Avidly Plc, Financial Statements Release, 7 Mar 2019 at 8:30 EET
Marketing service company Avidly increased its revenue significantly in 2018. During the year, Avidly expanded its operations to South-East Finland and the to Nordic countries, prepared a clear growth strategy and raised the funds to execute that strategy.
July–December 2018
- Revenue was EUR 10,100 thousand (7,424), +34.8%.
- Gross profit was EUR 8,385 thousand (6,071), +38.1%.
- EBITDA improved by EUR 189 thousand and was EUR 516 thousand (327) equalling 5.1% of revenue (4.4%).
- EBIT improved by EUR 67 thousand and was EUR 264 thousand (197) equalling 2.6% of revenue (2.7%).
- Result for the period was EUR 153 thousand (344).
- Earnings per share for the second half of 2018 were EUR 0.08 (0.25).
January–December 2018
- Revenue was EUR 19,770 thousand (15,665), +26.2%.
- Gross profit was EUR 15,327 thousand (12,912), +18.7%.
- Continuous services amounted to some 42% (41%) of gross profit.
- EBITDA was EUR 1,047 thousand (1,327) equalling 5.3% of revenue (8.5%).
- EBIT was EUR 616 thousand (1,064) equalling 3.1% of revenue (6.8%). Adjusted for transaction costs, EBIT amounted to EUR 811 thousand (1,071).
- Result for the period was EUR 352 thousand (960).
- Earnings per share were EUR 0.22 (0.69).
- Cash flow from operations improved and was EUR 934 thousand (791).
- Board proposes to the AGM a dividend of EUR 0.08 (0.16).
Outlook for 2019 (unchanged, published 19 December 2018)
Avidly estimates that its revenue in 2019 will be EUR 22–24 million (revenue 2018: EUR 19.8 million) and EBIT will improve compared to 2018 (EBIT 2018: EUR 0.6 million).
CEO Jyrki Vaittinen
In 2018, we succeeded in growing our business significantly, with our revenue increased by over 26%. By acquiring Nitroid, we expanded our operations to South-East Finland and we took our first steps in international expansion as well. Also, our result developed according to our expectations during the second half of the year.
Our new colleagues in Kotka, Lappeenranta and Kouvola brought us a lot of new know-how and ensure that we are close to our customers throughout Finland. A reorganisation at our Turku office following personnel changes helped them gain new momentum and as a result, we were able to get the business in Turku back on a good growth track during the autumn. At the end of the year, we also opened an office at Lahti.
In August, we finalised the transaction where we acquired the inbound marketing company Avidly AB operating in Sweden, Norway and Denmark. This major event led the company to change its name from Zeeland Family to Avidly AB and realised our plans for international growth. During the autumn, we postponed our planned dual listing in Sweden and in order to finance our growth, we raised in November 2018 and January 2019 a total of EUR 3.3 million from investors with CapMan Growth Fund being the anchor investor. This financing will help us look for organic and inorganic growth in inbound marketing based on HubSpot, in particular. HubSpot is the market leading technology for inbound marketing, comprising tools for marketing, sales and customer service, and Avidly is already one of the leading HubSpot partners in the world.
At the end of the year our contract with the Finnish retail company SOK on outsourcing the production of marketing materials ended. Even though we continue to cooperate, for example, in the field of package design, the discontinued outsourcing led to a need to adjust the operations of our Helsinki office. We communicated our new growth strategy at the beginning of 2019 and at the same time changed our organisation to better reflect the coming business needs. In future, we will strongly focus on building strategic partnerships also in continuous services.
Avidly’s strength is proved by our focus on helping our customers forward even during such an eventful year. In Finland, our organic revenue growth was 10%. Following the organisational changes at the beginning of 2018, we increased our pace and both our revenue and result increased significantly during the second half of the year. The expansion of our know-how in 2018, our new growth strategy and the funding raised for its execution will take us forward at speed also in 2019.
| Key figures | 1-12 | 1-12 |
| EUR 1,000 | 2018 | 2017 |
| Revenue | 19,770 | 15,665 |
| Gross profit | 15,327 | 12,912 |
| EBITDA | 1,047 | 1,327 |
| Operating profit (EBIT) | 616 | 1,064 |
| Profit before taxes | 256 | 847 |
| Personnel, average | 195 | 160 |
| Earnings/share, EUR | 0.22 | 0.69 |
| Equity ratio, % | 50.4% | 27.8% |
| ROI, % | 6.2% | 31.4% |
| Equity/share, EUR | 3.73 | 2.19 |
| Gearing, % | -14.7% | 15.6% |
| Number of outstanding shares, weighted average during the period | 1,585,980 | 1,385,677 |
| Number of outstanding shares, at the end of the period | 2,239,560 | 1,397,689 |
Market situation
Communication service companies in Finland described their market situation as fairly good according to the Business Tendency Survey compiled by the Confederation of Finnish Industries (EK) in January 2019. They are experiencing rapid growth and their outlook for the next six months is good. The economic trends are expected to remain fairly stable during the spring. According to the survey, 38% of companies had problems with recruitment.
