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Last close As at 26/05/2023
-4.75
▲ 1.25 (26.32%)
Market capitalisation
GBP13m
Research: TMT
Mirriad’s interim results confirm the trading update published in July, which indicated the impact of the withdrawal from China, and we make no further changes to our forecasts. There is good progress in the North American market, with US revenues 72% of the group total in H122. It is success here that will determine future growth and moves toward profitability. We regard the contract signed with Magnite at the end of May as a key milestone towards establishing the group’s in-content proposition as a line item in mainstream advertising budgets. Successful execution is key to driving an improved valuation.
Mirriad Advertising |
Looking to US campaign growth |
Interim results |
Media |
12 August 2022 |
Share price performance
Business description
Next events
Analyst
Mirriad Advertising is a research client of Edison Investment Research Limited |
Mirriad’s interim results confirm the trading update published in July, which indicated the impact of the withdrawal from China, and we make no further changes to our forecasts. There is good progress in the North American market, with US revenues 72% of the group total in H122. It is success here that will determine future growth and moves toward profitability. We regard the contract signed with Magnite at the end of May as a key milestone towards establishing the group’s in-content proposition as a line item in mainstream advertising budgets. Successful execution is key to driving an improved valuation.
Year end |
Revenue (£m) |
EBITDA |
PBT* |
Diluted EPS* |
P/E |
Yield |
12/20 |
2.18 |
(8.63) |
(9.09) |
(4.20) |
N/A |
N/A |
12/21 |
2.01 |
(11.58) |
(12.02) |
(3.93) |
N/A |
N/A |
12/22e |
2.01 |
(15.52) |
(15.72) |
(5.63) |
N/A |
N/A |
12/23e |
4.92 |
(14.75) |
(14.90) |
(5.34) |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
KPIs demonstrate progress
Mirriad is continuing to build market presence, demonstrated by its non-financial KPIs showing growth in partnerships and active relationships on both supply and demand sides. Recent appointments of heads of Studio and Programmatic Partnerships are reportedly already accelerating the number of opportunities with major blue-chip brands and major advertising agencies. Some are slated to run shortly but we would expect that the bulk are likely to be weighted towards Q4, boosted by the inherent industry seasonality. Campaigns have been run for Lexus, Nissan and ‘a leading food and drink manufacturer’ in H122 in the US (for Nissan on a streaming video-on-demand platform) and with blue-chip financial service and FMCG clients in Canada. Several campaigns have also been run in the music segment, which provides strong segmental targeting opportunities. Nielsen research clearly demonstrates improved reach versus ad breaks (+20%) and each successful campaign provides collateral to prompt repeat usage and for new clients and partners to view Mirriad’s proposition as a credible campaign component.
Investing in growth delivery
Cash at the end of the half-year was £17.7m, with cash consumption in H122 of £6.7m, including £1.8m in research and development (R&D). This is up from £5.5m in H121 (£1.5m R&D) as investment is made, principally in the people needed to deliver the US growth. The withdrawal from China should save around £1m in FY23, as part of a broader cost reduction programme targeting savings of £2.3m. Our modelling indicates that further funds will still be required in the next 12–18 months to support growth.
Valuation: Success in the US the catalyst for upside
With limited visibility, traditional multiples are unhelpful. However, we do believe that – with good execution – Mirriad’s opportunity can support a valuation significantly above the current level. We look to see announcements of new partners and evidence of progression with existing partners as key data points to demonstrate that the company is still well-placed to monetise its IP and platform.
