Business
SYZYGY : 9-Month Report 2024
SYZYGY : 9-Month Report
About this update from Syzygy Ag
9-Month Report 09 30 2024 Interim Report Content 3 Key financial figures as per 09/30/2024 5 Business development and Group Management Report Financial figures 12 Consolidated balance sheet 13 Consolidated statement of comprehensive income 15 Statement of changes in equity 16 Consolidated statement of cash flows 17 Selected explanatory notes 23 Financial calendar 2024 / contact diffferent Berlin Key financial figures Key financial figures as per 09/30/2024 2024 52,568 2023 54,388 2022 52,712 2021 44,658 2020 40,685 Development of sales (in kEUR) 7 % United Kingdom & US 82 % 11 % Poland Germany Sales by segments 2024 4,324 2023 -748 2022 4,752 2021 4,616 2020 2,606 Operating income (in kEUR) 2024 3,866 2023 -1,954 2022 4,062 2021 4,051 2020 2,051 Income before taxes (in kEUR) 2024 0.19 2023 -0.20 0.22 2022 2021 0.23 2020 0.11 Earnings per share undiluted (in EUR) 2024 -458 2023 -1,206 2022 -690 2021 -565 2020 -555 Financial income (in kEUR) 2024 2,717 2023 -2,569 2022 3,039 2021 3,139 2020 1,458 Net income (in kEUR) 2024 2,002 2023 1,477 2022 3,689 2021 709 2020 3,548 Operating cash flow (in kEUR) Key financial figures 50.33 % 36.62 % 9.63 % 3.42 % 100 % Bank deposits and overnight deposits Despite a persistently challenging economic environment, particularly in our core market Germany, we performed well in the first nine months of the year . WPP plc., St. Helier Private investors/others Institutional investors HANSAINVEST Shareholder structure Portfolio structure of cash and marketable securities 50 % 50 % 72 % 28 % Equity Liabilities Non current assets Current assets Balance sheet structure 36 % Services 18 % Automotive 18 % Consumer goods 15 % Finance/insurances 7 % Telecommunication/IT 6 % Others Sales allocation by vertical markets 2024 117 2023 110 2022 110 2021 109 2020 97 Sales by employee annualised (in kEUR) 33 % 17 % 50 % Top 5 Top 6-10 Others Sales by clients' volume 23 % Technology 16 % Strategy/consulting 16 % Project management 16 % Performance marketing 16 % Design 13 % Administration Employees by function Group Management Report Business development and Group Management Report 3. Quarter January - September 2024 2023 Change 2024 2023 Change kEUR kEUR kEUR kEUR Sales 17,639 18,396 -4% 52,568 54,388 -3% EBIT (before goodwill write-downs) 1,486 1,227 21% 4,324 3,457 25% EBIT margin (before goodwill write-downs) 8.4% 6.7% 1.7 pp 8.2% 6.4% 1.8 pp Goodwill write-downs 0 0 n.a. 0 -4,205 -100% EBIT 1,486 1,227 21% 4,324 -748 n.a. EBIT margin 8.4% 6.7% 1.8 pp 8.2% -1.4% 9.6 pp Financial income -147 -287 49% -458 -1,206 62% Net income before tax 1,339 940 42% 3,866 -1,954 n.a. Net income 910 627 45% 2,717 -2,569 n.a. Earnings per share (EUR) 0.06 0.04 50% 0.19 -0.20 n.a. Liquid assets and marketable securities 4,321 2,163 100% 4,321 2,163 100% Operating cash flow 2,251 1,373 64% 2,002 1,477 36% Employees incl. freelancers 588 665 -12% 588 665 -12% 1. General The following Group Management Report provides information on the performance of the SYZYGY GROUP (hereinafter referred to as "SYZYGY", the "Group" or the "Company"). The consolidated financial statements on which the Group Management Report is based have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial year corresponds to the calendar year. 2. Group profile For information on the SYZYGY GROUP's structure, strategy and management, please refer to the explanatory notes in the 2023 Management Report (2023 Annual Report, page 55 ff.). The Group consists of Syzygy AG as the holding company and seven subsidiaries: Ars Thanea S.A. diffferent GmbH syzygy Deutschland GmbH SYZYGY Digital Marketing Inc. Syzygy Performance Marketing GmbH SYZYGY UK Ltd. Unique Digital Marketing Ltd. Group Management Report 2.1. Employees The following table shows the distribution of permanent employees by region: Employees 09/30/2024 Technology 130 09/30/2023 118 The headcount at the SYZYGY GROUP decreased during the reporting period. As of September 30, 2024, the SYZYGY GROUP had 554 permanent employees. This is a decrease of 35 employees compared to December 31, 2023 and a decrease of 73 employees compared to September 30, 2023. This is a decrease of 51 employees in the German companies compared to the same quarter of the previous year and a decrease of 