8th Apr 2008 07:38
Zamano PLC08 April 2008 ZAMANO PLC ('zamano' or the 'Company' or the 'Group') Final Results - Year Ended 31st December 2007 Transformational Year - Revenue Doubles to €24.7 million zamano plc, a market leader in mobile data services, has today announced itsfinal results for the year ended 31st December 2007, prepared in accordance withIFRS. Highlights: 2007 2006 Growth •'000 •'000Revenue 24,716 12,352 100%EBITDA 3,518 2,444 44%Profit after tax 2,613 2,207 18%Adjusted Diluted EPS * 4.6 cents 4.0 cents 15% * Adjusted for amortisation, share option costs and deferred interest on acquisition • Transformational year, sixth consecutive year of revenue and profit growth • Revenues up 100% to €24.7 million • EBITDA up 44% to €3.5 million • Adjusted EPS up 15% to 4.6 cents • Completion of two significant acquisitions - Eirborne (now the foundation of the Group's online and mobile portal B2C business) & Red Circle (giving significant revenue scale in the UK and Australia and an entry point into US market) • Continued investment in research & development, focused on platform scaling, convergence of fixed line and mobile internet, and new forms of billing • Strengthening of the management team through the appointment of Colm Saunders as CFO and Cathal Fay as Head of B2C Chairman's Comments Rod Matthews, Chairman of zamano commented; "The Group has once again deliveredrevenue and EBITDA growth ahead of market expectations. In addition to thisstrong financial performance, the Group has also completed two very significantacquisitions which will be key factors in delivering future growth. Trading todate in 2008 is good, and the Board is pleased with progress made in theintegration of Red Circle. The Board looks forward to the remainder of the yearand is confident that the Group will continue to deliver revenue and profitgrowth." CEO's Comments John O'Shea, CEO of zamano commented; "2007 was a transformational year forzamano plc. When the Company listed in October 2006, we explained that ourstrategy for the growth and development of the Group would be focused on threekey areas: • Identification of suitable merger and acquisition targets in order to ensure that zamano benefits from the continuing consolidation of the market; • Development of our technology platform to support new technologies and services; and • Identification of appropriate new geographic markets and controlled entry into those markets. The Group made substantial progress in executing its strategy during 2007,resulting in a strong financial performance with revenues doubling and EBITDAincreasing by 44%. During the year, the Group considerably strengthened its management team and hasput the right resources in place to extend its strong growth story into 2008 andbeyond. I am very satisfied with recent progress in developing our team, our strategyand technology, and am confident that the 6 years of consecutively high growthto 2007 will continue in 2008 and beyond." Hybrid Business Model zamano continues to operate a hybrid business model, combining the offering ofmobile data services directly to consumers (B2C) as well as via partners (B2B).This delivers economies of scale in messaging, and spreads the technologyinvestment and operating costs over a wider stream of revenues. Financial Review zamano's financial performance in 2007 exceeded expectations. Revenue grew by100% to €24.7 million from €12.3 million in 2006, and the Group is confident ofcontinued growth in 2008, with market share gains expected in the UK, Ireland,Australia and the USA. Major growth drivers in 2007 have been the shift inadvertising from print to better performing on-line and operator mobile portals,and further customer wins in the B2B business unit. The Group's EBITDA grew faster than expected to €3.5 million (€2.4 million in2006) at a margin of 14%. As anticipated EBITDA margin was down 5%, driven by aproportion of the very significant revenue growth in new markets being atslightly lower gross margins. Cost control remains strong, evidenced by operating costs being maintained at24% of revenue, approximately the same level as reported for 2006. This isextremely pleasing given the dramatic growth which the business has experiencedover the past twelve months. Further evidence of this performance is in averagerevenue per employee, which increased 37% from €475k in 2006 to €650k for 2007. Adjusted EPS growth of 15% has lagged EBITDA growth, reflecting the impact ofthe large increase in the number of shares in circulation post the Company's IPOin late 2006. The cash raised through the IPO was partly utilised in theEirborne acquisition in April 2007 and, consequently, has yet to contribute toearnings on a full-year basis. At year end there was a €12.1m cash balance, of which €6.2m is assigned for thefinal payment to Eirborne shareholders and €1m is for payment to the Red Circleshareholders. Therefore, the underlying cash position available to the businessis €4.9m. In addition, the Group took on €15.0m in debt from Bank of Scotland(Ireland) to fund the acquisition of Red Circle resulting in net debt of €2.9million and underlying net debt of €10.1 