25th Sep 2008 07:00
|
Press Release |
25 September 2008 |
zamano PLC
('zamano', the 'Company' or the 'Group')
Interim Results for the six months to 30 June 2008
zamano plc, a leading provider of interactive applications and services to mobile devices, today announces its interim results for the 6 months to 30 June 2008, prepared in accordance with IFRS.
Highlights:
|
H1 2008 |
H1 2007 |
Growth |
|
|
€'000 |
€'000 |
||
|
Revenue |
23,723 |
9,671 |
145% |
|
EBITDA |
2,398 |
1,433 |
67% |
|
Diluted Adjusted EPS |
2.3 cents |
1.9 cents |
21% |
|
● |
EBITDA up 67% to €2.4 million, on a constant currency basis EBITDA would have grown by 106% to €2.9 million |
|
● |
Adjusted EPS up 21% to 2.3 cents, on a constant currency basis EPS would have grown by 50% to 2.9 cents |
|
● |
Positive cash flow of €1.85 million generated from operational activities |
|
● |
Integration of Red Circle business now complete |
Rod Matthews, Chairman of zamano, commented: "Taking account of the challenging regulatory and economic environment along with the negative currency movement, the Board is satisfied with the profitable growth achieved during the period. This challenging environment in the UK and Ireland is affecting growth rates particularly from print advertising, but the Board is taking steps to ensure that these effects are minimised."
John O'Shea, CEO of zamano, added: "In response to the current environment, we are adapting our approach to a number of areas of our business, including optimizing print advertising spend, expanding the US business, entering new territories, and launching new products. The Board feels that actions such as these, which are outlined in more detail below, will put the Company in a strong position for the future."
- Ends -
For further information, please contact:
|
Zamano plc |
|
|
John O'Shea, Chief Executive Officer |
Tel: +353 1 488 5830 |
|
Colm Saunders, Chief Financial Officer |
Tel: +353 1 511 1224 |
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NCB Corporate Finance |
|
|
Conor McCarthy |
Tel: +353 1 611 5100 |
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Seymour Pierce |
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Suzanne Johnson-Walsh / Matt Thomas |
Tel: +44 (0) 20 7107 8000 |
Media enquiries:
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Abchurch Communications |
Tel: +44 (0) 20 7398 7700 |
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Heather Salmond / Joanne Shears / Mark Dixon |
|
|
Tel: +44 (0) 20 7398 7709 |
|
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Tel: +44 (0) 20 7398 7729 |
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www.abchurch-group.com |
|
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Irish Media enquiries: Edelman |
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Donnchadh O'Leary |
Tel +353 1 678 9333 |
|
www.edelman.com |
Chairman's statement
Taking account of the challenging regulatory environment, economic conditions and negative currency movements, the Board is satisfied with the performance in the first half of 2008. The Group delivered substantial profitable growth driven by the two acquisitions completed in 2007.
The Board is pleased to announce that the integration of the Red Circle business, consisting of merging the technical teams and executing on a combined platform strategy, has now been completed.
Tightening regulations in UK and Ireland, combined with the economic conditions are having an impact on performance, particularly in the effectiveness of print advertising in the UK and Irish market. In response, the Company has reduced UK print advertising by 40% over the last 6 months, and has only retained the most profitable advertising. The Company continues to move the advertising spend into strategic areas to diversify revenue. Nevertheless, the Board expects EBITDA in H2 to be similar to that achieved in H1.
Regulatory Code of Practice
The regulatory environment in the UK and Ireland continues to evolve. Today, zamano launched a Code of Practice, the aim of which is to enhance compliance with all appropriate regulations and market best practice. To support this Code, a customer care manager has been given responsibility for end-user advocacy. Resulting from the new Code, the Group has restricted certain non-compliant customers access to its platform. The Directors have always focused on ensuring full regulatory compliance and this is further evidence of the Group's commitment to being at the forefront of best practice in the industry.
Summary
In response to the operating environment the Board have carried out a detailed review and strongly support the actions outlined below which we believe will position the Company for further growth in the medium term.
Rod Matthews
Chairman CEO's statement
Given the current environment, the management team is taking a number of actions to reposition the Group to take advantage of the next stage of growth:
|
● |
Adapting UK and Ireland print advertising to maximise effectiveness with appropriate value offerings; |
|
● |
Further investment in the Group's online and mobile portal presences; |
|
● |
Expanding the US team, where zamano is already experiencing profitable growth; |
|
● |
Entering new territories; |
|
● |
Investing in a mobile social networking solution which the Company expects to launch this year; |
|
● |
Developing new billing mechanisms and applications to take advantage of the convergence of the mobile and fixed line internet. |
The Group is realigning resources to ensure they are directed at these areas, and during this period of change, strict cost management is in place to underpin profitability.