23 employees in the Employees 09/30/2024 Germany 448 Poland 73 United Kingdom 29 United States 4 Total 554 09/30/2023 499 72 48 8 627 Strategy/consulting 92 Project management 88 Performance marketing 86 Design 86 Administration 72 Total 554 112 103 108 100 86 627 UK and USA, while employment in the Poland segment was largely stable. Germany 81 % Poland 13 % United Kingdom 5 % United States 1 % Employees by region The employees by function or area of work shows a significant increase in employees in the technology sector, while all other areas are declining: 23 % Technology 16 % Strategy/consulting 16 % Project management 16 % Performance marketing 16 % Design 13 % Administration Employees by function On average over the period, 566 employees plus around 34 freelancers worked for the SYZYGY GROUP. Annualised sales per head were therefore EUR 117.000 (previous year: EUR 110.000). 2.2. Net assets, financial position and results of operations of the SYZYGY GROUP 2.2.1. Results of operations Sales figures for the SYZYGY GROUP are arrived at by deducting media costs from billings. Media costs are incurred in the performance marketing companies as transitory items on the revenue and expenses side. SYZYGY GROUP sales decreased by 3 per cent to EUR 52.6 million in the 2024 reporting period. The proportion of sales generated in Germany rose to 82 per cent. The UK & US segment contributed 7 per cent of the sales generated, while the Poland segment contributed for 11 per cent to the total SYZYGY GROUP sales. Group Management Report Sales with customers in the service sector rose by 4 percentage points, while sales with customers from the consumer goods and telecommunications sectors each increased by 2 percentage points. In contrast, sales to customers in the automotive sector fell by 3 percentage points and sales to customers in the finance and insurance sector fell by 5 percentage points. The proportion of sales generated by companies that cannot be allocated to any of these five core sectors remained constant at 6 per cent. 36 % Services 18 % Automotive 18 % Consumer goods 15 % Finance/insurances 7 % Telecommunication/IT 6 % Others Sales allocation by vertical markets The Group generated 50 per cent of total sales with its ten largest customers. This is an increase of one percentage point compared to the same period last year. 2.2.2. Operating Expenses and depreciation The cost of sales for services rendered fell by 5 per cent to EUR 40.3 million (previous year: EUR 42.3 million). The gross margin increased by one percentage point to 23 per cent. Sales and marketing costs and general administration costs fell by 8 and 9 per cent respectively to EUR 3.7 million (previous year: EUR 4.0 million) and EUR 5.8 million (previous year: EUR 6.4 million). Depreciation and amortisation of fixed assets (before goodwill amortisation) decreased by EUR 0.8 million (EUR 3.3 million compared to EUR 4.1 million in the same period of the previous year). Furthermore, EUR 4.2 million of goodwill amortisation was incurred in the previous year. The decrease is mainly due to the reduction in rental space and the associated lower depreciation of leasehold improvements. 2.2.3. Operating income and EBIT margin The SYZYGY GROUP's operating profit (before goodwill impairment) increased year-on-year to EUR 4.3 million (previous year: EUR 3.5 million), while the EBIT margin rose accordingly to 8.2 per cent (previous year: adjusted EBIT margin of 6.4 per cent). No impairment losses on goodwill were recognised in the 2024 financial year (previous year: EUR 4.2 million). 2.2.4. Financial income 2024 4,324 2023 -748 2022 4,752 2021 4,616 2020 2,606 Operating income (in kEUR) Group Management Report The SYZYGY GROUP reported a negative financial result of EUR 0.5 million after nine months (previous year: EUR -1.2 million). The financial expenses mainly result from financing costs and pro rata interest expenses for long- term contracts in accordance with IFRS 16 (primarily rental agreements). 