28 Sep 2007 16:20
YooMedia plc
Interim report for the six months to 30 June 2007
YooMedia plc ("YooMedia" or "the Company"), the AIM-traded interactive media and games group announces results for the six months to 30 June 2007. The results reflect a period of restructuring and repositioning across the business. Significant improvements in operating margins and reduction of losses have been achieved during a period of rapid market changes.
HIGHLIGHTS
* The loss for the period fell to ‚£3.1m (H1 2006: ‚£4.9m) * Admin expenses reduced by 18% and interest payable cut by 43% * Continued margin growth in Games & Gambling
Post period end
* Significant headway made in the high value car parking market * Agreement to provide services announced with Meteor Parking Ltd * Remote Gaming Licence awarded
Neil MacDonald, Managing Director, Commented:
"YooMedia continues to explore opportunities in the interactive gaming sector and for its dedicated transaction services and we anticipate further positive news in the coming months. During a period of major change in the broadcast sector we have continued with the transformation of YooMedia into a leading provider of interactive transaction based products and services."
28 September 2007Enquiries:YooMedia PLC +44 (0) 207 462 0870 Neil MacDonald, Managing Director Nexus Financial Ltd +44 (0) 207451 7068 Nicholas Nelson/Kathy Boate Nicholas.nelson@nexusgroup.co.uk Seymour Pierce Limited +44 (0) 207 107 8000 Mark Percy Chairman's Statement
In the final results last June, the Company reported a period of restructuring and repositioning resulting in a streamlining of operations and the resulting margin benefits which were expected to surface in the current period. Today's results demonstrate that our margin expectations are being fulfilled.
As shareholders will be aware, the sector within which we operate has been subjected to major challenges. Whilst there is confidence that these are now largely behind us it will take time to make up for delays on project launch dates by broadcasters, programme makers and network operators. It has been a period of intense negotiations which has led to significant agreements announced in the few months subsequent to the period end and touched upon below.
Results Summary
Revenue has declined slightly to ‚£26.1m (H1 2006: ‚£31.2m) reflecting the change to becoming a service provider rather than operating own brand services in the Games & Gambling division. Difficult market conditions in the Interactive Services division as the industry faces the repercussions of the high profile issues raised earlier in 2007 have also impacted revenue growth.
The total loss for the period has fallen to ‚£3.1m (H1 2006: ‚£4.9m) and losses before interest, tax, depreciation and amortisation reduced to ‚£1.5m (H1 2006: ‚£2.2m). Administrative expenses were reduced by 18% to ‚£4.2m (H1 2006: ‚£5.1m). Management expect this trend to continue for the full year. In 2006 the Company decided to switch much of its expensive debt to cheaper equity. This has reduced the interest payable by 43% to ‚£0.58m (H1 2006: ‚£1.02m). These cost cutting measures leave the Company well positioned to create future profits for shareholders.
Gross profit margins have improved through the focus on interactive gaming and transaction services.
Games & Gambling
Gross revenue fell to ‚£21.6m (H1 2006: ‚£24.7m) although Gross profit increased by 28% to ‚£0.9m (H1 2006: ‚£0.7m) as a result of the Company's strategic move towards supplying other brand owners rather than operating own branded services. The Company is currently negotiating a number of new contracts driven by the liberalisation of television marketing for the games and gambling sector brought in by the 2007 Gambling Act.
In order to take advantage of this favourable change, the Company has moved decisively to transition the business towards a business-to-business model. Further news will be announced in the coming weeks.
YooMedia's gambling subsidiary, The Gaming Channel Ltd, is one of the first companies in the UK to have been awarded a Remote Gaming Licence by the Gambling Commission.