In Finland, a total of EUR 1,246 million was spent on media advertising in 2018, indicating a growth of 2.3% from the previous year. Based on Kantar TNS statistics and a study made by the media industry organisations, investments grew in all media categories except in print media. Online advertising attracts the largest share of spending, 34%. In 2018, outdoor advertising grew the most in percentage terms, 15%. Investments in TV advertising remained stable.
According to the Interactive Advertising Bureau in Finland, the total digital advertising spend in Finland amounted to EUR 421 million. Compared to the previous year, the spending grew by nearly 14% and the share of digital advertising spend of the total advertising spend increased by 3.6 percentage points.
Zenith and Group M estimate that global media advertising spend increased by some 4% in 2018. In 2019, investments in advertising are expected to grow globally, albeit at a lower pace than in 2018. Avidly estimates that the total marketing spend in its current markets will grow moderately in 2019.
Revenue and gross profit
Avidly Group’s revenue in 2018 grew significantly, by 26.2%, and amounted to EUR 19,770 thousand (15,665). Revenue developed positively in Finland and some 10% of the growth during the year was organic. During the year, Avidly expanded its operations also through acquisitions. New operations in Finland and in the Nordic countries corresponded to some 16% of the growth.
Gross profit increased by 18.7% during the year and was EUR 15,327 thousand (12,912). Continuous services amounted to some 42% (41 %) of gross profit.
Result
Avidly’s result began to improve during the second half of 2018. The profitability for the full financial year decreased from the comparable year, due to lower profitability during the first six months following personnel changes and transactions. During the year, the Group’s EBITDA decreased by 21.1% and was EUR 1,047 thousand (1,327) equalling 5.3% of revenue (8.5%). Operating profit decreased by 42.1% and was EUR 616 thousand (1,064). Operating profit was 3.1% (6.8%) of revenue and 4.0% (8.2%) of gross profit.
In 2018 Avidly made major acquisitions, which resulted in a total of EUR 195 thousand in transaction costs. In the comparable year, these costs totalled EUR 7 thousand. Adjusted for the transactions costs, EBIT in 2018 was EUR 811 thousand (1,071).
Profit before taxes was EUR 256 thousand (847). Profit for the period amounted to EUR 352 thousand (960). In addition to transaction costs, the profit for the period was affected by the costs related to raising funding, totalling EUR 196 thousand (49) and recorded in financial expenses. Income taxes include deferred tax assets amounting to EUR 138 thousand (168) resulting from losses confirmed in taxation.
Earnings per share in 2018 were EUR 0.22 (0.69).
Avidly owns some 27% of PCKT Money Oyj, a company developing and selling customer loyalty and payment card systems. Avidly’s estimated share of the result of this associated company at the date of the financial statements, EUR 43 thousand (0), is included in the consolidated financial statements as share of profit in associated companies.
Balance sheet and financial position
On 31 December 2018, Avidly’s balance sheet total grew to EUR 16,561 thousand (11,008). The growth came from increased goodwill as a result of the acquisitions as well as increased accounts receivable and cash and cash equivalents. The Group’s equity totalled EUR 8,355 thousand (3,056) at the end of the year. Equity increased due to a directed share issue to CapMan Growth Fund and other investors in November, which made up part of the funding raised in order to execute the Group’s future growth strategy. Avidly’s equity ratio at the end of the year increased thus to 50.4% (27.8%) and equity per share was EUR 3.73 (2.19).
The Group’s cash flow from operations was EUR 934 thousand (791). Net debt on 31 December 2018 was EUR -1,227 thousand (478) and gearing was -14.7% (15.6%). The net debt includes only interest-bearing loans from financial institutions. A non-interest bearing restructuring debt for one of the subsidiaries, to be repaid according to schedule in 2020, contributes to the Group’s debts.
Investments and R&D expenses
Avidly’s investments in 2018 totalled EUR 1,261 thousand (591). Investments comprised the acquisition of Nitroid in Finland and Avidly AB operating in the Nordic countries as well as replacement investments and renovations for new office spaces.
The Group’s R&D activities in 2018 were mainly executed in connection with customer projects. Recorded R&D expenses equalled 0% (0%) of revenue.
Changes in the Group structure
In May 2018, Avidly acquired the marketing communication agency Nitroid, operating in South-East Finland. The purchase price was EUR 592 thousand. Nitroid’s operations were consolidated with the Group figures as of 1 June 2018.
In July 2018, the fully-owned subsidiaries Zeeland United Oy, H1 Web Oy and Pakkahuone Oy were merged with the Parent Company.
