Half Yearly Report

RNS Number : 0757T

Easydate plc

22 September 2010

 

Date:	22 September 2010
On behalf of:	Easydate plc ('Easydate', 'the Group' or 'the Company')
Embargoed until:	0700hrs

 

 

Easydate plc

Half Yearly Report

 

Easydate plc (AIM: EZD), the internet-based dating operator, is pleased to announce its half year results for the six months ended 30 June 2010 ("H1 2010"). These are the first trading results for the Company since listing on AIM on 30 June 2010.

 

In addition the Company today announces its first significant acquisition post-listing, with the purchase of Cupid.com Inc. from OnTargetJobs Inc. for USD 6.6 million (£4.4million). A separate announcement with fuller details has been released simultaneously.

 

Financial highlights

 

The results show strong revenue and profit growth. The comparison period is the full 12 months to 31 December 2009.

 

- IPO completed at 30 June 2010 raising £8.8m net of costs

 

- Revenue of £8.8m for H1 2010 (£8.5m for the full year to 31 Dec 2009)

 

- Significant increase in Gross Margin to 35.8% (FY 2009:19.6%)

 

- EBITDA of £2.4m for H1 2010 (£1.2m for the full year 2009)

 

- Allegran business acquired from Daily Mail ("DMGT") on 31 March 2010 showing strong Apr to Jun 2010 growth and contribution

 

- International revenues becoming more significant: 20% for H1 2010 (FY 2009:13%)

 

Bill Dobbie, CEO of Easydate plc, commented:

 

"We have been very pleased with our overall performance in the first half of the year. We have grown revenue and profits in the UK and abroad whilst successfully integrating Allegran and another two smaller acquisitions.

 

We expect the current growth to continue and we are confident in our year end outlook."

 For further information please contact:

Easydate plc	Tel: +44 (0)131 220 1313
Bill Dobbie, CEO
Cenkos Securities plc	Tel: +44 (0)131 220 6939
Ken Fleming
Beth McKiernan
Redleaf Communications	Tel: +44 (0)207 566 6700
Paul Dulieu / Henry Columbine / Mike Ward	[email protected]

Notes to Editors

§ Easydate plc listed on AIM in June 2010 and is a leading provider of online dating services.

§ Easydate has built a base of over 13 million registrants and over 9 million members in 29 countries (those countries with over 1,000 members), with a growing proportion of members coming from outside of the United Kingdom.

§ Easydate offers a wide variety of online dating services allowing members to interact with each other and access the content available on the Group's websites. These websites are intended to appeal to dating users of diverse ages, cultures and social interest groups. The Group's most heavily visited websites include www.benaughty.com, www.cupid.com, www.girlsdateforfree.com and www.datetheuk.com. The Group also promotes the niche brands www.datingforparents.com, www.speeddater.com and www.maturedating.co.uk 

§ Further information on the Company can be found at www.easydategroup.com 

 

Chairman's statement

 

I am pleased to introduce myself to you with such a strong set of maiden trading results. The Company is developing well in all respects, and we are looking forward to continuing this development as a plc.

 

The online dating market is becoming increasingly familiar to many people in the UK and abroad, as its use gains more social acceptance and with increased availability and affordability of the internet as a day to day communications tool. We are well positioned to benefit from such trends.

 

Easydate's plan for the rest of the year is to continue international expansion, whilst adding to its network of sites.

 

George Elliott, Chairman

 

 

Operational Review H1 2010

 

During H1 2010 Easydate successfully completed its IPO, integrated the Allegran acquisition, strengthened the management team and product portfolio and continued to grow revenue and profits of both the organic business and Allegran. The Board is extremely pleased with the significant progress made during this period.

 

Revenue of £8.8m in the six months to 30 June 2010 is more than the full 2009 financial year (FY2009: £8.5m). EBITDA of £2.4m in the six months to 30 June 2010 is a 93% increase on the full 2009 financial year (FY2009: £1.2m).

 

Acquisitions

On 31 March 2010 Easydate acquired Allegran from the Daily Mail General Trust plc ("DMGT"). Monthly Allegran revenues have grown by 54% since the acquisition without adding any extra staff.

 

More recently, Easydate has also acquired Granamor.com to accelerate growth in Spain, and PlanetSappho has been added to our network of niche sites and of course today Cupid.com has been added to our portfolio.

