30th Nov 2005 07:00
30 November 2005 themutual.net plc Interim accounts for the period ended 31 October 2005 Highlights * Record 6-month turnover of ‚£1.76m (2004: ‚£1.53m) * Operating profit up 28% to ‚£0.47m (2004: ‚£0.37) * Profit before tax (including profit from sale of investment) up 247% to ‚£ 0.95m (2004: ‚£0.38m) * Member base stands at over 1.55 million (2004: 1.225m), now increasing by over 40,000 per month * Net cash of ‚£2.56m (2004: ‚£1.23m) * Basic eps up to 1.59p (2004: 0.60p) * September and October 2005 reached record revenue levels * Website, incorporating MutualShop technology, now generating over ‚£2m in sales for partners each month * Recent acquisition of EDR creates one of the largest online direct marketing companies in the UK and gives access to over 6.5 million email addresses * Expanded services include planning and buying email specialist agency for online advertisers Mark Smith, CEO of themutual.net plc, commented, "The first six months of theyear are very much in line with expectations, with the very strong trading inSeptember and October expected to continue into the New Year. Following theacquisition of Electronic Direct Response in November, we believe themutual.netis extremely well positioned, as one of the largest online direct marketingcompanies in the UK, to build its recent successes and deliver againstforecasts."Chairman's statementI am once more delighted to announce the Group results for the first six monthsof the financial year showing further strong growth in revenue andprofitability.The Group financial highlights, with comparative figures, are: Unaudited Unaudited Audited 6 months to 6 months to Year endedProfit and Loss Account 31/10/05 31/10/04 30/04/05 Turnover ‚£1,761,000 ‚£1,535,000 ‚£3,079,000Gross profit 1,537,000 1,355,000 2,732,000EBITDA 777,000 685,000 1,373,000Operating profit 470,000 366,000 733,000Profit before tax 947,000 383,000 778,000 Balance Sheet 31/10/05 31/10/04 30/04/05 Cash at bank ‚£2,563,000 ‚£1,225,000 ‚£1,555,000Net current assets 2,587,000 1,521,000 1,772,000Shareholders' funds 2,741,000 1,952,000 2,100,000Growth for the period is in line with management expectations and allows us tolook to the full year forecasts with confidence. Our profit before tax is ‚£947,000, including an exceptional profit of ‚£439,000 from the sale of aninvestment. Operating profit is up 28% compared to the six months to 31 October2004, while our cash at bank has increased to ‚£2,563,000.A number of factors have contributed to the group's performance, including thefollowing: * Email marketing rates have hardened, which has coincided with our focus on building a high quality, high response database * Website sales have recently reached record revenue figures, generating over ‚£2 million of sales for shopping, finance and service partners each month * We continue to sign up over 40,000 new members each month utilising the new website * We now have over 1.55 million members across our reward programmes * Total revenue in September and October reached record levels * The MyPoints database was fully written off in September, which reduces our amortisation charge by ‚£20,000 a month going forward. With the recent acquisition of Electronic Direct Response Limited ("EDR"), theenlarged group represents one of the largest online direct marketing companiesin the UK. The opportunities that this brings, along with the expanded servicesand database inventory, create an exciting company with fantastic potential ina rapidly growing market place. With over ‚£148m spent on email marketing in theUK alone in 2005 (source: e-Consultancy) and the total spend on internetadvertising predicted to break ‚£1 billion this year (source: InternetAdvertising Bureau), the enlarged group is well positioned to generateincreased revenue and enjoy strong growth.The enlarged group now owns or has access to in excess of 6.5 million emailaddresses and offers a complete range of high quality online marketing servicesto its base of over 500 clients. Core services include email sales for theowned databases, a full planning and buying agency for online advertisers,delivery solutions and further focus on the reward programmes, which continueto grow apace as the largest online reward site in the UK.We now have over 40 staff across our sales, technology and marketingdepartments and an increased strength and depth in management. James Morris,founder and