$1.5 million capital raise highlights Crowd Media’s positive future

By Jonathan Jackson. Published at Jun 23, 2020, in Technology

Crowd Media Holdings Limited (ASX:CM8 | FWB:CM3) has successfully raised $1.5 million (before costs) in a heavily subscribed placement.

The money raised will be used to strengthen the company’s balance sheet, accelerate scale up and bolster sales.

Crowd Media’s Billfront facility could also be reduced by up to AU$500,000.

Settlement of the placement is due to occur on Thursday 25 June, with new shares issued the following day.

Positive outlook for CM8

The capital raise has coincided with CM8 Chairman Steve Schapera’s address to shareholders, noting this financial year has been one of the most exciting for the company.

Following an operational restructure in 2019, Crowd has enjoyed a significant turnaround in fortunes led by Schapera and CEO Domenic Carosa.

Schapera co-founded BECCA Cosmetics, which was acquired for AU$300M by cosmetics powerhouse Este Lauder.

During this period of transition, CM8 strengthened its board following an investment from a European consortium of highly experienced heavy hitters; a group which has previously built large, profitable businesses.

Joining the Board along with Schapera is Robert Quandt, former COO/CFO of Invincible Brands.

The restructure has already led to several deals in the last few months including its latest two-year exclusive and binding Marketing Services Agreement with London-based VITAL Innovations Ltd. CM8 will market and sell key VITAL portfolio brands and products into the European market (excluding UK).

This includes products that have resonance in the age of COVID-19, with VITAL being the parent company of SuperSafe, the UK-based cleaning and sanitation brand that has been actively developing products used for testing and protection against COVID-19.

Overall, CM8 has achieved a positive operational position for the year to date with $13.6 million in revenue and a small profit of $0.1m in underlying EBITDA.

This compares favourably to the matching YTD 2019 loss of ($2.0m) in underlying EBITDA previously reported.

Schapera told shareholders, “Crowd is now more agile, more capable and more efficient despite operating upon a substantially lower cost base. This is evidenced by positive underlying EBITDA results for January through to June, and should ensure that the company remains on track to meet the Board’s goal of at least a breakeven/near breakeven underlying EBITDA position for the full year ending June 30, 2020.

“Despite witnessing a substantial downturn in the economies of all the markets in which the company is active, this pleasing turnaround for Crowd has been driven by Management’s focus on quality of revenue, cost efficiency, and agility from top to bottom.

“This agility has seen us test three new brands (I Am Kamu, London Labs, KINN) on our sales platform in three months, with another six to come in the next twelve months. We continue to reap the benefits of an over-arching strategy that saw us culling unprofitable customers, improving efficiency, and identifying new opportunities and alliances that could be profitably deployed.”

Schapera is confident the company will continue its positive momentum, with the oversubscribed capital raise also pointing to growing confidence among shareholders.

“Despite challenges that none of us have ever witnessed before, Crowd continues to improve in the most important of all metrics: the bottom line,” Schapera said.

“After two years of substantial losses, underlying EBITDA is now positive and steadily improving. We have streamlined every single aspect of the business and evolved into a lithe, lean, and nimble business run by entrepreneurs, not corporate managers. We have identified and flushed out opportunities, developed strategies to secure them, and executed with speed and professionalism.”

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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