20th Sep 2007 07:00
Zamano PLC20 September 2007 ZAMANO PLC INTERIM RESULTS TO 30 JUNE 2007 INCREASED INVESTMENT DELIVERING IMPROVED RESULTS Dublin, Ireland, September 20th 2007: zamano PLC (ZMNO AIM London, ZAZ IEXDublin) has today announced interim results for the six months ending 30th June2007. H1 2007 H1 2006 % change •'000 •'000Turnover 9,671 5,696 +70%EBITDA * 1,505 1,268 +19%Profit before tax 1,393 1,243 +12%Profit after tax 1,183 1,073 +10% * Before charge of €72,000 (H1 2006 €19,000) relating to share option costs Highlights • Revenues increased by 70%, with strong UK growth • EBITDA (before share option costs) up 19% on 2006 • 2 months' positive contribution from Eirborne acquisition, with performance and synergies ahead of internal targets • Full year EBITDA growth expected to meet market forecasts Chairman's comments Rod Matthews, Chairman of zamano commented "zamano has successfully reached anew level in its continued development. As well as listing on AIM and IEX, thecompany has strengthened its management team, increased its sales resources andinvested further in R & D. The results of this investment became very apparentin Q2 this year, and were manifested in continued improvements in revenues andprofits. Overall, the Board is very pleased with progress made, and is particularly happywith the performance in Q2 and Q3 to date, which we are confident will continuethrough the year end. The Directors are comfortable with market expectations ofsignificant annual revenue and EBITDA growth". Outlook Commenting on the results and looking forward, John O'Shea, Managing Director,zamano's said;" It is very satisfying to see the results of our investmentstrategy coming through. We have managed to retain industry-leading EBITDAmargins of almost 16%, and are seeing a further improvement on this in Q3. Ourstrategy remains one of maintaining the hybrid B2B:B2C business model,continuing to invest in technology, and accelerating our efforts in locatinggood acquisition targets. The stated aim of the company is to achieve ongoing,substantial increases in annual revenues while maintaining industry-leadingmargins. With 70% growth in the first half of the year, the company is wellpositioned to exceed the €20M revenue milestone in 2007." Business Review zamano has performed very well in the first half of 2007 with all parts of theCompany performing strongly. Access to capital and a freely traded stock enabledthe completion of the Eirborne acquisition in April. This deal has alreadyproven itself to be of very significant benefit to zamano and is deliveringrevenues, profits and synergy savings ahead of internal targets. zamano nowanticipates that Eirborne will exceed its earn-out targets, with the totalpurchase price capped at €8.5M, the large majority of which is payable in June2008. The B2B business has continued to perform ahead of expectations, with zamano nowthe largest messaging provider in Ireland, and a Top 10 player in the UK. Topline growth translated into improved margins in the last two months of the halfyear, a trend which has continued further into the third quarter. Segment Information zamano's business is made up of a B2B business unit servicing brands andcompanies wishing to interact with mobile phone users, and a B2C unit made up ofa number of zamano-owned brands selling directly to mobile consumers. Themargins in both units are different, ranging from between 15% to 30% in B2B, andup to 50% in B2C. The B2B:B2C revenue mix is therefore the main determinant ofthe overall Group margin. Substantial growth in one segment can result insignificant changes in overall margin, as is evident in the half year revenuegrowth of 70% being accompanied by 19% EBITDA growth. In the early part of 2007,the Group experienced substantial growth in the B2B Business Unit, therebyreducing overall margins. With the acquisition of Eirborne in April, and animprovement in the existing B2C margin performance, the Group margins wererestored and have improved further in Q3. Platform and development progress Continued investment has led to further progress in developing the zamano MobileMessaging (MMG) platform and its suite of applications. The new industry paymentprocessing initiative PayforIt has been launched this month, while new routes tomarket have been opened through the development of three new Web portals.Eirborne's video mail functionality is now available on Bebo, and has alreadyattracted significant numbers of new customers. Regulatory Affairs The Premium Rate industry has attracted negative publicity in the last 6 months,particularly in relation to TV voting and competitions. zamano is not active inthese market niches and therefore is unaffected. Nevertheless, policing thesector is very important and zamano takes its obligations very seriously. Anindependent review of the company's B2B operations