In August 2018, the transaction to acquire Avidly AB, a company offering HubSpot marketing automation services in Sweden, Norway and Denmark, was finalised. The purchase price was EUR 2,058 thousand. In addition, the sellers are entitled to a possible additional purchase price. At this date, the additional purchase price is not known. With the information available at this date, the Board of Directors assumes that the targets set for Avidly AB’s net result will not be met and therefore additional purchase price will not be paid. The company will confirm the possible final additional purchase price approximately in May 2019. Avidly AB’s operations were consolidated with the Group figures as of 1 September 2018.
Parent Company
In 2018, the Group’s parent company Avidly Plc’s revenue totalled EUR 4,870 thousand (1,962), its operating profit was EUR 363 thousand (123) and result for the period was EUR 88 thousand (117). Since fully-owned subsidiaries Zeeland United Oy, H1 Web Oy and Pakkahuone Oy were merged with Avidly Plc, the Parent Company’s business operations consist of marketing communication services in Finland in addition to providing administrative services at the end of year. This contributed to the increase in revenue and results.
These mergers also had an impact on the Parent Company balance sheet. At the end of the period, the Parent Company’s balance sheet total was EUR 13,651 thousand (7,823) and equity was 9,081 thousand (3,844). Equity ratio was 66.5% (49.1%).
Board’s proposal for distribution of profits
Avidly Plc’s Board of Directors proposes to the Annual General Meeting that, based on the consolidated balance sheet for the period ending on 31 December 2018, Avidly will distribute a dividend of EUR 0.08 per share (0.16), excluding the treasury shares held by the Company. The rest of the profits shall be left to an account for profits/losses. The dividend shall be paid to the shareholders registered in the shareholders’ register of Avidly Plc held by Euroclear Finland Ltd on the record date 3 April 2019. The Board of Directors proposes that the dividend will be paid on 10 April 2019.
Sustainability
Sustainability in Avidly means above all social responsibility, ensuring the well-being of personnel, and creating an inspiring work environment that promotes creativity.
In 2018, the Group employed on average 195 (160) people and the number of employees at the end of the year was 239 (162). Employee benefit expenses for the period amounted to EUR 9,362 thousand (7,649). Employee satisfaction is measured on a weekly basis. According to the study, the personnel’s satisfaction with their work and their employer is at a good level.
Avidly places strong emphasis on personnel development and well-being, and offers learning opportunities for future professionals. In August 2018, Avidly launched a trainee programme where four young digital marketers will learn and grow with us in order to become inbound marketing professionals.
Avidly wants to provide its employees with an enthusiastic work community that pulls together. In autumn 2018, Avidly began to write a culture code for the company. Avidly’s refined values and the culture code, to be launched in spring 2019, will facilitate the integration of acquired businesses as well as improve the success of recruitments.
Avidly’s environmental impacts are estimated to be low, and they are related to the environmental impacts of normal office work performed by knowledge workers, such as electricity consumption by IT equipment, printing, recycling, general energy consumption, and travelling. For 2019, Avidly chose climate change mitigation and minimising the CO2 footprint of the Finns as the subject of its Tomorrowbono sustainability programme. Avidly will do this pro bono work together with CO2Esto, a Finnish company specialising in climate change mitigation.
According to its strategy, published in January 2019, Avidly is primarily a growth company. Despite its clear growth objectives, the core of Avidly’s financial responsibility continues to be profitable growth and good dividend yield.
Shares and share capital
The Company has a single share series. Each share gives one vote. Avidly Plc’s shares are listed on the Nasdaq First North marketplace in Helsinki under the code AVIDLY.
Trading in shares and market value
In 2018, a total of 625,710 Avidly shares (1,262,267) were traded, representing approximately 39% (91%) of all shares. On the final trading day of 28 December 2018, the share price was EUR 5.16 (6.89). The highest quoted price during the year was EUR 7.96 (7.09) and the lowest price was EUR 4.58 (3.18). The market value of Avidly Plc’s outstanding shares at the end of the period was EUR 11,556 thousand (9,561).
Share capital, number of shares and share ownership
At the beginning of 2018, the number of shares was 1,397,869, the share capital was EUR 322 thousand, and the total number of owners was 775.
During the year Avidly had several directed share issues and as a result, at the end of the year the number of shares was 2,258,772, of which 2,239,560 were outstanding. The share capital remained at EUR 322 thousand. The number of shareholders increased during the year and was 934 at the end of the period.
The average number of shares during the period was 1,604,559 (1,397,869) and 1,795,435 (1,397,869) during the second half of 2018.
The personnel employed by Avidly held 11.9% (19.2%) of shares on 31 December 2018. The holdings of the Board of Directors, CEO and the bodies they control (directly or indirectly) totalled 25.8% at the year-end (31.12.2017: 29,8%). Avidly does not have options plans at the moment.
