| Company name | Zamano PLC |
| Headline | Final Results |
ZAMANO PLC ('zamano' or the 'Company' or the ’Group’) Final Results – Year Ended 31st December 2007
zamano plc, a market leader in mobile data services, has today announced its final results for the year ended 31st December 2007, prepared in accordance with IFRS.
Highlights:
|
|
2007 |
2006 |
Growth |
|
|
€’000 |
€’000 |
|
|
Revenue |
24,716 |
12,352 |
100% |
|
EBITDA |
3,518 |
2,444 |
44% |
|
Profit after tax |
2,613 |
2,207 |
18% |
|
Adjusted Diluted EPS * |
4.6 cents |
4.0 cents |
15% |
* Adjusted for amortisation, share option costs and deferred interest on acquisition
· Transformational year, sixth consecutive year of revenue and profit growth
· Revenues up 100% to €24.7 million
· EBITDA up 44% to €3.5 million
· Adjusted EPS up 15% to 4.6 cents
· Completion of two significant acquisitions – Eirborne (now the foundation of the Group’s online and mobile portal B2C business) & Red Circle (giving significant revenue scale in the UK and Australia and an entry point into US market)
· Continued investment in research & development, focused on platform scaling, convergence of fixed line and mobile internet, and new forms of billing
· Strengthening of the management team through the appointment of Colm Saunders as CFO and Cathal Fay as Head of B2C
Chairman’s Comments
Rod Matthews, Chairman of zamano commented; “The Group has once again delivered revenue and EBITDA growth ahead of market expectations. In addition to this strong financial performance, the Group has also completed two very significant acquisitions which will be key factors in delivering future growth. Trading to date in 2008 is good, and the Board is pleased with progress made in the integration of Red Circle. The Board looks forward to the remainder of the year and is confident that the Group will continue to deliver revenue and profit growth.”
CEO’s Comments
John O'Shea, CEO of zamano commented; “2007 was a transformational year for zamano plc. When the Company listed in October 2006, we explained that our strategy for the growth and development of the Group would be focused on three key areas:
The Group made substantial progress in executing its strategy during 2007, resulting in a strong financial performance with revenues doubling and EBITDA increasing by 44%.
During the year, the Group considerably strengthened its management team and has put the right resources in place to extend its strong growth story into 2008 and beyond.
I am very satisfied with recent progress in developing our team, our strategy and technology, and am confident that the 6 years of consecutively high growth to 2007 will continue in 2008 and beyond.”
Hybrid Business Model
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.
Financial Review
zamano’s financial performance in 2007 exceeded expectations. Revenue grew by 100% to €24.7 million from €12.3 million in 2006, and the Group is confident of continued growth in 2008, with market share gains expected in the UK, Ireland, Australia and the USA. Major growth drivers in 2007 have been the shift in advertising from print to better performing on-line and operator mobile portals, and further customer wins in the B2B business unit.
The Group’s EBITDA grew faster than expected to €3.5 million (€2.4 million in 2006) at a margin of 14%. As anticipated EBITDA margin was down 5%, driven by a proportion of the very significant revenue growth in new markets being at slightly lower gross margins.
Cost control remains strong, evidenced by operating costs being maintained at 24% of revenue, approximately the same level as reported for 2006. This is extremely pleasing given the dramatic growth which the business has experienced over the past twelve months. Further evidence of this performance is in average revenue per employee, which increased 37% from €475k in 2006 to €650k for 2007.
Adjusted EPS growth of 15% has lagged EBITDA growth, reflecting the impact of the large increase in the number of shares in circulation post the Company’s IPO in late 2006. The cash raised through the IPO was partly utilised in the Eirborne acquisition in April 2007 and, consequently, has yet to contribute to earnings on a full-year basis.
At year end there was a €12.1m cash balance, of which €6.2m is assigned for the final payment to Eirborne shareholders and €1m is for payment to the Red Circle shareholders. Therefore, the underlying cash position available to the business is €4.9m. In addition, the Group took on €15.0m in debt from Bank of Scotland (Ireland) to fund the acquisition of Red Circle resulting in net debt of €2.9 million and underlying net debt of €10.1 million at the year end. The Board feel that there is a good balance of debt and cash to support the Group’s growth plans.
Sterling accounts for a significant proportion of the Group’s revenue and, consequently, the Group continue to monitor closely the recent movements in Sterling and any possible impact on financial performance. In order to hedge the currency exposure, the Group has consistently focused on matching Sterling revenue and costs.
