21st Sep 2006 07:00
Interactive World plc21 September 2006 INTERACTIVE WORLD PLC 21 September 2006 Preliminary results for the year ended 31 July 2006 Interactive World plc (AIM: ITW), the mobile content technology company,announces its preliminary results for the year ended 31 July 2006. Financial and business highlights: •Turnover of £9.1 million (2005: £8.9m) •Profit before tax rose by 37% to £4.3 million (2005: £3.2m) •Mobile related turnover reached record levels of £6.8 million (2005: £6m) •Earnings per share of 8.32p (2005: 6.21p) •Maiden dividend of 4.0p per share (yield of 5.5% on listing price of 73p) •Strong cash position of £3.4 million •Successful admission to AIM in May 2006 and raising of £2 million before costs in expansion capital •Five-year exclusive rolling content agreement now in place with the Sport Newspaper Group Simon Hume-Kendall, Chairman, said: "I am delighted to present such a positive set of preliminary results, the firstsince Interactive World's IPO on AIM in May. The results show a furtherimprovement in revenues and profits from the mobile content delivery business,and an improvement in profitability from our internet services. "Particularly pleasing is the ability of the company to pay a dividend producinga yield of over 5% as well as the confirmation of the 5 year rolling contractwith Sport Newspaper Group ensuring such visibility for our medium term contentsupply. "As we expand, the Company is increasingly well placed to participate in thegrowth and consolidation of its marketplace. In 2006 and beyond, we willcontinue with our expansion strategy through both organic and acquisitiveroutes, carefully considering likely targets and only proceeding when we arecertain that shareholder value will be enhanced." For press enquiries, please contact: Rob Johnson/Andy Fletcher Neil Boom/Tanya FenessInteractive World plc Gresham PR Ltd.020 8507 6969 020 7404 9000 Interactive World PLC CHAIRMAN'S STATEMENT We are delighted to present the preliminary results for the year ended 31 July2006. These are our maiden results since the Company's shares were successfullyadmitted to trading on AIM in May 2006. Our strong results show a furtherincrease in revenues from the mobile content delivery business, and animprovement in profitability from our internet services. Financial Review We are pleased to report that the Group achieved considerable growth during theyear. While turnover has grown to £9.1 million from £8.9 million the previousyear, the biggest boost to our financial performance has been the improvement inoperating margins, which have risen from 34.4% to 46.7%. This has helped theCompany to report a significant rise in pre-tax profits, up by 37% to £4.3million (2005: £3.2 million). Group cash balances were healthy at the year endwith a 20% increase to £3.4 million after the payment of an interim dividend of£1.29m prior to admission to AIM, lifted not only by the fundraising but alsofrom the highly cash generative nature of our business which has no debt toservice. Operating Review The year has seen further growth in the mobile phone content part of ourbusiness. The growth has been fuelled by a user base which now approaches over 5million individuals, of whom around 900,000 are regular customers. We attributethe Group's growth to the ease of use of our technology and our consistentlyappealing content. Growth has also been assisted by improvements to phonehandsets and by greater penetration of WAP mobile technology. Moreover, as 3Gpopularity and uptake rises, we expect it to support this positive trend goingforward. Our relationship with the Sport Newspapers group continues to work extremelywell. It provides an excellent source of fresh content, and a focused marketingoutlet which allows us to quickly reach our customer base. The strength of therelationship is such that we have recently been able to sign a five-yearexclusive rolling contract, providing a barrier to entry in the UK market place.This security provides significant additional mid-term visibility to ourever-popular and unique content supply The growth in the Group's substantial database of registered, age-verifiedmobile phone users allows us to continuously market new products to customerswhose choice of content and spending habits are already well known to us. Byreliably delivering high quality content to these users, we see high repeatpurchase patterns driving strong revenues per user. We believe our ability tounderstand and market products that appeal to our customers differentiatesInteractive World from other content suppliers. We also believe that thecustomers' experience and our quality of service are both consistently high. New Revenue Streams In June 2006 we announced to the market the joint venture with Probability Plcin which we co-market their mobile phone-based gaming. The venture is nowbearing fruit, and we are seeing a growing number of registered players