TIDMZMNO
RNS Number : 0748I
Zamano PLC
25 August 2016
zamano plc
Interim Results for the six month period ended 30 June 2016
zamano plc (AIM:ZMNO, ESM:ZAZ), a leading European provider of
interactive applications and services to mobile devices, today
announced its Interim Results for the six month period ended 30
June 2016.
Highlights
-- Sales increased by 80.2% to EUR18.748M compared to EUR10.404M in H1 2015.
-- zamano continued to improve its balance sheet position, with
cash of EUR7.430M at 30 June 2016 representing an increase of 36.7%
on the 30 June 2015 figure of EUR5.435M.
-- Gross profit decreased by 9.7% to EUR2.331M compared to EUR2.582M in H1 2015.
-- Adjusted EBITDA decreased by 13.1% to EUR1.196M compared to EUR1.377M in H1 2015.
-- Profit before tax decreased by 30.7% to EUR0.794M compared to
EUR1.146M in H1 2015, while profit after tax at EUR0.675M decreased
by 33.8% compared to EUR1.019M in H1 of 2015.
Colin Tucker, Acting Chairman of zamano commented: "While the
overall trading outcome for the business was somewhat mixed during
H1 2016, we can report a significant increase in both sales
performance and cash generation. This was offset by falling margins
due to increased investment in advertising, a changing sales mix in
the UK and some foreign exchange headwinds. We anticipate an
improvement in operating performance during H2 2016 thanks to H1
advertising spend and continuing strong UK sales performance. The
36% jump in our net cash position is very welcome as it provides us
with a solid platform to implement our acquisition strategy".
"With an active focus on M & A activity, we believe that
zamano can achieve one of its core strategic objectives by pursuing
higher value added business which we expect would open avenues for
growth in the coming twelve months. Our ambition to achieve this
strategic repositioning will run in tandem with adapting and
optimising our existing business lines. In addition, we will
continue to focus on delivering strategic acquisitions and we hope
to make significant progress in this regard during the second half
of the current financial year".
- Ends -
For further information, please contact:
zamano plc
Michael Connolly, Chief Financial Officer
Tel: +353 1 554 7261
Investec Corporate Finance
Shane Lawlor/Ian McGreal
Tel: + 353 1 4210000
Cenkos Securities (Nominated Advisor & Broker)
Derrick Lee/Neil McDonald
Tel: + 44 (0) 131 220 6939
Media Enquires:
MCOMM Communications Consultants
Richard Moore
Tel: +353 1 661 9428
Mob: +353 87 241 4751
Email: ir@zamano.com
zamano plc and subsidiaries
Acting Chairman's Statement
Introduction
Zamano plc ('zamano') today announces its trading results for
the six month period ended 30 June 2016.
We are pleased to report sales of EUR18.748M in H1 2016, which
is substantially in excess (80.2%) of the corresponding sales
figure in H1 2015 (EUR10.404M). However, gross profit for the
period at EUR2.331M was 9.7% below the EUR2.582M achieved in H1
2015. This reduction in actual contribution is largely attributable
to the predominance of UK third party sales in our product mix and
increased investment in advertising which we expect will benefit
the business in the second half of the year.
The Adjusted EBITDA for H1 2016 at EUR1.196M is down by 13.1% on
the EUR1.377M achieved in the first half of 2015. The reductions in
gross profits and Adjusted EBITDA during H1 2016 have also impacted
on the operating profit, pre-tax profit and post-tax profit
outcomes for the period.
During the first half of the year, zamano continued to
strengthen its balance sheet position, with cash at 30 June 2016
standing at EUR7.430M compared to EUR5.435M at 30 June 2015. This
improvement in cash and cash equivalents reflects the underlying
cash generating capacity of the company's current business
lines.
Market Review
UK
The UK business continues to make a very strong contribution to
zamano's operations. UK sales in the half year to 30 June 2016 were
EUR16.987M, a 105% increase on the EUR8.285M recorded during H1
2015. These sales translated into an actual gross profit
contribution of EUR1.985M which was 2.5% above H1 2015 (EUR1.937M).