Acquisitions
2007 was an extremely busy year for zamano in terms of acquisitions with two strategically important and sizeable acquisitions completed.
Eirborne, completed in April, was undertaken to enhance zamano’s online B2C offering and expand its geographical footprint in the UK and Australian markets. The final consideration was subject to profit targets to be achieved in the 12 months to the end of April 2008, and the maximum consideration of €8.5 million has been earned. The final payment of €6.2 million will be made before the end of May 2008. The integration has been successfully completed and all commercial and technical management has passed to the zamano team, with growth continuing.
The reverse takeover of Red Circle was undertaken to deliver substantial incremental B2C revenue in the UK, Australia and USA markets. The transaction was approved by shareholders and completed on 12 December 2007. Red Circle was acquired for a maximum purchase price of up to €24.4 million, comprising an initial consideration of €17.2 million and a deferred consideration of up to €7.2 million. The deferred consideration provided a mechanism for the vendors to achieve a higher valuation if the performance of the business for the year ended 31 December 2007 exceeded zamano’s expectations. The amount of the deferred consideration was to be determined based on the agreed financial results of Red Circle for the year ended 31 December 2007 as well the balance sheet at the date of acquisition. Following completion of these accounts, the final total consideration will be approximately €18.0 million. The Board remains pleased with the opportunity and the strategic logic of the acquisition.
In the 4 months since the Red Circle acquisition, an accelerated integration process has been completed. Teams from both companies are now working together within an integrated organisation structure, messaging traffic is being moved to the zamano platform and the sales teams are working on delivering profitable revenue growth. The Board is confident that the synergies discussed at the time of acquisition will be delivered.
Operational Performance
zamano has continued its technology investment program, and has enhanced its development team to support further growth initiatives. In line with the growing use of the mobile internet, zamano has focused development in three key areas:
Platform scaling: zamano’s platform successfully supported a doubling in monthly messaging traffic in 2007 and has the capability to support even faster growth in 2008
Convergence: as WAP usage grows, zamano has focused on building seamless migration capabilities between traditional and mobile internet portals supporting social networking, messaging and content provision
Billing: zamano has invested in Payforit, a new WAP payment system, and is integrating multiple payment systems into its converged web/WAP portals
Regulation
Regulation remains an important area for zamano and the Group has one of the strongest track records in the industry for both its B2C and B2B businesses. Whilst zamano has strong internal procedures within its B2C business to ensure that it is operating within regulations, the major focus remains on ensuring full regulatory compliance from its B2B customers, in relation to which zamano has less content and customer control. 2007 witnessed a further improvement in compliance from B2B customers brought about by increased investment in best practice definition, education and pro-active testing of services.
The Group continues to engage with regulators in defining best practices for new services and has accepted invitations to participate in regulatory oversight committees and strategic reviews.
Board
The Board was strengthened in 2007 through the appointment of Colm Saunders as CFO. Colm’s financial and operational experience is helping support the Group’s growth plans in 2008 and beyond.
Conclusion
zamano has built substantial scale and was recently placed second in the Deloitte Technology Fast 50, having achieved 1,999% growth in the five years to 2006. A further 100% revenue growth in 2007 is indicative of the strength of the business. Continued strong performance in zamano’s organic business units, combined with the substantial scale of the companies acquired in 2007 position the Group to continue its impressive growth trajectory.
zamano’s proven ability to acquire and integrate companies is a key competitive differentiator. With the continued support of our shareholders and banking partners, the Group will actively pursue further acquisition opportunities in the years ahead.
