PHRM.L Regulatory News (PHRM)

24 Apr 2007 07:02

121Media Inc24 April 2007 121Media, Inc (the "Company" or the "Group") Results for the year ended 31 December 2006 Chairman's Statement Results and dividends / financials I am pleased to announce the results of 121Media, Inc. ("121Media" or the"Group") for the year ending 31 December 2006. During 2006, we made a strategicshift away from the desktop based business in order to fully pursue our ISPrelationship strategy. As anticipated, this move has impacted our short-termfinancial performance and thus the results we are now publishing do not reflectthe prospects that our recent investments in people and technology represent. Turnover for the Group for the year to 31 December 2006 decreased by 76% to$1.27 million (2005: $5.2 million). Operating losses were $11.5 million (2005loss: $3.5 million), as a result of the business model shift to onlinebehavioural and contextual advertising through arrangements with global ISP's. Losses before taxation were $11.5 million (2005 loss: $3.5 million). Losses pershare were 1.12 cents (2005: 0.47 cents). The Board is not recommending the payment of a dividend with respect to 2006. Itis the Board's intention to pursue a prudent dividend policy, taking intoaccount the Group's business objectives. Strategy and business update We announced at the end of 2005 that the Group would focus on its ISP strategyfor the financial year ended 31 December 2006. The decision to concentratemanagement effort and financial resource has enabled 121Media to makesignificant progress in its talks with global ISP providers, most notably in theUK and the US. We look forward to updating the market once more formal agreements with ISPshave been set in place. People We have continued to invest in our management infrastructure during 2006, inparticular building out our global operations, planning and business developmentpresence. Senior appointments in 2006 included David Dorman, Virasb Vahidi, HugoDrayton and Marc Rothschild. 121Media now has a world-class team on which tobuild and with whom it will deliver on the ISP opportunity globally. David Dorman, former chairman and chief executive officer of AT&T Corp. joinedthe company in July 2006 as an advisor. In September the Group was alsodelighted to welcome Marc Rothschild as senior vice president, StrategicAlliances, and Hugo Drayton, formerly managing director of advertising.com, asCEO of the UK business. The year was completed with the appointment of VirasbVahidi, a former senior AT&T executive, who joined as group chief operatingofficer. The Group is immensely proud to have attracted leading industry executives ofsuch high calibre and, on behalf of the Board, I would like to thank them allfor their significant contribution to 121Media's progress during 2006. Prospects Investment in the business has continued during 2006 and we have receivedtremendous support from our investors for our ongoing programme of strengtheningties with the ISP community and developing our technology. During 2006 we raised over £5.9m ($10.2m) (before expenses) via three shareplacings with UK and US-based institutional investors. These have enabled theGroup to continue development of its behavioural advertising platform and itsprospects for use amongst global ISPs. Since the year end, the Group has received significant further endorsement ofits strategy, with Morgan Stanley Principal Investments investing £2.56m ($5m)to strengthen the Company's capital structure and underpin its globaldevelopment. This development has been very well received by the ISP communityand 121Media's other investors. This is my last statement as Chairman of the Company since I will step down fromthe Board at our forthcoming annual general meeting. It has been a Chairmanship of which I am immensely proud. The company's growthand evolution from its IPO in 2004, to where it is now, with the opportunity ofbeing a potential significant force in the next phase of revenues for ISPs hasbeen impressive, well managed and inspiring. I have greatly enjoyed my time working in such a forward-looking company withinsuch a dynamic Industry. I hand the reins over to Kent and his extremely capableteam and look forward to watching the Group's progress over the coming years,which I am sure will see it well placed to capture the heart of the globaldigital advertising space. David SvendsenChairman23 April 2007 CHIEF EXECUTIVE OFFICER'S REPORT The Company continues to strengthen its relationships with global ISPs in orderto reach agreements to deploy the Company's innovative behavioural advertisingtechnology platform. The Company is pleased to report its platform is in thefinal stage of evaluation by numerous major global ISPs. This significantdevelopment advances our objective of playing a major role in reshaping ISPrevenue models. It has been a year of significant progress on the technology front. The Companyhas built on its existing PageSense platform to create a new server-basedarchitecture called ProxySense. In Q4 of 2006, we conducted a live user trial ofPageSense with a UK ISP, and we are about to start a larger trial of ProxySensewith a test base of several hundred thousand users. We have developed the first version of a user interface that connectsadvertisers, agencies, ad networks and publishers into a global, real-timeadvertising exchange. We have completed a major development of our ad serversystem to support the interface and we are trialling the system with partnersfrom all of these sectors and working with them to develop future versions. In order to facilitate our anticipated growth the Company has continued to buildits infrastructure and invest in senior management - attracting leading industryfigures from AT&T and AOL, amongst others. I would like to thank David Svendsen for his outstanding contribution to theGroup ever since its IPO in 2004. We wish him well in his future endeavours. Iam looking forward to assuming the responsibilities of chairman and to steering121Media's expansion and growth. I would like to pay tribute to all our staff who have