Interim Results

zamano PLC

("zamano" or "the Group")

Interim Results 

Zamano PLC (AIM:ZMNO, ESM:ZAZ), a leading mobile commerce company in Europe announces its interim results for the six month period ended 30 June 2013.

Highlights:

· Revenue at €9.019 million down slightly (4.7%) on H1 2012 (H1 2012 Revenue €9.463 million).

· EBITDA at €1.421 million was 7.3% ahead of H1 2012 (H1 2012 EBITDA €1.324 million).

· Operating profit at €1.245 million was 14% ahead of H1 2012 (H1 2012 operating profit €1.088 million).

· Administrative Expenses at €1.283 million were 22.71% down on H1 2012 (H1 2012 administrative expenses €1.660 million).

· Gross debt reduced to €0.733 million from €4.255 million at 30 June 2012.

· Cash balances at 30 June 2013 of €2.262 million, (Net cash €1.529 million).

Pat Landy CEO of zamano commented: "during the first half of the year, zamano improved its operating performance over the same period in 2012. While revenues declined marginally compared to the first half of 2012, EBITDA and operating profits increased and the Group's improved balance sheet position gives us a platform to grow and diversify the business during the second half of 2013 and beyond".

John Rockett Chairman of zamano added: "the Group consolidated its financial position during the first half of 2013, building on the improvement made in the business during 2012. We continue to focus our efforts on broadening zamano's product-market base and hope to report further progress in this area in the not too-distant future".

For further information, please contact:

zamano plc

Pat Landy, Chief Executive Officer

Tel: +353 1 5547259

Investec Corporate Finance

Shane Lawlor /Conor McCarthy

Tel: +353 1 421 0347

Cenkos Securities

Alan Stewart/Neil MacDoland

Tel: +44 (0)131 220 6939

Jon Fitzpatrick

Tel: +44 (0) 20 7397 1951

Media enquiries:

Reputation Inc.

Cormac Bradley

Tel +353 1 4120511

www.reputation-inc.com

zamano plc and subsidiaries

CEO's Statement

Introduction

zamano is pleased to report a further improvement in EBITDA and operating profits for the six months ended 30 June 2013. Sales at €9.019 million were down slightly on the corresponding period in 2012 (H1 2012 sales €9.463 million) and consequently, gross profit was also down at €2.528 million versus €2.748 million in H1 2012. Nonetheless, EBITDA at €1.421 million was 7.3% ahead of H1 2012 (€1.324 million) and operating profit at €1.245 million was 14% ahead of the corresponding figure of €1.088 million for H1 2012. More significantly, cash generated from operations in the period ended 30 June 2013 was €1.867 million an increase of 15.5% over the figure of €1.616 million for the corresponding period last year.

Market Review

UK

Our UK operations performed well during the first half of 2013. Sales for the six months ended 30 June 2013 were €5.570 million up 33.3% on the same period last year. This translated into a gross profit contribution of €1.643 million, up 9.2% on the corresponding period in 2012. The increase in gross profits did not match the increase in sales as zamano invested heavily in advertising to acquire new subscribers which impacted on the outturn at gross margin level. While the UK remains our most important sales territory, it is, nevertheless, a highly regulated market. This will make it more difficult for zamano to sustain the recent growth achieved in this region.

Ireland

As referenced in our interim results for 2012, the anticipated introduction by Comreg of a new code of practice in 2012 pushed direct-to-consumer (D2C) and whitelabel sales activity ahead during the first half of that year. The benefit of the once-off impact of that market push in H1 2012 distorted our subscription revenues during the first half of last year. In addition, the deleterious impact of double opt-in under the new Comreg code of practice effectively eliminated our subscription based revenues in H2 2012 and H1 2013. As a result, Irish sales (which now largely comprise non-subscription and business to business services) were €2.179 million in H1 2013 down by 41.6% on the same period in 2012 when sales were €3.735 million. Consequently, gross profit for the first half was €0.661 million as against €0.808 million in H1 2012 a fall of 18.2%.

USA

A number of issues connected to the sale of Mblox, our U.S aggregator, in March meant that we could no longer advertise our new subscription service offering in the U.S, which we had started to trial during quarter three of 2012. Consequently, U.S revenues have been severely impacted since mid-March. In H1 2013, U.S revenues were €0.657 million compared to a corresponding amount of €1.232 million for H1 2012.

Other Territories

Since the commencement of 2013, we have established a D2C subscription and non-subscription service in the Czech Republic and Slovakia. We also relaunched a subscription service in Australia during the first quarter. In addition, we are targeting launches in Norway, Slovenia and Switzerland before the end of the year.

zamano plc and subsidiaries

CEO's Statement (continued)

Overall sales in our new territories during H1 2013 were a modest €0.613 million. However, the proposed launch in three new markets in the coming months will significantly enhance the sales contribution from new markets and, in time, reduce our sales dependency on the UK and Ireland.

