Final Results

RNS Number : 0980T
S4 Capital PLC
18 March 2019
 

 

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*Billings is gross billings to client including pass through costs

**Pro-forma numbers relate to unaudited full year non-statutory and non-GAAP consolidated results of MediaMonks and MightyHive and S4Capital as if the group had existed in full for the year and have been prepared under comparable GAAP with no consolidation eliminations

***Operational EBITDA is EBITDA adjusted for non-recurring items

****Net debt comprises bank loans minus cash

"It is clear that the Company's purely digital model based on first party data fuelling digital content and programmatic is resonating with clients. Our tag line "faster, better, cheaper" and unitary, one P&L structure also appeal strongly. The imperatives will be to broaden and deepen relationships with existing and new clients; to broaden and deepen geographical coverage; and to attract additional data, content and media talent and resources through direct recruitment, acquisition and/or merger."

 

 

S4Capital plc

 

 

 

 

Powerscourt (PR Advisor)

 

 

 

 

Dowgate Capital Limited (Joint Corporate Broker)

 

 

 

 

HSBC Bank plc (Joint Corporate Broker)

 

 

 

 

 

 

 

 

 

 

Chairman's Letter

 

 

 

For the period ended 31 December

 

Unaudited
2018
£'000

 

 

Unaudited pro-forma
2018
£'000

 

Unaudited pro-forma
2017
£'000

Revenue

 

54,845

 

 

135,929

 

86,114

Cost of sales

 

17,681

 

 

30,754

 

15,571

Gross profit

 

37,164

 

 

105,175

 

70,543

Net operating expenses

 

45,634

 

 

96,689

 

60,542

Operating profit

 

-8,470

 

 

8,486

 

10,001

 

 

 

 

 

 

 

 

Adjusted operating profit

 

4,042

 

 

20,998

 

10,052

Adjusting items

 

-12,512

 

 

-12,512

 

-51

Operating profit

 

-8,470

 

 

8,486

 

10,001

 

 

 

 

 

 

 

 

Finance income

 

324

 

 

352

 

-

Finance expenses

 

-975

 

 

-1,274

 

-1,425

Net finance expense

 

-651

 

 

-922

 

-1,425

 

 

 

 

 

 

 

 

Result before income tax

 

-9,121

 

 

7,564

 

8,576

Income tax expense

 

1,011

 

 

-2,250

 

-4,195

Result for the period

 

-8,110

 

 

5,314

 

4,381

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation to operational EBITDA

 

 

 

 

 

 

 

Operating profit

 

-8,470

 

 

8,486

 

10,001

Adjusting items

 

12,512

 

 

12,512

 

51

Depreciation

 

648

 

 

1,450

 

1,206

EBITDA

 

4,690

 

 

22,448

 

11,258

 

 

 

 

 

 

 

 

Reconciliation to adjusted operating profit

 

 

 

 

 

 

 

Operating profit

 

-8,470

 

 

8,486

 

10,001

Adjusting items

 

12,512

 

 

12,512

 

51

Adjusted operating profit

 

4,042

 

 

20,998

 

10,052

 

 

 

 

 

 

 

 

Reconciliation to adjusted result before income tax

 

 

 

 

 

 

 

Result before income tax

 

-9,121

 

 

7,564

 

8,576

Adjusting items

 

12,512

 

 

12,512

 

51

Adjusted result before income tax

 

3,391

 

 

20,076

 

8,627

 

 

 

 

 

 

 

 

Reconciliation to adjusted result for the period

 

 

 

 

 

 

 

Operating profit

 

-8,110

 

 

5,314

 

4,381

Adjusting items

 

12,512

 

 

12,512

 

51

Tax on adjusting items

 

-1,877

 

 

-1,877

 

-

Adjusted result for the period

 

2,525

 

 

15,949

 

 4,432

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

Weighted average number of shares in issue for the purpose of basic and adjusted net result per share

 

247,776,256

 

 

348,125,891

 

348,125,891

Net result attributable to equity owners of the Company (£'000)

 

-8,110

 

 

5,314

 

4,380

Basic net result per share

 

-0.033

 

 

0.015

 

0.013

Diluted net result per share

 

-0.033

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted non-recurring expenses

 

5,005

 

 

5,005

 

51

Adjusted amortisation of intangible assets related to acquisitions

 

7,507

 

 

7,507

 

-

Adjusted tax on amortisation

 

-1,877

 

 

-1,877

 

-

Adjusted net result

 

2,525

 

 

15,949

 

4,431

Adjusted basic net result per share

 

0.010

 

 

0.046

 

0.013

For the period ended 31 December

Note

Unaudited
2018
£'000

Revenue

2

54,845

Cost of sales

 

17,681

Gross profit

 

37,164

Net operating expenses

 

45,634

Operating profit

 

-8,470

 

 

 

Adjusted operating profit

 

4,042

Adjusting items

3

-12,512

Operating profit

 

-8,470

 

 

 

Finance income

 

324

Finance expenses

 

-975

Net finance expense

 

-651

 

 

 

Result before income tax

 

-9,121

Income tax expense

 

1,011

Result for the period

 

