Audioboom Grp. Regulatory News (BOOM)

23 February 2015

Audioboom Group plc

("Audioboom" or the "Company")

Final Results

Audioboom (AIM: BOOM), the leading spoken-word audio on-demand mobile platform, announces its final audited results for the 11 month period ended 30 November 2014, a period of continued growth in its active userbase and content partners, and during which the Company has established a platform for accelerated future growth and long term revenue generation.

Audioboom is a mobile, web and connected device platform which aims to provide the very best spoken-word content in news, current affairs, business, entertainment and sports - see www.audioboom.com. Audioboom is using this platform to create the world's first aggregated audio content syndication and advertising network.

Period-end highlights

· 3.14m registered users, up 64% on same time last year (Nov 2013: 1.92m)

· Over 2,000 content partners (Nov 2013: 297)

· Launch of new free iOS Audioboom app and rebranding as Audioboom

· Media sales partnership with talkSPORT

· Year-end cash balance of £8.9m following oversubscribed placing in October 2014

Post-period highlights

· Major new content deal with Russell Brand and launch of marketing campaign

· Advertising revenues to come from media sales deals with Global Radio (UK) and AdLarge Media (US)

· Revenue referral agreement with Audible, a subsidary of Amazon.com

· Partnership to make on-demand and listen again functionality available to radio stations utilising the Nobex mobile app platform

· Expansion into Africa via mobile content aggregator Cloud Africa

· Continued growth in registered users (to 3.4m) and content partners (to 2,300) in Q1

Rob Proctor, CEO of Audioboom, commented:

"We remain very much on course with our plans to establish a global userbase of listeners who are attracted by our 'go to' destination for spoken-word audio covering sport, news, business, entertainment and current affairs. We believe consumers want a new way to listen to spoken-word audio and that is through digital devices, with content delivered on-demand. The number and range of high quality, global content partners using Audioboom to provide short, snappy, interesting and shareable pieces of audio continues to grow.

At this stage of the business our focus, and the driver of shareholder value, will be through providing the highest quality content and attracting as wide an audience as possible. A platform like this has significant potential for revenue generation through the creation of the first aggregated audio content syndication and ad network based on embedded audio carrying adverts."

Presentations for analysts and investors will take place later today. To register to attend please contact Sam Allen at Walbrook PR on 020 7933 8780 or email: audioboom@walbrookpr.com.

About Audioboom (www.audioboom.com)

Audioboom Group plc is a digital, on-demand, streaming audio platform enabling the creation, broadcast and consumption of audio across multiple global media outlets. Audioboom works with some of the biggest names in broadcasting across sport, entertainment and current affairs to bring their content to millions of listeners worldwide via Facebook, Twitter and other media platforms.

The technology allows partners to embed playlists onto their sites and apps, use our mobile apps and functionality as listen again players and re-syndicate their content around the web.

Audioboom also allows the monetisation of audio via the dynamic insertion of pre and post roll advertising into content as a user is listening, allowing contemporary advertising selection, depending on content genre and geographic location of the user.

Audioboom currently has over 2,300 content partners, including the BBC, Telegraph, Guardian, CBS, Sky Sports, Sky News Radio, Premier League, Southern Cross Austereo, Reuters, CNBC, Universal and Fox.

CEO Statement

I am delighted to provide an overview of trading for the 11 month period ended 30 November 2014 and a summary of our results for that period. These are the first set of final results published since our admission to AIM in May 2014 and already, in a short period of time, we have made a great deal of progress in the business. Audioboom is now well funded for future growth, we have continued to grow our registered user base, as well as rapidly increasing the number of high quality content partners that use our platform. We have executed on our strategy for long term revenue growth through the creation of the world's first aggregated audio content syndication and advertising network.