million at the year end. The Boardfeel that there is a good balance of debt and cash to support the Group's growthplans. Sterling accounts for a significant proportion of the Group's revenue and,consequently, the Group continue to monitor closely the recent movements inSterling and any possible impact on financial performance. In order to hedgethe currency exposure, the Group has consistently focused on matching Sterlingrevenue and costs. Acquisitions 2007 was an extremely busy year for zamano in terms of acquisitions with twostrategically important and sizeable acquisitions completed. Eirborne, completed in April, was undertaken to enhance zamano's online B2Coffering and expand its geographical footprint in the UK and Australian markets.The final consideration was subject to profit targets to be achieved in the 12months to the end of April 2008, and the maximum consideration of €8.5 millionhas been earned. The final payment of €6.2 million will be made before the endof May 2008. The integration has been successfully completed and all commercialand technical management has passed to the zamano team, with growth continuing. The reverse takeover of Red Circle was undertaken to deliver substantialincremental B2C revenue in the UK, Australia and USA markets. The transactionwas approved by shareholders and completed on 12 December 2007. Red Circle wasacquired for a maximum purchase price of up to €24.4 million, comprising aninitial consideration of €17.2 million and a deferred consideration of up to€7.2 million. The deferred consideration provided a mechanism for the vendorsto achieve a higher valuation if the performance of the business for the yearended 31 December 2007 exceeded zamano's expectations. The amount of thedeferred consideration was to be determined based on the agreed financialresults of Red Circle for the year ended 31 December 2007 as well the balancesheet at the date of acquisition. Following completion of these accounts, thefinal total consideration will be approximately €18.0 million. The Boardremains pleased with the opportunity and the strategic logic of the acquisition. In the 4 months since the Red Circle acquisition, an accelerated integrationprocess has been completed. Teams from both companies are now working togetherwithin an integrated organisation structure, messaging traffic is being moved tothe zamano platform and the sales teams are working on delivering profitablerevenue growth. The Board is confident that the synergies discussed at the timeof acquisition will be delivered. Operational Performance zamano has continued its technology investment program, and has enhanced itsdevelopment team to support further growth initiatives. In line with the growinguse of the mobile internet, zamano has focused development in three key areas: Platform scaling: zamano's platform successfully supported a doubling inmonthly messaging traffic in 2007 and has the capability to support even fastergrowth in 2008 Convergence: as WAP usage grows, zamano has focused on building seamlessmigration capabilities between traditional and mobile internet portalssupporting social networking, messaging and content provision Billing: zamano has invested in Payforit, a new WAP payment system, and isintegrating multiple payment systems into its converged web/WAP portals Regulation Regulation remains an important area for zamano and the Group has one of thestrongest track records in the industry for both its B2C and B2B businesses.Whilst zamano has strong internal procedures within its B2C business to ensurethat it is operating within regulations, the major focus remains on ensuringfull regulatory compliance from its B2B customers, in relation to which zamanohas less content and customer control. 2007 witnessed a further improvement incompliance from B2B customers brought about by increased investment in bestpractice definition, education and pro-active testing of services. The Group continues to engage with regulators in defining best practices for newservices and has accepted invitations to participate in regulatory oversightcommittees and strategic reviews. Board The Board was strengthened in 2007 through the appointment of Colm Saunders asCFO. Colm's financial and operational experience is helping support the Group'sgrowth plans in 2008 and beyond. Conclusion zamano has built substantial scale and was recently placed second in theDeloitte Technology Fast 50, having achieved 1,999% growth in the five years to2006. A further 100% revenue growth in 2007 is indicative of the strength of thebusiness. Continued strong performance in zamano's organic business units,combined with the substantial scale of the companies acquired in 2007 positionthe Group to continue its impressive growth trajectory. zamano's proven ability to acquire and integrate companies is a key competitivedifferentiator. With the continued support of our shareholders and bankingpartners, the Group will actively pursue further acquisition opportunities inthe years ahead. CONSOLIDATED INCOME STATEMENT for the year ended 31 December 2007 2007 2006 •'000 •'000Continuing operationsRevenue 24,716 12,352Cost of sales (15,863) (7,129) _______ _______Gross profit 8,853 5,223 Administrative expenses (5,823) (2,831) _______ _______ Operating profit 3,030 2,392Finance revenue 366 85Finance costs (315) (26) _______ _______Profit before tax 3,081 2,451 Income tax expense (468) (244) _______ _______ Profit for the year attributableto equity holders of the parent 2,613 2,207 ======== ======= Earnings per share - basic €0.038 €0.042- diluted €0.036 €0.039 CONSOLIDATED BALANCE SHEETat 31 December 2007 2007 2006ASSETS •'000 •'000NON CURRENT ASSETS Poperty, plant and equipment 174 165Intangible assets 28,608 1,112Deferred tax asset 27 - _______ ________ 28,809 1,277 _______ ________CURRENT ASSETSTrade and other receivables 9,180 2,796Cash and cash equivalents 12,104 7,491 _______ ________ 21,284 10,287 _______ ________TOTAL ASSETS 50,093 11,564 ======== ========EQUITYCapital and reserves attributable toequity holders of the parentEquity share capital 81 68Share premium 11,155 6,367Capital conversion reserve 1 1Other reserves 233 99Retained earnings 4,835 2,222 _______ ________TOTAL EQUITY 16,305 8,757 _______ ________LIABILITIESNON CURRENT LIABILITIESInterest bearing loans and borrowings 12,416 -Deferred tax liability 569 - _______ _______ 12,985 - _______ ________CURRENT LIABILITIESTrade and other payables 9,429 2,596Acquisition accrual 8,410 -Interest bearing loans and borrowings 2,534 -Income tax payable 430 211 _______ ________ 20,803 2,807 _______ ________TOTAL LIABILITIES 33,788 2,807 _______ ________TOTAL EQUITY AND LIABILITIES 50,093 11,564 ======== ======== CONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor the year ended 31 December 2007 Attributable to equity holders of the parent ________________________________________________________ Equity Capital Share Share Conversion Retained Other Total Capital Premium Reserve Earnings Reserves Equity •'000 •'000 •'000 •'000 •'000 •'000 At 1 January 2007 68 6,367 1 2,222 99 8,757Foreign currency translation - - - - (19) (19) ______ _______ ______ _______ ______ _______Total income and expensefor the period recogniseddirectly in equity - - - - (19) (19) Profit for the period - - - 2,613 - 2,613 ______ _______ ______ _______ ______ _______Total income and expensefor the period - - - 2,613 - 2,613Issue of share capital 13 4,788 - - - 4,801Share based payments - - - - 153 153 ______ _______ ______ _______ ______ _______At 31 December 2007 81 11,155 1 4,835 233 16,305 ======= ======= ======= ======= ======= ======= Attributable to equity holders of the parent ________________________________________________________ Equity Capital Share Share Conversion Retained Other Total Capital Premium Reserve Earnings Reserves Equity •'000 •'000 •'000 •'000 •'000 •'000At 1 January 2006 26 622 1 15 43 707Profit for the period - - - 2,207 - 2,207 ______ _______ ______ _______ ______ _______Total income and expensefor the period - - - 2,207 - 2,207Issue of share capital 18 5,903 - - - 5,921Capitalisation issue 15 (15) - - - -Conversion of Series 'A'Convertible Redeemable PreferredShares to Ordinary Shares 9 898 - - - 907Costs associated with listingon AIM - (1,041) - - - (1,041)Share-based payments - - - - 56 56 ______ _______ ______ _______ ______ _______At 31 December 2006 68 6,367 1 2,222 99 8,757 ======= ======= ======= ======= ======= ======= CONSOLIDATED CASH FLOW STATEMENTfor the year ended 31 December 2007 2007 2006 •'000 •'000Cash Flows from Operating ActivitiesProfit before tax 3,081 2,451 Adjustments to reconcile profit for the year tonet cash inflow from operating activitiesDepreciation 94 52Amortisation of intangible assets 394 -Share-based payments expense 153 56Foreign exchange (19) -Increase in trade and other receivables (1,910) (850)Increase in trade and other payables 2,917 663Finance revenue (366) (85)Finance costs 315 26 ______ ______Cash generated from operations 4,659 2,313Interest paid (9) (5)Income tax paid (535) (67) ______ ______Net cash inflow from operating activities 4,115 2,241 Cash Flows from Investing ActivitiesPayment of deferred consideration onpurchase of Enabletel - (252)Acquisition of subsidiaries (14,532) -Purchase of property, plant and equipment (81) (165)Purchase of intangible assets (166) -Interest received 326 85 ______ ______Net cash outflow from investing activities (14,453) (332) ______ ______ Cash Flows from Financing ActivitiesProceeds from issue of share capital 1 5,921Interest-bearing loan 14,950 -Transaction costs of issue of share capital - (1,022) ______ ______Net cash inflow from financing activities 14,951 4,899 ______ ______Net Increase in Cash and Cash Equivalents 4,613 6,808 Cash and cash equivalents at 1 January 7,491 683 ______ ______ Cash and cash equivalents at 31 December 12,104 7,491 ====== ====== 1. The financial information set out in this preliminary announcement,which was approved by the Board of Directors on 7 April 2008, has been preparedbased on the accounting policies set out in the financial statements for theyear ended 31 December 2007. This financial information does not constitute thegroup's statutory financial statements but is derived from the financialstatements for the year ended 31 December 2007, which will be delivered to theCompany's Annual General Meeting. Following the Annual General Meeting, thefinancial statements will be filed with the Companies' Office in Dublin. Theauditors have reported on the financial statements for the year ended 31December 2007; their report was not qualified in any respect. 