Treasury shares
At the beginning of the year, the company held 10,154 treasury shares. In December 2017, the company began a share buyback programme, under the authorisation by the AGM of 6 April 2017. The share purchases continued until 29 March 2018. In March, 15,000 shares held by the company were transferred against payment to the CEO for incentive purposes. In June, the company redeemed 10,000 shares held by the former COO. Treasury shares were used as part of payment in the Nitroid acquisition. At the end of the year, Avidly held a total of 19,212 own shares, equal to 0.9% of all shares.
Share authorisations
The Annual General Meeting of 5 April 2018 authorised the Board of Directors to resolve upon the acquisition of the company’s own shares in one or more instalments. The maximum amount of shares to be acquired under the authorisation is 139,786 shares, corresponding to a maximum of some 10 percent of all shares on the date of the notice to the AGM. Any acquisition under the authorisation may only be carried out by using the company’s non-restricted equity and at a value formed in Nasdaq First North market place maintained by Nasdaq Helsinki at the time of the applicable acquisition. The authorisation is valid until 30 June 2019, and the Board did not use the authorisation during the period under review.
The AGM of 5 April 2018 authorised the Board to resolve upon one or more share issues without payment and/or share issues against payment. The authorisation includes the right to transfer treasury shares or to resolve upon issuing of option rights or other special rights entitling to shares as set out in the Finnish Limited Liability Companies Act Chapter 10 Section 1. The maximum amount of shares that can be issued under the authorisation, either by issuing new shares, transferring treasury shares and/or issuing option and other special rights entitling to shares as set out in the Finnish Limited Liability Companies Act Chapter 10 Section 1, is 600,000 shares, corresponding to some 30 percent of all shares after all shares that can be issued, all treasury shares that can be transferred and/or all shares that can be issued based on option and other special rights entitling to shares as set out in the Finnish Limited Liability Companies Act Chapter 10 Section 1 have been issued and/or transferred. This authorisation was used in connection with the acquisitions in 2018. A total of 151,309 shares could still be issued under this authorisation. The authorisation is valid until 30 June 2019.
The Extraordinary General Meeting of 31 August 2018 authorised the Board to resolve upon one or more directed share issues without payment directed to the shareholders of Avidly AB. The share issue shall be used as the payment of the conditional additional purchase price regarding the purchase of Avidly AB’s shares. The authorisation includes the right to issue new shares or transfer Avidly Plc’s treasury shares. The maximum amount of shares that can be issued under the authorisation, either by issuing new shares or by transferring treasury shares, is 800,000 shares. The authorisation is valid until 30 June 2019, and the Board did not use the authorisation during the period under review.
The EGM of 31 August 2018 authorised the Board to resolve upon one or more share issues without payment and/or share issues against payment. The authorisation includes the right to issue treasury shares or to resolve upon issue of option rights or other special rights entitling to shares as set out in the Finnish Limited Liability Companies Act Chapter 10 Section 1. The maximum amount of shares that can be issued under the authorisation, either by issuing new shares, transferring treasury shares and/or issuing option and other special rights entitling to shares as set out in the Finnish Limited Liability Companies Act Chapter 10 Section 1, is 450,000 shares. The authorisation does not revoke other authorisations. The authorisation is valid until 30 June 2019. The Board used this authorisation in November 2018 when issuing a total of 16,000 new shares to a group of investors and in January 2019 when deciding on a directed issue of 110,000 shares to Palcmills Oy. A total of 324,000 shares could still be issued under this authorisation.
The EGM of 31 August 2018 authorised the Board to resolve upon one or more share issues with the purpose of offering the issued shares to both general public and institutional investors. The maximum amount of shares that can be issued under the authorisation is 800,000 shares. The authorisation is valid until 30 June 2019. The Board used this authorisation when deciding on directed share issues to CapMan Growth Fund in November 2018. A total of 400,000 shares could still be issued under this authorisation.
Dividend
The AGM of 5 April 2018 decided to pay a dividend of EUR 0.16 per share. The record date for dividend payment was 9 April 2018 and the dividend was paid on 17 April 2018.
After the end of the financial period, the Board of Directors’ decided on 30 January 2019 on Avidly’s growth strategy and renewed the Group’s long-term dividend policy. During the strategy period of 2019–2024, Avidly may distribute at the most 50% of its annual net result as dividends, given that distribution of the dividends does not affect Avidly’s capability on reaching its growth targets for the period of 2019–2024. For 2018, the Board of Directors proposes a dividend of EUR 0.08 per share.
Administration
The Annual General Meeting of the company was held on 5 April 2018 in Helsinki. The AGM re-elected Ville Skogberg, Jari Tuovinen, Marko Häkkinen and Lasse Järvinen as members of the Board. In its organising meeting after the AGM, the Board elected Jari Tuovinen as Chair and Marko Häkkinen as Vice Chair. The Extraordinary General Meeting of 31 August 2018 made resolutions related to the acquisition of Avidly AB and as part of the transaction set the number of Board members at six. Ayed Mosa A Alshamrani and Ingunn Bjøru were elected as new members of the Board. The EGM of 13 December 2018 convened to decide on the directed share issue to CapMan Growth Fund decided to set the number of Board members at seven and elected Juha Mikkola as a new member.