-8,110

 

 

 

Profit is attributable to:

 

 

Owners of the Company

 

-8,110

Non-controlling interests

 

-

 

 

-8,110

 

 

 

Earnings per share attributable to the ordinary

 

 

equity holders of the Company:

 

 

Basic loss per share (in Pence 1)

4

-0.03

Diluted loss per share (in Pence 1)

4

-0.03

 

 

For the period ended 31 December

Unaudited
2018
£'000

Result for the period

-8,110

 

 

Other comprehensive income

 

Items that may be reclassified to profit or loss

 

Foreign operations - foreign currency translation differences

1,870

Total comprehensive income for the period

-6,240

 

 

 

 

Total comprehensive income of the period attributable to:

 

Owners of the Company

-6,240

Non-controlling interests

-

 

-6,240

 

 

 

 

Note

Unaudited
2018
£'000

ASSETS

 

 

Non-current assets

 

 

Intangible assets

5

387,275

Property, plant and equipment

 

4,007

Deferred tax assets

 

188

Other receivables

 

1,438

 

 

392,908

Current assets

 

 

Trade and other receivables

 

81,121

Cash and cash equivalents

 

25,005

 

 

106,126

Total assets

 

499,034

 

 

 

LIABILITIES

 

 

Non-current liabilities

 

 

Deferred tax liabilities

 

26,930

Loans and borrowings

6

45,638

Other payables

 

5,260

 

 

77,828

Current liabilities

 

 

Trade and other payables

 

77,779

Current tax liabilities

 

4,107

 

 

81,886

Total liabilities

 

159,714

 

 

 

Net assets

 

339,320

 

 

 

EQUITY

 

 

Share capital

7

90,849

Share premium

7

258,588

Other reserves

7

-2,107

Retained earnings

 

-8,110

Capital and reserves attributable to owners of the Company

 

339,220

Non-controlling interests

8

100

Total equity

 

339,320

 

 

 

Share
capital
£'000

 

Share
premium
£'000

 

Other
reserves
£'000

 

Retained
earnings
£'000

 

Total
£'000

 

Non-controlling
interests
£'000

 

Total
equity
£'000

Balance at 1 May 2018

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Derriston Capital plc equity

 

625

 

1,689

 

-156

 

-

 

2,158

 

-

 

2,158

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Result for the period

 

-

 

-

 

-

 

-8,110

 

-8,110

 

-

 

-8,110

Foreign currency translation differences

 

-

 

-

 

1,870

 

-

 

1,870

 

-

 

1,870

Total comprehensive income for the period

 

-

 

-

 

1,870

 

-8,110

 

-6,240

 

-

 

-6,240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transactions with owners of the Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issue of ordinary shares as consideration to effect business combination

 

90,224

 

256,899

 

-

 

-

 

347,123

 

-

 

347,123

Non-controlling interests on acquisition of subsidiaries

 

-

 

-

 

-

 

-

 

-

 

100

 

100

Employee share schemes

 

-

 

-

 

-3,821

 

-

 

-3,821

 

-

 

-3,821

 

 

90,224

 

256,899

 

-3,821

 

-

 

343,302

 

100

 

343,402

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2018

 

90,849

 

258,588

 

-2,107

 

-8,110

 

339,220

 

100

 

339,320

 

 

1.   Accounting policies for the financial period ended 31 December 2018

Business combinations

Revenue recognition

Intangible assets

Trade and other receivables

2.   Operating segments

1.   Assets at Scale is involved in the creation of dynamic and data-driven content for global brands.

2.   Platform and E-Commerce creates digital user experience design, development of branded e-commerce and apps.

3.   Creative Content and Innovation. This segment is involved in the production of digital content and films using and adapting the latest technology and trends like artificial intelligence, voice, augmented reality and virtual reality.

4.   Media planning and buying. This technology and services pillar encompasses full-service campaign management analytics, creative production and ad serving, platform and systems integration and transition and training and education.

 

 

 

Digital content

Media planning and buying
£'000

 

Total
£'000

 

 

Creative Content & Innovation
£'000

 

Assets @ Scale
£'000

 

Platforms & Commerce
£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

9,759

 

14,901

 

11,588

 

916

 

37,164

 

 

 

 

 

 

 

 

 

 

 

Segment profit

 

-570

 

5,739

 

721

 

172

 

6,062

 

 

 

 

 

 

 

 

 

 

 

Total overhead costs

 

 

 

 

 

 

 

 

 

-1,355

Acquisition related expenses

 

 

 

 

 

 

 

 

 

-5,005

Depreciation and amortisation

 

 

 

 

 

 

 

 

 

-8,172

Finance income and expenses

 

 

 

 

 

 

 

 

 

-651

Profit before tax

 

 

 

 

 

 

 

 

 

-9,121

Note: During 2018, the S4Capital Group has not been active in the area "first party data"

3.   Adjusting Items

-       Non-recurring items that are not considered part of underlying trading are material one-off items of expense or income, which are relevant to an understanding of the underlying performance of the Group.