Strategy and Key Performance Indicators ('KPIs')

The whole Audioboom concept is centred around the increasing consumer demand for a new way to listen to digital audio content. Gone are the days of listening by appointment or consumers sitting through hours of content to pick out the parts they want. What consumers want is to choose the best bits of audio content, from the best content producers, and listen to these in short, snappy and interesting audio pieces that can be easily shared via social media. We have deliberately moved the business away from perceived 'low value' user generated content to a high-quality, professional content provider making Audioboom the 'go to' platform for the best spoken-word audio in the world.

The near term focus of the business has to be the achievement of a critical mass of active registered users and increasing the partnerships we have with the very best audio content providers. As announced in September 2014 we launched our free iOS Audioboom app and have recently released an updated improved version. We expect to launch our new app on Android shortly and to begin our full marketing campaign to encourage the take-up of these apps. As a result, in the current financial year we will focus on driving the number of app downloads.

We believe that the delivery of these KPIs will have a direct impact on our ability to generate significant shareholder value and we have listed them below:

· Number of registered users

· Number of content partners

· Number of app downloads (from 2015)

We intend to update the market on a quarterly basis on these KPIs which will provide a better guide of progress than revenue in the short and medium term.

However, our long term model for the business is to derive advertising revenues by inserting advertisements directly into the content file in-stream as the user is playing it. In addition, we will seek ways to generate additional revenues through affiliate partnerships. In line with expectations, and as we've always made clear, significant revenue generation is a longer term goal, and we expect to report more substantial revenue growth from the third quarter of 2015 onwards.

Operational Review

As mentioned above, this financial period has seen great progress for the Company. In terms of our key performance indicators we have delivered impressive growth over the 12 months to the period end. At the end of November 2014, Audioboom had 3.14m registered users, a 64% increase (as at Nov 2013: 1.92m). The split of "listens" is currently c. 39% UK, 31% USA, 10% Australia and 20% ROW, which reflects the global appeal of Audioboom and the wide spread of content hosted.

At the same time we have increased the number of content partners from 297 by the end of November 2013, to over 2,000 at the period end. As announced through the year, we have signed agreements with a number of major content providers including Essel Group, as well as Sky News Radio, Barclays Bank, Beggars Group, Global Radio Group, Magic FM, Ladbrokes, TIME magazine and Vauxhall Football. These complement our existing agreements with high quality names such as the BBC, Telegraph, Guardian, CBS, Sky Sports, Premier League, Southern Cross Austereo, Reuters, CNBC, Universal and Fox.

In September, we announced the launch of our new free iOS Audioboom app and the rebranding of the business as Audioboom (previously Audioboo). Despite minimal marketing we have already seen the number of app downloads reach over 500,000 to date, ahead of management expectations. The download figures reflect the very early stages of the launch, but we expect these to increase considerably in 2015 following the formal launch of our marketing campaign and also the launch of the Android app, which we expect very shortly.

We announced in July the appointment of talkSPORT Limited as our exclusive UK sales partner for sport related advertising for media campaigns marketed directly to sports fans using the Audioboom platform.

Our expansion plans continue to move ahead with our team in New York growing from one to five people. Last month we opened a new production studio in London where we can create and curate new exclusive content for the platform. The studio will house a five-strong team for news and content creation. We continue to develop a Hispanic version of our app, website and content and look forward to updating shareholders when this is launched.

£8m fundraising to accelerate growth

In October 2014 we announced that we raised £8 million (gross) from new and existing institutional and other shareholders through an equity placing, with Directors themselves subscribing for 820,000 shares. The funds are being used to accelerate the growth of the business as shown in the developments above. The proposed use of funds outlined at the time of the fundraising included:

· global roll-out of the Audioboom app

· acceleration of the expansion of the New York and Australian offices

· development of a Hispanic version of the app to expand into the South and North American markets

· expansion of the content curation team

· creation of an aggregated audio advertising network

All of the above are underway. The cash resources will allow for the on-going running costs and enable the growth of the business until advertising and other revenue becomes significant. Your Board will ensure that expenditure is controlled and well directed.