At the end of 2018, Avidly’s Board of Directors comprised Jari Tuovinen (Chair), Marko Häkkinen (Vice Chair), Ayed Mosa A Alshamrani, Ingunn Bjøru, Lasse Järvinen, Juha Mikkola and Ville Skogberg.
Avidly’s CEO during the period under review was Tuomas Airisto. Jyrki Vaittinen, who was appointed COO of Avidly as of 1 October 2018, took over as CEO on 1 January 2019 as announced earlier.
Following the international expansion of the company, the structure of Avidly’s management team was renewed during the year. At the end of 2018, the management team consisted of Sirpa Alhava, Mikko Marttinen, Ismo Nikkola, Jyrki Vaittinen and Tuomas Airisto. At the beginning of 2019, Avidly organised its business in two segments and as of 1 January 2019, the management team comprises CEO Jyrki Vaittinen, Deputy CEO Ismo Nikkola, CFO Mikko Marttinen, COO (Finnish business) Teea Björklund and COO (International business) Ingunn Bjøru.
Avidly’s Corporate Governance Statement is available on the company’s investor website at https://investors.avidlyagency.com/en/governance
Certified advisor
The Company’s certified advisor, as required by the First North market place rules, has been Oaklins Merasco Oy during the accounting period.
Auditor
Jari Paloniemi, Authorized Public Accountant, acts as the auditor of Avidly Group, with Veikko Terho, Authorized Public Accountant, as the deputy.
Business risks and uncertainties
Strategic risks
Avidly aims to grow faster than the market both organically and by actively concluding M&A transactions. Digitalization is currently rapidly changing the marketing communications industry. This has brought, and will continue to bring, many new, agile operators into the industry, and defining the entire industry segment has become more difficult than before. This has made competition tougher, and Avidly will need to compete even more against both the established industry operators and entirely new competitors.
Operational risks
The general market situation has a large impact on demand for marketing communications services. Avidly has continuously aimed at improving its cost-efficiency and financial control and, thereby, its ability to react to any possible changes in the market situation.
The continuing, strong shift of focus in the marketing communications industry toward digital services demands that the current personnel acquire new competences and are able to rapidly renew themselves. Furthermore, it must be possible to recruit new expertise, which makes Avidly’s employer image very important.
Marketing communications projects commonly use a fixed price. Profitability requires that the projects are assessed and priced correctly. It is possible that the pricing of the projects will fail and the projects’ profitability will suffer. Pricing projects focused on software is especially challenging. Furthermore, there is increased price competition especially in public administration projects, which may affect the profitability of the projects. With regard to outsourcing services, the service contracts signed with clients will often have a long duration, and if Avidly should fail in the negotiations and pricing related to them, this may have a negative impact on the development of profitability within Avidly.
In line with its strategy, Avidly has concluded and will continue to aim to conclude M&A transactions in order to extend the Group’s service offering and grow its geographical coverage. In the longer term, Avidly will aim to conclude even more M&A transactions in Europe. Concluding acquisitions outside Finland and the Nordic countries may be more difficult than in a domestic context. There is uncertainty related to the completion of acquisition, in terms of finding suitable companies and determining the correct price. The integration phase occurring after an acquisition includes the risk of the customers and personnel of the acquired companies leaving following the arrangement.
Financial risks
Avidly has some EUR 1.4 million in interest-bearing liabilities. Changes in reference rates do not have a material impact on Avidly’s financing costs. Avidly’s interest rate risk is low and separate hedging against it has not been deemed necessary.
The Group's currency risk mainly consists of currency translation risk in foreign operations. The Group has not hedged this risk. Avidly’s long-term financing is in euros and does not have exchange rate risk. Avidly estimates its exchange rate risks at the time of closing the accounts to be not substantial.
Accident and interruption insurance has been taken out in order to protect against interruptions in Avidly’s business due to accidents. In order to ensure business continuity, most of Avidly’s documents are also automatically backed up in a secured storage located outside of the office locations.
One of Avidly's subsidiaries has two pending interlinked disputes in the Helsinki District Court related to termination of employment of two former employees. Avidly is not aware of any other litigation related to the Parent Company or the Avidly Group companies or risks related to authority activities.
Company restructuring programme for one of the Group companies
A company restructuring programme according to the Restructuring of Enterprises Act was confirmed on 9 July 2014 for Avidly Marketing Oy (formerly Zeeland Group Oy), a wholly-owned subsidiary of Avidly Plc. In 2018, Avidly Marketing has executed on the confirmed programme according to plan. If Avidly Marketing’s business does not develop in the manner required in the confirmed programme, this may have a negative impact on Avidly’s financial position.