Division Review
zamano continues to operate a hybrid business model, combining the offering of mobile data services directly to consumers (B2C) as well as via partners (B2B). This delivers economies of scale in messaging, and spreads the technology investment and operating costs over a wider stream of revenues.
The B2B division's revenue grew 16% over the same period in 2007; however, profits were down slightly due to margin declines over the period reflecting competitive pressure in some areas of the market.
The B2C division has experienced substantial growth with revenues up by over 300%, primarily driven by the full integration of the two acquisitions in 2007, Eirborne Text Promotions and Red Circle Technologies.
Summary
zamano has built substantial scale, is on track to deliver the sixth consecutive year of double digit profit growth and has successfully integrated five acquisitions. Through a policy of identifying and investing in areas of high growth potential, the Group is now positioning itself to move through the current challenging environment to the next stage of growth.
John O'Shea
CEO
Financial Review
Revenue grew 145% to €23.7 million (H1 2007: €9.7 million) and this rate of growth was affected by the decline in Sterling.
The Group's EBITDA grew by 67% to €2.4 million (H1 2007: €1.4 million) and this would have been 106% on a constant currency basis. The EBITDA margin was 10% which is down 4 percentage points reflecting the impact of Sterling, and gross margin decline in some traditional routes to market.
Cost control remains strong as evidenced by the fact that operating costs, excluding amortisation, declined to 17% of revenue from 24% in 2007. This is very pleasing given the dramatic growth which the business has experienced over the past twelve months. The Board continues to implement cost controls which should see this ratio declining further during 2008. The revenue per employee has continued to grow, despite the impact of Sterling, to an annualized €698k per employee in H1, growing from €650k in 2007
Cash generation in the Group continues to be strong, with €1.85 million of positive cash-flow generated from operating activities in the first 6 months of the year. The cash balance at 30 June was €5.1 million, a decline from €12.1 million at year end due to €7.3 million in deferred consideration payments and €1.5 million in loan repayments to Bank of Scotland (Ireland). The Group took on €15 million in debt from Bank of Scotland (Ireland) to fund the acquisition of Red Circle. The debt now stands at €14 million.
Colm Saunders
CFO
Condensed consolidated income statement
for the half-year ended 30 June 2008
|
Half year ended 30 June 2008 |
Half year ended 30 June 2007 |
|
|
Unaudited |
Unaudited |
|
|
€'000 |
€'000 |
|
|
Revenue |
23,723 |
9,671 |
|
Cost of sales |
(17,396) |
(5,995) |
|
Gross profit - continuing activities |
6,327 |
3,676 |
|
Other administrative expenses |
(3,929) |
(2,243) |
|
Depreciation |
(47) |
(47) |
|
Amortisation of intangible assets |
(1,202) |
(76) |
|
Administrative expenses |
(5,178) |
(2,366) |
|
Operating profit |
1,149 |
1,310 |
|
Finance income |
160 |
150 |
|
Finance costs |
(636) |
(67) |
|
Profit before tax |
673 |
1,393 |
|
Income tax expense |
(157) |
(210) |
|
Profit for the period attributable to equity holders of the parent |
516 |
1,183 |
|
Earnings per share |
||
|
basic |
€0.006 |
€0.017 |
|
diluted |
€0.006 |
€0.016 |
Condensed consolidated balance sheet
at 30 June 2008
|
30 June 2008 |
31 December 2007 |
30 June 2007 |
|
|
Unaudited |
Audited |
Unaudited |
|
|
€'000 |
€'000 |
€'000 |
|
|
Assets |
|||
|
Non-current assets |
|||
|
Intangible assets |
27,361 |
28,608 |
9,370 |
|
Property, plant and equipment |
305 |
174 |
173 |
|
Deferred tax asset |
44 |
27 |
26 |
|
27,710 |
28,809 |
9,569 |
|
|
Current assets |
|||
|
Trade and other receivables |
8,948 |
9,180 |
4,228 |
|
Cash and cash equivalents |
5,137 |
12,104 |
7,395 |
|
14,085 |
21,284 |
11,623 |
|
|
Total assets |
41,795 |
50,093 |
21,192 |
|
Equity |
|||
|
Equity attributable to equity holders of the parent |
|||
|
Share capital |
81 |
81 |
69 |
|
Share premium |