2.2.5. Income taxes, net income, earnings per share 2024 -458 2023 -1,206 2022 -690 2021 -565 2020 -555 Financial income (in kEUR) Business performance at the SYZYGY GROUP is reflected in earnings before taxes of EUR 3.9 million. This corresponds to an increase in earnings before taxes of EUR 5.8 million. After deducting taxes of EUR 1.1 million, consolidated net income totalled EUR 2.7 million. Based on the average of 13,500,000 shares entitled to dividends and after deducting minority interests of EUR 147 thousand, basic earnings per share amounted to EUR 0.19, which is EUR 0.39 higher than in the same period of the previous year. diffferent Berlin 2024 3,866 2023 -1,954 2022 4,062 2021 4,051 2020 2,051 Income before taxes (in kEUR) 2024 2,717 2023 -2,569 3,039 2022 2021 3,139 2020 1,458 Net income (in kEUR) 2024 0.19 2023 -0.20 0.22 2022 2021 0.23 2020 0.11 Earnings per share undiluted (in EUR) Group Management Report 2.2.6. Segment reporting In accordance with IFRS 8, which is based on the management approach, the SYZYGY GROUP is reporting segments unchanged from the previous year. The UK & US segment consists of the UK companies and SYZYGY Digital Marketing in the USA. The segment Poland consists the agency business under the SYZYGY Poland brand and the CGI business under the Ars Thanea brand. In the first nine months of 2024, the individual segments contributed to earnings as follows, compared with the same period in the previous year: 7 % United Kingdom & US 11 % Poland Sales by segments 82 % Germany January to September Germany 2024 2023 (in kEUR) Sales (unconsolidated) 43,092 43,398 Operative income (EBIT) 4,813 -624 Operative income (EBIT) in % 11% -1% Share of group sales in % 82% 81% (consolidated) United Kingdom & US 2024 2023 3,806 6,327 73 409 2% 6% 7% 12% Poland 2024 2023 5,923 4,718 888 800 15% 17% 11% 7% Group Management Report 2.2.7. Financial position SYZYGY had liquidity reserves totalling EUR 4.3 million as of the balance sheet date. This corresponds to an increase of EUR 0.3 million compared to December 31, 2023. Cash and cash equivalents are almost unchanged, with a significant reduction in trade payables being financed by taking out short-term loans and from operating cash flow. A total of 100 per cent of the funds was accounted for by bank deposits as at September 2024. Cash flow from operating activities was positive at EUR 2.0 million in the reporting period. This is mainly due to a positive consolidated result of EUR 2.7 million, depreciation and amortisation of EUR 3.2 million and an increase in advance payments received of EUR 1.0 million, while payments of liabilities (EUR -5.6 million) had a negative impact on cash flow. 2024 2,002 2023 1,477 2022 3,689 2021 709 2020 3,548 Operating cash flow (in kEUR) Total cash flow was slightly positive at EUR 0.2 million as at the reporting date. Cash flow from investing activities was slightly positive at EUR 0.2 million. Changes in non-current assets totalling EUR 0.8 million were offset by investments in intangible assets and property, plant and equipment amounting to EUR 0.6 million. The cash flow from financing activities is mainly characterised by repayments of lease liabilities in the amount of EUR 3.0 million and payments for the interest portion of lease obligations in the amount of EUR 0.4 million. In addition, the proceeds from the utilisation of loans exceeded the repayments of loans by EUR 1.5 million. Accordingly, cash flow from financing activities amounted to EUR -2.0 million. 2.2.8. Asset situation Total assets of the he SYZYGY GROUP decreased by EUR 1.1 million to EUR 86.2 million in the reporting period compared to December 31, 2023, which corresponds to a decrease of 1 per cent. Non-current assets decreased by EUR 1.3 million to EUR 61.8 million compared to the balance sheet date on December 31, 2023 (EUR 63.1 million). The main reason for this development is the EUR 1.2 million decrease in property, plant and equipment and right-of-use assets (due to depreciation). SYZYGY Warsaw At EUR 24.4 million, current assets are slightly above the level as of December 31, 2023 (EUR 24.2 million). The EUR 0.3 million increase in liquidity reserves was the main reason for this. At EUR 43.3 million, equity increased by EUR 3.1 million compared to December 31, 2023. The main reason for this development is the consolidated net profit of EUR 2.7 million. In addition, there is other comprehensive income of EUR 0.5 million (previous year: EUR 0.6 million), which includes differences from the foreign currency translation of foreign business operations. The equity ratio rose by 4 percentage points to 50 per cent due to the positive consolidated result.