Avidly’s new strategy, financial targets and dividend policy
Avidly Plc's Board of Directors approved, after the end of the accounting period on 30 January 2019, the new strategy and mid-term financial targets for Avidly and confirmed a new dividend policy. In 2019–2024, Avidly is targeting the annual organic revenue growth to exceed 25% and overall revenue growth to exceed 40%. Avidly targets its revenue to exceed EUR 100 million in 2024.
The new strategy rests on two strong pillars:
1. Avidly aims to substantially grow its services based on HubSpot technology both organically and by means of acquisitions in existing markets (Finland, Sweden, Norway, and Denmark), and by expanding into selected regions, mainly within Europe.
2. In Finland, Avidly continues its organic growth as a marketing agency offering a comprehensive range of services and serving customers throughout the country. The company focuses on offering continuous, comprehensive marketing services to medium-sized companies and individual marketing services to large enterprises.
| Mid-term targets | Target 2019–2024 |
| Organic revenue growth | > 25% annually |
| Inbound Marketing, organic growth | > 35% annually |
| Marketing Services, organic growth | 5–10% annually |
| Revenue growth through M&A | > 15% annually |
| Inbound Marketing, growth through M&A | > 35% annually |
| Total revenue | EUR 100 million by 2024 |
| Operating profit (EBIT), % of revenue | 2–7% |
| Inbound Marketing, EBIT-% | > 0% |
| Marketing Services, EBIT-% | 7–12% |
The Board of Directors also updated Avidly’s dividend policy to better reflect the strong growth mode of the strategy period. Avidly may distribute at the most 50% of its annual net result as dividends during the strategy period of 2019 - 2024 given that distribution of the dividends does not affect Avidly’s capability on reaching its growth targets for the period of 2019–2024.
Events after the end of accounting period
As announced previously, Jyrki Vaittinen began as the CEO of the company on 1 January 2019.
On 21 January 2019, Avidly announced a directed share issue to Palcmills Oy. A total of 110,000 shares were issued with a price of EUR 6.25 per share. In total, Avidly received EUR 687,000 in this issue. With the issue, the total funding raised by Avidly in order to execute its growth strategy increased to EUR 3.3 million.
On 28 January, the Board decided to change Avidly’s reporting structure and disclosure policy. As of January 2019, Avidly publishes its financial reports and releases both in Finnish and English. Avidly will report two segments from the accounting period starting from 1 January 2019 onwards. The two business areas and reporting segments will be Marketing Services and Inbound Marketing, and the half-year report 2019 will be the first financial report on new segments.
Avidly’s contract with the Finnish retail company SOK on outsourcing the production of marketing materials, signed on 1 January 2017, was discontinued on 31 December 2018. On 7 February 2019, Avidly announced the completion of co-operation negotiations related to the discontinuation of the contract. As a result, 7 employees became redundant and 11 were temporarily laid off until further notice. In addition, 11 persons working in the department mostly affected by the SOK deal have moved over to other companies. As a result of the personnel changes, Avidly will book an estimated one-time cost of EUR 0.1 million in its half-year result for the first six months of 2019.
Annual General Meeting and financial information
Avidly Plc’s Annual General Meeting is estimated to be held on 1 April 2019. Financial Statements and the Report of the Board of Directors will be available on 7 March 2019 at the Helsinki office of Avidly and online at https://investors.avidlyagency.com/
The next half-year report will be published on 22 August 2019.
Aarhus, 6 March 2019
AVIDLY PLC
Board of Directors
Additional information:
Jyrki Vaittinen, CEO, tel. +358 40 703 1662
Mikko Marttinen, CFO, tel. +358 50 581 7669
Oaklins Merasco Oy acts as Avidly Plc’s Certified Advisor, tel. +358 9 6129 670
Avidly (former Zeeland Family) is Finland’s leading marketing service provider and a leading marketing automation company in the Nordics, listed on the Nasdaq First North marketplace in Helsinki. We create an atmosphere for growth to take our customers forward. We are a team of more than 230 navigators and explorers, makers and shakers in 16 locations in Finland, Sweden, Norway and Denmark. www.avidlyagency.com
Accounting policies
This Financial Statements Release has been prepared in accordance with the International Financial Reporting Standards (IFRS). THe accounting policies are available online at https://investors.avidlyagency.com/
All figures have been rounded from exact figures. The financial statements for 2018 and 2017 have been audited. The auditor’s report has been given on 6 March 2019.
Avidly has applied IFRS 15 Revenue from Contracts with Customers standard as of 1 January 2018. The effects of this standard change, EUR 7 thousand, has been reported as a deduction of retained earnings.