Managing Director of EDR, joins the plc board and I would like totake the opportunity once more to welcome him.The integration process has begun and we expect to see the synergies andbenefits develop positively over the coming months. The enlarged group will beorganised in two separate divisions - one dealing with the sales and marketingof the combined databases and reward products, and the other offering aspecialist planning and buying service for online advertisers. A fullre-branding of the enlarged group and the individual divisions will commence inthe next few months.We feel that we are in an excellent position to build on our existing marketshare in the online direct marketing sector, with a strong foundation ofexperience and our history of success to back this up. The group is structuredto handle this and further expansion and we look to the future with greatenthusiasm and confidence.I would like to welcome the new staff who have joined us following the purchaseof EDR and to thank all the staff for their dedication and hard work during theperiod, all of whom have contributed to our success.Warren TaylerChairmanGroup profit and loss account for the period ended 31 October 2005 Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 31 October 31 October 30 April 2005 2005 2004 ‚£ ‚£ ‚£ Turnover 1,761,311 1,534,613 3,079,352 Cost of sales 224,278 179,820 346,847 ________ ________ ________ Gross profit 1,537,033 1,354,793 2,732,505 Administrative expenses 759,613 670,145 1,359,024 ________ ________ ________ EBITDA (*) 777,420 684,648 1,373,481 Depreciation (25,600) (21,006) (44,089)Database amortisation (281,386) (297,806) (596,441) ________ ________ ________ Operating profit 470,434 365,836 732,951 Profit on disposal of investment 439,586 - - Interest receivable 37,293 16,771 45,214 ________ ________ ________ Profit on ordinary activities 947,313 382,607 778,165before taxation Taxation on profit on ordinary (306,376) (140,000) (288,780)activities ________ ________ ________ Profit on ordinary activities after taxation, attributable to 640,937 242,607 489,385shareholders ________ ________ ________ Basic earnings per share 1.59p 0.60p 1.21p ________ ________ ________ Diluted earnings per share 1.49p 0.56p 1.13p ________ ________ ________* EBITDA = Earnings before interest, tax, depreciation and amortisationThe notes below form part of these accounts.Group balance sheet at 31 October 2005 Unaudited Unaudited Audited 31 October 31 October 30 April 2005 2005 2004 ‚£ ‚£ ‚£ Fixed assets Intangible assets 408,483 630,311 456,093Tangible assets 56,649 65,597 68,001Investments - - 121,363 ________ ________ ________ 465,132 695,908 645,457 ________ ________ ________ Current assets Debtors 974,902 727,589 760,229Cash at bank and in hand 2,562,514 1,225,204 1,554,764 ________ ________ ________ 3,537,416 1,952,793 2,314,993 Creditors: amounts falling due within one year (950,802) (431,418) (542,547) ________ ________ ________ Net current assets 2,586,614 1,521,375 1,772,446 ________ ________ ________ Total assets less current liabilities 3,051,746 2,217,283 2,417,903 Provisions for liabilities and charges Other provisions 310,858 265,031 318,000 ________ ________ ________ 2,740,888 1,952,252 2,099,903 ________ ________ ________ Capital and reserves Called up share capital 104,052 104,044 104,003Share premium account 2,330,501 2,330,501 2,330,501Other reserves 120,464 120,424 120,464Profit and loss account 185,871 (602,717) (455,065) ________ ________ ________ Shareholders' funds 2,740,888 1,952,252 2,099,903 ________ ________ ________The notes below form part of these accounts.Cash flow statement for the period ended 31 October 2005 Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 31 October 31 October 30 April 2005 2004 2005 ‚£ ‚£ ‚£ Net cash inflow from operating 657,482 595,963 1,267,475activities ________ ________ ________ Returns on investments and servicing of finance Interest received 37,293 16,771 45,214 ________ ________ ________ Net cash inflow from returns on investments and servicing of finance 37,293 16,771 45,214 ________ ________ ________ Capital expenditure and financial investment Purchase of tangible fixed assets (14,248) (8,768) (34,255)Purchase of intangible fixed assets (233,775) (210,303) (334,721)Acquisition of investments - - (121,363)Sale of investments 560,949 - - ________ ________ ________ Net cash inflow/(outflow) for capital expenditure