ADUX : First-Half 2017 results

Paris, July 27, 2017, 8:40 AM
First-Half 2017 results

• €26.1 Million in revenue on 2017 first-half
  • Robust momentum in growth activities
  • Decline in revenue from legacy activities
     
• Positive EBITDA of €0.4 Million and a net loss of €0.5 Million for the period
   
• Faster refocusing on Native Advertising, Drive-To-Store Marketing and Social Marketing

The digital marketing group AdUX Group (ISIN FR0012821890 - HIM, HIM.FR) has published its results for the first half of 2017

€14.8 million in second-quarter revenue Revenue from growth activities(1) rose by 12% year-on-year in the second quarter Legacy activities saw revenue contract by 16% year-on-year, preventing consolidated revenue from increasing over the period as initially expected Consolidated revenue and gross profit were virtually unchanged year-on-year, with a 2% decline and a 2% gain respectively   EBITDA hit €0.7 million in the second quarter and rose over the first half EBITDA(2): €0.7 million in Q2 2017 vs. €0.3 million in Q2 2016 EBITDA(2): €0.4 million in H1 2017 vs. €0.3 million in H1 2016   Operating loss of €0.4 million and a net loss of €0.5 million   The Group will continue to adjust its business base and step up the process of refocusing on native advertising, drive-to-store marketing and social marketing   (1) Growth activities correspond to native and local advertising (or community advertising for Spanish speakers in the United States) provided by the Admoove, Local Media, Himedia Sweden, Latam Digital Ventures and Quantum subsidiaries. (2) Earnings before interest, tax, depreciation and amortization.

 

Commenting on the first-half figures, Cyril Zimmerman, Chairman and Chief Executive Officer of AdUX said: "AdUX has confirmed its return to positive EBITDA and the robust momentum in its new businesses. To drive a return to growth and eliminate the adverse impact of the decline in our legacy activities, we plan to adjust our business base and focus on our native advertising (Quantum), drive-to-store marketing (Admoove) and social marketing (Adpulse) operations."

Second-Quarter revenue and consolidated first-half financial highlights

	En M€	Q2 2017	Q2 2016	Var.		H1 2017	H1 2016	Var.
Group	Revenue	14.8	15.1	-2%		26.1	28.4	-8%
	Gross margin	6.8	6.7	+2%		12.3	13.2	-7%
	EBITDA (2)	0.7	0.3	+128%		0.4	0.31	+14%
	En M€	Q2 2017	Q2 2016	Var.		H1 2017	H1 2016	Var.
Growth activities (1)	Revenue	8.5	7.6	+12%		14.7	13.2	+11%
	Gross margin	4.1	3.7	+10%		7.4	6.7	+11%
	EBITDA (2)	0.4	0.3	+38%		0.2	0.1	+116%
Legacy activities	Revenue	6.3	7.5	-16%		11.3	15.2	-25%
	Gross margin	2.7	3.0	-9%		4.9	6.5	-25%
	EBITDA (2)	0.3	(0.0)	-		0.1	0.2	-46%

Consolidated revenue amounted to €14.8 million in the second quarter, down a slight 2% from the year-earlier period due to a steeper-than-expected 16% fall-off in revenue from legacy activities. Note however that these activities performed better than in the first quarter, when their revenue dropped 35%. Revenue from growth activities rose by 12% over the period, slightly better than the 11% reported in the first quarter. 

The trend is therefore continuing to improve, but revenue fell €0.3 million short of furthering the return to growth expected in the second quarter. To eliminate the downward pressure from the disappointing performances of the legacy activities, AdUX is planning to adjust its business base to focus more sharply on its new businesses, organized around native advertising, drive-to-store marketing and social marketing.

At the same time, the Group is continuing to expand its fast growing businesses. In native advertising, Quantum is cooperating with more than 650 publishers in Europe, has opened an office in the United Kingdom. Quantum now covers five European countries and has signed distribution agreements in Russia and the Netherlands.

In the drive-to-store segment, Admoove has focused in recent months in preparing its scheduled deployment in Europe in the second half. Business was weaker than expected, but the company's market positioning and technological platform is increasingly robust. 

Lastly, the Adpulse social marketing business enjoyed very strong growth over the first half and is continuing to broaden its customer brand portfolio by over 45% (Danone, Monabanq, Kenwood, Maison du Monde, Saviencia, Bonduelle .).