 

Development of senior management team

Given the Company's appetite for international expansion, a new role has been created for co-founder Max Polyakov who will move from his current operational role to a position of International Business Development Director; seeking significant partnerships and acquisition opportunities.

 

Throughout 2010 Easydate's plc Board has been strengthened in line with the business growth, with Mark Doughty recruited as CFO in April 2010 and George Elliott joining as Chairman in May 2010.

 

In addition the Company has continued to expand and develop the operational management team with Vladimir Lewykin recently promoted to Operations Director, Tatyana Gorohovska becoming Marketing Director and Tim Simmonds becoming Commercial Director.

 

New products and clients

Easydate has recently introduced psychology based matchmaking services LoveChemistry and CupidAffinity to its network, allowing the Company to compete in this emerging sector of the market.

 

The Company's products are constantly evolving, including integration with Facebook, the development of Apple compatible applications and the introduction of other new routes to online markets.

 

Over the period, the Company has also seen a number of new client wins in its White Labelling activities including S1 Dating, Bauer Media and Metro Newspapers.

 

International expansion

During H1 2010, approximately 20% of Easydate's revenues were from outside the UK. The Company expects international revenues to continue to rise and play an increasing role in the Company's overall growth. One such example is that the Company is now adding international subscribers and revenues to its Allegran sites.

 

Outlook

 

Easydate's existing sites are growing healthily, and the Company has added to this network by introducing its own new services, such as LoveChemistry, and identifying further niches. Easydate will also seek further earnings enhancing acquisition opportunities which it can integrate with relatively modest additions to its cost base.

 

The Company will continue to target international expansion and expects that this will be significant, growing to become larger than Easydate's UK business.

 

Easydate looks forward to the future with confidence and expects to provide a further trading update in November 2010.

 

Bill Dobbie, CEO

Consolidated statement of comprehensive income for the 6 months ended 30 June 2010

 

	Notes	H1 2010	FY2009 (proforma - see note 1)
		£000	£000
Continuing operations:
Revenue	2	8,821	8,499
Cost of sales		(5,667)	(6,830)
Gross profit		3,154	1,669
Operating expenses (excluding depreciation and amortisation)		(743)	(420)
EBITDA		2,411	1,249
Depreciation of plant and equipment		(30)	(32)
Amortisation of intangible assets		(395)	(229)
Total operating expenses		(1,168)	(681)
Operating profit		1,986	988
Finance income and costs		-	(5)
Profit before taxation		1,986	983
Taxation charge	5	(609)	(334)
Profit for the period from continuing operations		1,377	649
Discontinued operations:
Profit from discontinued operations, net of tax		-	708
Profit for the period and total comprehensive income		1,377	1,357
Basic and diluted earnings per share (continuing operations)	8
Basic (p per share)		2.42	1.14
Diluted (p per share)		2.30	1.07
Basic and diluted earnings per share (total)	8
Basic (p per share)		2.42	2.39
Diluted (p per share)		2.30	2.24

 

 

 

 

 

Consolidated statement of financial position at 30 June 2010

 

	Notes	H1 2010	FY2009 (proforma - see note 1)
		£000	£000
ASSETS
Non-current assets
Intangible assets - goodwill	6	1,933	1,261
Intangible assets - other	6	3,668	950
Plant and equipment		79	59
		5,680	2,270
Current assets
Trade and other receivables		2,402	949
Cash and cash equivalents		9,508	241
		11,910	1,190
Total assets		17,590	3,460
LIABILITIES
Non-current liabilities
Non-current borrowings		9	18
Deferred consideration		766	-
		775	18
Current liabilities
Trade and other payables	7	5,390	1,776
Deferred taxation		96	96
Current borrowings		18	19
		5,504	1,891
Total liabilities		6,279	1,909
CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY SHAREHOLDERS
Called up share capital	9	1,876	1,420
Share premium account		8,350	-
Share options reserve		196	126
Retained earnings		889	5
Total equity		11,311	1,551
Total equity and liabilities		17,590	3,460

 

Consolidated cashflow statement for the 6 months ended 30 June 2010

 

