Financial statements Q2 2018 for United Communications Inc.
Financial statements Q2 2018 for United Communications Inc. attached.
Letter of CEO
Net revenues and media billings
Net revenues the first half year 2018 are 4.2% higher the same period in 2017.
During the three months ended June 30, 2018, the Net revenues have been 13% lower than the same period last year. This is explained by the loss of two of our top five clients whose contracts have expired during the second quarter and the seasonality of the spending pattern this year. During the three months ended March 31, 2018, Net revenues were 23.5% higher than compared with the same period in 2017. We have won and continue to win new clients and assignments from existing clients, but it will take time to cover the gap of the clients that have left during the first half year.
Compared with last year clients’ media investments have increased with 11%, excluding In Sight AS that was sold in year 2017. Our share of the aggregated media spending for all companies in the group increased by 9,8% ($4.8 MUSD) the six months ending June 2018. For year 2018 our current forecast shows that it is uncertain that the group reaches last years’ media investment volume.
Gross profit and result of operations
Gross profit for the group has increased 19% compared to the six months ending June 2017. The attained Gross profit margin is 9.2% compared to 8% last year. The increased gross profit margin is a result of increased sales of services not directly linked to the media investments, for example market analysis, competitive analysis, econometric modelling et al.
The operations generated a profit of $353,000 the first half year compared to a profit of $345,000 the same period last year. The selling, general and administrative expenses of the operations have increased 21.8%, $443,000, so far this year. The gross profit growth has largely been re-invested to improve and strengthen the Company’s ability to compete in the market. Costs for retaining qualified staff, costs for recruiting staff with specialist skills within digital disciplines, investments in training, systems and tools and expanded office space for a growing work force are main contributing factors to the increased costs. We aim to keep our organisation both lean and effective, but at the same time we need to offer our clients a broader array of digital specialist services in today’s market to have a competitive edge in an increasingly fierce market. We also need to secure the best people to service our current clients and win new clients.
Profit before taxes and minority interest
Profit before taxes and minority interests generated the first six months is $240,000 compared to $499,000 in 2017. Included in the profit in year 2017 is our share of the income In Sight AS of $243,000. We sold our shareholding in In Sight AS in the end of year 2017. The profit the first half year 2017 excluding this income is $256,000, which is close to this years’ outcome.
The profit available to shareholders for the six months ended June 30, 2018, is $157,000.
We are still hesitantly positive about this years’ outcome being aware of the significant financial effect of the loss of two of our top clients. It poses a challenge. Our top priority has been and continues to be to win more new clients to fully compensate for these losses and we are working intensively to ensure this happens.
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New York, USA, 15th of August 2018
Niclas Fröberg, Chief Executive Officer
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