%
French Connection Group ($FCCN)48.1%47.9%47.6%46.7%46.3%
Stanley Gibbons Group ($SGI)43.7%43.2%51.5%40.3%
Signet Jewelers Ltd ($SIG)38.3%38.6%37.5%36.2%37.3%
 
Median (9 companies)32.5%36.4%31.6%34.3%37.3%
7Digital Group ($7DIG)16.5%13.9%59.0%68.1%71.0%


Top companies by EBITDA margin, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Aa ($AA.)35.5%37.0%42.2%37.9%36.8%
Just Eat ($JE.)16.3%21.0%25.8%
Signet Jewelers Ltd ($SIG)16.0%16.6%16.2%12.7%13.4%
Lotte Shopping Co Ltd ($LOTS)8.8%8.2%7.4%6.3%6.5%
Caffyns ($78GL)10.8%3.0%2.0%6.5%2.2%
 
Median (9 companies)8.8%6.7%7.4%7.5%2.2%
7Digital Group ($7DIG)-8.4%-10.9%-34.2%24.1%-38.3%


Top companies by CAPEX/Revenue, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Aa ($AA.)2.7%0.7%1.0%3.8%7.7%
Lotte Shopping Co Ltd ($LOTS)7.1%6.5%6.6%3.8%4.1%
Signet Jewelers Ltd ($SIG)2.6%3.4%3.6%3.8%3.5%
Just Eat ($JE.)3.4%2.3%2.5%
Caffyns ($78GL)1.6%2.2%3.9%1.4%1.6%
 
Median (9 companies)1.2%1.0%1.0%1.9%1.6%
7Digital Group ($7DIG)2.2%0.3%3.4%8.2%3.8%


Top companies by ROIC, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Aa ($AA.)138.0%134.4%61.1%34.9%32.8%
Signet Jewelers Ltd ($SIG)21.6%21.5%20.4%15.5%15.2%
Caffyns ($78GL)60.8%15.4%11.1%37.3%10.4%
Just Eat ($JE.)16.4%9.1%9.8%
Lotte Shopping Co Ltd ($LOTS)5.3%4.9%3.8%2.6%2.9%
 
Median (9 companies)21.4%18.4%10.5%6.8%2.9%
7Digital Group ($7DIG)-7.7%-11.3%-51.2%22.2%-281.2%


Top companies by Net Debt / EBITDA

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Aa ($AA.)0.6x-0.0x7.7x7.9x7.8x
Lotte Shopping Co Ltd ($LOTS)5.1x4.9x5.2x6.7x6.4x
Stanley Gibbons Group ($SGI)-1.1x-3.0x2.3x
Signet Jewelers Ltd ($SIG)-0.8x-0.5x-0.3x1.7x1.4x
Caffyns ($78GL)0.5x2.0x3.0x0.7x2.2x
 
Median (9 companies)-0.8x-0.2x-0.3x0.7x1.8x
7Digital Group ($7DIG)-0.7x


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