8th Mar 2007 07:00
Interactive World plc08 March 2007 INTERACTIVE WORLD PLC 8 March 2007 Interim results for the six months ended 31 January 2007 Interactive World plc (AIM: ITW), the mobile content technology company,announces its interim results for the six months ended 31 January 2007. Financial and business highlights: •Turnover of £5.1 million, an increase of 28% (2006: £3.9m) •Like-for-like turnover (pre-acquisitions) up by 20% •Profits before tax rose by 18% to £2.1 million (2006: £1.8m) •Interim dividend of 3p per share in line with stated dividend policy •Mobile related turnover up 13% to £3.8 million (2006: £3.3m) •Earnings per share of 3.70p (2006: 3.53p) •Strong net cash position of £2.1 million •Strictly Broadband acquisition bedding in well and now beginning to deliver profits Simon Hume-Kendall, Chairman, said: "I am delighted to present such a positive set of interim results, which show afurther improvement in revenues and profits from the mobile content deliverybusiness, and an increase in profitability from our internet services. "Particularly pleasing is the Company's ability to pay a generous dividend whichmeans that our shares currently yield around 10% on an annualised basis. "Looking forward, we anticipate an increase in revenues through mobile searchesas mobile network operators benefit from customers browsing 'off-portal' moreextensively. We also expect to see a steady improvement in the profitability ofour internet-based billing and content services. We are confident of achievingmarket expectations for the full year from, in particular, new revenueopportunities currently in deployment. This is despite our overseas expansionbeing slower than originally forecast in terms of full year contribution,notwithstanding that it is now starting to show real potential in the UnitedStates." For press enquiries, please contact: Interactive World plc 020 8507 6920Rob JohnsonAndy Fletcher Daniel Stewart & Company plc 020 7776 6550Lindsay Mair Gresham PR Ltd. 020 7404 9000Neil BoomLaura Black Interactive World PLC CHAIRMAN'S STATEMENT Interactive World plc is pleased to report a strong set of interim results forthe half year ended 31 January 2007. In the six months under review we aredelighted to have substantially increased both revenues and profits from mobilecontent delivery, and the profitability of our internet services. Financial Review We are pleased to announce that the Group achieved considerable growth duringthe period, helping us report a significant rise in pre-tax profits, which roseby 18% to £ 2.1 million (2006: £1.8m). Turnover also rose substantially,increasing by 28% to £5.1 million (2006: £3.9m). Group net cash balances werehealthy at the half year end at £2.1 million after the payment of a finaldividend of £1.5m relating to the year ended 31 July 2006. The highlycash-generative and profitable nature of our business, and by being debt freeand not having to meet interest or overdraft charges, allows us to pay outaround 80% of earnings in dividends. Operating Review Group growth has been aided by a couple of advantageous developments in ourmarket; namely the increased availability and reduced costs of wirelessbandwidth, and the ever-increasing sophistication of mobile handsets, both ofwhich enable us to offer an improved customer experience. In short, the changes in the mobile content market, along with our expertise atcreating fresh and appealing content, have helped Interactive World to continueto strengthen the business. Our technology and experience in the complex world of digital content deliverylie at the heart of the business. In the six months reported, we have continuedto invest in our products, and in the IT systems that deliver the currentservices. We are now working on a number of new products, including a new DVDwhich has PIN access technology which we have recently introduced with verypromising results. It is worth reiterating the importance of our relationship with the SportNewspapers group. Our five-year rolling relationship remains an essentialelement in our success and provides us with an exclusive source of freshcontent. Through a combination of editorial and advertising, the Sport'snewspapers constantly refresh our database and create demand from both new andexisting customers At present, we have over five million age-verified individuals on our database.Approximately one in five is a regular customer, having used our services atleast once in the last 12 months. The rate of overseas expansion has been slower than originally