Interactive Services
Gross profit in the Interactive Services division has increased to ‚£1.4m (H1 2006: ‚£1.2m). This in part is due to significant headway made in positioning its remote payment services towards the high value car parking market. The result was an agreement announced in August 2007, with Meteor Parking Limited, a subsidiary of the GoAhead Group Plc and Britain's third largest car parks company. The aim of the agreement was to enable motorists to dispense with the tradition of feeding car park machines with coins. Instead payment can be tendered using an Interactive Voice Response (IVR) system without any requirement for prior registration or, if preferred, via mobile phone text messaging (for those who choose to register).
The Directors believe that car parking provides, potentially, a rich source of income to the business and believe that a growing number of car park operators will view YooPark as the most efficient way for customers to pay for their parking.
Further new interactive products and services have been introduced and are expected to start contributing to revenues before the end of the year. These include interactive kiosks which provide a point of fulfilment for consumers who interact with advertising and promotion via their mobile phones such as the pilot scheme run for L'Oreal during the period.
The broadcast sector was beset with problems relating to premium rate telephony participation by viewers and this has had the effect of temporarily depressing interactive activity by broadcasters and programmers. Whilst YooMedia is not a provider of these services, the fall out has effected new business growth in this sector. The new products and revenue streams coming online this year will offset any further impact from these events.
Dating
Net revenue in the Dating business line has decreased to ‚£0.7m (H1 2006: ‚£ 1.87m). As previously announced, dating is non-core to the Company's strategic aims and the business trading as Avenues has been closed and the disposal of the Dateline business is anticipated in the near future. This will leave YooMedia better placed to continue improving the commercial activities of its more profitable, higher margin products.
Financial Reporting
In line with new reporting requirements for AIM-listed companies, a review has been conducted for the transition from UK GAAP to IFRS accounting standards, the impact of which is detailed in the Transition Statement released earlier today. This statement includes an increase in net assets at 31st December 2006 of ‚£1.5m and a reduction in the retained loss for the year ended 31 December 2006 of ‚£0.1m.
Post period end negotiations
In July we announced that a Spanish investment group called Kasei 2000 has been granted an option to acquire the Company's subsidiary, The Gaming Channel Ltd for a consideration of ‚£5.25m. Following on from this, on 19th September 2007 the Company announced that the duration of the option had been extended to allow for a continuation in our negotiations with Kasei 2000 which has expressed interest in gaining a wider holding in the Company which may, if concluded, result in their becoming involved in the Group as a whole.
Outlook
YooMedia continues to explore opportunities in the interactive gaming, remote payments, advertising and promotion sectors for its dedicated transaction services and we anticipate further positive news in the coming months. With the discussions underway with the Spanish investment group the Directors believe that YooMedia will be able to provide sufficient resources to support the growth of the business.
Consolidated income statement for the six months to 30 June 2007
Note Six months Six months Year ended ended ended 31 December 30 June 2007 30 June 2006 2006 (Unaudited) (Unaudited) (Unaudited) ‚£000's ‚£000's ‚£000's Revenue 26,054 31,233 62,586 Cost of sales (23,429) (28,352) (54,171) Gross profit 2,625 2,881 8,415 Administrative costs (4,164) (5,073) (9,258) Loss before interest, tax, (1,539) (2,192) (843)Depreciation, amortisation and Exceptionals Depreciation (342) (817) (1,276) Amortisation of and impairment of (448) (625) (1,296)intangibles Impairment of goodwill - - (16,383) Provision for bad debts - - (637) Restructuring costs (54) (2,988) Share-based payment charges (187) (254) (539) Total depreciation, amortisation (1,031) (1,696) (23,119)and exceptionals Total administrative costs (5,195) (6,769) (32,377) Operating loss (2,570) (3,888) (23,962) Finance income 4 1 3 Finance expense (583) (1,023) (1,411) Loss on ordinary activities (3,149) (4,910) (25,370)before taxation Taxation - - - Loss for the financial period (3,149) (4,910) (25,370) Loss per share - basic & diluted 4 (0.41p) (0.94p) (4.36p)
There were no other gains or losses recognised in the period.
There is no difference between the loss on ordinary activities before taxation and the loss for the periods stated above, and their historical cost equivalents.