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2007
2007 2006
€’000 €’000
Continuing operations
Revenue 24,716 12,352
Cost of sales (15,863) (7,129)
_______ _______
Gross profit 8,853 5,223
Administrative expenses (5,823) (2,831)
_______ _______
Operating profit 3,030 2,392
Finance revenue 366 85
Finance costs (315) (26)
_______ _______
Profit before tax 3,081 2,451
Income tax expense (468) (244)
_______ _______
Profit for the year attributable
to equity holders of the parent 2,613 2,207
======== ========
Earnings per share
- basic €0.038 €0.042
- diluted €0.036 €0.039
CONSOLIDATED BALANCE SHEET
at 31 December 2007
2007 2006
ASSETS €’000 €’000
NON CURRENT ASSETS
Property, plant and equipment 174 165
Intangible assets 28,608 1,112
Deferred tax asset 27 -
_______ ________
28,809 1,277
_______ ________
CURRENT ASSETS
Trade and other receivables 9,180 2,796
Cash and cash equivalents 12,104 7,491
_______ ________
21,284 10,287
_______ ________
TOTAL ASSETS 50,093 11,564
======== ========
EQUITY
Capital and reserves attributable to
equity holders of the parent
Equity share capital 81 68
Share premium 11,155 6,367
Capital conversion reserve 1 1
Other reserves 233 99
Retained earnings 4,835 2,222
_______ ________
TOTAL EQUITY 16,305 8,757
_______ ________
LIABILITIES
NON CURRENT LIABILITIES
Interest bearing loans and borrowings 12,416 -
Deferred tax liability 569 -
_______ _______
12,985 -
_______ ________
CURRENT LIABILITIES
Trade and other payables 9,429 2,596
Acquisition accrual 8,410 -
Interest bearing loans and borrowings 2,534 -
Income tax payable 430 211
_______ ________
20,803 2,807
_______ ________
TOTAL LIABILITIES 33,788 2,807
_______ ________
TOTAL EQUITY AND LIABILITIES 50,093 11,564
======== ========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2007
Attributable to equity holders of the parent
________________________________________________________
Equity 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 8,757
Foreign currency translation - - - - (19) (19)
______ _______ ______ _______ ______ _______
Total income and expense
for the period recognised
directly in equity - - - - (19) (19)
Profit for the period - - - 2,613 - 2,613
______ _______ ______ _______ ______ _______
Total income and expense
for the period - - - 2,613 - 2,613
Issue of share capital 13 4,788 - - - 4,801
Share based payments - - - - 153 153
______ _______ ______ _______ ______ _______
At 31 December 2007 81 11,155 1 4,835 233 16,305
======= ======= ======= ======= ======= =======
Attributable to equity holders of the parent
________________________________________________________
Equity Capital
Share Share Conversion Retained Other Total
Capital Premium Reserve Earnings Reserves Equity
€’000 €’000 €’000 €’000 €’000 €’000
At 1 January 2006 26 622 1 15 43 707
Profit for the period - - - 2,207 - 2,207
______ _______ ______ _______ ______ _______
Total income and expense
for the period - - - 2,207 - 2,207
Issue of share capital 18 5,903 - - - 5,921
Capitalisation issue 15 (15) - - - -
Conversion of Series ‘A’
Convertible Redeemable Preferred
Shares to Ordinary Shares 9 898 - - - 907
Costs associated with listing
on AIM - (1,041) - - - (1,041)
Share-based payments - - - - 56 56
______ _______ ______ _______ ______ _______
At 31 December 2006 68 6,367 1 2,222 99 8,757
======= ======= ======= ======= ======= =======
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2007
2007 2006
€’000 €’000
Cash Flows from Operating Activities
Profit before tax 3,081 2,451
Adjustments to reconcile profit for the year to
net cash inflow from operating activities
Depreciation 94 52
Amortisation of intangible assets 394 -
Share-based payments expense 153 56
Foreign exchange (19) -
Increase in trade and other receivables (1,910) (850)
Increase in trade and other payables 2,917 663
Finance revenue (366) (85)
Finance costs 315 26
______ ______
Cash generated from operations 4,659 2,313
Interest paid (9) (5)
Income tax paid (535) (67)
______ ______
Net cash inflow from operating activities 4,115 2,241
Cash Flows from Investing Activities
Payment of deferred consideration on
purchase of Enabletel - (252)
Acquisition of subsidiaries (14,532) -
Purchase of property, plant and equipment (81) (165)
Purchase of intangible assets (166) -
Interest received 326 85
______ ______
Net cash outflow from investing activities (14,453) (332)
______ ______
Cash Flows from Financing Activities
Proceeds from issue of share capital 1 5,921
Interest-bearing loan 14,950 -
Transaction costs of issue of share capital - (1,022)
______ ______
Net cash inflow from financing activities 14,951 4,899
______ ______
Net Increase in Cash and Cash Equivalents 4,613 6,808
Cash and cash equivalents at 1 January 7,491 683
______ ______
Cash and cash equivalents at 31 December 12,104 7,491
====== ======
1. The financial information set out in this preliminary announcement, which was approved by the Board of Directors on 7 April 2008, has been prepared based on the accounting policies set out in the financial statements for the year ended 31 December 2007. This financial information does not constitute the group's statutory financial statements but is derived from the financial statements for the year ended 31 December 2007, which will be delivered to the Company's Annual General Meeting. Following the Annual General Meeting, the financial statements will be filed with the Companies' Office in Dublin. The auditors have reported on the financial statements for the year ended 31 December 2007; their report was not qualified in any respect.