11,155 |
11,155 |
6,866 |
|
Capital conversion reserve |
1 |
1 |
1 |
|
Retained earnings |
5,351 |
4,835 |
3,405 |
|
Other reserves |
301 |
233 |
164 |
|
Total equity |
16,889 |
16,305 |
10,505 |
|
Liabilities |
|||
|
Current liabilities |
|||
|
Trade and other payables |
8,279 |
9,429 |
3,563 |
|
Interest bearing loans and borrowings |
2,368 |
2,534 |
- |
|
Deferred consideration |
1,755 |
8,410 |
6,559 |
|
Income tax payable |
494 |
430 |
455 |
|
Total current liabilities |
12,896 |
20,803 |
10,577 |
|
Non-current liabilities |
|||
|
Interest bearing loans and borrowings |
11,586 |
12,416 |
- |
|
Deferred tax liability |
424 |
569 |
110 |
|
Total non-current liabilities |
12,010 |
12,985 |
110 |
|
Total liabilities |
24,906 |
33,788 |
10,687 |
|
Total equity and liabilities |
41,795 |
50,093 |
21,192 |
Condensed consolidated statement of changes in equity
for the half-year ended 30 June 2008
|
Attributable to equity holders of the parent |
||||||
|
Share capital |
Share premium |
Capital conversion reserve |
Retained earnings |
Other reserves |
Total equity |
|
|
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
|
|
At 1 January 2008 |
81 |
11,155 |
1 |
4,835 |
233 |
16,305 |
|
Foreign currency translation |
-
|
- |
- |
- |
(21) |
(21) |
|
Total income and expense |
||||||
|
for the period recognised |
- |
- |
- |
- |
(21) |
(21) |
|
directly in equity |
||||||
|
Profit for the period |
- |
- |
- |
516 |
- |
516 |
|
Total income and expense |
||||||
|
for the period |
- |
- |
- |
516 |
- |
516 |
|
Share-based payment |
- |
- |
- |
- |
89 |
89 |
|
At 30 June 2008 (unaudited) |
81 |
11,155 |
1 |
5,351 |
301 |
16,889 |
|
Attributable to equity holders of the parent |
||||||
|
Share capital |
Share premium |
Capital conversion reserve |
Retained earnings |
Other reserves |
Total equity |
|
|
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
|
|
At 1 January 2007 |
68 |
6,367 |
1 |
2,222 |
99 |
8,757 |
|
Foreign currency translation |
- |
- |
- |
- |
(7) |
(7) |
|
Total income and expense |
||||||
|
for the period recognised |
- |
- |
- |
- |
(7) |
(7) |
|
directly in equity |
||||||
|
Profit for the period |
- |
- |
- |
1,183 |
- |
1,183 |
|
Total income and expense |
||||||
|
for 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 |
Condensed consolidated cash flow statement
for the half-year ended 30 June 2008
|
Half year ended 30 June 2008 |
Half year ended 30 June 2007 |
|
|
Unaudited |
Unaudited |
|
|
€'000 |
€'000 |
|
|
Cash flows from operating activities |
||
|
Profit before tax |
673 |
1,393 |
|
Adjustments to reconcile profit before tax to net cash flows |
||
|
Depreciation of property, plant and equipment |
47 |
47 |
|
Amortisation of intangible assets |
1,202 |
76 |
|
Share-based payment |
89 |
72 |
|
Foreign currency translation |
(21) |
(7) |
|
Decrease/(increase) in trade and other receivables |
240 |
(740) |
|
Decrease)/increase in trade and other payables |
(590) |
386 |
|
Finance income |
(160) |
(150) |
|
Finance costs |
636 |
67 |
|
2,116 |
1,144 |
|
|
Interest expense |
(11) |
(4) |
|
Income tax paid |
(256) |
(8) |
|
Net cash flows from operating activities |
1,849 |
1,132 |
|
Cash flows from investing activities: |
||
|
Interest received |
185 |
112 |
|
Purchase of property, plant and equipment |
(177) |
(41) |
|
Purchase of intangible assets |
(9) |
(67) |
|
Deferred consideration paid |
(7,290) |
- |
|
Acquisition of a subsidiary, net of cash acquired |
- |
(1,232) |
|
Net cash flows used in investing activities |
(7,291) |
(1,228) |
|
Cash flows from financing activities: |
||
|
Long term loan repayments |
(1,525) |
- |
|
Net cash flows used in financing activities |
(1,525) |
- |
|
Net decrease in cash and cash equivalents |
(6,967) |
(96) |
|
Cash and cash equivalents at 1 January |
12,104 |
7,491 |
|
Cash and cash equivalents at 30 June |
5,137 |
7,395 |
|
1. |
Basis of preparation |
The half-yearly condensed consolidated financial statements, which were approved by the Board on 24 September 2008, have been prepared in accordance with International Financial Reporting Standard (IFRS) IAS 34 "Interim Financial Reporting", as endorsed by the EU.