Consolidated balance sheet as at 30 June 2007
Note 30 June 30 June 31 Dec 2007 2006 2006 (Unaudited) (Unaudited) (Unaudited) ‚£000's ‚£000's ‚£000's Non-current assets Goodwill 25,520 43,930 25,521 Intangible assets 1,335 1,886 1,378 Property, plant and equipment 1,803 3,014 2,123 Investments 18 1,493 18 Total non-current assets 28,676 50,323 29,040 Trade and other receivables 5,896 7,767 6,591 Cash and cash equivalents 102 401 139 Current assets 5,998 8,168 6,730 Total assets 34,674 58,491 35,770 Trade and other payables (10,101) (14,763) (9,536) Provisions (26) (52) (23) Current liabilities (10,127) (14,815) (9,559) Net current liabilities (4,129) (6,647) (2,829) Total assets less current liabilities 24,547 43,676 26,211 Interest bearing loans and borrowings (5,684) (6,483) (5,518) Provisions for liabilities (999) (869) (348) Accruals and deferred income (1,736) (1,977) (2,512) Non-current liabilities (8.419) (9,329) (8,378) Total liabilities (18,546) (24,144) (17,937) Net Assets 16,128 34,347 17,833 Capital and reserves Issued Capital 6 15,156 12,482 13,878 Shares to be Issued 281 281 281 Share Premium 78,735 76,490 78,755 Other Reserves 2,065 1,592 1,877 Retained Earnings (80,109) (56,498) (76,958) Equity shareholders' funds 5 16,128 34,347 17,833
Consolidated statement of cash flows six months to 30 June 2007
6 months 6 months Year ended ended ended 30 June 07 30 June 31 Dec 2006 2006 (Unaudited) (Unaudited) (Unaudited) ‚£000's ‚£000's ‚£000's Cash flows from operating activities Loss for the period (3,149) (4,910) (25,370) Depreciation of property, plant and 342 817 1,276equipment Amortisation and impairment of 448 625 17,679goodwill and intangible assets Share-based payment charges 188 254 539 Net finance costs 579 1,022 1,408 Cash flow relating to restructuring - - 2,988provisions Operating cash flows before movements (1,593) (2,192) (1,480)in working capital Change in receivables 695 (133) 1,398 Change in payables 472 153 (212) Cash generated by operations (426) (2,172) (294) Interest and similar expenses paid (29) (991) (1,004) Net cash from operating activities (455) (3,163) (1,298) Cash flows from investing activities Interest and similar income received 4 1 3 Acquisition of subsidiary, net of - (5) (357)overdrafts Assets in the course of construction - - (360) Acquisition of property, plant and (21) (1,095) (664)equipment Acquisition of other intangible (405) (536) (705)assets Net cash used in investing activities (422) (1,635) (2,083) Cash flows from financing activities Proceeds from issue of share capital 721 1,695 2,008 New loans acquired 250 6,000 6,000 Repayment of Loans - (1,000) (1,000) Repayment of Capital Element of (131) (59) (117)Finance Leases Net cash used in financing activities 840 6,636 6,891 Net (decrease)/increase in cash and (37) 1,838 3,510cash equivalents Opening cash and cash equivalents 139 (3,371) (3,371) Closing cash and cash equivalents 102 (1,533) 139
Notes to the Accounts
1. Going concern
During the 6 months ended 30 June 2007, the Group recorded a loss before interest, tax, depreciation, amortisation and exceptionals of ‚£1.5 million and a net loss of ‚£3.1 million, and at 30 June 2007 the Group had net current liabilities of ‚£4.1 million. Net cash outflow from operations in the period was ‚£0.4 million.