However, the contribution of third party revenues together with
increased advertising spend resulted in a decrease in the UK gross
margin percentage during H1 2016 (11.7%) compared to H1 2015
(23.4%).
zamano plc and subsidiaries
Acting Chairman's Statement (Continued)
As in previous years, zamano continues to proactively engage
with the UK regulator, mobile network operators and various
industry bodies to ensure that we can influence product and market
trends thus protecting our business and improving the service
offering to consumers of our services. In this regard, the
introduction of Payforit (PFI), a new payment system adopted by the
mobile network operators during the early part of 2016, has
impacted on some of our traditional products and services in the
UK. However, in the short to medium term, we believe that we can
continue to adapt our advertising to somewhat ameliorate the
commercial impacts of this new payment system on our traditional
product market in the UK.
Ireland
Sales in the Irish market during H1 2016 were EUR1.178M compared
to EUR1.656M achieved during H1 2015. This decline of 28.9% is
attributable to changes in our Irish product mix. During H1 2016, a
number of old product lines were discontinued and replaced with a
suite of new interactive services. The increase in advertising
costs associated with the new suite of services combined with the
fall off in sales, resulted in the actual gross profit contribution
for the period falling by 39.3% to EUR0.320M (H1 2015:
EUR0.527M).
Zamano has informed shareholders over the course of the past
number of years that ongoing changes in regulatory and compliance
regimes has made it difficult to grow the Irish business. In this
regard, while Ireland remains an important market territory for
zamano, overall market conditions continue to be challenging.
Other Locations
Sales revenue during H1 2016 in locations other than UK and
Ireland at EUR0.583M were 25.9% higher compared to H1 2015
(EUR0.463M). As in previous years, Australia represented the vast
majority of these sales during the six months ended 30 June
2016.
The company continues to seek out locations where it can
successfully launch products and services which capitalise on our
aggregator relationships and billing platforms.
Financial Review
At the commencement of this announcement, we stated that sales
in H1 2016 at EUR18.748m were 80.2% ahead of H1 2015 (EUR10.404M).
This significant improvement in sales performance was primarily due
to a significant uplift in sales in the UK. However, as this
business activity typically carries lower margins than our more
traditional business products and services, actual gross profits
were down by 9.7% when compared to H1 2015.
zamano plc and subsidiaries
Acting Chairman's Statement (Continued)
The fall in actual gross profits, taken with losses on currency
translation, primarily relating to the UK, negatively impacted on
EBITDA, operating profit, profit before tax and profit after tax
during the H1 2016. Sales revenues, however, continue to grow, and
this together with an increase in advertising spend should result
in an improvement across all of these financial metrics during H2
2016.
Notwithstanding the impact of margin pressure and adverse
foreign exchange movements on the operating performance of the
business during H1 2016, the Group continues to strengthen its
overall financial position. Cash and cash equivalents at 30 June
2016 were EUR7.430M, up from EUR5.435M at 30 June 2015, an increase
of 36.7%. The improved cash position demonstrates the financial
strength of the business and places the Group in a strong position
to implement the focused bolt-on acquisition programme in the
mobile advertising, social and billing areas identified in the
Strategic Review (more details below).
New Opportunities
In August 2016, zamano updated shareholders on its Strategic
Review which we anticipate will lead to a significant
re-positioning of the company and provide it with a blueprint to
secure new high end market opportunities and acquire leading edge
technology and systems. This will open new opportunities in
existing markets but also allow zamano to realise its potential in
new markets.
The board commissioned OFS, an IT consultancy, to carry out the
strategic review of the business, with the findings formally
presented to the Board at the end of July 2016. This review came
against a backdrop of the many market and regulatory changes which
are currently taking place in zamano's core business. More
significantly, the review focused on the numerous growth
opportunities which currently exist in product - market areas such
as mobile advertising and billing/payments.
The Strategic Review concluded that zamano should be
repositioned to focus on higher value added, growth orientated
activities. The board has determined that this can be most
effectively achieved by implementing a focused acquisition
programme in the mobile advertising, social and billing areas.
Arising from this, a small number of potential acquisition targets
have been identified in the three sectors already referenced. The
company is currently actively evaluating these acquisition
opportunities.
zamano plc and subsidiaries
Acting Chairman's Statement (Continued)
Outlook
While the overall trading outcome for the business was somewhat
mixed during H1 2016, we can report a significant increase in both
sales performance and cash generation. This was offset by falling
margins due to increased investment in advertising, a changing
sales mix in the UK and some foreign exchange headwinds. We
anticipate an improvement in operating performance during H2 2016
thanks to H1 advertising spend and continuing strong UK sales
performance. The 36% jump in our net cash position is very welcome
as it provides us with a solid platform to implement our new
acquisition strategy.