Other Activities

In addition to the work done by our development opportunities team on launching services in Eastern Europe and Australia during H1 2013, a significant amount of work has been carried out developing an SMS product for small and medium enterprises. A market launch programme is currently being developed with a view to launching the product in Ireland by end October. Ireland will be a 'test market' for the product and, subject to a successful launch, we intend to roll-out the product to clients in the UK and Europe.

Throughout the course of the first half of 2013, senior management, supported by the development opportunities team, have been actively pursuing product licensing, joint ventures and acquisitions across a range of web and mobile services. While no transactions have yet been concluded, we anticipate that these efforts will come to fruition in the not too-distant future.

Financial Review

As detailed above, the Group performed extremely well at EBITDA, Operating Profit and Cash Generation levels during the first half of 2013. This is primarily due to the strong revenue performance in the UK and a significant reduction in Group administration expenses during the period.

While sales revenues as a whole were 4.7% down on the same period last year due to the impact on our Irish subscription business of the new Comreg code of practice, we started to broaden our geographic sales base via the addition of three new territories, with a further three to be added in the second half of 2013. These initiatives will gradually underpin sales activity in 2014 and beyond.

Overall gross margins at 28% for the period held up well in comparison with H1 2012 (29%) particularly, when one takes account of the significant advertising costs incurred in the UK during the first six months to build our subscriber base in that market.

The robustness of zamano's financial performance during the period is demonstrated by the fact that in spite of taking a substantial finance charge to the profit and loss account of €0.262 million in connection with interest on a loan from Pageant Holdings Limited ("Pageant"), our largest shareholder, we recorded a profit before tax of €0.984 million, which was 4% ahead of the H1 2012 figure of €0.946 million.

Furthermore, the Group's cash position continued to improve during the six months ended 30 June 2013. The Group repaid an existing loan liability due to Pageant, partially refinanced by a new loan from a financial institution. Gross debt at €0.733 million was substantially down on 30 June 2012 (€4.255 million) arising from the debt settlement concluded with our bankers in December 2012. At 30 June 2013, the Group had cash balances of €2.262 million; after deducting gross debt from this figure, the Group had net cash of €1.529 million at that date.

zamano plc and subsidiaries

CEO's Statement (continued)

Outlook

The first half of 2013 was a period of consolidation for zamano, after the seminal events of 2012 which included the repositioning and financial restructuring of the business. While our major markets of the UK and Ireland are challenging from a competitive and regulatory perspective, we have started to gradually penetrate new geographies with our existing D2C subscription and non-subscription services. A total of six new markets will be entered by the year end, which broadens our territorial base and gradually reduces our dependency on the UK and Ireland.

Our newly formed development opportunities team continues to explore, identify and target new product licencing, joint venturing and acquisition opportunities. An SMS product targeted at SMEs will be launched next month in Ireland and we anticipate that other market initiatives currently being undertaken by the development opportunities team will come to fruition in the near term future.

The board and management while fully aware of the many issues and challenges confronting the business on an on-going basis, nevertheless, anticipate a satisfactory trading outturn for the Group in the year ending 31 December 2013.

Pat Landy 25 September 2013

Chief Executive Officer

zamano plc and subsidiaries

Unaudited condensed consolidated income statement

for the half-year ended 30 June 2013

Unaudited condensed consolidated statement of comprehensive income

for the half-year ended 30 June 2013

zamano plc and subsidiaries

Unaudited condensed consolidated balance sheet

at 30 June 2013

zamano plc and subsidiaries

Unaudited condensed consolidated statement of changes in equity

for the half-year ended 30 June 2013

for the half-year ended 30 June 2012

zamano plc and subsidiaries

Unaudited condensed consolidated cash flow statement

for the half-year ended 30 June 2013

zamano plc and subsidiaries

Notes to the half-yearly condensed consolidated financial statements (unaudited)  

1 Reporting entity

zamano plc is a limited company incorporated and domiciled in Ireland with shares publicly traded on the Alternative Investment Market (AIM) in London and the Enterprise Securities Market (ESM) in Dublin.

The half-yearly condensed consolidated financial statements of zamano plc as at and for the six months ended 30 June 2013 consist of the results and financial position of the company and its subsidiaries together referred to as "the Group." The principal activities of the Group are the provision of mobile data services and technology.

2 Statement of compliance

This unaudited half-yearly condensed consolidated preliminary financial information have been prepared in accordance with IAS 34 "Interim Financial Reporting", as adopted by the EU. It does not include all of the information required for full annual financial statements and should be read in conjunction with the most recent published financial statements of the Group. The comparative figures included for the year ended 31 December 2012 do not constitute statutory financial statements of the Group within the meaning of the European Communities (Companies: Group Accounts) Regulations 1992. The consolidated financial statements for the year ended 31 December 2012 are available at www.zamano.com. The auditor's report on those financial statements was unqualified.