		H1 2010	FY2009 (proforma - see note 1)
		£000	£000
Profit after tax		1,377	1,357
Taxation		609	609
Depreciation		30	32
Amortisation		395	229
Movement in trade receivables		(1,453)	1,271
Movement in trade payables		1,043	(627)
Equity settled share-based payment transactions		70	126
Cash flow from operations		2,071	2,997
Tax paid		-	(161)
Net cash from operating activities		2,071	2,836
Cash flow from investing activities
Purchase of plant and equipment		(40)	(23)
Acquisitions		(860)	-
Capitalised intangible assets		(207)	(656)
Net cash used in investing activities		(1,107)	(679)
Cash flows from financing activities
Issue of shares (net)		8,806	-
Payment of finance lease liabilities		(10)	(24)
Dividends paid to company shareholders		(493)	(2,167)
Net cash used in financing activities		8,303	(2,191)
Net increase/(decrease) in cash and cash equivalents		9,267	(34)
Cash and cash equivalents at start of the period		241	275
Cash and cash equivalents at end of the period		9,508	241

 

Consolidated statement of changes in equity for the 6 months ended 30 June 2010

 

	Share capital	Share premium	Options reserve	Retained earnings	Total
	£000	£000	£000	£000	£000
At 1 January 2010	1,420	-	126	5	1,551
Share based payments	-	-	70	-	70
Retained profit for the period	-	-	-	1,377	1,377
Dividend	-	-	-	(493)	(493)
Shares issued	416	8,342	-	-	8,758
Options exercised	40	8	-	-	48
At 30 June 2010	1,876	8,350	196	889	11,311

  

Notes to the accounts

 

1. Basis of preparation

 

Easydate plc ("the Company") was incorporated in the UK on 13 November 2009. The principal activity is the development and management of dating websites. Its registered office is at 23 Manor Place, Edinburgh.

 

On 15 December 2009 the Company acquired the trade and certain assets and liabilities of Easy Date Limited and ownership of its subsidiaries from Interactive Digital Entertainment Group Limited ("IDE Group"). The Company and its subsidiaries comprise "the Group".

 

The Group therefore only constituted a separate legal group with effect from 15 December 2009. The financial information for the year ended 31 December 2009 was prepared specifically for the purposes of the AIM admission document on the basis that the combined and consolidated financial information presented herein is in respect of the Group and the underlying business of EasyDate Limited and its subsidiaries as if they had always been part of the same group.

 

The combined and consolidated financial information has been prepared in accordance with the requirements of the Prospectus Directive Regulation including the implementing regulation as regards issuers with complex financial histories, the listing rules, and in accordance with this basis of preparation, including the significant accounting policies, described below. This basis of preparation describes how the financial information has been prepared in accordance and complies with International Financial Reporting Standards as adopted by the European Union ("Adopted IFRSs") except as described below.

 

In particular, Adopted IFRSs do not provide for the preparation of combined financial information and accordingly in preparing the combined and consolidated financial information certain accounting conventions commonly used for the preparation of historical financial information for inclusion in investment circulars as described in the Annexure to SIR 2000 (Investment Reporting Standard applicable to public reporting engagements on historical financial information ) issued by the UK Auditing Practices Board have been applied. In all other material respects Adopted IFRSs have been applied.

 

The tax charge for the year ended 31 December 2009 has been calculated in accordance with the accounting policy set out below. As noted above, on 15 December 2009 the Company acquired the trade and certain assets and liabilities of EasyDate Ltd and ownership of its subsidiaries. The company did not assume the liability of £733,000 for corporation tax as at 15 December 2009 nor £119,000 of trade and other payables, and Easydate Limited retained assets of £852,000 to settle these liabilities.

 

The consolidated financial information for the six months to 30 June 2010 has been prepared in accordance with the recognition and measurement criteria of Adopted IFRSs.

 

The consolidated financial information contains the results and financial position of Easydate plc and its subsidiaries. Subsidiaries are entities over which Easydate plc has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights so as to obtain benefits from activities. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

 

The key judgement made by the directors is amortisation of intangible assets. This is discussed in the appropriate note.

 

The financial statements have been prepared on a going concern basis which the directors believe is appropriate for the following reasons:

 

The directors have prepared cashflow forecasts which show the Group expects to meet its liabilities as they fall due for a period in excess of 12 months from the date of these financial statements.

 

2. Significant accounting policies

 

Revenue recognition

Website membership income is recognised on a straight line basis over the period of the membership subscription.

Revenue from management contracts is recognised when the service is provided.

 

Business combinations and goodwill

All business combinations are accounted for by applying the purchase method. Goodwill represents amounts arising on acquisition of subsidiaries, associates and jointly controlled entities. Goodwill represents the difference between the cost of the acquisition and the net fair value of the identifiable assets, liabilities and contingent liabilities acquired. Identifiable intangibles are those which can be sold separately or which arise from legal rights regardless of whether those rights are separable.

