Six-Months Report. January 1 June Trig Social Media AB (publ) Corporate Identity Number

Transcription

1 Six-Months Report January 1 June Trig Social Media AB (publ) Corporate Identity Number

2 SIX MONTHS REPORT, JANUARY 1 - JUNE 30,

3 Six Months, January - June 2015 Net sales amounted to Euro Operating loss amounted to Euro Losses after taxes amounted to Euro Losses per share amounted to -0,0024 Euro Cash flow for the period amounted to Euro Six Months, January - June 2014 Net sales amounted to Euro Operating loss amounted to Euro Losses after taxes amounted to Euro Loss per share amounted to -0,0034 Euro Cash flow for the period amounted to Euro Comments by Mr. Peter Kristoffersson, Managing Director Dear Reader, As the newly appointed CEO of the company (having started this assignment on 1 July 2015), I have been charged with the task of effectively relaunching the company and its products by introducing a more streamlined and efficient organisational path. The company has previously announced its intention to reorganise and since my arrival we have been aggressively managing the process of cost reductions and operational streamlining with more focus on core business and product. In order to achieve the objective several difficult decisions will be required. Cost and structure is likely to have to change to adapt to the new reality. The decisions will significantly impact the Trig Group in the short term, but I believe, with appropriate support from its stakeholders we will begin to address the lack of revenue growth. A pre-requisite to achieving these objectives is to ensure funding availability, good corporate governance and appropriate resources within the business to deliver the environment for the business to succeed. Recent History The group has suffered greatly from a number of events over the recent. In March of this year, BaFin, the German regulator, posted a warning notice on their website with respect to purported market manipulation in our security. This has had a very negative effect in developing the company s shareholder base and marketing in this region. A specialist lawyer was engaged in Germany to handle this situation. Other than his initial approach to BaFin, neither he nor the group have been contacted by BaFin in relation to this posting. 2

4 Post this event, there were several articles published online grossly defamatory of the company and its directors. The company was able to have the articles withdrawn from the various sites as they gave false information. Unfortunately, many third parties were able to republish these before their removal. We are currently considering some form of legal action and to seek compensation for the financial damage this has caused our business. The impact of this has been extremely detrimental to the company, which saw many commercial contracts cancelled. This made it difficult to obtain further external funding needed to propel the business into self-sustainability. Shortly after these matters were published and just six days prior the 2014 annual report was due to be submitted, our former auditor resigned. We believe that this resignation was incorrect and are currently considering taking legal actions to receive compensation for the damage this has caused the business. In addition, our new auditor determined the need to review our former auditors work for correctness and as consequence to review the work performed by various external bookkeepers in order to better control the quality of the accounting available to the directors. All these events created an environment where financing lines previously available to us, have been stopped. This in turn impacted our ability to rollout our products. However, we have been negotiating new financing and we believe that in the coming weeks and months this position will change. Finance and operations Due to the challenges faced by the company over the last 6 months, the ability to raise investment by the group has been severely damaged thus putting operations at risk. The financial performance of the group has been very weak with neither Trig Social Media AB ( TSM ) nor its main operational subsidiary, Trig Entertainment AB ( TEAB ), having received any significant cash inflow during the quarter. This had an immediate effect on the day to day business and has severely impacted the ability of the business to progress. As a result, the group cancelled all spend on non-business critical activities which in turn led to cancelling all marketing efforts. This strategy allowed us to continue functioning but unfortunately also meant that we were not able to work on increasing our client numbers which affects our revenue. As a part of these efforts, we have also decided to pause all of our Esports activities and we are going to prepare a liquidity balance sheet for the most affected companies in the group. To address the commercial and cash challenges which the business still faces, a more streamlined design of the product delivery model was developed so that a faster market penetration could be achieved. The work on the new model is ongoing and is based on a country/regional franchise approach where we packaged a number of our products into a combined product program, called Fusion. The intention is to franchise this packaged program on a country-by-country basis, which we expect will have the following outcomes: a predictable regional franchise revenue allows for speedy customer increase transfers the cost of marketing in particular region to the franchisee allows us to focus on core operations of the business whilst the revenue mix is reduced in respect to our percentage of the proceeds, as we have only a small cost base, the impact is not so great. 3

