Interim Results for the six month period ended 30 June 2015
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 2015.
Highlights
- Sales of €10.404M which was significantly (19.3%) ahead of the H1 2014 outcome of €8.718M.
- Gross profit for the period of €2.582M which was 8.49% ahead of the corresponding figure in 2014 of €2.380M
- EBITDA of €1.420M which was 16.6% ahead of the H1 2014 EBITDA of €1.218M.
- Profit before tax for the half year at €1.146M was 18.9% ahead of H1 2014 (€0.964M), while profit after tax (despite an increase in tax charges) at €1.019M was 16.7% ahead of the figure of €0.873M achieved in the first half of 2014.
- During the period under review, zamano continued to improve its balance sheet position, with cash of €5.435M at 30 June 2015 (30 June 2014: €2.973M). The net cash position at 30 June 2015 taking account of our current bank loan facility was €5.224M (30 June 2014: €2.493M)
- Ross Conlon CEO of zamano commented: “During H1 2015, zamano commenced a process to gradually overhaul its UK customer acquisition model, which, when concluded, will give us greater in-house capabilities and flexibility in terms of the way we address this market. The overall trading outcome for the business during the period ended 30 June 2015 was highly satisfactory. These positive results are attributable to a strong third party (B2B) sales performance in the UK, an improvement in contribution margins in Ireland and tight cost controls and efficient cash management across the Group”.
Possible Offer Update
On 3 August 2015 the Company announced that it had received a preliminary and highly conditional approach regarding a possible offer for the Company at an offer price of €0.20 per zamano ordinary share and conditional on, amongst other things, confirmatory due diligence. There continues to be no certainty that any offer will be made nor as to the terms of any offer. Further announcements will be made as appropriate and shareholders are advised to take no action for the time being.
zamano plc and subsidiaries
Chief Executive Officer’s Statement
Introduction
zamano plc (“zamano”) today announces its trading results for the six month period ended 30 June 2015.
We are pleased to report sales of €10.404M, which were significantly ahead (by 19.3%) of the sales recorded in H1 2014 of €8.718M. Gross profit for the period of €2.582M was 8.49% ahead of the corresponding figure in 2014 of €2.380M. The gross margin at 24.8% was lower than the H1 2014 gross margin of 27.3%. This was largely attributable to the significant increase in third party sales in the UK during the first half of the year.
The EBITDA[1] outcome for H1 2015 at €1.420M was 16.6% ahead of the EBITDA of €1.218M achieved in H1 2014, whilst cash generated from operations at €0.809M was 57% ahead of the same period last year.
By maintaining administrative expenses at approximately the same level as H1 2014 and benefiting again from lower interest costs, during H1 2015, zamano increased its operating, pre and post tax profits over the same period last year. Operating profits for H1 2015 at €1.162M were 17.3% ahead of H1 2014 (€0.991M). Profit before tax for the half year at €1.146M was 18.9% ahead of H1 2014 (€0.964M), while profit after tax (despite an increase in tax charges) at €1.019M was 16.7% ahead of the figure of €0.873M achieved in the first half of 2014.
During the period under review, zamano continued to improve its balance sheet position, with cash at 30 June 2015 at €5.435M compared to €2.973M at 30 June 2014. The net cash position at 30 June 2015 was €5.224M, compared to an equivalent figure of €2.493M at 30 June 2014.
Market review
UK
Our UK business delivered another strong performance during the period ended 30 June 2015. Sales for the first six months were €8.285M an increase of 29% on the figure of €6.423M recorded during the first half of 2014. This translated into a gross profit contribution of €1.937M, 6.8% ahead of the equivalent figure for H1 2014. The reduction in the gross margin percentage in the UK from 28.2% to 23.4% is mainly attributable to increased third party (B2B) sales during the first half of 2015.
During H1 2015, zamano commenced a process to overhaul its UK customer acquisition model, which, when concluded, will give us greater in-house capabilities and flexibility in terms of the way we address this market.
zamano plc and subsidiaries
Chief Executive Officer’s Statement (continued)
Ireland
Sales in the Irish market during the first half of 2015 were €1.656M, compared to the figure of €1.747M recorded during H1 2014. This reduction of 5.2% was considerably less than the sales decline of 19.8% recorded during the first half of 2014. The actual gross profit contribution of €0.527M was marginally ahead of the H1 2014 figure of €0.508M, while the gross margin percentage achieved of 31.8% was ahead of the 29.1% achieved during the first half of 2014.
The Irish business continues to be impacted by ongoing changes in compliance requirements. Consequently, while Ireland remains an important market for zamano, overall market conditions remain challenging.
Other locations
Our sales during H1 2015 in locations other than UK and Ireland were marginally lower than the same period last year (H1 2015; €0.463M – H1 2014; €0.548M). Australia was the best performer among this grouping during the six months ended 30 June 2015.
Other activities
The Board and management continue to focus on the diversification of the business within the web and mobile commerce sector. During the period under review, zamano explored and examined a number of acquisition, investment and joint venture/licencing opportunities in mobile media, payment/billing and messaging. However, these activities have not yet resulted in a transaction being concluded which meets our acquisition criteria.
Financial review
In the introductory paragraph of this announcement, we referred to the fact that Group sales in H1 2015 were significantly ahead of sales during the first half of 2014. This 19.3% increase in overall sales is primarily due to a significant uplift in third party (B2B) sales in the UK. This considerable increase in sales during the first half of 2015 resulted in an increase in actual gross profit over the same period in 2014 of 8.49%. However, those third party (B2B) sales carry a lower margin, which resulted in a fall in the overall gross margin percentage to 24.8% compared to the 27.3% achieved during the first half of 2014.
The EBITDA outturn for H1 2015 was 16.6% ahead of that achieved in the corresponding period last year. Furthermore, across all other operating metrics, (operating profit, profit before tax and profit after tax) zamano recorded significant double digit increases in performance over the same period in 2014. This H1 2015 outcome is reflective of the strong sales performance and rigid operational management controls which characterise the business.
At balance sheet level, the Group continues to enhance its overall financial position, with gross cash at 30 June 2015 coming in at €5.435M, compared to €2.973M at 30 June 2014. Even when one takes account of zamano’s term loan facility, net cash at 30 June 2015 was €5.224M. These cash balances underpin the Groups financial position and provide it with a “war chest” to pursue product/market development, technology acquisition and M&A activities.
zamano plc and subsidiaries
Chief Executive Officer’s Statement (continued)
Outlook
The overall trading outcome for the business during the period ended 30 June 2015 was highly satisfactory. These positive results are attributable to a strong third party (B2B) sales performance in the UK, an improvement in contribution margins in Ireland and tight cost controls and efficient cash management across the Group.
zamano continues to adapt and modify its product/service offerings in order to meet the requirements of consumers. In this regard, it continues to seek out investment, acquisition and joint venture opportunities to enable it to grow and diversify the business. The Group has market leading capability in data analytics, mobile payments and mobile marketing and will continue to lever this expertise to sustain and develop its operations during the second half of 2015 and beyond.
Full details available on zamano.com