The business is now well funded and has quickly established itself as one of the UK's largest digital media platforms and we are confident in Audioboom's ability to generate long term value for shareholders.

Financial Results

Due to the acquisition by Audioboom (formerly One Delta plc) of Audioboo Limited, which completed on 20 May 2014, being classed as a reverse acquisition, the comparative numbers in these accounts are those of Audioboo Limited only, which the Directors believe makes a more meaningful and useful comparison. Audioboom's year end is 30 November and so the results cover 11 months whereas the comparative numbers are for the 12 months to 31 December 2013.

During the 11 months to November 2014, Audioboom focused on continuing to grow its registered usersbase and increase the number of content partners using its platform. Therefore, in line with expectations, the Group generated minimal revenues of £51,000 (2013: £45,000) and recorded an adjusted EBITDA loss (adjusted for share based payments and exceptional items) of £2.11m (2013: £1.53m). The total exceptional items of £1.36m consist of a non-cash accounting adjustment of £1.29m and costs of £72,000 (mainly professional fees) recognised in relation to the reverse acquisition of Audioboo Limited.

The Company raised £7.7m net of expenses in October 2014 through an equity placing to fund the accelerated growth of the business. Whilst cash controls remain tight within the business, the Company will use these funds to invest in future growth and as a result net cash used in operating activites increased to £2.38m (2013: £1.49m). Audioboom finished the period well funded with cash reserves of £8.87m (as at 31 December 2013: £0.02m).

A more detailed review and explanation of certain of these items in included in the Financial Review section which follows this Report.

Board and Management

Following the reverse acquisition, re-admission to AIM and the successful fundraise at the end of the period a number of Board changes took place to provide the Executive team with the advice and support needed to take Audioboom to the next level. In October 2014, the Board appointed both Malcolm Wall, as non-executive Chairman, and Jason Mackay, as a non-executive Director. Malcolm's background in global media, digital and technology will be very helpful, as will his plc and corporate governance experience, and Jason Mackay has extensive experience in the financial markets including 11 years at UBS and Morgan Stanley and most recently as a Managing Director in Morgan Stanley's equity business.

At the same time Roger Maddock stood down from his role as Chairman, although he remains on the Board as a non-executive Director, and Rodger Sargent stood down from the Board. In addition, following a successful transition to the new non-executive Directors, Brian Southward also stood down. On behalf of the Board I would like to thank Rodger and Brian for their contribution and I know they remain firm supporters of the business. We also added Michael Cooper to the Board as a non-executive Director in June 2014 and we are very pleased to have his insights from the world of global media planning and buying.

To further augment our Executive team, the Board is in the process of recruiting a Chief Financial Officer and we will update shareholders when this process concludes.

Post-period end events

Our focus on revenue generation in 2015 and the establishment of the world's only aggregated audio content syndication and advertising network was reinforced by the completion of two media sales deals with Global Radio in the UK and AdLarge Media in the US. These deals complement the existing relationship with talkSPORT that we announced last year. Global Radio will directly represent Audioboom's inventory across news, current affairs, politics and business, to all of the major media planning and buying agencies in the UK. AdLarge Media will connect national advertisers with consumers on nationally distributed audio-on-demand inventory via the Audioboom platform. The development of these commercial relationships has been encouraging and we expect to see the first campaigns launch either side of the Atlantic in the first half of the current financial year.

Following the year end we announced a number of deals that will generate revenues through affiliate partnerships. The first of these was Audible, a subsidiary of Amazon.com, with over 1,500,000 hours of content, including digital audiobooks and audio versions of magazines and newspapers. Audioboom will receive a payment for every user that registers with Audible having listened to a free sample of an audiobook on Audioboom, as well as an on-going percentage of retail sales from that user.