5 While operational revenue remains minimal, the franchise model could produce regional revenue for the areas in which Trig Money and other of our products have a potential value. The franchise strategy is still in its infancy and being tested out. Resources permitting, we also intend to refocus on marketing Trig Money, which, alongside the franchise model development, is designed to increase revenue by reaching new and re-activating lapsed contacts. Reorganisation To stabilise the business, the board took the decision at the end of June 2015 to put its exposed subsidiary, TEAB, into a reconstruction process ( the Process ). The Process allows TEAB to have protection from its creditors while it attempts to resolve the issues and focus on delivering results. Due to the material nature of the Process, certain previously entered sponsorship and ambassador agreements have been irreparably damaged. This damage has severely impacted the ability of the business to develop its Spanish subsidiary. The consequent failure to deliver anticipated commercial results triggered the cancelation of the majority of the pipeline of agreements. The reorganisation exercise, which is ongoing in the current quarter, is intended to deliver a more cost effective organisation with a more achievable, clearly defined objective to accelerate operational revenue generation. As of the 30th of June the Trig group had 23 employees and engaged 4 consultants. At the time for the release of this report Trig has 17 employees and engages 2 consultants. Funding The company is currently evaluating a number of funding opportunities. Our franchise approach is expected to generate a steady income but it is only one of the avenues we are exploring. Trig Media Group AB and its shareholders have been and will continue to provide any necessary financial support during this process. Further announcements on funding initiatives are expected to be made in the immediate future. Governance The board has instigated a process to strengthen its financial reporting and control as part of an overall governance review to track the performance of the new initiatives and to support new funding activities. Capital Investments The Trig Group has during the period not initiated any major investments in new projects or invested in new subsidiaries Significant risks and uncertainty factors Through its business operations, Trig is exposed to various risks, both financial and operational. Operational risks relate to Trigs' day-to-day business and the financials risks relate to the working capital requirements of Trig's different operations. The principal risks are interest-rate, currency risks and financing risk. The financing risk has been identified as being of significant risk in the period to 30 June 2015 and will probably remain so. 4

6 Financing risk Cash flow and financing remains a concern. There is a risk that the Trig Group will not be able to raise enough funds to finance its operations and the development of launched projects and finalization of future services under development. The board is exploring all possible means to secure financing to maintain operations in Trig Entertainment AB. The current search for new financing is ongoing and an announcement is anticipated to be made on this matter in the immediate future. Interest-rate risk There is currently no interest-rate risk since the company does not have any loans or debt where changes in interest rates will affect net interest items and cash flow. Currency risks There is a constant risk that changes in exchange rates will affect the consolidated income statement, balance sheet and cash flow statement. The functional currency of the Trig group is euro while the operating currency of projects is both Swedish kronor and Euros. Legal risk On 10 March 2015 the German Financial Supervisory authorities, BaFin, announced it is investigating the allegation of cold calls and possible market manipulation. At the time of writing the Group has not had any communication from BaFin besides the contact made by Trig through their German lawyers. The board is still of the opinion that no errors or wrongdoings have been committed and that the company runs no legal exposure in relation to this. During Q2, 2015 a number of statements were published allegedly quoting Swedish Financial Supervisory Authority, Finansinspektionen, saying that they were investigating Trig Social Media AB. Till date, we have not been able to ascertain the authenticity of these statements. The Swedish operating entity, Trig Entertainment AB, has been summoned to court by two former employees for not respecting the Swedish labour law rules for priority order when laying people off. Trig is of the opinion that the claim is immaterial and, is wrongful. Trig Entertainment AB has been notified of legal action by a Labour union for breach of the Swedish labour legislation when not completing negotiations before giving notice to the two persons mentioned above. Transactions with closely related parties During the second quarter, the company has taken loans from its parent company, Trig Media Group AB, which have been in part guaranteed by its major shareholder. Outlook We believe our core objective to deliver high quality social medial integrated with a unique revenue model remains possible. It is imperative that the business obtains additional funding to support this objective. Any new initiatives are subject to new funding availability 5