-       Other adjusting items comprise the amortisation of certain fair value adjustments recorded in respect of finite-life intangible assets recognised in the purchase price allocation for the acquisition of the MediaMonks Multimedia Holding Group and the MightyHive Group.

For the year ended 31 December

Reported
£'000

Adjusting:
Non-recurring expenses1
£'000

Adjusting:
Amortisation2
£'000

Adjusted
£'000

Operating profit

-8,470

5,005

7,507

4,042

Net finance expense

-651

-  

-  

-651

Result before income tax

-9,121

5,005

7,507

3,391

Income tax expense

1,011

-

-1,877

-866

Result for the period

-8,110

5,005

5,630

2,525

1.   Non-recurring expenses relate to the total expenses for acquisition of the MediaMonks Multimedia Holding Group and the MightyHive Group in 2018.

2.   This relates to the amortisation of certain intangibles assets recognised as a result of the acquisitions of the MediaMonks Multimedia Holding Group and the MightyHive Group during the period ended 31 December 2018. In addition, there is a (deferred) income tax credit in respect of these amortisations.

4.   Earnings per share

Basic earnings per share (unaudited)

 Year to 31 December 2018

Weighted average number of shares in issue for the purpose of basic and adjusted net result per share

247,776,256

Net result attributable to equity owners of the Company (£'000)

-8,110

Basic net result per share

-0.03

Diluted net result per share

-0.03

 

 

Adjusted non-recurring expenses

5,005

Adjusted amortisation of intangible assets related to acquisitions

7,507

Adjusted income tax expense

-1,877

Adjusted net result

2,525

Adjusted basic net result per share

0.01

5.   Intangible assets

Movement intangible assets (unaudited)

 Goodwill
£'000

 Brands
£'000

 Customer relationships
£'000

 Order backlog
£'000

 Software
£'000

 Total
£'000

Intangible assets as of 1 January 2018

-

-

-

-

-

-

Additions

279,898

8,538

100,665

4,360

51

393,512

Charge for year

-

-212

-3,123

-4,179

-10

-7,524

Foreign exchange differences

791

39

456

0

1

1,287

Intangible assets as of 31 December 2018

 280,689

 8,365

 97,998

 181

 42

 387,275

-       100% of the shares of MediaMonks Multimedia Holding B.V. (including subsidiaries), as of 9 July 2018;

-       100% of the shares on MightyHive, Inc (including subsidiaries), as of 24 December 2018.

 

 

 

Fair value
£'000

Intangible assets - Brand name

              8,493

Intangible assets - Order backlog

              4,360

Intangible assets - Customer relationships

         100,665

Intangible assets - Software

                   51

Property, plant and equipment

              2,615

Financial fixed assets

                 847

Cash and cash equivalents

              4,150

Trade and other receivables

           21,049

Trade and other payables

        -19,785

Other non current liabilities

             -489

Deferred taxation

        -28,444

Net assets

           93,512

Goodwill

         168,248

Total purchase consideration

         261,760

 

 

Payment in kind (common stock and (un)vested options)

           56,359

Cash

         205,401

Total purchase consideration

         261,760

 

 

Purchase consideration - cash

         205,401

Cash and cash equivalents

          -4,150

Cash outflow on acquisition (net of cash acquired)

         201,251

 

Fair value
£'000

Property, plant and equipment

 566

Financial fixed assets

 664

Cash and cash equivalents

 7,874

Trade and other receivables

 54,043

Trade and other payables

 -59,260

Net assets

 3,887

Goodwill

 111,634

Total purchase consideration

 115,521

 

 

Payment in kind (common stock and (un)vested options)

 43,613

Deposit on escrow amount

 4,338

Cash

 67,570

Total purchase consideration

 115,521

 

 

Purchase consideration - cash

 67,570

Cash and cash equivalents

 -7,874

Cash outflow on acquisition (net of cash acquired)

 59,696

6.   Bank loans facilities

As at 31 December 2018 (unaudited)

 Total
£'000

Total term loan facilities

44,727

Multicurrency revolving loan facility

1,789

 

46,516

Transaction costs

-878

Total loans and borrowing

45,683

·     

·     

 

7.   Equity

Share capital, share premium other reserves (unaudited)

Nominal value in pence

Number of shares

 Issued
share capital
£'000

 Share premium5
£'000

 Other reserves
£'000

Derriston Capital Plc equity1

25

2,500,000

625

1,689

-

Issue of shares 29 May 2018 - fundraising2

25

59,196,700

14,799

35,716

-

Acquisition MediaMonks Group 9 July 20183

 

 

 

 

 

- Placed in fundraising

25

126,293,692

31,573

91,676

-

- Rollover shares

25

55,794,748

13,949

42,182

-

- Employee benefit trust

25

11,709,601

2,928

-

-2,928

Acquisition MightyHive Group 24 December 20184

 

 

 

 

 

- Placed in fundraising

25

67,272,727

16,818

55,817

-

- Rollover shares

25

37,068,084

9,267

31,508

-

- Employee benefit trust

25

3,561,431

890

-

-890

Other comprehensive income

 

 

 

 

1,870

As at 31 December 2018

25

363,396,983

90,849

258,588

-1,948

8.   Non-controlling interests


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