|
2. |
Earnings per share |
Basic earnings per share amounts are calculated by dividing net profit for the half-year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
The following reflects the income and share data used in the basic and diluted earnings per share computations:
|
Half year ended 30 June 2008 |
Half year ended 30 June 2007 |
|
|
Unaudited |
Unaudited |
|
|
€'000 |
€'000 |
|
|
Profit attributable to equity holders of the parent company |
516 |
1,183 |
|
Half year ended 30 June 2008 |
Half year ended 30 June 2007 |
|
|
000's |
000's |
|
|
Basic weighted average number of shares |
81,662 |
68,427 |
|
Dilutive potential ordinary shares: |
||
|
Employee share options |
3,702 |
6,343 |
|
Diluted weighted average number of shares |
85,364 |
74,770 |
|
Earnings per share |
||
|
basic |
€0.006 |
€0.017 |
|
diluted |
€0.006 |
€0.016 |
|
3. |
Adjusted earnings per share |
The following reflects earnings per share based on adjusted net income using the same weighted average number of shares for the purposes of the basic and diluted earnings:
|
Half year ended 30 June 2008 |
Half year ended 30 June 2007 |
|
|
€ |
€ |
|
|
Adjusted basic EPS |
0.024 |
0.020 |
|
Adjusted diluted EPS |
0.023 |
0.019 |
|
Adjusted net income is calculated as: |
||
|
Half year ended 30 June 2008 |
Half year ended 30 June 2007 |
|
|
€'000 |
€'000 |
|
|
Profit after tax |
516 |
1,183 |
|
Share-based payment |
89 |
72 |
|
Interest on deferred consideration |
145 |
63 |
|
Amortisation of intangible assets |
1,202 |
76 |
|
1,952 |
1,394 |
|
|
4. |
Segment information |
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).
The group's operations are not significantly impacted by seasonal fluctuations.
|
Half year ended 30 June 2008 |
||||
|
B2B |
B2C |
Eliminations |
Total |
|
|
€'000 |
€'000 |
€'000 |
€'000 |
|
|
Revenue |
||||
|
Sales to external customers |
6,517 |
17,206 |
- |
23,723 |
|
Inter-segment sales |
11 |
908 |
(919) |
- |
|
Total revenue |
6,528 |
18,114 |
(919) |
23,723 |
|
Segment results |
1,259 |
2,476 |
- |
3,735 |
|
Unallocated expenses |
(2,586) |
|||
|
Profit before tax, finance costs and finance revenue |
1,149 |
|||
|
Net finance costs |
(476) |
|||
|
Profit before tax |
673 |
|||
|
Income tax expense |
(157) |
|||
|
Net profit for half-year |
516 |
|||
|
Half-year ended 30 June 2007 |
||||
|
B2B |
B2C |
Eliminations |
Total |
|
|
€'000 |
€'000 |
€'000 |
€'000 |
|
|
Revenue |
||||
|
Sales to external customers |
5,602 |
4,069 |
- |
9,671 |
|
Inter-segment sales |
6 |
319 |
(325) |
- |
|
Total revenue |
5,608 |
4,388 |
(325) |
9,671 |
|
Segment results |
1,377 |
1,341 |
- |
2,718 |
|
Unallocated expenses |
(1,408) |
|||
|
Profit before tax, finance costs and finance revenue |
1,310 |
|||
|
Net finance income |
83 |
|||
|
Profit before tax |
1,393 |
|||
|
Income tax expense |
(210) |
|||
|
Net profit for half-year |
1,183 |
|
4. |
Segment information (continued) |
The amortisation charge is allocated to the business segments as follows:
|
Half year ended 30 June 2008 |
Half year ended 30 June 2007 |
|
|
€'000 |
€'000 |
|
|
B2B |
- |
- |
|
B2C |
1,202 |
76 |
|
1,202 |
76 |
|
|
5. |
Income tax expense |
The major components of income tax expense in the half-year consolidated income statement are:
|
Half year ended 30 June 2008 |
Half year ended 30 June 2007 |
|
|
€'000 |
€'000 |
|
|
Current income tax |
||
|
Current income tax charge |
272 |
196 |
|
Underprovision in prior year |
15 |
- |
|
Foreign tax |
32 |
35 |
|
319 |
231 |
|
|
Deferred income tax |
||
|
Relating to origination and reversal of temporary differences |
(162) |
(21) |
|
157 |
210 |
|
6. |
The half-yearly condensed consolidated financial statements will be available at the Company's website (www.zamano.com).
Related Shares:
Zamano