In addition, we announced two deals last month which also have the potential to generate long-term revenues for the Company. The partnership agreement with Nobex will allow 20,000 radio stations in the United States, and 75 other countries around the world, to make on-demand and listen-again audio content available via the Nobex mobile app platform. Whilst Audioboom will pay Nobex a referral fee for every radio station that opens an Audioboom account, revenues are likely to be generated through display and audio ads inserted around on-demand plays. Once the referral fee has been recouped, Nobex will pay Audioboom a fixed percentage of revenues generated through the on-demand audio usage via the Nobex app.

Our other agreement was with African mobile content aggregator Cloud Africa and this will see the Audioboom app either pre-loaded onto new handsets, or offered to current mobile contract users as a branded service with revenues shared from data package purchases to use the service as well as other advertising and branding opportunites.

Outlook

I am delighted to report that along with the news mentioned above we have had a very successful start to 2015 and continue to trade in line with expectations. Already this year the number of registered users has risen to c. 3.4m and we have now have over 2,300 content partners. 

We believe that Audioboom is ideally positioned to benefit from the growth in digital audio content and demand for radio-like streaming services and that our establishment of an aggregated audio content syndication and advertising network, as well as the deals with affiliate partnerships, will generate robust long-term revenues.

We continue to attract premium and household names to our platfom by actively building our content partnerships and are determined to become the world's 'go-to' online destination for audio dedicated to the spoken-word. We expect to announce a number of new agreements throughout the year with a number of high profile brands to provide even more exciting audio content for our users.

Today's announcement of a major new content deal with alternative celebrity, comedian and political activist Russell Brand illustrates our commitment to producing unique, compelling, bite-sized audio content available exclusively on the Audioboom platform. This will be launched in tandem with a proactive marketing campaign headed up by Russell Brand himself. We expect this marketing push to significantly increase Audioboom's profile and to have a positive impact on the number of app downloads and registered users, as will the launch of our new app for Android devices which we expect very shortly.

Finally, I would like to put on record my thanks to our shareholders and our staff for their support over the period and look forward to the future with great optimism. I have every confidence that we will make Audioboom a global success and I look forward to updating shareholders as we progress.

Rob Proctor

CEO

20 February 2015

Financial Review

This review covers the consolidated results of Audioboom Group plc (formerly One Delta plc), which went through a reverse acquisition with Audioboom Limited (formerly Audioboo Limited) on 20 May 2014. The Statement of Comprehensive Income consists of 11 months of Audioboom Limited, from 1 January 2014, and 6 months and 11 days of Audioboom Group plc, from 20 May 2014. The comparative 2013 figures are for Audioboom Limited only.

In the period to 30 November 2014, Audioboom revenues increased by 13% to £51,000 (2013: £45,000), mainly driven by an increase in advertising revenues which grew to £25,000 (2013: £2,000). Subscription revenues fell to £22,000 (2013: £39,000) as the Group moved its strategy away from user generated content to forming relationships with content partners. Gross profit increased by 48% to £44,000 (2013: £29,000), as the result of higher cost of sales in 2013 as the Group incurred costs seeking new revenue streams. Underlying administrative expenses increased by 37% to £2.16m (2013: £1.58m) as the business continued to implement its growth strategy, together with the additional corporate and governance costs of being a company whose shares are traded on AIM.

Adjusted results

Adjusted EBITDA (which excludes share based payment charges, taxation, depreciation of tangible assets, amortisation of intangible assets and exceptional items) showed a loss of £2.11m (2013: loss of £1.53m). The pre-exceptional operating loss widened by 36% to £2.12m (2013: loss of £1.55m).

Adjusting and exceptional items

The Group took a charge of £413,000 (2013: £nil) which related to share based payments including the issue of shares, options and warrants to directors and employees. The Group had exceptional items of £1.36m during the period: adjustment on acquisition of £1.29m and costs of £72,000 (mainly professional fees) were recognised in relation to the acquisition of Audioboom Limited. There were no exceptional items in the year to 31 December 2013.