forecast, dueprimarily to delays in local markets in terms of the development of necessaryinfrastructure items such as age verification safeguards. We are neverthelesspleased that in the United States we are now achieving traction with mobileproducts, and believe that the medium terms prospects are very promising. Acquisition Progress During the period the Company acquired a controlling stake by increasing itsequity holding from 16% to 55.5% in Strictly Broadband Ltd - a profitableVideo-on-Demand (VoD) specialist that has a database of over 200,000 registeredusers. The integration of Strictly Broadband has gone very smoothly and it has shownsome very positive early trading. Its full contribution to Group revenues willbe included in our 2007 full year results. We have also acquired the exclusive UK and European licensing rights andcustomer database of 'U.R. The Star', an established video technology thatallows customers to make personalised DVDs in which their children, family orfriends can 'star' in their own animated adventures. As noted at the time of acquisition, the U.R. The Star licensed rights are notexpected to have a material impact on current year performance as the salescycle for this product begins in late September each year with peak salesoccurring around Christmas. Dividends During the period the Company paid its final dividend in respect of the yearended 31 July 2006. The Company is today pleased to announce an interimdividend of 3p per share for the period ended 31 January 2007, in line with itsstated policy of distributing at least 80% of earnings under normalcircumstances. This represents an annualized yield of 10% on the subscriptionprice of the Company's shares at the date of the AIM admission, when added tothe final dividend paid earlier in the year. The dividend reflects the strongcash generative nature of the Company and is part of a progressive paymentpolicy. The Board believes that its cash resources are sufficient to allow it topursue other suitable acquisitions. Shareholders on the register at the close of business on 16 March 2007 will beentitled to the interim dividend. Current Trading and Future Prospects The second half of the year has started positively and in line withexpectations. The Company is implementing a number of new revenue lines that canbe successfully integrated with its current user base. We are also seeking outnew content, particularly in music and sport. We have sufficient cash to make potential future acquisitions but are mindfulthat they must deliver demonstrable value and must not expose the Company tounnecessary operational risk. However, changes in our marketplace show a trendfor consolidation as the mobile content industry matures. We believe InteractiveWorld is increasingly well placed to benefit from this. Looking forward, we anticipate an increase in revenues through mobile searchesas mobile network operators benefit from customers browsing 'off-portal' moreextensively. We also expect to see a steady improvement in the profitability ofour internet-based billing and content services. We look forward to the secondhalf with confidence. Simon Hume-KendallChairman8 March 2007 Interactive World PLC Consolidated Profit & Loss Accounts Six months ended 31 January 2007 --------- --------- --------- Note Six months Six months Year ended ended 31 ended 31 31 July January January 2006 2007 2006 --------- --------- --------- £'000 £'000 £'000 TurnoverContinuingoperations 4,796 3,982 9,065Acquisitions 313 - - --------- --------- --------- 2 5,109 3,982 9,065Cost of sales (2,368) (1,843) (3,949) --------- --------- --------- Gross profit 2,741 2,139 5,116Administrativeexpenses (729) (405) (882) --------- --------- --------- Operating profitContinuingoperations 1,970 1,734 4,234Acquisitions 42 - - --------- --------- --------- 2,012 1,734 4,234Interestreceivable 65 42 87 --------- --------- --------- Profit onordinaryactivitiesbeforetaxation 2,077 1,776 4,321Tax on profiton ordinaryactivities (644) (519) (1,307) --------- --------- --------- Profit aftertaxation 1,433 1,257 3,014Equityminorityinterest (10) - - --------- --------- --------- Profit for theperiod 1,423 1,257 3,014 ========= ========= ========= Basic earningsper share 4 3.70p 3.53p 8.32p Dilutedearnings pershare 4 3.37p 3.53p 7.67p The Group had no recognised gains or losses other than the profits for theperiods. Interactive World PLC Consolidated Balance Sheets As at 31 January 2007 ---------- ---------- ---------- 31 January 31 January 31 July 2007 2006 2006 ---------- ---------- ---------- £'000 £'000 £'000 FIXED ASSETSIntangible assets 796 - -Tangible assets 122 95 106Investments - 20 32 ---------- ---------- ---------- 918 115 138CURRENT ASSETSDebtors 2,435 1,688 2,020Cash at bank and in hand 2,387 1,458 3,421 ---------- ---------- ---------- 4,822 3,146 5,441CREDITORSAmounts falling duewithin one year (1,959) (1,115) (1,798) ---------- ---------- ---------- NET CURRENT ASSETS 2,863 2,031 3,643 ---------- ---------- ----------NET ASSETS 3,781 2,146 3,781 ========== ========== ========== CAPITAL AND RESERVESCalled up share capital 96 - 96Share premium account 1,262 - 1,161Profit and loss account 2,309 2,046 2,424Merger reserve 100 100 100 ---------- ---------- ----------SHAREHOLDERS' FUNDS 3,767 2,146 3,781 ---------- ---------- ---------- Minority interest 14 - - ---------- ---------- ---------- 3,781 2,146 3,781 ========== ========== ========== Interactive World PLC Consolidated Cash Flow Statements Six months ended 31 January 2007 --------- --------- -------- Six months Six months Year ended 31 ended ended July 31 January 31 January 2006 2007 2006 --------- --------- -------- £'000 £'000 £'000 Net cash flow fromoperatingactivities 1,639 1,131 3,887 Returns on investments and servicing offinanceInterest received 65 42 87 --------- --------- --------Net cash flow fromreturns oninvestments andservicing offinance 65 42 87 Corporation taxpaid (942) (139) (777) Capital expenditure and financialinvestment Purchase ofintangible fixedassets (505) - -Purchase oftangible fixedassets (33) (48) (102)Disposal of fixedasset tradeinvestments - - (12) --------- --------- --------Net cash flow fromcapital expenditureand financialinvestment (538) (48) (114) Acquisitions and disposalsPurchase ofsubsidiaryundertaking (net ofcash acquired) (45) - - --------- --------- --------Net cash outflowfrom acquisitionsand disposals (45) - - Payment of equitydividends (1,538) (2,196) (3,487) --------- --------- --------Net cash flowbefore financing (1,359) (1,210) (404) Financing Issue of sharecapital - - 2,000Costs of issue - - (804)Share capitalrepurchase - (16) (16) --------- --------- --------Net cash flow fromfinancing - (16) 1,180 (Decrease)/increasein cash (1,359) (1,226) 776 ========= ========= ======== Interactive World PLC Six months ended 31 January 2007 Reconciliation of operating profit to cash flow from operating activities ---------- --------- -------- Six months Six months Year ended 31 ended ended July 31 January 31 January 2006 2007 2006 ---------- --------- -------- £'000 £'000 £'000 Operating profit 2,012 1,734 4,234Depreciation andamortisation 55 25 67(Increase)/decreasein debtors (171) (498) (830)Increase/(decrease)in creditors (257) (130) 416 ---------- --------- --------Net cash flow fromoperatingactivities 1,639 1,131 3,887 ========== ========= ======== Reconciliation of net cash flow to movement in net funds ---------- --------- -------- Six months Six months Year ended 31 ended 31 ended 31 July January January 2007 2006 2006 ---------- --------- -------- £'000 £'000 £'000 (Decrease)/increase in cash (1,359) (1,226) 776Net fundsbroughtforward 3,420 2,644 2,644 ---------- --------- --------Net fundscarriedforward 2,061 1,418 3,420 ========== ========= ======== Interactive World PLC Six months ended 31 January 2007 Reconciliation of movements in shareholders' funds --------- ---------- -------- Six months Six months Year ended 31 ended 31 ended 31 July January January 2007 2006 2006 --------- ---------- -------- £'000 £'000 £'000Profit for theperiod/yearafter taxation 1,423 1,257 3,014Dividends (1,538) (2,196) (3,487)Sharesrepurchased - (16) (16)Issue of newshares 106 - 2,000Cost of shareissues (5) - (831) --------- ---------- --------(Decrease)/increase inshareholders'funds (14) (955) 680Openingshareholders'funds 3,781 3,101 3,101 --------- ---------- --------Closingshareholdersfunds carriedforward 3,767 2,146 3,781 ========= ========== ======== Interactive World PLC - Notes to the interim financial informationPeriod ended 31 January 2007 1 BASIS OF PREPARATION AND ACCOUNTING POLICIES The financial information set out in this announcement does not constitutestatutory accounts for the Group. Except as set out below, the financialinformation for the period ended 31 January 2007 has been prepared usingaccounting policies which are consistent with those adopted in the auditedaccounts of the Group for the year ended 31 July 2006. The Company has adopted FRS20 'Share Based Payments' in the current financialyear ending 31 July 