2. The London Stock Exchange AIM and the IEX in Dublin have mandated theuse of International Financial Reporting Standards (IFRS) for all AIM and IEXcompanies with financial years commencing on or after 1 January 2007.Consequently, these financial statements are prepared in accordance with IFRS asadopted by the European Union. The date of transition is 1 January 2006. 3 EARNINGS PER ORDINARY SHARE Basic earnings per share amounts are calculated by dividing net profitfor the year attributable to ordinary equity holders of the parent by theweighed average number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing the netprofit attributable to ordinary equity holders of the parent by the weightedaverage number of ordinary shares outstanding during the year plus the weightedaverage number of ordinary shares that would be issued on the conversion of allthe dilutive potential ordinary shares into ordinary shares. The following reflects the income and share data used in the basic anddiluted earnings per share computations: 2007 2006 •'000 •'000 Net profit attributable to equity holders of the parent 2,613 2,207 ======= ======= 2007 2006 thousands thousands Basic weighted average number of shares 69,567 52,933 Dilutive potential ordinary shares: Employee share options 3,868 4,147 Deferred consideration 45 - _______ _______ Diluted weighted average number of shares 73,480 57,080 ======= ======= 4 ADJUSTED EARNINGS PER ORDINARY SHARE The following reflects earnings per share based adjusted net income: 2007 2006 • • Adjusted basic EPS 0.049 0.043 Adjusted diluted EPS 0.046 0.040 ======= ======= Adjusted net income is calculated as: 2007 2006 •'000 •'000 Profit after tax 2,613 2,207 Share option cost 153 56 Interest on deferred consideration 249 - Amortisation 394 - _______ _______ 3,409 2,263 ======= ======= 2007 20065 TRADE AND OTHER RECEIVABLES •'000 •'000 (all current) Trade receivables 8,313 2,648 Prepayments 628 126 VAT recoverable 239 - Corporation tax recoverable - 22 ______ _______ 9,180 2,796 ======= ======= 2007 20066 TRADE AND OTHER PAYABLES •'000 •'000 (all current) Trade payables and accruals 8,720 1,928 PAYE/PRSI 307 136 VAT 346 532 Loan interest 56 - ______ _______ 9,429 2,596 ======= ======= 7. SEGMENT INFORMATION The primary segment reporting format is determined to be businesssegments as the Group's risks and rates of return are affected predominantly bydifferences in the services provided. Secondary information is reportedgeographically. The operating businesses are organised and managed separatelyaccording to the nature of the services provided, with each segment representing a strategic business unit that offers different services. Business Segments The Group facilitates communication and interaction between businesses andconsumers on mobile phones through a range of value-added mobile applications(B2B). The Group also develops, promotes and distributes mobile content andinteractive services directly to consumers (B2C). The following tables present revenue and profit and certain assetsand liability information regarding the Group's business segments: Year ended 31 December 2007 B2B B2C Eliminations Total •'000 •'000 •'000 •'000 Revenue Sales to external customers 12,513 12,203 - 24,716 Inter-segment sales 38 1,566 (1,604) - _______ _______ ______ _______ Total revenue 12,551 13,769 (1,604) 24,716 ======= ======= ======= ======= Results Segment results 3,036 3,653 - 6,689 ======= ======= ======= Unallocated expenses (3,659) _______ Profit before tax, finance costs and finance revenue 3,030 Net finance income 51 _______ Profit before tax 3,081 Income tax expense (468) _______ Net profit for year 2,613 Year ended 31 December 2006 B2B B2C Eliminations Total •'000 •'000 •'000 •'000 Revenue Sales to external customers 6,601 5,751 - 12,352 Inter-segment sales - - - - _______ _______ ______ _______ Total revenue 6,601 5,751 - 12,352 ======= ======= ======= ======= Results Segment results 1,578 2,663 - 4,241 ======= ======= ======= Unallocated expenses (1,849) _______ Profit before tax, finance costs and finance revenue 2,392 Net finance income 59 _______ Profit before tax 2,451 Income tax expense (244) _______ Net profit for year 2,207 _______ 8 The report and accounts for the year ended 31 December 2007 will be posted to shareholders in due course and further copies will be available from the website (www.zamano.com). -Ends- For Reference zamanoJohn O'Shea - CEO +353 1 488 5830Colm Saunders CFO +353 1 511 1224www.zamano.com Seymour PierceDavid Newton +44 207 107 8000www.seymourpierce.com NCB Corporate FinanceConor McCarthy +353 1 611 5936www.ncb.ie EdelmanPaul Lockstone (London) +44 (0) 20 7344 1325Joe Carmody/Donnchadh O'Leary (Dublin) +353 1 678 9333www.edelman.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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