7 CONSOLIDATED INCOME STATEMENT SIX MONTHS JAN-JUN Y/E DEC Amounts in Euro Net sales Net sales Other income 0 0 Gross operating income Other external costs Personnel costs Depreciation of tangible and intangible assets Operating income Financial items, net Asset write-down Income after financial items Tax 0 0 Income for the period Exchange differences on translation of foreign operations Other comprehensive income Total comprehensive income Attributable to the equity holders of the parent company 1 -Income for the period Other comprehensive income Average number of shares, before and after dilution Earnings per share ,002-0,057

8 CONSOLIDATED BALANCE SHEET Amounts in Euro Intangible assets Tangible assets Financial assets Total fixed assets Short term receivables Tax receivables Cash and bank balances Total current assets TOTAL ASSETS Equity Share capital Additional paid in capital Retained earnings and other reserves Profit/loss for the period Total equity Long term liabilities Current liabilities Accrued expenses and deferred income Total current liabilities TOTAL EQUITY AND LIABILITIES Change in consolidated equity Amounts in Euro 6/30/2015 6/30/ /31/2014 Opening balance Total comprehensive income for the period Total transactions with equity holders Closing balance Note that there are no comparative figures for the period of six months to June 2014.

9 CONSOLIDATED CASH FLOW STATEMENT SIX MONTHS JAN-JUN Y/E 18 Mths to Dec Amounts in Euro Operating profit/loss Adjustment for non-cash items Interest paid Interest income Income tax paid 0 Cash flow from operating activities before working capital changes Changes in receivables Changes in liabilities Cash flow after working capital changes Acquisition intangible assets Acquisition tangible assets Acquisition subsidiaries Cash flow from investment activities Shareholders contributions New share issue Equity instruments at fair value Cash flow from financing activities Cash flow of the year Cash at the beginning of the period Translation differences Cash at the end of the period

10 CONSOLIDATED KEY FIGURES Six Months Jan - Jun Three Months Jan - Mar Year End (18 months) Dec 2014 Amounts in Euro Net sales Operating profit/loss Operational margin Neg Neg. Neg. Neg. Neg. Balance total Solidity 70% 6% 82% 3% Investment non current assets Number of shares at the end of the period Earnings per share ,004-0,002-0,057 Dividends per share N/A N/A N/A N/A N/A Number of Employees

11 Accounting principles, group This report has been compiled in accordance with IAS 34, Financial Reporting. The report is compiled in accordance with International Financial Reporting Standards (IFRS) and with International Financial Reporting Interpretations Committee (IFRIC), the interpretations of financial standards approved by EU, as well as the Swedish Accounting Standards Council s RFR 1 recommendation, Reporting for Groups, and accompanying references to Chapter 9 of the Annual Accounts Act. The report has been prepared in accordance with the same accounting principles and methods of calculations as the 2014 Annual Report. Note 1 Segment reporting Trig is conducting its operations in one business segment and one geographical area. The business segment is social media services and related income generating activities. The geographical area is global. Trig will start segment reporting when income generated from the Trig Money operations have become more substantial. Note 2 Long-term liabilities The group has long-term liabilities of EUR. Note 3 Cash flow statement Payment of debts has been financed by new borrowings and investments. The board and the Managing Director ensures that the Group accounts have been drawn up in accordance with IFRS international accounting standards as adopted by the EU and give a fair picture of the Group s position and profit/loss. The report has been drawn up in accordance with good accounting practice and gives a fair picture of the parent company s position and profit/loss. The company s auditor has reviewed, but not audited this report. Nacka, Sweden, 07 September 2015 The Board of Directors of Trig Social Media AB (publ) Peter Kristoffersson Managing director Phillip Cook Chairman of the board

12 Contact' ' Trig'Social'Media'AB'(publ)' ' Visiting'address'Vikdalsgränd 10 B Post address: P O Box 1268, Nacka Strand,'Sweden ' Telefon: info@trig.com Web:' Investor'Relations' ' GFEI AG: Mr Lars Kuhnke Address: Office Center Plaza, Mailänder Straße 2, Hannover, Germany Telefon: kuhnke@gfei.de Web:

13 Trig Social Media AB (publ) Visiting adress: Vikdalsgränd 10 B Postal address: P O Box Nacka Strand, Sweden Phone: Mail: info@trig.com Webb: