Clever Group (ADG) sees second-quarter profits plummet by 67%, and has just dissolved an affiliated programming company.

A software development affiliate company in which Clever Group (ADG) holds a 29% stake has been dissolved.

Clever Group Joint Stock Company (ADG) has just approved the decision to dissolve Techcen Joint Stock Company, one of ADG's affiliated companies. The specific reason for this dissolution has not yet been announced.

Techcen is an affiliated company in which ADG owns 29% of the charter capital. The company was established in February 2021 and is located at 161 Dang Van Ngu Street, Phuong Lien Ward, Dong Da District, Hanoi . The legal representative of the company is Mr. Lo Van Hung. The company's main business activity is computer programming.

As of the end of Q2 2023, Clever Group held 29% of the company's charter capital, equivalent to VND 417 million in contributed capital. Besides Techcen, Clever Group's Q2 2023 financial statements also show ownership of four other affiliated companies: Smart Advertising Network JSC, ADOP Vietnam Co., Ltd., VKIDS Vietnam Co., Ltd., and Lazi Technology JSC.

Second-quarter profits plummet 67%, ADG stock reverses trend.

The dissolution of a company affiliated with Clever Group has attracted investor attention. This is because, in recent times, the company's stock has been trending downwards, and its business results have shown a sharp decline in profits.

Specifically, from the beginning of the year until now, both revenue and after-tax profit of ADG have shown signs of decline compared to the same period last year. Particularly in the first quarter of 2023, the company's revenue only recorded 82.2 billion VND, a decrease of 30.2% compared to the same period. Also in this quarter, the company recorded an after-tax loss of 1.6 billion VND.

Clever Group's Q2 earnings fell 67%; they just dissolved an affiliated programming company (Figure 1). — Clever Group (ADG) experienced a decline in profits and revenue in the first half of 2023 (Photo: TL)

Entering the second quarter, although business results improved, they were still lower than the same period last year. Net revenue reached VND 100.1 billion while after-tax profit reached VND 7.4 billion, decreasing by 22.3% and 67.8% respectively compared to the same period.

ADG explained that the sharp decline in profits in the second quarter was due to a drop in revenue. Economic difficulties following the pandemic led companies to tighten and limit advertising spending, resulting in a relatively significant decrease in sales revenue. The parent company's financial income also decreased by 22% due to the overall market impact, and increased selling expenses also contributed to the decline in profits.

Despite declining profits, the company still issued 64,100 ESOP shares to key employees.

Despite a decline in profits during the first two quarters of 2023, ADG's Board of Directors recently decided to issue 64,100 ESOP shares as a reward for members of the Board of Directors, the Management Board, key personnel, and members of subsidiary companies.

ESOP shares will be issued at a price of VND 10,000 per share. In the trading session on August 28, 2023, ADG shares were trading at VND 29,000 per share. Therefore, the ESOP shares awarded to ADG's leaders are currently priced 66% lower than the market price.

These shares will be subject to a one-year transfer restriction from the date of issuance. The issuance plan is expected to be implemented from the third to the fourth quarter of this year, after approval from the State Securities Commission.

Also in early August, Singaporean foreign fund FSN Asia Private Limited successfully acquired 8.56 million ADG shares, equivalent to 40% of the charter capital, from Yello Digital Marketing Global Pte.Ltd and became the largest shareholder of ADG.

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