During 2007 the directors have raised ‚£650,000 from draw downs of the existing convertible debt facility and it has also raised ‚£1,638,000 through share placings. Additionally, the Group has a ‚£0.85 million undrawn facility remaining on convertible debt of ‚£7.5 million. On 2 July 2007 the Company entered into an option agreement with a Spanish investment group, Kasei 2000, to dispose of the Company's subsidiary The Gaming Channel Ltd for ‚£5.25 million. Subsequent to this agreement wider discussions have been taking place which have led to Kasei 2000 indicating their intention to invest into the Group as a whole which the Directors believe would be sufficient to fund the Group's working capital requirements for at least the next twelve months.
Consequently, the directors consider that it is appropriate to prepare the accounts on the going concern basis. However, the directors recognise that there will remain a material uncertainty over the Group's ability to realise future profitability and positive cash flows until the Group has established a track record of profitable trading, cash generation and meeting its working capital projections.
There is, therefore, material uncertainty related to the above events and conditions which may cast significant doubt on the entity's ability to continue as a going concern and it may be unable to realise its assets and discharge its liabilities in the normal course of business.
2. Accounting policies
The accounting policies set out below, have, unless otherwise stated, been applied consistently to all periods presented in these Group financial statements and in preparing an opening IFRS balance sheet at 1 January 2006.
These interim results are unaudited and do not constitute statutory accounts.
Basis of Preparation
The financial statements are presented in sterling, rounded to the nearest thousand unless otherwise stated. The consolidated financial statements of YooMedia Plc have been prepared in accordance with International Financial Reporting Standards as adopted by the EU ('adopted IFRS').
The unaudited financial information presented in this document has been prepared on the basis of the expected accounting policies which the Group will comply with in the accounts to 31 December 2007 and on the basis of all International Financial Reporting Standards ('IFRS'), including International Accounting Standards ('IAS') and interpretations issued by the International Accounting Standards Board ('IASB') and its committees, as adopted by the EU. These are subject to ongoing amendment by the IASB and subsequent endorsement by the European Commission and are therefore subject to possible change. As a result, information contained within this release will require updating for any subsequent amendment to IFRS required for first time adoption or those new standards that the Group may elect to adopt early.
The financial statements have been prepared in accordance with applicable accounting standards, and under the historical cost accounting rules, except for derivative financial instruments which are stated at their fair value, and non-current assets and disposal groups held for sale which are stated at the lower of previous carrying value and fair value less costs to sell.
Basis of consolidation
The Group financial statements consolidate the financial statements of YooMedia plc and its subsidiary undertakings drawn up to 30 June 2007. No profit and loss account is presented for YooMedia plc as permitted by section 230 of the Companies Act 1985.
The subsidiaries have been included within the Group financial statements using the acquisition method of accounting. Accordingly the Group profit and loss account and Group cash flow statement includes the results and cash flows of the subsidiaries from the dates of acquisition up to 30 June 2007.
Subsidiaries
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The results of subsidiaries are included in the Group income statement from the date of acquisition, or in the case of disposals, up to the effective date of disposal. Inter-company transactions and balances between Group companies are eliminated upon consolidation.
Goodwill
Goodwill represents the difference between the cost of acquisition of a business and the fair value of identifiable assets, liabilities and contingent liabilities acquired. Identifiable intangibles are those which can be sold separately or which arise from legal rights regardless of whether those rights are separable. Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash generating units and is tested annually for impairment. Any impairment is recognised immediately in profit or loss and is not subsequently reversed.
Intangible assets
Intangible assets acquired by the Group are stated at cost less accumulated amortisation and impairment losses. Intangible assets are amortised on a straight-line basis over their useful lives in accordance with IAS 38 'Intangible Assets'.
Assets are not re-valued. The amortisation period and method are reviewed at each financial year end and are changed in accordance with IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors' if this is considered necessary.
Externally acquired computer software which is not integral to a related item of hardware is included in intangible assets and amortised over its estimated useful life of 2 years.
Costs relating to development of computer software for internal use are capitalised once the recognition criteria are met. These development costs are included within intangible fixed assets. Development costs are capitalised in accordance with IAS 38 if the directors are satisfied that the asset can be used or sold to generate a future economic for the group and that that benefit can be reliably measured. A project will be capitalised either on completion or at a particular point in development where there exists an intention and the technical feasibility for the project to be completed.
