Goldbach Group Increases Revenue and Profit
OREANDA-NEWS. Revenue growth of 3.2% to CHF 234 million - operating result increased on EBITDA level by 12% - net result of CHF 3.7 million - major extensions and acquisitions of marketing mandates in the first semester - further streamlining in the Marketing Services segment through the sale of the Digital Presences business unit - positive financial outlook for 2016 confirmed - CMO Klaus Nadler leaves Goldbach. K?snacht, 24.08.2016. The Goldbach Group, which is listed on the SIX Swiss Exchange, had a successful first semester in 2016. The Group increased its revenue in a challenging advertising marketplace by 3.2% against the prior- year period to CHF 234 million. Adjusted for divestments and currency effects, revenue growth was 4.6%. Operating profit before depreciation (EBITDA) came to CHF 13.3 million and operating profit (EBIT) was CHF 11.8 million, corresponding to growth of 12.2% and 10.1% respectively.
As an indicator of operational profitability, the EBITDA margin increased to 5.7% during the period under review (prior year 5.2%). The successful sale of the Group's operations in Poland was behind an extraordinary result of CHF +1.9 million, relative to CHF +0.7 million when the Group streamlined its business portfolio in the prior year. After taxes and minority interests, the net result attributable to the shareholders of the Goldbach Group thus came to CHF 3.7 million, compared to CHF 2.4 million in the prior year. Ad Sales Switzerland The Ad Sales Switzerland segment comprises the Group's advertising sales in Switzerland and achieved revenue of CHF 211 Mio. (+6.5% against the previous year). This growth was reflected in the EBITDA of this segment by a 2.6% increase to CHF 18.1 million. Swiss TV business continued to grow in 2016, posting a marked increase of 8.9%, in spite of our assessment that the advertising market contracted during the first semester and this year's major TV events, such as the European Football Championships, are mainly being covered by public broadcasters. This success is partly due to the consistent growth of the Goldbach Media (Switzerland) AG channel portfolio, the popularity with advertisers of programmes screened by channels represented by Goldbach and a strong sales performance. Moreover, the early and multi-year extension of the marketing strategy with the media group RTL Deutschland in the first half of 2016 established a long-term working relationship with this important partner. The nomination of Goldbach Media (Switzerland) AG as the best marketer by advertising clients and media agencies at the Media Trend Awards (for the fifth consecutive year) was equally gratifying.
Radio also performed well, although it did not quite reach the record revenue levels of the months following the abandonment of the euro minimum exchange rate in January 2015, which it wasn't expected to do. The popularity of advertising formats on digital radio platforms such as Spotify is still growing. Goldbach has managed to position itself as a prominent leader in the strongly growing segment of online video advertising through its acquisition of exclusive marketing mandates for Zattoo and Teleboy. The company also entered into a strategic partnership with VICE, a rapidly growing media platform for young adults, and added the website transfermarket.ch to its sport segment. Goldbach Crossfactory and Goldbach SynchScreen were launched as innovative products in the first semester, enabling an extension of the TV brand presence in the online domain. It is worth highlighting that this offer enables programmes to be delivered via the mobile platform Splicky, which was acquired in 2015. Ad Sales Germany There was organic business expansion in Germany, although it proved slower than projected. Nonetheless, the quarter-on-quarter revenue growth shows that the business is on the right track. Goldbach has accumulated a major advertising inventory over the past one-and-a-half years and currently markets 86 media platforms, of which 28 are pay and free TV broadcasters which have had an AGF licence with Goldbach TV since the end of 2015, making them eligible for the advertising market. In addition, cross-border products have been under development in Germany for the German, Austrian and Swiss markets since the start of 2016.
In the first half-year, Ad Sales Germany achieved major revenue growth exceeding 150% to CHF 3.5 million. The half-year EBITDA result improved to CHF -1.3 million (prior year CHF -1.8 million). Ad Sales Austria Business development remains positive in Austria. The TV portfolio was expanded by the start of the advertising window N24. Goldbach has Austria's largest independent online marketing network. Ad Sales Austria posted revenue of CHF 5.7 million in the first half-year and an EBITDA of CHF 0.1 million. Marketing Services The Marketing Services segment failed to meet expectations in the first semester of 2016 due to the persistently fraught market situation. Revenue was down by 23% to CHF 14.7 million and the EBITDA operating result was CHF -1.4 million (prior year -0.6 million). The Group conducted a strategic review of the segment in 2016. Having withdrawn from a plan last year to develop a 360-degree creative agency, the Group is now also discontinuing its production and development of websites and e-commerce shops. In July 2016, Goldbach sold its Digital Presences business unit based in Biel to Computer Rock AG.
In the first semester of 2016, Digital Presences employed about 20 people with revenue in the low one-digit millions. Marketing Services will focus in future on campaign-related services in the areas of performance marketing, search marketing and social media. These services are being offered to direct clients in Switzerland, Germany and Austria by a significantly leaner organisation and they comprise a key component of the Goldbach Group portfolio. Earnings and cash flow The net result increased by 57% to CHF 3.7 million in the first semester of 2016. This clear increase was partly due to consistent cost management as well as the good operating result and the income from the sale of the subsidiaries in Poland. Overhead costs were reduced by over CHF 1 million against the prior year in the first semester 2016. Operative cash-flow was CHF 8.4 million, which was CHF 12.7 million higher than the prior year. Outlook Based on the current outlook and due to the consistent implementation of the initiated measures, the Goldbach Group anticipates its positive financial development to continue through the second half of the year. The Group is standing by its financial goals for 2016 and expects organic revenue growth in the one-digit percent range from continuing operations and an improvement of EBITDA operative profitability in the two-digit percentage range. The net result attributable to shareholders should increase to CHF 8-10 million in 2016.