 

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but is tested annually for impairment.

 

Negative goodwill arising on an acquisition is recognised immediately in profit or loss.

 

Other intangible assets

Expenditure on research activities is recognised as an expense in the period in which it is incurred. Where no internally generated intangible assets can be recognised, development expenditure is expensed in the period as incurred.

An intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated:

 

-The technical feasibility of completing the intangible asset so that it will be available for use or sale.

-The intention to complete the intangible asset and use or sell it.

-The ability to use or sell the intangible asset

-How the intangible asset will generate probable future economic benefits

-The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset

-The ability to measure reliably the expenditure attributable to the intangible asset during its development.

 

The amount initially recognised for internally generated intangible assets is the sum of expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above.

Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses.

 

Internally generated assets are amortised over their estimated lifespan depending on each asset. The asset lifespan is estimated by management based on experience of similar assets in the past.

 

Other intangible assets that are acquired by the Company are stated at cost less accumulated amortisation and less accumulated impairment losses.

 

 

Amortisation

Amortisation is charged to the income statement on a straight line basis over the estimated useful lives of the intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life and goodwill are systematically tested for impairment at each balance sheet date. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows:

Intellectual property over estimated asset lifespan

Internally generated development assets over estimated asset lifespan

Customer database over estimated asset lifespan

Contracts with suppliers and partners over estimated asset lifespan

 

The estimated asset lifespans for current intangibles are between 2 and 10 years.

 

Share based payments

The Company issues equity-settled share-based payments to certain employees. In accordance with IFRS2 "share based Payments" equity-settled share-based payments are measured at fair value at the date of grant. Fair value is measured by use of the Black-Scholes pricing model as amended to cater for share options in issue where vesting is based on future valuation performance conditions. The fair value determined at the date of grant of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company's estimate of the number of share that will eventually vest.

 

3. Operating segments

 

IFRS8: Operating Segments is a disclosure standard requiring the identification of the Group's reportable operating segments are identified and reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker ("CODM"). The CODM has been identified as the Board of Directors as they are responsible for allocating resources and assessing the performance of the Group.

 

The information presented to the Board of Directors does not split the Group into different segments, consequently the Group has only one reportable segment being the development and management of dating websites.

 

4. Acquisitions

 

On 31 March 2010, the Company acquired the trade and assets of Allegran Ltd for £3.3m of which £200,000 was initially settled in cash and £3,100,000 was deferred. At 30 June 2010 £2,633,000 remains deferred. This consisted of domain names, trademarks, customer database and computer equipment.

 

The directors believe that the Allegran acquisition is not significant enough to merit separate disclosure as an acquisition in the consolidated statement of comprehensive income.

 

Goodwill arose on the acquisitions because of the difference between the cost of the acquisition and the book value of the net assets acquired and is supported by value attributed to the underlying trade.

 

Effect of acquisition

 

The acquisition had the following effect on the Company's assets and liabilities:

 

	Recognised values on acquisition
	£000
Plant and equipment	10
Web domains	877
Trademarks and copyright	439
Customer database	1,202
Contracts with suppliers and partners	100
Net identifiable assets and liabilities	2,628
Goodwill on acquisition	672
	3,300

 

On 22 September 2010 the Company acquired 100% of the share capital of US based Cupid.com Inc and its subsidiaries from OnTargetJobs Inc for £4.4m.

In the year ended 31 December 2009 Cupid.com Inc generated revenue of £1.3M and EBITDA of £0.5M.

 

5. Taxation

 

Recognised in the income statement:

	H1 2010	FY2009 (proforma see note 1)
	£000	£000
Current tax expense
Current year	609	281
Adjustments for prior years	-	-
Current tax expense	609	281
Deferred tax expense
Deferred tax expense	-	53
Tax expense in income statement (excluding tax on discontinued operation)	609	334
Tax in relation to discontinued operation	-	275
Total tax expense	609	609
Reconciliation of effective tax rate
Profit for the period	1,377	1,357
Total tax expense (including tax on discontinued operations)	609	609
Profit before taxation	1,986	1,966
Tax using the UK corporation tax rate of 28% (2009: 28%)	556	550
Non-deductible expenses	53	59
Total tax expense (including tax on discontinued operation)	609	609

 

 

