VGI Sailed through COVID-19 in 2019/20, recording an all-time high revenue of THB 4,000mn and net profit of THB 1,424mn, seeing 117.5% growth in the Digital Services Segment

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VGI PLC, the market leader in Offline-to-Online (“O2O”) Solutions across Advertising, Payment and Logistic platforms, one again delivered an outstanding performance for FY 2019/20 which ended on 31 March 2020, despite the COVID-19 crisis, achieving a revenue and all-time high net profit of THB 4,000mn and THB 1,424mn, respectively. Meanwhile, its newest data-driven digital market arm – VGI Digital Lab – excelled in the first year, surpassing its revenue goal, and helping to drive growth in the Digital services segment by 117.5% YoY; in turn pushing the Company’s net profit margin to 35.6%.

Nelson Leung, CEO of VGI, said, “Following the status change of Master Ad Public Company Limited (“MACO”) from a subsidiary to an associate company, effective as of 30 January 2020, we have deconsolidated MACO from our financial performance. Therefore, part of our 2018/19 Outdoor media revenue, directly managed by MACO, and revenue from Trans.Ad Group, recognised under our Digital services segment, have been restated from our profit and loss statement. Going forward, we will only recognise share of profit (loss) from our investment in MACO.”

Our Advertising segment saw its revenue decline 7.6% YoY to THB 2,848mn, accounting for 71.2% of the Company’s total revenue. This was mainly due to renovation work on our digital media screens on BTS stations, and reduce advertising demand. Moreover, the COVID-19 pandemic, which began in early 2020, has affected the entire media industry as companies have taken measures to reduce cost by cutting their advertising spending. Nonetheless, our Digital services segment saw a remarkable growth of 117.5% YoY, recording a revenue of THB 1,151mn, which made up 28.8% of our total revenue. Overall, our growth was mainly driven by the revenue recognition of VGI Digital Lab, a comprehensive online media agency that utilises our Group’s Data Management Platform (DMP) to create online/digital marketing campaigns. Within its first year of operation, VGI Digital Lab, was able to deliver a strong performance, exceeding its revenue target set at THB 150mn. Moreover, the group was able to make solid gains thanks to the strong organic growth of businesses operated by the Rabbit Group.

Key Developments and Management Outlook

In Advertising, VGI has established a new online agency – VGI Digital Lab – focusing on offering online and digital marketing services. The Company also partnered with the largest online marketing and data technology platform in China with the aim to help brands in the region gain access into the lucrative Chinese outbound traveller market through a comprehensive suite of digital marketing technology. Moreover, with the acquisition in Plan B Media Public Company Limited (“PlanB”), by combining VGI’s O2O Solutions and PlanB’s engagement marketing, we have been able to launch new media packages and utilise both companies along with MACO’s digital screens to deliver more impactful and measurable campaigns.

In Payment, we have partnered with Thailand’s leader in consumer products – the SAHA Group – to open Lawson 108 convenience stores on 12 BTS stations, also offering Rabbit Card and Rabbit LinePay as options for cashless payments. To date, the Rabbit Card and Rabbit LinePay have seen a constant growth in their user bases, with the number of Rabbit Cards issued now reaching 13mn, and the number of Rabbit LinePay users reaching 7.3mn.

In our Logistics segment, in collaboration with Kerry Express (Thailand) Company Limited (“Kerry”), we have launched various synergy products to provide new advertising solutions and deliver better user experience, for instance through the delivery of more than 600,000 sampling products, attachment of over 500,000 Parcel Stickers ads on parcel boxes and wrap advertising services on 400 Kerry Express Trucks. In addition, we have launched Kerry parcel shops on 4 BTS stations, offering greater convenience to over a million BTS passengers.

Alas, the COVID-19 pandemic has had an unprecedented impact on people’s lives and business around the world. At times such as this, our goal is to make meaningful contributions to our staff as well as every stakeholder and community. Therefore, we have put in place strict preventive measures within our organisation from the start of the outbreak. We have also offered free media space to government agencies and non-profit organizations to raise awareness about COVID-19 and offered our payment platform as a channel for donations to fund the manufacturing of protective and medical equipment. Moreover, through Kerry, we have supported taxi drivers to work as delivery drivers as well as offered free delivery for any essential supply sent to medical staff and hospitals.

For 2020/21, although we anticipate to see negative impact from the COVID-19 crisis on all of our business segments, thanks to shifting consumer behaviour and demands towards online marketing and the e-commerce market, we can expect these to have positive effects across our business units. We will also strive to maintain our strong financial position and financial stability by focusing on expenses reduction and postponing our new investments as well as leveraging our existing strengths.

In light of continual uncertainty surrounding COVID-19 and the constantly evolving measures, it is difficult for us to assess the impact of the pandemic on our financial performance comprehensively and provide a prudent financial guidance for 2020/21 at this stage. We will follow the situation closely and will provide the guidance when the effects can be concretely estimated.

Despite the crisis, our Board of Directors has approved the payment of cash dividend at THB 0.016 per share from the operating results of   2H 2019/20. The payment is still subject to the approval of the shareholders’ meeting.

Finally, we would like to take this opportunity to extend our best wishes to everyone as we continue to battle against COVID-19. We hope that soon Thailand will safely get through this difficult time.

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