The policy of the Group is to amortise these capitalised development costs over their useful economic lives which is expected to be between one and three years. These costs are expensed through the profit and loss account. In addition to this an annual impairment review is also carried out in accordance with IAS 36 and any impairment costs, if required, are also expensed.
Research costs are not capitalised but expensed to the profit and loss account as incurred.
Tangible fixed assets
Tangible fixed assets are stated at cost net of depreciation and any provision for impairment. Depreciation is calculated so as to write off the cost of fixed assets, less their estimated residual values, on a straight-line basis over the expected useful economic lives of the assets concerned. The principal annual rates used for this purpose are:
Computer equipment 33%Office equipment 33%Fixtures and fittings 33%Short-leasehold improvements 20%Deferred taxation
The charge for taxation is based on the loss for the year and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more, or a right to pay less, tax in the future have occurred at the balance sheet date, except that deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.
Deferred tax is measured on a non-discounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
Finance leases
Assets funded through finance leases are capitalised as property, plant and equipment and depreciated over their estimated useful lives or the lease term, whichever is shorter. The amount capitalised is the lower of the fair value of the asset or the present value of the minimum lease payments during the lease term at the inception of the lease. The resulting lease obligations are included in liabilities net of finance charges. Finance costs on finance leases are charged directly to the income statement.
Share based payments
The Company has adopted IFRS 2 `Share-based Payment' in the year. Under IFRS 2 the Company charges the profit and loss account with the fair value of the options issued. The fair value is calculated using the Black-Scholes method, which is spread over the vesting period allowing for expected lapses.
Compound financial instruments
Compound financial instruments comprise both liability and equity components. At issue date, the fair value of the liability component is estimated by discounting its future cash flows at an interest rate that would have been payable on a similar debt instrument without any equity conversion option. The liability component is accounted for as a financial liability.
The difference between the net issue proceeds and the liability component, at the time of issue, is the residual or equity component, which is accounted for as an equity instrument.
Transaction costs that relate to the issue of a compound financial instrument are allocated to the liability and equity components of the instrument in proportion to the allocation of the proceeds.
The interest expense on the liability component is calculated by applying the effective interest rate for the liability component of the instrument. The difference between any repayments and the interest expense is deducted from the carrying amount of the liability.
Financial liabilities
Interest-bearing bank loans and overdrafts are recorded initially at fair value, which is generally the proceeds received, net of direct issue costs. Subsequently, these liabilities are held at amortised cost using the effective interest method.
Finance charges, including premiums payable on settlement or redemption and direct issue costs are accounted for on an accrual basis to the income statement using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
Foreign currency transactions
Transactions denominated in foreign currencies are translated at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement.
Revenue
Revenue consists of sales from interactive media services and dating services and is recognised as these services are provided or in accordance with the contract. Revenue is recognised when the significant risks and rewards of products and services have been passed to the buyer and can be measured reliably.
Gaming revenues, where the Company holds a gaming licence, are recognised on a gross basis and winnings are recognised as a cost of sale. All revenue is generated in the United Kingdom.
3. Segmental information
A segment is a distinguishable component of the Group that is engaged in providing products or services within a particular economic environment. The principal activities of the Group are divided into the following business segments; games and gambling, dating and interactive services. These segments are the basis on which the management analyses Group's performance. The operations of the Group are based in the UK and as a consequence, the Group has only one business segment and no secondary segment disclosure has been made.
Six months Six months Year ended ended ended 30 June 2007 30 June 2006 31 Dec 2006 ‚£'000 ‚£'000 ‚£'000 Segment Revenue Games and gambling 21,578 24,784 50,690 Interactive services 3,815 4,515 8,996 Dating 661 1,934 2,900 Consolidated revenue 26,054 31,233 62,586 Gross profit Games and gambling 883 723 2,307 Interactive services 1,413 1,235 4,702 Dating 329 923 1,406 Consolidated 2,625 2,881 8,415 Segment result for period Games and gambling 623 265 1,901 Interactive services 458 (858) 870 Dating (242) (405) (709) Unallocated central costs (3,988) (3,912) (27,432) Consolidated loss for the period (3,149) (4,910) (25,370)
There is no significant inter-segment revenue included in neither of the segments which is required to be eliminated.