2007. The Company's accounting policy in this respect is asfollows: Employee share schemes The Company's employee share schemes allow the Group's employees to acquireshares in the Company. The fair value of options granted is recognised as anemployee expense with a corresponding increase in equity. The fair value ismeasured at grant date and spread over the period during which the employeesbecome unconditionally entitled to the options. At each balance sheet date, theCompany revises its estimates of the number of options that are expected tobecome exercisable. It recognises the impact of the revision of originalestimates in employee expense and in a corresponding adjustment to equity overthe remaining vesting period. There were no material adjustments arising as a result of this change inaccounting policy in respect of the period ended 31 January 2007 or of priorperiods. The financial information for the year ended 31 July 2006 has been extractedfrom the statutory accounts for that year for the Group, which have beendelivered to the Registrar of Companies. The Board of Directors approved the financial information set out in thisannouncement on 8 March 2007. Interactive World PLC - Notes to the interim financial informationPeriod ended 31 January 2007 2 TURNOVER AND SEGMENTAL ANALYSIS For management purposes the Group is currently organised into a single operatingdivision. For internal reporting purposes the Group records and monitorsrevenues and cost of sales according to the delivery platform to which contentis delivered and through which services are provided. The Group differentiatesits key business segments between Mobile Telephony and Internet. Administrativeexpenses are shared overheads of the business and cannot be meaningfullyallocated by revenue stream. The Groups' principal tangible fixed assets consistof computer equipment and servers, which are utilised in the delivery of contentand services through both platforms. All of the Group's activities are carriedout in the UK. --------- --------- -------- Six months Six months Year ended 31 ended ended July 2006 31 January 2006 31 January 2006 -------- --------- --------- £'000 £'000 £'000 ------- -------TurnoverMobileTelephonyService 3,789 3,353 6,766InternetService 1,320 629 2,299 --------- --------- -------- 5,109 3,982 9,065 ========= ========= ======== 3 DIVIDENDS --------- --------- -------- Six months Six months Year ended ended ended 31 July 31 January 2007 31 January 2006 2006 --------- --------- -------- £'000 £'000 £'000 ------- ------- ------- 2005 final dividend paid(6.21 pence per share) - 2,196 2,196 2006 interim dividend paid(3.65 pence per share) - - 1,291 2006 final dividend paid(4.0 pence per share) 1,538 - - ========= ========= ======== 1,538 2,196 3,487 =========== ========== ========= Interactive World PLC - Notes to the interim financial informationPeriod ended 31 January 2007 4 EARNINGS PER SHARE The calculation of basic earnings per share is based on a profit for the sixmonths ended 31 January 2007 of £1.423 million (Six months ended 31 July 2006:£1.257 million; Year ended 31 July 2006: £3.014 million) and weighted averageshares in issue of 38,495,252 (Six months ended 31 January 2006: 35,512,210;Year ended 31 July 2006: 36,225,371). Diluted earnings per share assumes dilutive options have been converted intoordinary shares throughout the period. The calculations are as follows: Six months Six months Six months Six months Year ended Year ended ended ended ended ended 31 January 2007 31 January 2007 31 January 2006 31 January 2006 31 July 2006 31 July 2006 Profit Shares Profit Shares Profit Shares £'000 No. £'000 No. £'000 No. Basic 1,423 38,495,252 1,257 35,512,210 3,014 36,225,371earningsDilutiveeffects: - Options - 3,754,800 - - - 3,047,436 -------- -------- ------- ------- ------- -------Dilutedearnings 1,423 42,250,052 1,257 35,512,210 3,014 39,272,807 ======== ======== ======= ======= ======= ======= On 4 April 2006, each of the Company's authorised and issued ordinary shares of£1 was sub-divided into 400 shares of 0.25 pence each. Also on the 4 April 2006,the Company made a bonus issue of 35,209, 540 new ordinary shares of 0.25 penceeach. Information in respect of dividends and earnings per share set out innotes 3 and 4 above refer to dividends and earnings per share as calculated onthe basis of shares in issue and as adjusted to take account of the sub-divisionand bonus issue of share capital in the year ended 31st July 2006. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SPMG.L