andthose returning to play on a regular basis. Probability has a pipeline ofexciting new games which it intends to roll out over the coming months, and weexpect this to have a positive impact on the revenues generated by our jointventure. We are confident that this will deliver a growing monthly contributionthroughout the coming year and we are discussing other areas of collaborationwith Probability in the mobile content area. We also launched a number of new services with either new content suppliers ornew technology partners, all of which are expected to help underpin our organicgrowth in the coming financial year. Our reputation as a technology partner ofchoice within the adult market place is without question. When combined with ourquoted company status we are now positioned to approach alternative suppliers ofcontent in a manner that was not possible when we were privately owned. Dividends During the year the company paid its final dividend in respect of the year ended31st July 2005, and also paid an interim dividend in respect of the period ended31st January 2006. The Company today announces a final dividend of 4p per sharefor the year ended 31st July 2006, its maiden dividend as a public company. Thisrepresents a yield of 5.5% on the subscription price of the company's shares atthe date of the AIM admission. The dividend reflects the strong cash generativenature of the Company and is intended to be the beginning of a progressivepolicy. The Board believes that it has sufficient cash resources to allow it topursue other suitable acquisitions. Shareholders on the register at the close of business on 19th September 2006will be entitled to the final dividend, which will be subject to approval byshareholders at the Company's Annual General Meeting to be held on 23rd October2006. Current Trading and Future Prospects The year has started well and performance is in line with Board expectations,with celebrity content doing particularly well. The Company is exploring newrevenue lines that can be successfully integrated with its current user base, aswell as seeking out new content that is more broadly focused than that which hastraditionally driven sales. From an analysis of the Group's marketplace, weexpect to see increasing revenues through mobile searches as the mobile networkoperators begin to see the benefits of allowing customers to browse 'off-portal'more extensively. We also expect to see a steady improvement in theprofitability of our internet-based billing and content services. Whilst we expect to see overseas expansion of the business this year, the timingof the venture is difficult to predict at the moment. Some limited success hasbeen achieved in the USA, and testing continues, but the rate at which this canbe scaled up to material levels is still to be determined. The Board isconfident that numerous opportunities exist outside the UK, and will continueits stated policy of prudent evaluation. As we expand, the Company is increasingly well placed to participate in thegrowth and consolidation of its marketplace. In 2006 and beyond, we willcontinue with our expansion strategy through both organic and acquisitiveroutes, consistent with enhancing shareholder value. Finally, I would like to take this opportunity to sincerely thank all theemployees of Interactive World without whose enthusiasm and commitment thesepleasing results could not have been achieved. Simon Hume-KendallChairman 21 September 2006 Interactive World PLC Consolidated Profit & Loss Account Year ended 31 July 2006 Note 2006 2005 ---------- ---------- £'000 £'000 Turnover 4 9,065 8,851Cost of sales (3,949) (4,971) ---------- ---------- Gross profit 5,116 3,880Administrative expenses (882) (839) ---------- ---------- Operating profit 4,234 3,041Interest receivable 87 115 ---------- ---------- Profit on ordinary activities before taxation 4,321 3,156Tax on profit on ordinary activities (1,307) (951) ---------- ---------- Profit after taxation retained 3,014 2,205 ========== ========== Basic earnings per share 3 8.32 6.21 Diluted earnings per share 3 7.67 6.21 The Group has no recognised gains or losses other than the profit for theperiod. All amounts relate to continuing activities. Interactive World PLC Consolidated Balance Sheet As at 31 July 2006 2006 2005 ------- ------- £'000 £'000 £'000 £'000 FIXED ASSETSTangible assets 106 71Investments 32 20 ------- ------ 138 91CURRENT ASSETSDebtors 2,020 1,190Cash at bank and in hand 3,421 2,874 ------- ------ 5,441 4,064CREDITORSAmounts falling duewithin one year (1,798) (1,054) ------- ------ NET CURRENT ASSETS 3,643 3,010 TOTAL ASSETS LESS ------ ------CURRENT LIABILITIES 3,781 3,101 ====== ====== CAPITAL ANDRESERVESCalled up share capital 96 -Share premium account 1,161 -Profit and loss account 2,424 3,001Merger reserve 100 100 SHAREHOLDERS' ------ ------FUNDS 3,781 3,101 ====== ====== Approved by the board on 21 September 2006 Interactive