in the UK has been completed,and additional more stringent guidelines for service management have been put inplace. A similar review will shortly be undertaken in relation to our Irish andAustralian activities Financial Review In line with AIM and IEX regulations, zamano is reporting results under IFRS forthe first time. Consequently certain modifications are being made to theprevious year's returns. A Transition Document detailing all impacts of theadoption of IFRS for the year ended 31 December 2006 is being published todaytogether with the company's interim results. There has been no impact on EBITDA. The main modifications relate to revenuerecognition and the amortisation of acquisition goodwill. Within the B2BBusiness Unit, aggregation revenues were previously recognised as being theoutpayments from the Mobile Network Operators. Under IFRS, only the marginretained will be recognised going forward. This has resulted in 2006 revenuesand cost of sales being reduced by approximately €1M, with no impact on profit.In 2006, zamano recognised an amortisation charge of €209,000 relating to thewriting down of goodwill associated with the acquisition of Enabletel in 2004.Under IFRS, goodwill is no longer amortised, resulting in the reversal of thewrite-down and an equal increase in 2006 profits before tax. Earnings per Share (EPS) zamano's fully diluted EPS fell from €0.020 in H1 2006 to €0.016 in H1 2007, asa result of the issue of 16,666,666 shares in the AIM flotation of October 2006,when €4.9M was raised after costs. Fully Diluted Diluted weighted average number of Net Cash at end of EPS shares (thousands) June H1 2007 €0.016 74,758 €7.395M H1 2006 €0.02 54,091 €1.825M Eirborne Acquisition The Balance Sheet for 30 June 2007 now reflects the management's view that theEirborne vendors will maximise their payment by exceeding the earn-out targets.As the maximum possible payment was capped at €8.5M, and the Eirborne profitswill likely exceed €1.7M, the net result will be that the acquisition will havebeen made at an EBITDA multiple of less than 5. Board Composition Good progress has been made in the appointment of a new Finance Director. TheBoard expect to be able to announce an appointment within a month. Niall McKeon, a non-executive director and one of the founders of zamano, hasresigned to pursue his other business interests. The Board thanks him for hiscontribution and wishes him all the best for the future. Investor downloadsThe Interim Condensed Consolidated Financial Statements and IFRS Adoptiondocument are available at www.zamano.com. INTERIM CONSOLIDATED INCOME STATEMENTfor the six months ended 30 June 2007 For the six months ended 30 June __________________________ 2007 2006 Unaudited Note •'000 •'000 Continuing operations Revenue 9,671 5,696 Cost of sales (5,995) (3,077) _______ _______Gross profit 3,676 2,619 Administrative expenses (2,366) (1,389) _______ _______Operating profit 1,310 1,230 Finance income 150 16 Finance costs (67) (3) _______ _______Profit before tax 1,393 1,243 Income tax expense (210) (170) _______ _______Profit for the period attributableto equity holders of the parent 1,183 1,073 ======== ======== Earnings per share - basic 3 €0.017 €0.022 - diluted 3 €0.016 €0.020 INTERIM CONSOLIDATED BALANCE SHEETat 30 June 2007 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited AuditedASSETS •'000 •'000 •'000 NON CURRENT ASSETS Property plant and equipment 173 81 165Intangible assets 9,370 1,112 1,112 _______ _______ ________ 9,543 1,193 1,277 _______ _______ ________CURRENT ASSETS Trade and other receivables 4,228 1,823 2,796Deferred tax asset 26 - -Cash and cash equivalents 7,395 1,825 7,491 _______ _______ ________ 11,649 3,648 10,287 _______ _______ ________TOTAL ASSETS 21,192 4,841 11,564 ======== ======== ========EQUITY Equity attributable to equity holders of the parent Share capital 69 26 68Share premium 6,866 622 6,367Capital conversion reserve 1 1 1Retained earnings 3,405 1,089 2,222Other reserves 164 62 99 _______ _______ ________TOTAL EQUITY 10,505 1,800 8,757 _______ _______ ________LIABILITIES CURRENT LIABILITIES Trade and other payables 3,563 1,971 2,596Deferred consideration 6,559 - -Income tax payable 455 163 211 _______ _______ ________ 10,577 2,134 2,807 _______ _______ ________NON CURRENT LIABILITIES Deferred tax liability 110 - -Other liabilities - 907 - _______ _______ _______ 110 907 - _______ _______ ________TOTAL LIABILITIES 10,687 3,041 2,807 _______ _______ ________TOTAL EQUITY AND LIABILITIES 21,192 4,841 11,564 ======== ======== ======== INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor the six months ended 30 June 2007 Attributable to equity holders of the parent ________________________________________________________ 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 - - - - (7) (7) ______ _______ ______ _______ ______ _______Total income and expensefor the period recogniseddirectly in equity - - - - (7) (7) Profit for the period - - - 1,183 - 1,183 ______ _______ ______ _______ ______ _______ Total income and expensefor the period - - - 1,183 - 1,183 Issue of share capital 1 499 - - - 500 Share based payment - - - - 72 72 ______ _______ ______ _______ ______ _______At 30 June 2007(unaudited) 69 6,866 1 3,405 164 10,505 ======= ======= ======= ======= ======= ======= Attributable to equity holders of the parent ________________________________________________________ Capital Issued Share Conversion Retained Other Total Capital Premium Reserve Earnings Reserves Equity •'000 •'000 •'000 •'000 •'000 •'000 At 1 January 2006 26 622 1 16 43 708 Profit for the period - - - 1,073 - 1,073 ______ _______ ______ _______ ______ _______Total income and expensefor the period - - - 1,073 - 1,073 Share-based payment - - - - 19 19 ______ _______ ______ _______ ______ _______At 30 June 2006(unaudited) 26 622 1 1,089 62 1,800 ======= ======= ======= ======= ======= ======= INTERIM CONSOLIDATED CASH FLOW STATEMENTfor the six months ended 30 June 2007 For the six months ended 30 June ________________________ 2007 2006 Unaudited •'000 •'000 Operating activities Profit before tax from continuing operations 1,393 1,243 Adjustments to reconcile profit before taxto net cash flows Depreciation of property, plant and equipment 47 19Amortisation of intangible assets 76 -Share-based payments expense 72 19Foreign exchange (6) -(Increase)/decrease in trade and other receivables (741) 101Increase in trade and other payables 386 80Finance Income (150) (16)Finance Costs 67 3 ______ ______ 1,144 1,449 Interest expense (4) (3)Income tax paid (8) (20) ______ ______Net cash flows from operating activities 1,132 1,426 Cash Flows from Investing Activities Interest received 112 16Purchase of property, plant and equipment (41) (48)Purchase of intangible assets (67) -Acquisition of a subsidiary net of cash acquired (1,232) (252) ______ ______Net cash flows used in investing activities (1,228) (284) ______ ______ Net (decrease)/increase in cash and cash equivalents (96) 1,142 Net foreign exchange differences - - Cash and cash equivalents at 1 January 7,491 683 _______ _______ Cash and cash equivalents at 30 June 7,395 1,825 ======= ======= NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTSfor the six months ended 30 June 2007 1. CORPORATE INFORMATION The interim condensed consolidated financial statements of the Group for the sixmonths ended 30 June 2007 were authorised for issue in accordance with aresolution of the directors on 19 September 2007. Zamano plc is a limited company incorporated and domiciled in Ireland whoseshares are publicly traded on the London Alternative Investment Market (AIM) andthe Irish Enterprise Exchange (IEX) in Dublin. The principal activities of the company and its subsidiaries ("the Group") arethe provision of mobile data services and technology. 2. BASIS OF PREPARATION AND ACCOUNTING POLICIES Basis of preparation The interim condensed consolidated financial statements for the six months ended30 June 2007 have been prepared in accordance with IAS 34 Interim FinancialReporting. Significant accounting policies - adoption of IFRS The London Stock Exchange AIM and the IEX in Dublin has mandated the use ofInternational Financial Reporting Standards (IFRS) for all AIM and IEX companieswith financial years commencing on or after 1 January 2007. Consequently, theseinterim financial statements are prepared in accordance with IFRS as adopted bythe European Union. The date of transition is 1 January 2006.The interim results have been prepared on the basis of the recognition andmeasurement requirements of IFRS in issue that have been endorsed by the EU forthe year ending 31 December 2007, the Group's first annual reporting date underIFRS. The respective standards that will be applicable for the year ending 31December 2007 are not known with certainty at the time of preparing theseinterim results. Accordingly, the accounting policies for the year will befinally determined only when the annual financial statements for year ending 31December 2007 are prepared. The basis of preparation and accounting policies followed in this interim reportdiffer from those set out in the Group's financial statements for the year ended31 December 2006, which were prepared in accordance with Irish GenerallyAccepted Accounting Practice (GAAP). The interim condensed financial statements do not constitute statutory accounts.The financial information for the year ended 31 December 2006 has been extractedfrom the statutory accounts for the Group for that year now amended to conformto the IFRS accounting policies expected to be applied in the consolidatedfinancial statements for the year ended 31 December 2007. The statutory accountsfor the year ended 31 December 2006 were reported on by the auditors withoutqualification or an emphasis of matter reference and have been delivered to theRegistrar of Companies. The effect of the transition from Irish GAAP to IFRS on the Group's profit andnet assets are presented in a separate document ("zamano plc - Adoption ofInternational Financial Reporting Standards"). The accounting policies of theGroup under IFRS are also set out in the IFRS adoption document. 