iCreate Limited earnings base remained on an upward trajectory for the first half of the year as it prepares to raise new capital to finance its acquisition of Visual Vibe Limited.
The company's revenue for the second quarter (April to June) improved by 123 per cent to $34.50 million arising from a mix of new business clients along with existing opportunities in its pipeline which were closed during the period. One such opportunity was the acquisition of a majority stake in GetPaid Limited, which is in the digital payments and communication space. The company also signed the NCB Foundation Level-Up partnership in the period, increasing the firm's now major long-term corporate training partnerships to three.
After accounting for relatively higher administrative and general expenses, the company's operating profit grew 32 per cent to $6.90 million. As a result of the $68.81 million debt conversion between Kintyre Holdings Limited and Dequity Capital Management Limited, iCreate's financing costs dropped 81 per cent to $507,065, which resulted in its net profit moving up 153 per cent to $6.39 million.
Kintyre is a connected party to iCreate's President and Chief Executive Officer Tyrone Wilson.
"There has been a noticeable increase in the demand for digital creative and design training, especially among large institutions, and iCreate Institute is well positioned to meet this demand. At the same time, we continue to aggressively push business growth across our other divisions, including digital marketing and advertising," a signed preamble from by Audit Committee Chairman Ivan Carter and Wilson stated.
For the six-month period the company's revenue increased 239 per cent to $80.89 million. However, the net accounts receivable balance grew by $42.63 million in the same period as the company executed business.
Operating profit rose 91 per cent to $18.06 million with finance costs down 69 per cent to $1.56 million. The company's interest cover was 13.65 times, which meant its operating profit was sufficient to cover its interest payments.
Net profit nearly tripled from $4.44 million to $16.50 million as earnings per share moved from $0.02 to $0.09. The company's revenue for the first six months trumped the $32.83 million earned in all of 2021 when it suffered a $32.26 million loss.
iCreate's total assets grew 113 per cent year on year to $128.86 million, which included $38.6 million related to funds set aside for the investment in Visual Vibe. The company's cash balance declined from $47.12 million at the start of the year to $1.85 million as the company paid down payables and its account receivables balance went up along with a reduction in investments or other non-current assets. Total liabilities rose 59 per cent to $102.79 million as the company's non-current liabilities, which largely includes loans payable, saw an increase to $86.61 million. Shareholders equity moved from a deficit of $3.97 million to $26.06 million at the end of June.
The company's issued shares grew from 197,592,500 shares at the start of the year to 308,560,242 as a result of the debt conversion and supplementary listing during the period. Emedia's stake decreased from 50 per cent to 32 per cent, while Dequity is now the second largest shareholder with 81,451,613 shares or 26 per cent of the company. Kintyre's stake of 29,516,129 shares represents a 10 per cent stake in the firm. The ownership by the company's top 10 rose from 79 per cent to 85 per cent as other top 10 shareholders increased their positions in the firm.
iCreate's stock price has rocketed from $0.78 to $4.22 this year, a 443 per cent increase, which makes it the best-performing stock on the market. The company's market capitalisation stood at $1.30 billion.
The company has called an extraordinary general meeting (EGM) for Thursday, August 25, 2022 for shareholders to vote on the proposed $425 million rights issue proposal to complete the acquisition of video board advertising company Visual Vibe.
Visual Vibe operates 13 boards across the island, including the big screen at Mandela Park in Half-Way-Tree, St Andrew.
With the company's share capital at $124.62 million, it's expected that the rights issue would keep it under the $500-million mark which affords them the tax remission.
iCreate listed in January 2019, which affords it another two years of no income tax once it remains in compliance with the Junior Market parameters.
A rights issue affords existing shareholders to purchase new ordinary shares in the company relative to their existing holding as at the record date set by the firm.
Shareholders will also vote on the $100-million convertible debt financing to be provided by Kintyre and Astronomical Holdings Limited, which is owned by attorney-at-law Able-Don Foote. The loans will be converted to ordinary shares at a fixed subscription price to be made available in the rights issue. Shareholders will also vote on the their pre-emption rights being disapplied for the purpose of implementing the rights issue and securing the convertible debt financing.
The other resolutions include the authorisation for the directors to dispose of all new ordinary shares not taken up by existing shareholders in the rights issue and to give way for the directors and the company secretary to execute the necessary steps for the rights issue and convertible debt financing arrangements.
The hybrid EGM will be held at the AC Hotel Kingston at 2:00 pm.
Victoria Mutual Wealth Management Limited is the lead broker on the rights issue and Visual Vibe acquisition.