Following on from the Strategic Review, with an active focus on
M & A activity, we believe that zamano can achieve one of its
core strategic objectives by pursuing higher value added business
which will open avenues for growth in the coming twelve months. Our
desire to achieve this strategic repositioning will run in tandem
with adapting and optimising our existing business lines. In
addition, our energy and focus on delivering strategic acquisitions
will, we anticipate, enable us to confirm substantial progress has
been made in this regard during the second half of the current
financial year.
Colin Tucker
Acting Chairman 24 August 2016
zamano plc and subsidiaries
Unaudited condensed consolidated income statement
for the half year ended 30 June 2016
Half year Half year
ended ended
30 June 30 June
2016 2015
Notes EUR'000 EUR'000
Revenue 5 18,748 10,404
Cost of sales (16,417) (7,822)
Gross profit - continuing
activities 2,331 2,582
Other administrative
expenses (including
foreign exchange) (1,310) (1,200)
Depreciation (42) (37)
Amortisation of intangible
assets 10 (183) (183)
---------------------------- ------ ---------- ----------
Total administrative
expenses (1,535) (1,420)
Operating profit 5 796 1,162
Finance income 6 1
Finance expense (8) (17)
Profit before tax 794 1,146
Income tax expense 6 (119) (127)
Profit for the period
- all attributable
to owners of the company 675 1,019
Earnings per share
* basic 7 EUR0.007 EUR0.010
* diluted 7 EUR0.007 EUR0.010
Unaudited condensed consolidated statement of comprehensive
income
for the half year ended 30 June 2016
Half year Half year
ended ended
30 June 30 June
2016 2015
EUR'000 EUR'000
Profit for the half year
period
- all attributable to owners
of the company 675 1,019
Other comprehensive income:
Items that are or may be
reclassified subsequently
to profit and loss
Foreign currency translation
adjustment (49) 10
Total comprehensive income
- all attributable
to owners of the company 626 1,029
zamano plc and subsidiaries
Unaudited condensed consolidated balance sheet
as at 30 June 2016
30 June 31 December 30 June
2016 2015[1] 2015
Notes EUR'000 EUR'000 EUR'000
Assets
Non-current assets
Property, plant and
equipment 12 113 142 111
Intangible assets 11 6,394 6,428 6,457
Deferred tax asset 93 107 107
6,600 6,677 6,675
Current assets
Trade and other receivables 4,793 4,407 3,080
Cash and cash equivalents 7,430 6,322 5,435
12,223 10,729 8,515
______
Total assets 18,823 17,406 15,190
Equity
Share capital 99 99 99
Share premium 13,538 13,538 13,538
Capital conversion
reserve 1 1 1
Foreign currency
translation reserve (109) (60) (54)
Share-based payment
reserve 400 438 400
Retained earnings (1,769) (2,412) (3,532)
Total equity 12,160 11,604 10,452
Current liabilities
Trade and other payables 6,388 5,562 4,154
Loans and borrowings - 71 211
Current tax liabilities 275 169 373
6,663 5,802 4,738
Total liabilities 6,663 5,802 4,738
Total equity and
liabilities 18,823 17,406 15,190
zamano plc and subsidiaries
Unaudited condensed consolidated statement of changes in
equity
for the half year ended 30 June 2016
Capital Foreign Share-based
currency
Share Share conversion Retained translation payment Total
capital premium reserve earnings reserve reserve equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
At 1 January 2016 99 13,538 1 (2,413) (60) 438 11,603
Total comprehensive income
for the period
Profit for the half year
period - - - 675 - - 675
Currency translation adjustment - - - - (49) - (49)
Transactions with owners
of the company
Share based payments expense - - - - - 16 16
Settlement of share options - - - (31) - (54) (85)
At 30 June 2016 99 13,538 1 (1,769) (109) 400 12,160
for the half year ended 30 June 2015
Capital Foreign Share-based
currency
Share Share conversion Retained translation payment Total
capital premium reserve earnings reserve reserve equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
At 1 January 2015 99 13,538 1 (4,551) (64) 362 9,385
Total comprehensive profit
for the period
Profit for the half year
period - - - 1,019 - - 1,019
Currency translation adjustment - - - - 10 - 10
Transactions with owners
of the company
Share based payments expense - - - - - 38 38
At 30 June 2015 99 13,538 1 (3,532) (54) 400 10,452
zamano plc and subsidiaries
Unaudited condensed consolidated cash flow statement
for the half year ended 30 June 2016
Half year Half year
ended ended
30 June 30 June
2016 2015
EUR'000 EUR'000
Cash flows from operating activities
Profit after tax 644 1,019
Adjustments to reconcile profit
before tax for the period