Statutory result

A reconciliation of the statutory loss for the period of £3.83m (2013: £1.49m loss) to the pre-exceptional operating loss and pre-exceptional EBITDA is shown below:

Reported earnings per share showed a loss of 1.17 pence per share (2013: loss of 0.85 pence).

Cash and cash flow

In the 11 months to 30 November 2014 the Group had a cash inflow of £8.86m (2013: £230,000 outflow) including a cash outflow of £2.43m from operating activities (2013: £1.56m outflow). £3.19m was generated from investing activities (2013: £4,000 outflow). £150,000 was received as a loan (2013: £501,000 convertible loan), and the Group received a total of £7.9m from the issue of shares (2013: £765,000). At 30 November 2014, the Group had cash in the bank of £8.87m (2013: £22,000).

Dividend

Due to the Group being in the startup phase, the Board of Directors have decided not to pay an interim or final 2014 dividend (2013: £nil) and to use the cash to continue with the growth strategy.

ON BEHALF OF THE BOARD

Rob Proctor

Chief Executive Officer

20 February 2015

Audioboom Group plc

Consolidated statement of comprehensive income

(1) For treatment of restated 2013 figures, refer to Note 1

Audioboom Group plc

Consolidated statement of financial position

Audioboom Group plc

Consolidated cash flow statement

Audioboom Group plc

Consolidated statement of changes in equity

Audioboom Group plc

Notes to the financial statements

1. General information and basis of preparation

Audioboom Group plc is incorporated in Jersey under the Companies (Jersey) Law 1991. The company's shares are traded on the Alternative Investment Market of the London Stock Exchange ("AIM").

The Group prepares its consolidated financial statements in accordance with International Accounting Standards ("IAS") and International Financial Reporting Standards ("IFRS") as adopted by the EU. The consolidated financial statements have been prepared in accordance with and in compliance with the Companies (Jersey) Law 1991 and were approved by the Board on 20 February 2015. The preparation of financial statements in accordance with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.

The consolidated financial statements are for the eleven months to 30 November 2014. During the period Audioboom Group plc (formerly One Delta plc) completed the acquisition of Audioboo Limited. The directors determined that the transaction was akin to a reverse acquisition as per IFRS 3, Business Combinations. However, in order to fall under the category of a Business Combination under IFRS3, the purchase needs to be of a business. The directors have determined that One Delta plc did not consitute a business.Therefore the transaction did not appear to fall under the scope of IFRS3.

In the absence of a Standard that specifically applies to this transaction the Interpretations Committee observed in their IFRIC of March 2013 that such transactions have some features of a reverse acquisition under IFRS 3. Consequently, it is appropriate to apply by analogy, in accordance with paragraphs 10-12 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, the guidance in paragraphs B19-B27 of IFRS 3 for reverse acquisitions. Application of the reverse acquisitions guidance by analogy results in the non-listed operating entity being identified as the accounting acquirer, and the listed non-operating entity being identified as the accounting acquiree. The Interpretations Committee noted that in applying the reverse acquisition guidance in paragraph B20 of IFRS 3 by analogy, the accounting acquirer is deemed to have issued shares to obtain control of the acquiree. Therefore for accounting purposes Audioboom Limited should account as if it purchased Audioboom Group plc (formerly One Delta plc). However, as no business has been acquired, any difference between the fair value of the assets acquired and the fair value of the shares issued should not be recognised as goodwill, but should be written off to the income statement, in accordance with IFRS 3.

Therefore the results contained herein treat Audioboom Limited as the acquiring company and the historical comparatives are the comparatives of Audioboom Limited, rather than of Audioboom Group plc. Audioboom Limited had a 31 December year end whereas Audioboom Group plc, and now Audioboom Limited, have a 30 November year end. Consequently, the Statement of Comprehensive Income consists of 11 months of Audioboom Limited, from 1 January 2014, and 6 months and 11 days of Audioboom Group plc, from 20 May 2014.