Exhibit 1: Financial summary
£m |
2019 |
2020 |
2021 |
2022e |
2023e |
||
31-December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||
Revenue |
|
|
1.140 |
2.180 |
2.010 |
2.014 |
4.924 |
Cost of Sales |
(0.178) |
(0.244) |
(0.294) |
(0.302) |
(0.739) |
||
Gross Profit |
0.961 |
1.936 |
1.716 |
1.712 |
4.186 |
||
EBITDA |
|
|
(11.505) |
(8.626) |
(11.579) |
(15.516) |
(14.750) |
Operating profit (before amort. and excepts.) |
|
|
(12.174) |
(9.092) |
(12.019) |
(15.716) |
(14.900) |
Amortisation of acquired intangibles |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Exceptionals |
0.000 |
0.000 |
0.000 |
(0.150) |
(0.180) |
||
Share-based payments |
(0.360) |
(0.350) |
(0.815) |
(0.800) |
(0.800) |
||
Operating profit |
(12.534) |
(9.442) |
(12.834) |
(16.666) |
(15.880) |
||
Net Interest |
0.023 |
0.004 |
(0.001) |
(0.001) |
(0.001) |
||
Joint ventures & associates (post tax) |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Exceptionals |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Profit Before Tax (norm) |
|
|
(12.151) |
(9.089) |
(12.020) |
(15.717) |
(14.901) |
Reported tax |
0.056 |
0.032 |
1.048 |
0.000 |
0.000 |
||
Profit After Tax (norm) |
(12.095) |
(9.056) |
(10.972) |
(15.717) |
(14.901) |
||
Minority interests |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Discontinued operations |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Net income (normalised) |
(12.095) |
(9.056) |
(10.972) |
(15.717) |
(14.901) |
||
Average Number of Shares Outstanding (m) |
150.2 |
215.7 |
279.1 |
279.1 |
279.1 |
||
EPS - normalised (p) |
|
|
(8.1) |
(4.2) |
(3.9) |
(5.6) |
(5.3) |
EPS - normalised fully diluted (p) |
|
|
(8.1) |
(4.2) |
(3.9) |
(5.6) |
(5.3) |
EPS - basic reported (p) |
|
|
(8.3) |
(4.4) |
(4.2) |
(6.0) |
(5.7) |
Dividend (p) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Revenue growth (%) |
174.0 |
91.3 |
(7.8) |
0.2 |
144.5 |
||
Gross Margin (%) |
84.4 |
88.8 |
85.4 |
85.0 |
85.0 |
||
EBITDA Margin (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
||
Normalised Operating Margin |
N/A |
N/A |
N/A |
N/A |
N/A |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
1.125 |
0.823 |
0.930 |
0.806 |
0.992 |
Intangible Assets |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Tangible Assets |
0.913 |
0.637 |
0.767 |
0.642 |
0.592 |
||
Trade & other receivables |
0.212 |
0.186 |
0.163 |
0.163 |
0.399 |
||
Current Assets |
|
|
20.193 |
36.970 |
27.510 |
11.026 |
3.058 |
Stocks |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Debtors |
1.025 |
1.476 |
1.892 |
1.214 |
3.778 |
||
Cash & cash equivalents |
19.092 |
35.421 |
24.501 |
8.695 |
(1.836) |
||
Other |
0.077 |
0.073 |
1.116 |
1.116 |
1.116 |
||
Current Liabilities |
|
|
(1.696) |
(2.317) |
(3.087) |
(2.290) |
(9.268) |
Creditors |
(1.298) |
(1.914) |
(2.867) |
(2.069) |
(4.047) |
||
Tax and social security |
(0.025) |
(0.013) |
(0.002) |
(0.002) |
(0.002) |
||
Short term borrowings |
0.000 |
0.000 |
0.000 |
0.000 |
(5.000) |
||
Lease liabilities |
(0.373) |
(0.390) |
(0.218) |
(0.218) |
(0.218) |
||
Long Term Liabilities |
|
|
(0.423) |
(0.204) |
(0.412) |
(0.412) |
(0.412) |
Long term borrowings |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Long term lease liabilities |
(0.423) |
(0.204) |
(0.412) |
(0.412) |
(0.412) |
||
Net Assets |
|
|
19.200 |
35.271 |
24.941 |
9.130 |
(5.630) |
Minority interests |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Shareholders' equity |
|
|
19.200 |
35.271 |
24.941 |
9.130 |
(5.630) |
CASH FLOW |
|||||||
Operating Cash Flow |
(11.505) |
(8.626) |
(11.579) |
(15.516) |
(14.750) |
||
Working capital |
(0.237) |
0.165 |
0.560 |
(0.119) |
(0.586) |
||
Exceptional & other |
0.000 |
0.318 |
0.568 |
(0.150) |
(0.180) |
||
Tax |
0.248 |
0.082 |
0.026 |
0.000 |
0.000 |
||
Net operating cash flow |
|
|
(11.494) |
(8.061) |
(10.426) |
(15.785) |
(15.516) |
Capex |
(0.062) |
(0.025) |
(0.159) |
(0.075) |
(0.100) |
||
Acquisitions/disposals |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Net interest |
0.023 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Equity financing |
15.290 |
24.779 |
0.044 |
0.000 |
0.000 |
||
Dividends |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Other |
(0.389) |
(0.363) |
(0.380) |
(0.096) |
(0.096) |
||
Net Cash Flow |
3.367 |
16.330 |
(10.920) |
(15.956) |
(15.712) |
||
Opening net debt/(cash) |
|
|
(15.204) |
(19.092) |
(35.421) |
(24.501) |
(8.545) |
FX |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Other non-cash movements |
0.520 |
0.000 |
0.000 |
0.000 |
0.000 |
||
Closing net debt/(cash) |
|
|
(19.092) |
(35.421) |
(24.501) |
(8.545) |
7.166 |
Source: Company accounts, Edison Investment Research
|
|
Research: Financials
JDC Group (JDC) reported strong Q222 numbers and reiterated its FY22 guidance for revenues of €165.0–175.0m (FY21: €146.8m) and EBITDA of more than €11m in FY22 (FY21: €8.3m). We have left our estimates unchanged. In our recent update, we concluded that, based on 2023e consensus EV/sales, EV/EBITDA multiples and our DCF calculation of €37.90 per share, JDC’s valuation does not seem demanding.
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