2. The London Stock Exchange AIM and the IEX in Dublin have mandated the use of International Financial Reporting Standards (IFRS) for all AIM and IEX companies with financial years commencing on or after 1 January 2007. Consequently, these financial statements are prepared in accordance with IFRS as adopted by the European Union. The date of transition is 1 January 2006.
3 EARNINGS PER ORDINARY SHARE
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighed average number of ordinary shares outstanding during the year.
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 year 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:
2007 2006
€’000 €’000
Net profit attributable to equity holders of the parent 2,613 2,207
======= =======
2007 2006
thousands thousands
Basic weighted average number of shares 69,567 52,933
Dilutive potential ordinary shares:
Employee share options 3,868 4,147
Deferred consideration 45 -
_______ _______
Diluted weighted average number of shares 73,480 57,080
======= =======
4 ADJUSTED EARNINGS PER ORDINARY SHARE
The following reflects earnings per share based adjusted net income:
2007 2006
€ €
Adjusted basic EPS 0.049 0.043
Adjusted diluted EPS 0.046 0.040
======= =======
Adjusted net income is calculated as:
2007 2006
€’000 €’000
Profit after tax 2,613 2,207
Share option cost 153 56
Interest on deferred consideration 249 -
Amortisation 394 -
_______ _______
3,409 2,263
======= =======
2007 2006
5 TRADE AND OTHER RECEIVABLES €’000 €’000
(all current)
Trade receivables 8,313 2,648
Prepayments 628 126
VAT recoverable 239 -
Corporation tax recoverable - 22
______ _______
9,180 2,796
======= =======
2007 2006
6 TRADE AND OTHER PAYABLES €’000 €’000
(all current)
Trade payables and accruals 8,720 1,928
PAYE/PRSI 307 136
VAT 346 532
Loan interest 56 -
______ _______
9,429 2,596
======= =======
7. SEGMENT INFORMATION
The primary segment reporting format is determined to be business segments as the Group’s risks and rates of return are affected predominantly by differences in the services provided. Secondary information is reported geographically. The operating businesses are organised and managed separately according to the nature of the services provided, with each segment
representing a strategic business unit that offers different services.
Business Segments
The Group facilitates communication and interaction between businesses and consumers on mobile phones through a range of value-added mobile applications (B2B). The Group also develops, promotes and distributes mobile content and interactive services directly to consumers (B2C).
The following tables present revenue and profit and certain assets and liability information regarding the Group’s business segments:
Year ended 31 December 2007
B2B B2C Eliminations Total
€’000 €’000 €’000 €’000
Revenue
Sales to external customers 12,513 12,203 - 24,716
Inter-segment sales 38 1,566 (1,604) -
_______ _______ ______ _______
Total revenue 12,551 13,769 (1,604) 24,716
======= ======= ======= =======
Results
Segment results 3,036 3,653 - 6,689
======= ======= =======
Unallocated expenses (3,659)
_______
Profit before tax, finance costs
and finance revenue 3,030
Net finance income 51
_______
Profit before tax 3,081
Income tax expense (468)
_______
Net profit for year 2,613
Year ended 31 December 2006
B2B B2C Eliminations Total
€’000 €’000 €’000 €’000
Revenue
Sales to external customers 6,601 5,751 - 12,352
Inter-segment sales - - - -
_______ _______ ______ _______
Total revenue 6,601 5,751 - 12,352
======= ======= ======= =======
Results
Segment results 1,578 2,663 - 4,241
======= ======= =======
Unallocated expenses (1,849)
_______
Profit before tax, finance costs
and finance revenue 2,392
Net finance income 59
_______
Profit before tax 2,451
Income tax expense (244)
_______
Net profit for year 2,207
_______
8 The report and accounts for the year ended 31 December 2007 will be posted to shareholders in due course and further copies will be available from the website (www.zamano.com).
-Ends- For Reference zamanoJohn O'Shea - CEO +353 1 488 5830Colm Saunders – CFO +353 1 511 1224www.zamano.com Seymour Pierce
David Newton +44 207 107 8000www.seymourpierce.com NCB Corporate FinanceConor McCarthy +353 1 611 5936www.ncb.ie EdelmanPaul Lockstone (London) +44 (0) 20 7344 1325
Joe Carmody/Donnchadh O'Leary (Dublin) +353 1 678 9333www.edelman.comEND