Income statement analysis

En M€	H1 2017	H1 2016	YoY change	% change
Sales	26.1	28.4	-2.3	-8%
Charges invoiced by the media	(13.8)	(15.3)	+1.4	-10%
Gross profit	12.3	13.2	-0.9	-7%
Purchases	(3.5)	(4.2)	+0.7	-21%
Payroll costs	(8.4)	(8.6)	+0.2	-2%
EBITDA	0.4	0.3	0.0	+13%
Depreciation, amortization	(1.0)	(0.9)	-0.1	+9%
Current operating profit/(loss)	(0.6)	(0.6)	0.0	+7%
Stock-based compensation	(0.1)	0.0	-0.1	+82%
Other non-current income and expense, net	0.3	1.4	-1.1	-318%
Operating profit/(loss)	(0.4)	0.8	-1.2	+289%
Cost of indebtedness	0.0	(0.1)	0.0	-159%
Other financial income and charges	0.1	(0.1)	+0.2	+226%
Earning of the consolidated companies	(0.4)	0.6	-1.0	+278%
Share in the earnings of the companies treated on an equity basis	0.0	0.0	0.0	0%
Earnings before tax of the consolidated companies	(0.4)	0.6	-1.0	+278%
Income tax	(0.1)	(0.4)	+0.3	-263%
Income tax on non-recurring items	0.0	0.0	0.0	0%
Net income of the consolidated companies	(0.5)	0.2	-0.7	+153%
Net income from discontinued operations	0.0	0.0	0.0	0%
Net income	(0.5)	0.2	-0.7	+153%
Minority interests from continuing operations	(0.1)	(0.3)	+0.1	-101%
Minority interests from discontinued operations	0.0	0.0	0.0	0%
Including Group Share	(0.3)	0.5	-0.8	+250%

Held back by the legacy activities and the sharp contraction in the first quarter, consolidated revenue declined by 8% to €26.1 million in the first half. Margins remained firm overall, with gross profit tracking the revenue trend line.

As part of its ongoing commitment to optimization and flexibility, the company maintained cost discipline over the period, enabling it to deliver positive EBITDA, of €0.7 million in the second quarter. First-half EBITDA stood at €0.4 million, up slightly from the €0.3 million reported a year earlier.

Depreciation, amortization and provision expense came to €1 million, net of reversals.

The recurring operating loss amounted to €0.6 million, unchanged from first-half 2016. After the recognition of non-recurring income, including the proceeds from the disposal of the HiPay shares, the consolidated operating loss stood at €0.4 million for the period.

Finance costs and other financial income and expense, net represented income of €0.1 million, while income tax expense amounted to €0.1 million.

After non-controlling interests, the consolidated net loss ended the first half at €0.5 million.

Outlook and financial structure

The native advertising, drive-to-store marketing and social marketing businesses are all expanding very quickly, their positioning has been amply validated by the advertising market and they enjoy major growth potential. They are now large enough to act as AdUX's core business and no longer require any significant financing. As a result, the Group plans to focus on these three activities and will seek to adjust its business base accordingly.

The planned refocusing process is designed to give AdUX a clearer growth profile, while retaining its strong commitment to flexibility and cost discipline, so as to make the Group more profitable.

If any scope variations might intervene in 2017, new targets will be communicated to the market but the positive EBITDA achievement is not reconsidered.

The company has the financial resources needed to fund these developments, with €4.7 million in gross cash and cash equivalents, a transferable equity interest in HiPay worth €2.2 million. 

***

The half-year accounts approved by AdUX SA's board of July 25, 2017, have been subjected to a limited audit by the Group auditors, and the corresponding report will be available will be issued once all formalities required to file the half-year financial report have been completed. The half-year financial report on the accounts closed as at June 30, 2017 will be available within the legal time limits on the company's website www.adux.com, in the "Investors" section.

Investor calendar
Third-quarter 2017 revenue on 9 November 2017 after close of trading

À propos d'AdUX
AdUX is an industry pioneer and European leader in digital marketing.

With operations in six European countries, the United States and Latin America, the Group reported revenue of €59 million in 2016.

Independent since its creation, the company is listed on Euronext Paris, in compartment C, and is included in the CAC Small, CAC All-Tradable and CAC SME indices. Code ISIN: FR 0012821890/Symbol: HIM

                                                       

For more information, please visit www.adux.com and [e-mail]

Follow us on Twitter: @AdUX_is_AdUX

Investor and analyst contact
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Media contact
Patricia Goldman Communication, Christine Amella
[e-mail]
Tel. : [phone]

This press release may contain certain forward-looking statements. Although AdUX Group believes that these statements are based on assumptions that were reasonable as of the date of this press release, they are by their very nature subject to risks and uncertainties that could cause actual results to differ from those indicated or projected in these statements. AdUX Group operates in a continually changing environment and new risks may emerge. AdUX Group assumes no obligation to update these forward-looking statements to reflect any new information, future events or other circumstances.