3. EARNINGS PER ORDINARY SHARE Basic earnings per share amounts are calculated by dividing net profit for theperiod attributable to ordinary equity holders of the parent by the weighedaverage number of ordinary shares outstanding during the period. Diluted earnings per share amounts are calculated by dividing the net profitattributable to ordinary equity holders of the parent by the weighted averagenumber of ordinary shares outstanding during the period 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 and dilutedearnings per share computations: For the six months ended 30 June 2007 2006 Unaudited •'000 •'000 Profit attributable to equity holders of the parent company 1,183 1,073 ======== ======== For the six months ended 30 June 2007 2006 thousands thousands Basic weighted average number of shares 68,469 49,787 Dilutive potential ordinary shares: Employee share options 6,289 4,304 _______ _______ Diluted weighted average number of shares 74,758 54,091 ======= ====== Earnings per share - basic €0.017 €0.022 - diluted €0.016 €0.020 4. BUSINESS COMBINATION Acquisition of Eirborne Text Promotions LimitedOn 20 April 2007, the Group acquired 100% of the voting shares of Eirborne TextPromotions Limited ("Eirborne") an unlisted company based in Irelandspecialising in mobile content and entertainment. The acquisition has beenaccounted for using the purchase method of accounting. The interim condensedconsolidated financial statements include the results of Eirborne for the 2month period from the acquisition date. The fair value of the identifiableassets and liabilities of Eirborne as at the date of acquisition were: Fair value Previous recognised carrying on acquisition value ______________________________ Unaudited •'000 •'000 Property, plant and equipment 14 66 Customer lists 751 - Web portal and technology 129 - Trade and other receivables 711 711 Deferred tax asset 5 5 Cash 132 132 ______ _______ 1,742 914 Trade and other payables (660) (660) Deferred tax liability (110) - ________ ________ Net assets 972 254 ======= Goodwill arising on acquisition 7,387 ________ Total acquisition cost 8,359 ======= Discharged by: Fair value of shares issued 500 Cash paid on acquisition 1,200 Costs directly attributable to the acquisition 253 Net present value of deferred consideration 6,406 _______ 8,359 ======= 1,136,364 shares with a total nominal value of €1,136 were as issued as partial consideration for the acquisition. The fair value of the shares issued wasbased on the published share price at the date of the acquisition. Cash outflows on acquisition: Unaudited •'000 Net cash acquired with the subsidiary 132 Cash paid (1,364) ________ Net cash outflow (1,232) ======= From the date of acquisition Eirborne has contributed €316,000 to the netprofit of the Group. If the combination had taken place at the beginning ofthe year, the operating profit for the group would have been €1,112,000 andrevenue from continuing operations would have been €10,168,000. The goodwill recognised above is attributed to the expected synergies andother benefits from combining the assets and activities of Eirborne with thoseof the Group. In accordance with IFRS 3 'Business Combinations', management has reflected provisional values on the initial purchase price allocation calculationperformed. All adjustments to these provisional values will be finalised withintwelve months. 5. SEGMENT INFORMATION Six months ended Six months ended 30 June 2007 30 June 2006 Unaudited Unaudited Segment Segment Segment Segment Revenue Result Revenue Result •'000 •'000 •'000 •'000 B2B 5,602 1,377 2,864 736 B2C 4,069 1,414 2,832 1,362 Central overheads - (1,474) - (868) ______ ______ ______ ______ 9,671 1,317 5,696 1,230 ====== ====== ====== ====== zamano facilitates communication and interaction between companies and consumers on mobile phones through a range of value-added mobile applications (B2B). zamano also develops, promotes and distributes mobile content and interactive services directly to consumers (B2C). -Ends- For Reference zamanoJohn O'Shea +353 1 488 5830www.zamano.com Seymour PierceDavid Newton/Matthew Thomas +44 207 107 8000www.seymourpierce.com NCB Corporate FinanceConor McCarthy/Barclay Clibborn +353 1 611 5936www.ncb.ie EdelmanKatherine Murphy +44 207 344 1571/ +44 7792 191 828Joe 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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