World PLC Consolidated Cash Flow Statement Year ended 31 July 2006 2006 2005 --------- -------- £'000 £'000Reconciliation of operating profit to cash flow from operating activitiesOperating profit 4,234 3,041Depreciation 67 44(Increase)/decrease in debtors (830) 260Increase/(decrease) in creditors 416 (301) --------- --------Net cash flow from operating activities 3,887 3,044 ========= ======== CASH FLOW STATEMENT Net cash flow from operating activities 3,887 3,044 Returns on investments and servicing of financeInterest received 87 115 --------- --------Net cash flow from returns on investments and servicing offinance 87 115 Corporation tax paid (777) (1,196) Capital expenditure and financial investment Purchase of tangible fixed assets (102) (86)Purchase of fixed asset trade investments (12) (20) --------- --------Net cash flow from capital expenditure and financialinvestment (114) (106) Payment of equity dividends (3,487) (1,892) --------- -------- Net cash flow before financing (404) (35) Financing Issue of share capital 2,001 -Costs of issue (805) -Share capital repurchase (16) (90) --------- --------Net cash flow from financing 1,180 (90) --------- --------Increase/(decrease) in cash 776 (125) ========= ======== Interactive World PLC Consolidated Cash Flow Statement Year ended 31 July 2006 2006 2005 --------- -------- £'000 £'000Reconciliation of net cash flow to movement in net funds Increase/(decrease) in cash 776 (125)Net funds brought forward 2,644 2,769 --------- --------Net funds carried forward 3,420 2,644 ========= ======== Interactive World PLC Notes to the financial information Year ended 31 July 2006 1 The financial information set out in this announcement does not constitutethe Group's statutory accounts for the years ended 31 July 2006 and 2005. Thefinancial information for the year ended 31 July 2006 has been prepared usingthe accounting policies which are consistent with those adopted in the auditedaccounts for the year ended 31 July 2005. The financial information for the yearended 31 July 2005 is derived from the statutory accounts for that year for boththe Company and its Subsidiary, both of which have been delivered to theRegistrar of Companies however, not before been consolidated. The group'sprevious auditors have reported on the 2005 accounts for each company; theirreports were unqualified and did not contain a statement under section 237 (2)or (3) of the Companies Act 1985. The group's current auditors have yet to signtheir report on the 2006 consolidated accounts. The statutory consolidatedaccounts for the year ended 31 July 2006 will be finalised on the basis of thefinancial information presented by the Directors in this preliminaryannouncement and will be delivered to the Registrar of Companies following theCompany's Annual General Meeting. The Board of Directors approved the financialinformation set out in this announcement on 21 September 2006. 2 DIVIDENDS 2006 2005 ------- -------- £'000 £'000 ------- ------- 2004 final dividend paid (£5,550/5.35 pence per share) - 1,892 2005 final dividend paid (£5,950/6.21 pence per share) 2,196 - 2006 interim dividend paid (£3,500/3.65 pence per share) 1,291 - ------- -------- 3,487 1,892 ======= ======== On 4th April 2006, each of the Company's authorised and issued ordinary sharesof £1 was sub-divided into 400 shares of 0.25 pence each. Also on the 4th April,the company made a bonus issue of 35,209, 540 new ordinary shares of 0.25 penceeach. Dividends per share set out above refer to dividends per share ascalculated on the basis of shares in issue and as adjusted to take account ofthe sub-division and bonus issue of share capital in the year to 31st July 2006. Interactive World PLC Notes to the financial information Year ended 31 July 2006 3 EARNINGS PER SHARE The calculation of basic earnings per share is based on a profit of £3.014m(2005: £2.205m) and a weighted average of 36,225,371 (2005: 35,512,210) sharesin issue. 2006 2005 ------- -------- Basic earnings per share 8.32 6.21 Diluted earnings per share 7.67 6.21 ======= ======== Diluted earnings per share assumes dilutive options have been converted intoordinary shares. The calculations are as follows: 2006 2005 ------ ------ Profit Shares Profit Shares No. No. £'000 000 £'000 000Basic earnings 3,014 36,225,371 2,025 35,512,210Dilutive effects: - Options - 3,047,436 - - ------- --------- ------- --------Diluted earnings 3,014 39,272,807 2,025 35,512,210 ======= ========= ======= ======== 4 TURNOVER AND SEGMENTAL ANALYSIS The activities of the Group divide into two segments: the Mobile EntertainmentBusiness and the Internet Content and Services Business. All of its activitiesare carried out in the UK. 2006 2005 ------------- ------------ £'000 £'000 TurnoverMobile 6,766 6,014Internet 2,299 2,837 ------------- ------------TOTAL 9,065 8,851 ============= ============ This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SPMG.L