The accounting policies used in completing this financial information have been consistently applied in all periods shown.

Going concern

During the year One Delta plc completed the reverse acquisition of Audioboom Limited and the Group was renamed Audioboom Group plc. As part of this process the listed company had completed a subscription on 17 March 2014 which raised a total of £3.49 million. Following the transaction the Group raised a further £8.00 million on 1 October 2014 to fund the combined business and to support the growth strategy. The directors note that the business is at an early stage of development which requires investment. This new funding means that the business has a strong balance sheet and funding position going forward.

The Board has concluded that no matters have come to its attention which suggest that the Group will not be able to maintain its current terms of trade with customers and suppliers. The Group's forecasts for the combined Group, including due consideration of the continued operating losses of the Group, and projections, taking account of reasonably possible changes in trading performance, indicate that the Group has sufficient cash available to continue in operational existence throughout the forecast period and beyond. The Board has considered various alternative operating strategies should these be necessary and are satisfied that revised operating strategies could be adopted if and when necessary. As a consequence, the Board believes that the Group is well placed to manage its business risks, and longer term strategic objectives, successfully. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.

2. Revenue

Geographical information

The Group's operations are located in the United Kingdom. The main assets of the Group, cash and cash equivalents, are held in Jersey.

The Group currently has one reportable segment - provision of services - and categorises all revenue from operations to the segment.

The Group's revenue from external customers by geographical location is detailed below:

3. Acquisition

On 20 May 2014, One Delta plc acquired Audioboo Limited, and subsequently changed its name to Audioboom Group plc. On a legal basis the transaction was an acquisition by Audioboom Group plc (formerly One Delta plc) of Audioboo Limited. However, from an accounting and AIM Rules basis, the transaction was a reverse acquisition.

The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in the table below:

The consideration of £4.29 million was deemed to have been satisfied by the issue of 285,974,355 ordinary shares of Audioboom Group plc at a deemed value of £0.015 per share. The difference between the total consideration and the fair value of the assets purchased was taken to the statement of comprehensive income and has been classified as an exceptional item. The directors believe that this value, if it had been allowable to be capitalised as a goodwill balance under IFRS, would have represented the goodwill relating to the AIM listing of One Delta plc. The acquisition of the subsidiary recognised in the cash flow is in respect to the cash acquired along with the cancellation of a £150,000 pre-acquisition loan between One Delta plc and Audioboo Limited. The Group incurred costs related to the acquisition which have been classified as exceptional due to the size and one-off nature of these costs.

4. Staff costs

5. Loss per share

Basic earnings per share is calculated by dividing the loss attributable to shareholders by the weighted average number of ordinary shares in issue during the period.

IAS 33 requires presentation of diluted EPS when a company could be called upon to issue shares that would decrease earnings per share, or increase the loss per share. For a loss-making company with outstanding share options, net loss per share would be decreased by the exercise of options. Therefore, as per IAS33:36 the antidilutive potential ordinary shares are disregarded in the calculation of diluted EPS.

The 2013 calcuation of EPS has been restated.

Reconciliation of the loss and weighted average number of shares used in the calculation are set out below:

6. Share-based payments

The Company has share option schemes for employees of the Group. Details of the share options granted during the year are as follows:

Equity-settled shares relate to annual director fees. Due to the timing of the issue of shares as compared to the period of service the actual shares issued in the period do not equate to the charge taken in the accounts, with some amounts being accrued as shares to be issued (£5,000) and some amounts prepaid for future director services (£46,000). The total value of equity issued to directors was £141,000.

The Group currently have outstanding share warrants for a total of 25,348,384 shares with weighted average exercise price of 4.2p. 344,688 of the warrants were exercisable at period end, and the balance will become exercisable within 1 year.

Total number of instruments over equity (including both share options and warrants) outstanding at period end was 57,584,249 of which 344,688 were exercisable.