6. Intangible assets

	Internally generated development assets	Goodwill	Intellectual property	Customer database	Contracts	Total
	£000	£000	£000	£000	£000	£000
Cost
Balance at 1 January 2010	396	1,261	914	-	-	2,571
Acquisitions - externally purchased	-	-	288	-	-	288
Internally generated	207	-	-	-	-	207
Acquisition of Allegran (see note 4)	-	672	1,316	1,202	100	3,290
Balance at 30 June 2010	603	1,933	2,518	1,202	100	6,356
Amortisation
Balance at 1 January 2010	54	-	306	-	-	360
Amortisation for the period	99	-	133	150	13	395
Balance at 30 June 2010	153	-	439	150	13	755
Net book value
At 30 June 2010	450	1,933	2,079	1,052	87	5,601
At 31 December 2009	342	1,261	608	-	-	2,211

Amortisation

Amortisation is recognised in the following line item in the income statement:

	H1 2010	FY2009 (proforma see note 1)
	£000	£000
Amortisation of intangible assets	395	229

 

There have been no indicators of impairment in respect to intangible assets and as a result no impairment review has been completed.

 

7. Trade and other payables

 

	H1 2010	FY2009 (proforma see note 1)
	£000	£000
Deferred consideration on acquisitions	2,117	155
Accrued IPO costs	464	-
Trade and other payables	2,200	1,621
Taxation	609	-
	5,390	1,776

 

 

 

 

8. Earnings per share

	H1 2010	FY2009 (proforma - see note 1)
Continuing operations:
Basic
Profit attributable to equity holders of the company (£000)	1,377	649
Weighted average of number of ordinary shares in issue (thousands)	56,899	56,800
Basic earnings per share (p per share)	2.42p	1.14p
Diluted
Profit attributable to equity holders of the company (£000)	1,377	649
Weighted average of number of ordinary shares in issue (thousands)	56,899	56,800
Adjustments for: share options (thousands)	2,848	3,880
Weighted average number of ordinary shares for diluted earnings per share (thousands)	59,747	60,680
Diluted earnings per share (p per share)	2.30p	1.07p

 

Earnings per share (total):
Basic
Profit attributable to equity holders of the company (£000)	1,377	1,357
Weighted average of number of ordinary shares in issue (thousands)	56,899	56,800
Basic earnings per share (p per share)	2.42p	2.39p
Diluted
Profit attributable to equity holders of the company (£000)	1,377	1,357
Weighted average of number of ordinary shares in issue (thousands)	56,899	56,800
Adjustments for: share options (thousands)	2,848	3,880
Weighted average number of ordinary shares for diluted earnings per share (thousands)	59,747	60,680
Diluted earnings per share (p per share)	2.30p	2.24p

 

9. Called up share capital

	H1 2010	H1 2010	FY 2009	FY2009 (proforma - see note 1)
	Number	£000	Number	£000
Allotted, called up and fully paid
Equity share capital
Ordinary shares of 2.5p (FY2009: £1) each	75,047,067	1,876	1,419,959	1,420

 

On 17 June the shares were subdivided to 2.5p shares increasing the number of shares in issue to 56,798,360.

On 30 June 2010 16,666,667 shares were issued for 60p as part of the IPO. On the same date 1,582,040 shares were issued for 3p as a result of share options being exercised. The premium on issue of shares less expenses of £1,242,000 has been credited to the share premium account.

 

10. Principal risks and uncertainties

 

The directors believe that the principal risks and uncertainties to the Company are:

Exchange rate risks, finding suitable acquisitions to grow the business, growing the customer base, operating in other countries and retaining key staff.

 

 

   

INDEPENDENT REVIEW REPORT TO EASYDATE PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly report for the six months ended 30 June 2010 which comprises the consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity and the related explanatory notes. We have read the other information contained in the half-yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

 Directors' responsibilities

The half-yearly report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly report in accordance with the AIM Rules.

The annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly report has been prepared in accordance with the recognition and measurement requirements of IFRSs as adopted by the EU.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly report for the six months ended 30 June 2010 is not prepared, in all material respects, in accordance with the recognition and measurement requirements of IFRSs as adopted by the EU and the AIM Rules.

 

B Marks

for and on behalf of KPMG Audit plc

Chartered Accountants

191 West George Street

Glasgow

G2 2LJ

22 September 2010

Copies of this half yearly report are being posted to shareholders and will be available shortly at www.easydategroup.com

 

This information is provided by RNS

The company news service from the London Stock Exchange