Consolidated income statements for the half-years ending on 30 June 2017 and 30 June 2016

In thousands of euro	30 June 2017	30 June 2016
Sales	26 087	28 415
Charges  invoiced by the media	-13 819	-15 261
Gross profit	12 268	13 154
Purchases	-3 469	-4 214
Payroll charges	-8 446	-8 632
EBITDA (1)	353	309
Depreciation and amortization	-988	-902
Current operating profit	-635	-593
Stock based compensation	-106	-19
Other non-current income and charges	332	1 386
Operating profit	-410	774
Cost of indebtedness	-20	-51
Other financial income and charges	78	-99
Earning of the consolidated companies	-351	624
Share in the earnings of the companies treated on an equity basis	-	-
Earnings before tax of the consolidated companies	-351	624
Income Tax	-105	-381
Net income of the consolidated companies	-456	243
Net income from discontinued operations	-	-
Net income	-456	243
Minority interests from continuing operations	124	253
Minority interests from discontinued operations	-	-
Including Group Share	-332	495
	30 June 2017	30 June 2016
Weighted average number of ordinary shares	2 886 088	2 886 088
Earnings per share, Group share (in euro)	-  0,11	0,17
Weighted average number of ordinary shares (diluted)	2 886 088	2 886 088
Diluted earnings per share, Group share (in euro)	-  0,11	0,17

⁽¹⁾ Current operating income before allocations and reversals of depreciation, amortisation and provisions.

Consolidated balance sheets at 30 June 2017 and 31 December 2016

ASSETS - In thousands of euro	30 June 2017	31 Dec 2016
Net goodwill	20 860	20 860
Net intangible fixed assets	1 255	1 413
Net tangible fixed assets	1 245	1 319
Deferred tax credits	54	54
Other financial assets	1 428	1 484
Non-current assets	24 842	25 131
Customers and other debtors	26 587	26 101
Other current assets	12 305	13 988
Current financial assets	2 215	3 259
Cash and cash equivalents	4 687,031	5 690
Current assets	45 794	49 037
TOTAL ASSETS	70 635	74 168
LIABILITIES - In thousands of euro	30 June 2017	31 Dec 2016
Share capital	4 329	4 329
Premiums on issue and on conveyance	83 870	83 870
Reserves and retained earnings	-68 002	-64 485
Treasury shares	-4 107	-5 722
Consolidated net income (Group share)	-332	-1 092
Shareholders' equity (Group share)	15 758	16 900
Minority interests	371	375
Shareholders' equity	16 129	17 274
Long-term borrowings and financial liabilities	3 187	3 416
Non-current provisions	706	696
Non-current liabilities	0	-
Deferred tax liabilities	188	264
Non-current liabilities	4 082	4 376
Short-term financial liabilities and bank overdrafts	480	480
Current provisions	-	-
Suppliers and other creditors	39 905	40 612
Other current debts and liabilities	10 039	11 425
Current liabilities	50 424	52 517
TOTAL LIABILITIES	70 635	74 168

Table of consolidated cash flows for the half-years ending on 30 June 2017, on 31 December 2016 and on 30 June 2016

In thousands of euro	30 June 2017	31 Dec 2016	30 June 2016
Net income	-456	-1 316	243
Depreciation of the fixed assets	1 029	1 757	919
Value losses	-	-	-
Other non-current without impact on the cash	191	-411	-1
Cost of net financial indebtedness	20	58	51
Share in associated companies	-	-48	-
Net income on disposals of fixed assets	-764	-1 568	-2 114
Cash flow from discontinued operations	-	-	-
Cash flow from business to be divested	-	-	-
Costs of payments based on shares	106	37	19
Tax charge or proceeds	105	333	381
Operating profit before variation of the operating capital need	230	-1 157	-503
Variation of the operating capital need	-1 083	-4 247	-3 001
Cash flow coming from operating activities	-853	-5 404	-3 503
Interest paid	-20	-58	-45
Tax on earnings paid	-390	-369	-281
NET CASH FLOW RESULTING FROM OPERATING ACTIVITIES	-1 262	-5 832	-3 829
Income from disposals of fixed assets	-	-	-
Valuation at fair value of the cash equivalents	-	-	-
Proceeds from disposals of financial assets	-	-	-
Disposal of subsidiary, after deduction of cash transferred	1 817	6 303	3 268
Acquisition of a subsidiary	-545	-1 767	-89
Acquisition of fixed assets	-704	-1 297	-515
Variation of financial assets	3	80	38
Variation of suppliers of fixed assets	-13	-398	-34
Effect of the perimeter variations	-2	-	-
NET CASH FLOW COMING FROM INVESTMENT ACTIVITIES	555	2 922	2 668
Proceeds from share issues	-37	-50	3
Redemption of own shares	170	97	33
New borrowings	-	1 576	14
Repayments of borrowings	-240	-	-
Other financial liabilities variation	-218	-406	-1 126
Dividends paid to minority interests	-	-19	-
NET CASH FLOW COMING FROM FINANCING ACTIVITIES	-326	1 198	-1 076
Effect of exchange rate variations	29	-31	-34
NET VARIATION OF CASH AND OF CASH EQUIVALENTS	-1 003	-1 743	-2 270
Cash and cash equivalents on January 1st	5 690	7 434	7 434
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	4 687	5 690	5 163

First-Half 2017 results

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Source: HI-MEDIA via Globenewswire