helped to build thecompany to the strong position in which we now find ourselves. We enter 2007with a high level of excitement and confidence. Kent ErtugrulChief Executive Officer23 April 2007 For enquiries: 121Media, Inc.Kent Ertugrul (Chief Executive) Tel: + 44 (0)870 405 7722 Canaccord AdamsMark Williams / Andrew Chubb Tel: +44 (0)20 7050 6500 Edelman Financial PRPaul Lockstone Tel: +44 (0)20 7344 1325Sorrel Beynon Tel: +44 (0)20 7344 1253 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2006 Notes 2006 2005 (As Restated) $ $ Turnover 1,272,254 5,207,136 Cost of Sales (403,306) (2,171,486) Gross Profit 868,948 3,035,650 Sales and Administrative Expenses - General (10,498,913) (6,352,667) - Share Based Payments (1,906,674) (195,848) Operating Loss (11,536,639) (3,512,865) Other Income 82,312 15,695 Interest Payable and Similar Charges (16,186) (27,962) Loss on Ordinary Activities Before Taxation (11,470,513) (3,525,132) Taxation on Loss on Ordinary Activities (12,705) - Loss on Ordinary Activities After Taxation (11,486,218) (3,525,132) Standard / Diluted Loss per Share - Basic 2 (1.12) (0.47) CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2006 2006 2005 (As Restated) $ $ Fixed Assets Intangible assets 48,827 - Tangible assets 384,857 504,803 433,684 504,803 Current AssetsDebtors 594,063 1,975,086 Cash at bank and in hand 3,804,771 570,533 4,398,834 2,545,619 Creditors: Amounts Falling Due Within One Year (1,495,420) (1,002,472) Net Current Assets 2,903,414 1,543,147 Total Assets Less Current Liabilities 3,337,098 2,047,950 Creditors: Amounts Falling Due After One Year (11,303) (76,714) Net Assets 3,325,795 1,971,236 Capital and ReservesCalled Up Share Capital 11,217 8,190 Share Premium Account 18,706,233 6,734,601 Other Reserves 1,128,838 663,576 Profit and Loss Account (16,520,493) (5,435,131) Shareholders' Funds 3,325,795 1,971,236 CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2006 Notes 2006 2005 (As Restated) $ $Net Cash Outflow from Operating Activities a (7,898,599) (1,821,605) Returns on Investments and Servicing of Finance b 66,126 (12,267) Taxation c (12,705) - Capital Expenditure and Financial Investment d (566,211) (288,321) Net Cash Outflow Before Financing (8,411,389) (2,122,193) Financing e 11,645,627 1,814,399 Increase / (Decrease) in Cash in the Period f 3,234,238 (307,794) Notes to the cash flow statement for the year ended 31 December 2006 a. Reconciliation of operating loss to net cash outflow from operatingactivities 2006 2005 $ $Operating Loss (11,536,639) (3,512,865) Amortization 1,395 - Depreciation Charges 593,106 560,109 Loss on Disposal 42,829 - Transfer to Option Reserve 1,254,065 203,299 Exchange Difference Taken to Reserves (106,675) (174,221) Decrease in Debtors 1,381,023 666,843 Increase in Creditors 472,297 435,230 Net cash Outflow from Operating Activities (7,898,599) (1,821,605) b. Returns on investments and servicing of finance 2006 2005 $ $ Interest received 82,312 15,695 Interest paid (16,186) (27,962)Net cash inflow/(outflow) from returns on investments and servicing of finance 66,126 (12,267) c. Taxation 2006 2005 $ $ Taxation 12,705 - d. Capital expenditure 2006 2005 $ $ Payments to acquire tangible fixed assets (515,989) (388,321) Payments to acquire intangible fixed assets (50,222) - Receipts from sale and leaseback - 100,000 Net cash outflow from capital expenditure (566,211) (288,321) e. Financing 2006 2005 $ $ Issue of equity share capital 11,690,387 1,819,259 Capital element of finance lease (44,760) (4,860) Net cash inflow from financing 11,645,627 1,814,399 f. Analysis of change in net funds At 1 Jan Cash Flows At 31 December 2006 2006 $ $ $ Cash in hand and at bank 570,533 3,234,238 3,804,771 570,533 3,234,238 3,804,771 Debt: Finance leases and hire purchase contracts (95,140) 44,760 (50,380) Net funds 475,393 3,278,998 3,754,391 Notes to the Audited Results for the year ended 31 December 2006 1. Publication of non-statutory financial statements The financial information set out in this announcement does not constitutestatutory financial statements. The Company is incorporated in the US state of Delaware and is not subject tothe requirements of the Companies Act 1985; however the financial statements have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice. The consolidated balance sheet as at 31 December 2006 and the consolidatedprofit and loss account, consolidated cash flow statementand associated notes for the year have been extracted from the Group's auditedfinancial statements on which the auditors provided an unqualified report. 2. Loss per share The calculation of the basic loss per share and diluted loss per share is basedon the loss attributable to ordinary shareholders of $11,483,218 (2005: $3,525,132) divided by the weighted average number of shares in issue during the year. The weighted average number of shares used in the calculation are set out below: Year ended 31 December 2006 Year ended 31 December 2005 Number of shares Number of shares 10,257,408 7,491,507 3. Prior year adjustment The group issues equity-settled share-based payments to certain employees andhas applied Financial Reporting Standard No. 20 (IFRS2)'Share-based payments' for the first time. As a result the comparative figureswere restated, resulting in an increase in the loss for the year ended 31 December 2005 by $191,533, comprising the FRS 20 charge of $203,299, employers' NIC of $(7,451) and gain on foreign currency translation of $(4,315). The deficit in the Profit and Loss Reserve increased by $282,275, with a corresponding increase in employers' NIC accrual of $29,050 and an increase of $253,225 in the option reserve. 4. Dividends The Directors are not proposing the payment of a dividend in respect of the yearended 31 December 2006. 5. Copies of the annual report and financial statements will be sent to theshareholders shortly and will also be available at the Company's UK principle office, Golden Cross House, 8 Duncannon Street, London WC2N, 4JF. This information is provided by RNS The company news service from the London Stock Exchange