Zamano Regulatory News (ZMNO)

zamano plc

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.

- Ends -

For further information, please contact:

zamano plc

Ross Conlon, Chief Executive Officer

Tel: + 353 1 554 7313

Michael Connolly, Chief Financial Officer

Tel: +353 1 554 7261

Investec Corporate Finance

Shane Lawlor/Conor Murtagh

Tel: + 353 1 4210000

Cenkos Securities

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

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 EBITDA1 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.

Ross Conlon

Chief Executive Officer 15 September 2015

zamano plc and subsidiaries

Unaudited condensed consolidated income statement

for the half year ended 30 June 2015

Unaudited condensed consolidated statement of comprehensive income

for the half year ended 30 June 2015

zamano plc and subsidiaries

Unaudited condensed consolidated balance sheet

as at 30 June 2015

zamano plc and subsidiaries

Unaudited condensed consolidated statement of changes in equity

for the half year ended 30 June 2015

for the half year ended 30 June 2014

zamano plc and subsidiaries

Unaudited condensed consolidated cash flow statement

for the half year ended 30 June 2015

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 2015 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 2014 do not constitute statutory financial statements of the Group within the meaning of the European Communities (Companies: Group Accounts) Regulations 1992. The consolidated financial statements for the year ended 31 December 2014 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 15 September 2015 and are available at the Group's website as noted above.

3 Significant accounting policies - basis of preparation

These half-yearly financial statements have been prepared in accordance with the accounting policies set out in the Group's 31 December 2014 published consolidated financial statements, which were prepared in accordance with IFRS as adopted by the EU.

The following amendments were applicable in the financial year beginning 1 January 2015 and were required to be applied in preparation of these financial statements:

Annual improvements to IFRS 2011-2013 Cycle:

· IFRS 1 First-time adoption of IFRS: meaning of 'effective IFRS'.

· IFRS 3 Business Combinations: scope exceptions for joint ventures.

· IFRS 13 Fair Value Measurement: scope of paragraph 52 (portfolio exception).

· IAS 40 Investment Property: clarifying the interrelationship between IFRS 3 and IAS 40 when classifying property as investment property or owner-occupied property.

For changes to the standards above, the Group has changed its accounting policies where necessary. This did not have a material impact on the financial results or financial position of the Group.

zamano plc and subsidiaries

Notes (continued)

4 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 4 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.

5 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.

(1) Unallocated expenses relate to central overheads such as rent, administration, salaries and other office overhead costs which are not allocated to individual reportable segments. 

zamano plc and subsidiaries 

Notes (continued)

5 Segment information (continued)

(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. 

6 Income tax

The major components of the income tax expense in the half-yearly condensed consolidated income statement are:

zamano plc and subsidiaries

Notes (continued)

7 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:

zamano plc and subsidiaries

Notes (continued)

8 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:

Adjusted net income is calculated as:

Reconciliation of reported operating profit to earnings before interest, tax, depreciation and amortisation ("EBITDA") and share-based payment expense is as follows:

zamano plc and subsidiaries

Notes (continued)

9 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 2014. All of the options granted are deemed to be equity-settled. 6,118,972 share options were outstanding at 30 June 2015 (6,203,972 - 30 June 2014) of which 200,000 had vested (2014: 285,000). There were no new options granted during the period (30 June 2014: Nil). The share-based payments expense for the period was €38,079 (2014 - €40,391).

10 Intangible assets

 * 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 note 16 of the 31 December 2014 financial statements. The directors are satisfied that the results of the Group for the period to 30 June 2015 are in line with the assumptions applied as at 31 December 2014 and that no other events have occurred in the current period which would require an impairment test of the goodwill as at 30 June 2015 to be undertaken.

Additions to intangibles for the period to 30 June 2015 were €150,000 which relate to internally capitalised payroll costs on research and development projects.

zamano plc and subsidiaries

Notes (continued)

11 Property, plant and equipment

Acquisitions and disposals

During the six months ended 30 June 2015, the Group acquired property, plant and equipment assets with a cost of €21,925 (2014 - €22,060).

No assets were disposed of by the Group during the six months ended 30 June 2015 (2014 - Nil).

12 Loans and borrowings

The loan outstanding at 30 June 2015 is due to Bank of Ireland and is secured by a first debenture over the assets of zamano plc and each material subsidiary.

13 Capital commitments

The Group had no capital commitments at 30 June 2015 (2014: 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 €304,000 (2014: €302,000) for the half year period ended 30 June 2015. 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.