to net cash inflow from operating
activities
Income tax expense 119 127
Depreciation 42 37
Amortisation of intangible assets 183 183
Share-based payments expense 16 38
Foreign exchange movements (16) 12
Increase in trade and other receivables (351) (16)
Increase/(decrease) in trade
and other payables 826 (607)
Finance income (6) (1)
Finance expense 8 17
Cash generated from operations 1,465 809
Finance expense (8) (17)
Income tax (35) -
Net cash inflow from operating
activities 1,422 792
Cash flows from investing activities
Purchase of property, plant and
equipment (14) (22)
Capitalisation of internally
generated intangible assets (150) (150)
Interest received 6 1
Net cash outflow from investing
activities (158) (171)
Cash flows from financing activities
Repayment of loan (71) (136)
Settlement of share options (85) -
Net cash outflow from financing
activities (156) (136)
Net increase in cash and cash
equivalents 1,108 485
Cash and cash equivalents at
1 January 6,322 4,950
Cash and cash equivalents at
30 June 7,430 5,435
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 2016 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
These unaudited half-yearly condensed consolidated financial
statements (the "half-yearly financial statements") have been
prepared in accordance with IAS 34 "Interim Financial Reporting",
as adopted by the EU. They do 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 2015 do not constitute statutory financial statements of
the Group. The consolidated financial statements for the year ended
31 December 2015 are available at www.zamano.com. The auditor's
report on those financial statements was unqualified.
These half-yearly financial statements were approved by the
Board on 24 August 2016 and are available at the Group's website as
noted above.
3 Significant accounting policies - basis of preparation
The accounting policies and methods of computation and
presentation adopted in the preparation of the interim financial
statements are consistent with those applied in the Annual Report
and Accounts for the year ended 31 December 2015 and are described
in those financial statements on pages 17 to 22, except for the
impact of the new standards and policies described below.
The following new and amended standards and interpretations are
effective for the Group for the first time for the financial year
beginning 1 January 2016. None of these had a material impact on
the Group:
-- Defined Benefit Plans: Employee Contributions (Amendments to IAS 19);
-- Annual improvements to IFRSs 2010 - 2012 Cycle;
-- Amendments to IAS 1 Disclosure initiative;
-- Amendments to IAS 16 and IAS 38 Clarification of acceptable
methods of depreciation and amortisation;
-- Amendments to IAS 27 Equity method in Separate Financial Statements;
-- Amendments to IAS 16 Property, Plant and Equipment and IAS 41 Bearer Plants;
-- Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations; and
-- Annual improvements to IFRSs 2012 - 2014 Cycle.
zamano plc and subsidiaries
Notes (continued)
4 New standards and interpretations not yet adopted
A number of new standards, amendments to standards and
interpretations are effective for future annual reporting periods
of the Group, and have not been applied in preparing these interim
financial statements and the Group is currently assessing their
potential impact. The Group does not plan to early-adopt these
standards.
5 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 these
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 5 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.
6 Segment information
The Group is managed based on two reportable segments which are
defined based on geographical markets as follows: Republic of
Ireland (ROI) and United Kingdom (UK). 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.
zamano plc and subsidiaries
Notes (continued)
6 Segment information (continued)
Half year ended 30 June 2016
Other
ROI UK territories Total
EUR'000 EUR'000 EUR'000 EUR'000
Revenue 1,178 16,987 583 18,748
Gross profit 320 1,985 26 2,331
Unallocated expenses
(1) (1,566)
Operating profit 765
Net finance expense (2)
Profit before
tax 763
Income tax (119)
Profit for the
half year period 644
Half year ended Other
30 June 2015
ROI UK territories Total
EUR'000 EUR'000 EUR'000 EUR'000
Revenue 1,656 8,285 463 10,404
Gross profit 527 1,937 117 2,582
Unallocated expenses
(1) (1,420)
Operating profit 1,162
Net finance (16)
Profit before
tax 1,146
Income tax expense (127)
Profit for the
half year period 1,019
(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.
