THE MARKETING GROUP PLC - FINANCIAL RESULTS FOR THE SIX-MONTH PERIOD ENDING 30th JUNE 2018
FINANCIAL RESULTS FOR THE SIX-MONTH PERIOD ENDING 30th JUNE 2018
THE MARKETING GROUP PLC - FINANCIAL RESULTS FOR THE SIX-MONTH PERIOD ENDING 30thJUNE 2018
London – 31st August 2018 - The Marketing Group plc (“TMG” or the “Group” or the “Company”), which trades as RYVL,is pleased to announce its financial results for the six months period from 1st January 2018 to 30th June 2018.
First Half Highlights:
- H1 2018 Turnover of €9.5 million (H1 2017: €9.6 million)
- H1 2018 Net Revenue of €6.9 million (H1 2017: €6.2 million)
- H1 2018 Trading EBITDA of €0.9 million (H1 2017: €0.7 million)
- H1 2018 Operating EBITDA of €0.4 million (H1 2017: €0.7 million)
CEO’s statement
H1 2018 saw the Group grow Net revenue by 11% to €6.9 million. This growth was primarily driven by the acquisition of Wildcard Communications in the second half of 2017. Whilst growth was strong in the first quarter the Group experienced a more challenging trading environment in the second quarter. The Group and Group agencies were rebranded under the RYVL name in June 2018. This enhanced our proposition to offer clients an integrated service and in the first half of 2018 we have seen a significant increase in the number of multi-agency briefs for which we have been invited to pitch. In H1 2018 we have won 7 collaborative pitches with annualised net revenue of €0.6 million.
New Business performance across the Group has been strong in the first half of the year with new business wins representing €0.8 million in addition to the collaborative pitch wins worth €0.6 million. New wins include Speedo, IMDA Singapore, Issey Miyake, Energy Market Authority Singapore, The Southbank Centre, China Life Singapore, Nestle, Aftershokz and Wargaming: World of Tanks.
Whilst we are disappointed to see Group EBITDA decline year-on-year from €0.7 million to €0.4 million, this has been caused by a number of known or planned factors:
(i) In the second half of 2017 the Group launched TRUTH media, our blockchain-enabled global media agency and in 2018 commenced the development of TRUTH data cloud, a GDPR compliant consumer data-driven ecosystem where consumers can monetise their personal data by sharing it with brands. As anticipated, the agency was not profitable in H1 2018;
(ii) In H1 2017, central costs were not representative of the actual head office costs. As such, year-on-year central costs have increased; and
(iii) One of the Group’s agencies lost its largest client in Q1. This has had a material impact on the profitability of the affected agency and, whilst appropriate actions have been taken to mitigate the impact of this loss, there has been an adverse impact on profit for the agency and the Group for the period.
The Group has invested significantly in its wholly owned venture TRUTH which has been well received by the market. The TRUTH Data Cloud is a tokenised, blockchain-enabled data ecosystem. In July we launched an Initial Coin Offering (ICO) with a target of raising between US$5 million and US$50 million. We are currently in the private sale round which precedes the wider public offering. It is anticipated that the initial target of US$5 million would be secured through the private pre-sale with the subsequent public sale allowing us to reach our target of US$50 million. The injection of funds into the Group from the ICO would enable it to continue the development of the platform ready for the public launch of the product in 2019.
Whilst we had strong early initial commitments of over US$1 million, due to a series of macro-economic factors affecting current sentiment towards Token Sales in general, the Board have taken the decision to extend the private round and delay the public sale until Q1 2019 at the earliest. Whilst the private sale remains open, we are yet to reach the minimum target of US$5 million.
The Board continue to pursue the raising of US$5 million through the private token sale. Additionally, and under the right terms and conditions, the Board are considering alternative sources of investment in order to accelerate TRUTH’s development.
The Board previously announced its intention to explore the potential to move to the AIM market of the London Stock Exchange. The Board continues to explore a cross listing and has made significant progress in this area. The Group has commenced the introduction of new governance procedures in order to comply with the diligence requirements of an AIM admission. It is envisaged that this will happen no sooner than the end of Q1 2019.
The Group remains committed to making further acquisitions in line with the strategy laid out in the 2017 annual report. Raising additional capital is the top priority and the Board are investigating several funding options to help support this goal.
Financial commentary
In June 2018 it was announced that Lead Generation went into voluntary liquidation and consequently the Group relinquished control of the entity. It has therefore been classified as a disposal during the period and their results excluded from the H1 2018 results with 2017 re-stated accordingly
Net revenue for H1 2018 was €6.87 million. This is an increase of 11% compared to the same period of 2017. This growth is the result of the acquisition of Wildcard Communications in November 2017 and the full year impact of the acquisition of Reflexion Publique in May 2017. Excluding the impact of these acquisitions, like-for-like Net revenue declined 4%, driven primarily by the loss of the Group’s largest client in Q1 2018.
Operating EBITDA for H1 2018 was €379k which is a decrease of €284k compared to 2017. Profit from Continuing Activities for the period was €125k compared to 2017 H1’s profit of €419k.
In H1 2018 the Group delivered a net loss of €4.6 million (H1 2017: net loss €43.1 million) which was a result of the disposal of Lead Generation and the write off of the associated goodwill of €4.8 million.
Basic and Diluted Earnings / (Loss) per Share from Continuing Activities for H1 2018 was €0.004 (H1 2017 €0.014; 2017: Loss of €0.339). Basic and Diluted Loss per Share from Continuing and Discontinuing Activities for H1 2018 was €0.131 (H1 2017 €1.450; 2017 €1.437). The average number of shares in issue during H1 2018 was 35,352,955 (H1 2017: 29,735,366; 2017: 31,667,566). The number of shares in issue at 30 June 2018 was 37,861,704 (30 June 2017: 31,941,563; 31 December 2017: 34,290,077).
The Group’s balance sheet at 30 June 2018 had net assets of €27.7 million (31 December 2017 €32.6 million). Net cash reduced from €2.0 million at 31 December 2017 to €0.9 million at 30 June 2018 as a result of an adverse movement in working capital of €1.0 million and capital investment in TRUTH of €0.4 million.
The Board continue to monitor the performance of the Group closely.
Outlook
The Directors are of the opinion that the second half of 2018 will continue to be a challenge for some subsidiaries within the Group and the Group as a whole. Whilst costs have been reduced where necessary, the full impact of these cost reductions will not be felt until the final quarter of the financial year.
The Board will publish the results for the financial year ending 31 December 2018 on or before 29th March 2019.
Adam Graham, CEO
For further information please contact:
Adam Graham, CEO
Email: investorrelations@tmg-plc.com
Investor relations
Tim Metcalfe
Miles Nolan
Phone:+44 (0) 203 934 6630
Email: investorrelations@tmg-plc.com
The Marketing Group plc (“TMG”) in brief
TMG is building a global full-service marketing network, powered by technology, that provides a fresh alternative for global brands that want to see more bang for their buck. With offices in America, Europe, Asia and Australasia, TMG’s collaborative network of agencies provide a holistic service to deliver highly effective results.
The Marketing Group is listed on Nasdaq First North, Stockholm. www.tmg-plc.com.
Mangold Fondkommission AB, +46 8-5030 15 50, is the company’s Certified Adviser and liquidity provider.
This information is information that The Marketing Group plc is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 7.00am CET on 31 August 2018.
Further Information.
The Full Results for H1 2018 are attached to this document and are available on https://ryvl.com/investors/financial-results-and-reports
An Investor Presentation providing more commentary on the H1 2018 results will be available within the Investors section of the company website (https://ryvl.com/investors/financial-results-and-reports)
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