and financial investment 312,926 (219,071) (490,339) ________ ________ ________ Net cash inflow before financing 1,007,701 393,663 822,350 ________ ________ ________ Financing Issue of ordinary share capital 49 52 52Purchase of own shares - (50) (91)Premium on purchase of own shares (87,824) (186,910) ________ ________ ________ Net cash inflow/(outflow) from 49 (87,822) (186,949)financing ________ ________ ________ Increase in cash 1,007,750 305,841 635,401 ________ ________ ________The notes below form part of these accounts.Notes forming part of the accounts for the period ended 31 October 20051 Basis of preparationThe results for the period ended 31 October 2005 and the comparative figuresfor the six months ended 31 October 2004 are unaudited. They have been preparedon accounting bases and policies that are consistent with those used in thepreparation of the financial statements of the Group for the year ended 30April 2005.The financial information contained in this report does not constitutestatutory accounts within the meaning of Section 240 of the Companies Act 1985.The financial information for the period ended 30 April 2005 has been extractedfrom the audited financial statements for that period, which have been filedwith the Registrar of Companies and which contain an unqualified audit report.2 Profit per shareBasic profit per share for the six months ended 31 October 2005 has beencalculated based on the weighted average number of shares in issue during theperiod of 40,267,368 (31 October 2004 - 40,564,614) and the profit for theperiod of ‚£640,937 (31 October 2004 - ‚£242,607).Diluted earnings per share has been calculated based on the weighted averagenumber of shares of 43,143,201 (31 October 2004 - 43,357,114) which includesthe dilutive potential of shares under option.3 Net cash inflow from operating activities Unaudited Unaudited Audited 6 months 6 months Year ended ended ended 30 April 31 October 31 October 2005 2005 2004 ‚£ ‚£ ‚£ Operating profit 470,434 365,836 732,951Depreciation of tangible fixed 25,600 21,006 44,089assets Amortisation of intangible fixed 281,386 297,806 596,442assets (Increase) in debtors (214,673) (37,596) (70,236)(Decrease)/increase in creditors 101,877 (58,174) (95,825)(Decrease)/increase in provisions (7,142) 7,085 60,054 ________ ________ ________ Net cash inflow from operating activities 657,482 595,963 1,267,475 ________ ________ ________ 4 Reconciliation of net cash flow to movement in net funds Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 31 October 2005 31 October 30 April 2004 2005 ‚£ ‚£ ‚£ Increase in cash in the period 1,007,750 305,841 635,401 ________ ________ ________ Change in net funds arising from 1,007,750 305,841 635,401cash flows ________ ________ ________ Movement in net funds in the period 1,007,750 305,841 635,841Net funds at start of period 1,554,764 919,363 919,363 ________ ________ ________ Net funds 2,562,514 1,225,204 1,554,764 ________ ________ ________5 Analysis of changes in net funds Opening Cash flows 31 October balance 2005 1 May 2005 ‚£ ‚£ ‚£ Cash at bank and in hand 1,554,764 1,007,750 2,562,514 ________ ________ ________ Net funds 1,554,764 1,007,750 2,562,514 ________ ________ ________6 DividendThe company does not intend to pay a dividend at this time.7 Subsequent EventOn 15th November 2005 the company acquired the entire issued share capital ofElectronic Direct Response Limited for an initial consideration of ‚£2.0 millionin cash and the issue of 7,843,137 new ordinary shares. In addition to theinitial cash payment and initial shares, the total consideration includesdeferred consideration of ‚£0.6 million, payable in cash in three equalinstalments of ‚£200,000 each on 31 May 2006, 31 May 2007 and 31 May 2008. Thereis also further deferred consideration, contingent on the future profitabilityof the enlarged group, of up to ‚£0.1 million in cash and up to 1,960,785shares. The contingent consideration is dependent on the future profitabilityof the enlarged group for the years ended 30 April 2007 and 30 April 2008 andis payable following publication of the enlarged group's audited annualaccounts.Copies of this statement will be available for a period of one 1 month from thecompany's registered office.The Company Secretary, themutual.net plc, 2nd Floor, 69-73 Theobalds Road,London WC1X 8TAENDthemutual.net PLCRelated Shares:
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