The Marketing Group PLC (ST:TMGR) Q118 update shows the group delivering sales broadly in line and EBITDA a little ahead of expectations through good cost control. This discipline should stand TMG in good stead as it builds its business both within the existing agencies and in potential further acquisitions. Our forecasts are unchanged on this update. With the TRUTH blockchain-enabled media agency continuing to garner high levels of industry interest, the scale of the discount of the rating to the peer group is looking increasingly anomalous.
Making fit for purpose
Q118 net revenue of €3.7m was 10% below the restated Q117 figure, but operating EBITDA (after central costs) was ahead by 35% at €0.4m. This gives a margin of 10.9% on net revenue, against 7.3% in the prior year. There is a clear focus on making sure that the overheads are sensibly aligned with business levels but also that they allow for the investment needed to build out TRUTH (both the platform and in winning commercial client business) and in laying the groundwork for scaling the business.
This is most likely to be through further acquisitions, with North America and Europe being the priority areas. Management is also working on cementing collaboration through unified branding and building the recurring and repeatable revenue base, as well as looking into an AIM listing.
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