4. Loss per share
The basic loss per share for the six months ending 30 June 2007 of 0.41p has been calculated by dividing the net loss for the period of ‚£3.149m (2006: ‚£ 25.37m) by the weighted average number of 766,356,541 shares in issue during the period (2006: 581,251,181). The Company has potentially dilutive ordinary shares being share options issued to staff and shares contracted to be issued.
For the periods ended 30 June 2007, 31 December 2006 and 30 June 2006 the diluted loss and earnings per share is calculated on the same basis as basic loss and earnings per share because the effect of the potential ordinary shares reduces the net loss per share and is therefore anti-dilutive.
The deferred shares are not included in the earnings per share or diluted earnings per share. These shares have no voting rights and are non-convertible and therefore do not form part of the ordinary share capital used for the loss per share calculation.
5. Reconciliation of movement in shareholders' funds
Six months Six months Year ended ended ended 30 June 2007 30 June 2006 31 Dec 2006 ‚£'000 ‚£'000 ‚£'000 Loss for the period (3,149) (4,910) (25,370) New shares issued 1,257 1,391 5,052 Additions to Capital reserves 187 629 914 Minority Interest - (357) (357) Net reduction in shareholder funds (1,705) (3,247) (19,761) Opening shareholders funds 17,833 37,594 37,594 Closing shareholder funds 16,128 34,347 17,8336. Share Capital 30 June 07 30 June 07 31 Dec 2006 31 Dec 2006 No. ‚£ No. ‚£ Authorised Ordinary shares of 1p each 1,200,000,000 12,000,000 1,200,000,000 12,000,000 Deferred shares of 1p each 900,000,000 9,000,000 900,000,000 9,000,000 Total 2,100,000,000 21,000,000 2,100,000,000 21,000,000 Allotted, called up and fully paid Ordinary shares of 1p each 824,742,053 8,247,421 696,964,276 6,969,643 Deferred shares of 1p each 690,822,639 6,908,226 690,822,639 6,908,226 Total 1,515,564,692 15,155,647 1,387,786,915 13,877,869During the year the following share issues took place: Date of Description Funds Raised Shares Nominal ShareNotice Issued Value Premium ‚£ No. ‚£ ‚£ 15 February Placing 762,500 67,777,777 677,778 84,72207 5 May 07 Loan conversion 250,000 25,000,000 250,000 - 5 May 07 Loan conversion 250,000 25,000,000 250,000 - 5 May 07 Loan conversion 100,000 10,000,000 100,000 - Total 1,362,500 127,777,777 1,277,778 84,7227. Post balance sheet events
On 2 July 2007 the Company announced that a Spanish investment group, Kasei 2000, had been granted an option to acquire the Company's subsidiary, The Gaming Channel Ltd, for a consideration of ‚£5.25 million. On 19 September 2007 the Company announced that the duration of the option period had been extended to allow for a continuation in the negotiations with Kasei 2000.
On 16 July 2007 the Company raised ‚£375,000 (gross) through a placing of 37,500,000 new ordinary shares at 1p each.
On 8 August 2007 the Company raised ‚£500,000 (gross) through a placing of 500,000,000 new ordinary shares at 1p each.
On 7 September 2007 the Company announced the cessation of trading of its subsidiary company Finlaw 532 Ltd which trades under its brand name, Avenues.
8. Other
Copies of unaudited interim results have not been sent to shareholders, however copies are available on request from the Company Secretary at the Company's registered office, Northumberland House, 155-157 Great Portland Street, London, W1W 6QP.
YOOMEDIA PLC