The half-yearly financial statements were approved by the Board on 25 September 2013 and are available at www.zamano.com.

3 Significant accounting policies - basis of preparation

The condensed consolidated preliminary financial information have been prepared in accordance with the accounting policies set out in the Group's 31 December 2012 published consolidated financial statements, which were prepared in accordance with IFRS as adopted by the EU.

zamano plc and subsidiaries

Notes (continued)

4 Estimates

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing the half-yearly condensed consolidated financial statements, the significant judgements made by management and the key sources of estimation uncertainty were the same as disclosed in note 4 to the most recently published annual consolidated financial statements. The most subjective judgement relating to these interim financial statements relates to the valuation of goodwill on a previous business combination. Details related to our key assumptions in this regard are set out in note 16 to the most recently published annual consolidated financial statements.

5 Segment information

The Group is managed based on three reportable segments which are defined based on geographical markets as follows: Republic of Ireland (ROI), United Kingdom (UK) and United States of America (USA). It also has sales in other jurisdictions but these are not deemed to be stand-alone reportable segments under the requirements of IFRS 8 and are classified as "other locations" in the table below.

Information regarding the results of each reportable segment is included below. Performance is measured based on segment results as included in the reports that are reviewed by the Group's Chief Operating Decision Maker (or 'CODM')

The Group's operations are not significantly impacted by seasonal fluctuations.

(1) Unallocated expenses relate to central overheads such as rent, administration, salaries and other office overhead costs which are not allocated to individual reportable segments.

zamano plc and subsidiaries 

Notes (continued)

5 Segment information (continued)

(1) Unallocated expenses relate to central overhead costs such as rent, administration, salaries and office overhead costs which are not allocated to individual reportable segments. 

6 Income tax

The major components of the income tax expense in the half-yearly condensed consolidated income statement are:

zamano plc and subsidiaries

Notes (continued)

7 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 company by the weighted average number of ordinary shares outstanding during the period.

Diluted profit per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the company 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:

zamano plc and subsidiaries

Notes (continued)

8 Adjusted earnings per share

The following reflects earnings per share based on adjusted net income:

Adjusted net income is calculated as:

Reconciliation of reported operating profit across business divisions to earnings before interest, tax, depreciation amortisation (EBITDA) and non-recurring charges.

zamano plc and subsidiaries

Notes (continued)

9 Share-based payments

 The Board may offer to grant share options to any director, employee or consultant of the Group and these are usually granted at an exercise price equal to the market price of the company's shares at the date of grant. The rules relating to the granting of share options are disclosed in the consolidated financial statements for the year ended 31 December 2012. All of the options granted are deemed to be equity-settled.

The share-based payments expense for the period was €23,562 (2012 - €Nil).

There were 6,278,458 new options granted during the period (30 June 2012: no share options granted). The fair value of these options granted was calculated at the date of grant using an option pricing model (the Black Scholes option pricing model), taking into account the terms and conditions upon which the options were granted. Set out below are the principal inputs to the model for these options.

The fair value of share options granted during the period was €0.04 per share.

10 Intangible assets

zamano plc and subsidiaries

Notes (continued)

10 Intangible assets (continued)

Goodwill arises from business combinations in prior years. Details regarding the underlying assumptions determined by the directors in assessing the recoverability of goodwill are

disclosed in note 16 of the 31 December 2012 financial statements. The directors are satisfied that the results of the Group for the period to 30 June 2013 are in line with the assumptions applied as at 31 December 2012 and that no other events have occurred in the current period which would require an impairment test of the goodwill as at 30 June 2013 to be undertaken.

Additions to intangibles for the period to 30 June 2013 were €163,000 of which €150,000 relates to internally capitalised payroll costs on research and development projects.

11 Property, plant and equipment

Acquisitions and disposals

During the six months ended 30 June 2013, the Group acquired property, plant and equipment assets with a cost of €60,000 (2012 - €21,000).

No assets were disposed of by the Group during the six months ended 30 June 2013 (2012 - €Nil).

12 Loan

During the period the Group entered in a loan agreement with a financial institution to borrow €800,000 through a three year facility at fixed interest rate with monthly repayment commitments. The loan is secured by way of a fixed and floating charge over the assets of zamano plc. The funds were used to discharge a loan liability due to Pageant Holdings Limited (Pageant) (note 14).

13 Capital commitments

The Group had no capital commitments at 30 June 2013 (2012: €Nil).

14 Related party transactions

During the six months ended 30 June 2013 the Group made payments totalling €1,264,500 to Pageant. Pageant holds 29.35% of the issued share capital of zamano plc. The payments were made in order to discharge an existing loan due to Pageant which was drawn down in December 2012. The amounts paid to Pageant discharged the liability due under this loan arrangement except for an amount of €46,000 in relation to an arrangement fee which remains outstanding as at 30 June 2013.