IASB has published the following new or amended standard, which the Group has not yet adopted. Avidly will start using it from the effective date of each standard or interpretation or, if the effective date differs from the first date of the accounting period, from the start of the accounting period following the effective date: IFRS 16 Leases (effective for financial periods beginning on or after 1 January 2019). As a consequence, nearly all leases will be recorded in the balance sheet, since operating leases and finance leases are no longer separated. According to the new standard, the asset (the right to use the leased commodity) and a financial liability concerning the lease payments is recognized. The only exceptions are short-term leases concerning assets of minor value. The accounting treatment for lessors will not change significantly. The Group has estimated that the adaptation of this standard will improve the Group’s EBITDA significantly while the effect on EBIT will only be minor. The Group’s assets and liabilities will increase significantly, which will impact key figures based on balance sheet.
| Consolidated income statement, IFRS | ||||
| 7-12 | 7-12 | 1-12 | 1-12 | |
| EUR 1,000 | 2018 | 2017 | 2018 | 2017 |
| Revenue | 10,100 | 7,215 | 19,770 | 15,665 |
| Other operating income | 12 | 83 | 83 | 117 |
| Materials and services | -1,727 | -1,249 | -4,527 | -2,869 |
| Employee benefit expenses | -5,935 | -4,556 | -11,079 | -9,292 |
| Depreciation and amortization | -252 | -130 | -431 | -263 |
| Other operating expenses | -1,934 | -1,188 | -3,243 | -2,294 |
| Share of profit in associated companies | 0 | 0 | 43 | 0 |
| OPERATING PROFIT | 264 | 176 | 616 | 1,064 |
| Financial income and expenses | -270 | -102 | -359 | -217 |
| PROFIT BEFORE TAXES | -7 | 74 | 256 | 847 |
| Income taxes | 160 | 253 | 96 | 113 |
| Profit for the period | 153 | 326 | 352 | 960 |
| Attributable to: | ||||
| Parent company shareholders | 153 | 326 | 352 | 960 |
| Minority shareholders | 0 | 0 | 0 | 0 |
| Earnings per share calculated from profit attributable to parent company shareholders | ||||
| Undiluted, EUR | 0.08 | 0.25 | 0.22 | 0.69 |
| Diluted, EUR | 0.08 | 0.25 | 0.22 | 0.69 |
| Consolidated statement of comprehensive income | ||||
| EUR 1,000 | ||||
| Profit for the period | 153 | 326 | 352 | 960 |
| Items that may be reclassified to profit or loss in subsequent periods | ||||
| Translation differences | 0 | 0 | 0 | 0 |
| Total comprehensive profit for the period | 153 | 326 | 352 | 960 |
| Total comprehensive income attributable to: | ||||
| Parent company shareholders | 153 | 326 | 352 | 960 |
| Minority shareholders | 0 | 0 | 0 | 0 |
| Consolidated balance sheet, IFRS | 31.12.2018 | 31.12.2017 | ||||
| EUR 1,000 | ||||||
| ASSETS | ||||||
| Non-current assets | ||||||
| Intangible assets | 698 | 246 | ||||
| Goodwill | 6,408 | 4,479 | ||||
| Machinery and equipment | 1,025 | 717 | ||||
| Other tangible assets | 13 | 1 | ||||
| Investments in associated companies | 296 | 253 | ||||
| Deferred tax assets | 440 | 314 | ||||
| Total non-current assets | 8,880 | 6,010 | ||||
| Current assets | ||||||
| Work in progress | 1,195 | 932 | ||||
| Accounts receivable | 2,163 | 1,507 | ||||
| Deferred tax assets | 365 | 334 | ||||
| Other receivables | 392 | 333 | ||||
| Prepayments and accrued income | 541 | 443 | ||||
| Cash and cash equivalents | 3,025 | 1,449 | ||||
| Total current assets | 7,681 | 4,998 | ||||
| TOTAL ASSETS | 16,561 | 11,008 | ||||
| EQUITY AND LIABILITIES | ||||||
| Equity | ||||||
| Share capital | 322 | 322 | ||||
| Invested unrestricted equity fund | 8,338 | 3,161 | ||||
| Retained earnings | -305 | -427 | ||||
| Total equity | 8,355 | 3,056 | ||||
| Non-current liabilities | ||||||
| Financial liabilities | 1,157 | 1,728 | ||||
| Deferred tax liabilities | 250 | 156 | ||||
| Other non-current liabilities | 665 | 1,344 | ||||
| Total non-current liabilities | 2,072 | 3,228 | ||||
| Current liabilities | ||||||
| Financial liabilities | 641 | 199 | ||||
| Received advances | 211 | 114 | ||||