zamano plc and subsidiaries
Notes (continued)
7 Income tax
The major components of the income tax expense in the
half-yearly condensed consolidated income statement are:
Half year Half year
ended ended
30 June 30 June
2016 2015
EUR'000 EUR'000
Irish corporation tax 119 127
8 Earnings per share
Basic earnings per share ("EPS") 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:
Half year Half year
ended ended
30 June 30 June
2016 2015
Basic EPS EUR0.007 EUR0.010
Diluted EPS EUR0.007 EUR0.010
Half year Half year
ended ended
30 June 30 June
2016 2015
EUR'000 EUR'000
Profit attributable to equity
holders of the company 675 1,019
Half year Half year
ended ended
30 June 30 June
2016 2015
000's 000's
Basic weighted average number
of shares 99,451 99,451
Dilutive potential ordinary
shares:
Effects of employee share
options 2,330 2,121
Diluted weighted average
number of shares 101,781 101,572
zamano plc and subsidiaries
Notes (continued)
9 Adjusted earnings per share
The following reflects earnings per share ("EPS") based on
adjusted net income, which is a non-GAAP measure, is as
follows:
Half year Half year
ended ended
30 June 30 June
2016 2015
Adjusted basic EPS EUR0.009 EUR0.012
Adjusted diluted EPS EUR0.009 EUR0.012
Adjusted net income is calculated as:
Half year Half year
ended ended
30 June 30 June
2016 2015
EUR'000 EUR'000
Profit after tax 675 1,019
Share-based payments expense 15 38
Amortisation of intangible
assets 183 183
873 1,240
Reconciliation of reported operating profit to earnings before
interest, tax, depreciation, amortisation and foreign exchange
("Adjusted EBITDA") and share-based payment expense is as
follows:
Half year Half year
ended ended
30 June 30 June
2016 2015
EUR'000 EUR'000
Reported profit before tax 794 1,146
Share-based payment expense 46 38
Depreciation 42 37
Amortisation of intangible
assets 183 183
Foreign exchange 129 (43)
Finance costs 8 17
Finance income (6) (1)
1,196 1,377
zamano plc and subsidiaries
Notes (continued)
10 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 2015. All of the options
granted are deemed to be equity-settled. 4,518,972 share options
were outstanding at 30 June 2016 (6,118,972 - 30 June 2015) of
which 4,518,972 had vested (2015: 200,000). There were no new
options granted during the period (30 June 2015: Nil). The
share-based payments expense for the period was EUR15,866 (2015 -
EUR38,079).
11 Intangible assets
Goodwill Software Other* Total
EUR'000 EUR'000 EUR'000 EUR'000
Cost:
At 1 January
2016 18,735 2,690 5,814 27,239
Additions - 150 - 150
At 30 June 2016 18,735 2,840 5,814 27,389
Amortisation:
At 1 January
2016 12,670 2,328 5,814 20,812
Charge for the
period - 183 - 183
At 30 June 2016 12,670 2,511 5,814 20,995
Carrying value:
At 30 June 2016 6,065 329 - 6,394
At 31 December
2015 6,065 363 - 6,428
At 30 June 2015 6,065 392 - 6,457
* Includes other intangible assets such as databases, content
management systems and web portals which were acquired through
historical acquisitions.
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 the 31 December 2015 financial statements. The directors are
satisfied that the results of the Group for the period to 30 June
2016 are in line with the assumptions applied as at 31 December
2015 and that no other events have occurred in the current period
which would require an impairment test of the goodwill as at 30
June 2016 to be undertaken.
Additions to intangibles for the period to 30 June 2016 were
EUR150,000 (2015: EUR150,000) which relate to internally
capitalised payroll costs on development projects.
zamano plc and subsidiaries
Notes (continued)
12 Property, plant and equipment
Acquisitions and disposals
During the six months ended 30 June 2016, the Group acquired
property, plant and equipment assets with a cost of EUR13,691 (2015
- EUR21,925).
No assets were disposed of by the Group during the six months
ended 30 June 2016 (2015 - Nil).
13 Capital commitments
The Group had no capital commitments at 30 June 2016 (2015:
Nil).
14 Related party transactions
Key management personnel receive compensation in the form of
short-term employee benefits, post-employment benefits and equity
compensation benefits. Key management personnel received total
compensation of EUR348,000 (2015: EUR304,000) for the half year
period ended 30 June 2016, including EUR85,000 in settlement of
outstanding share options owned by the Chief Executive Officer.
Total remuneration is included in other administrative
expenses.
There were no other related party transactions in the period
under review.
15 Post balance sheet events
There are no post balance sheet events that would require
adjustment to or disclosure in these financial statements.
[1] Amounts at 31 December 2015 are derived from the 31 December
2015 audited financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BLGDIGUDBGLS
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