| Accounts payable | 701 | 477 | ||||
| Other liabilities | 2,039 | 1,645 | ||||
| Accrued expenses and deferred income | 2,542 | 2,289 | ||||
| Total current liabilities | 6,134 | 4,724 | ||||
| Total liabilities | 8,206 | 7,952 | ||||
| TOTAL EQUITY AND LIABILITIES | 16,561 | 11,008 | ||||
| Consolidated cash flow statement, IFRS | 1-12 | 1-12 |
| EUR 1,000 | 2018 | 2017 |
| Cash flow from operations | ||
| Operating profit | 616 | 1,064 |
| Adjustments to operating profit | 431 | 263 |
| Change in working capital | -108 | -551 |
| Financial income in the income statement | -15 | -49 |
| Financial expenses in the income statement | 375 | 266 |
| Financial income received | 15 | 49 |
| Financial expenses paid | -375 | -211 |
| Taxes paid | -5 | -40 |
| Cash flow from operations | 934 | 791 |
| Cash flow from investments | ||
| Investments in tangible and intangible assets | -713 | -285 |
| Business acquisitions | -548 | -306 |
| Cash flow from investments | -1,261 | -591 |
| Cash flow from financing | ||
| Business acquisitions | 405 | 58 |
| Changes in short-term loans | 442 | -270 |
| Changes in long-term loans | -1,250 | 1,005 |
| Dividends | -222 | -110 |
| Purchase of treasury shares | -176 | -62 |
| Sales of treasury shares | 104 | 132 |
| Share issue | 2,600 | - |
| Cash flow from financing | 1,903 | 753 |
| Total cash flows | 1,576 | 953 |
| Change in cash and cash equivalents | 1,576 | 953 |
| Cash and cash equivalents at 1 Jan | 1,449 | 496 |
| Cash and cash equivalents at 31 Dec | 3,025 | 1,449 |
| Changes in consolidated equity, IFRS | ||||
| EUR 1,000 | Share capital | Invested unrestricted equity fund | Retained earnings | Total |
| Equity 1.1.2017 | 322 | 3,092 | -1,278 | 2,136 |
| Dividends | -110 | -110 | ||
| Purchase of treasury shares | -62 | -62 | ||
| Transfer of treasury shares | 132 | 132 | ||
| Profit for the period | 960 | 960 | ||
| Equity 31.12.2017 | 322 | 3,162 | -428 | 3,056 |
| Equity 1.1.2018 | 322 | 3,162 | -428 | 3,056 |
| Share issue | 5,248 | 5,248 | ||
| Dividends | -222 | -222 | ||
| Purchase of treasury shares | -176 | -176 | ||
| Transfer of treasury shares | 104 | 104 | ||
| IFRS 15 change | -7 | -7 | ||
| Profit for the period | 352 | 352 | ||
| Equity 31.12.2018 | 322 | 8,338 | -305 | 8,355 |
| Financial liabilities, book value | 2018 | 2017 |
| EUR 1,000 | ||
| Non-current financial liabilities valued at amortized cost | ||
| Loans from credit institutions | 502 | 991 |
| Finance lease liabilities | 242 | 244 |
| Contingent purchase price liabilities | 80 | 207 |
| Checking account limit | 415 | 493 |
| Restructuring debt | 583 | 1,137 |
| Total | 1,822 | 3,072 |
| Current financial liabilities valued at amortized cost | ||
| Loans from credit institutions | 260 | 0 |
| Restructuring debt | 553 | 320 |
| Factoring | 1,344 | 1,022 |
| Finance lease liabilities | 381 | 199 |
| Total | 2,538 | 1,541 |
| Total financial liabilities valued at amortized cost | 4,360 | 4,613 |
| Guarantees and contingent liabilities | 2018 | 2017 |
| EUR 1,000 | ||
| Minimum rents paid on the basis of binding business premises lease agreements | ||
| Within one year | 1,080 | 429 |
| Over one year and under five years | 4,320 | 0 |
| In more than five years | 0 | 0 |
| Total | 5,400 | 429 |
| Leasing payments | ||
| Within one year | 381 | 199 |
| Over one year and under five years | 232 | 244 |
| Total | 613 | 44 |
| Guarantees given on own behalf | ||
| Corporate mortgages | 2,100 | 2,100 |
| Pledged shares by book value | 0 | 226 |
| Pledged bank accounts | 0 | 0 |
| Total | 2,100 | 2,326 |
| Key figures, quarterly | ||||||||
| 1-3 | 4-6 | 7-9 | 10-12 | 1-3 | 4-6 | 7-9 | 10-12 | |
| EUR 1,000 | 2018 | 2018 | 2018 | 2018 | 2017 | 2017 | 2017 | 2017 |
| Revenue | 4,702 | 5,058 | 4,011 | 5,999 | 4,026 | 4,215 | 3,107 | 4,317 |
| Gross profit | 3,542 | 3,400 | 3,334 | 5,050 | 3,500 | 3,341 | 2,542 | 3,529 |
| Operating profit / -loss | 402 | -50 | 30 | 234 | 590 | 277 | -80 | 277 |
| Operating profit, % of gross profit | 8.5% | -1.0% | 0.7% | 3.9% | 1,7% | 6.6% | -2.6% | .,4% |