(GETM.L) Getmobile Europe PLC Buy/Sell

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(RNS) 2009-09-29 07:02 Getmobile Europe PLC - Interim Results
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RNS Number : 8029Z Getmobile Europe PLC 29 September 2009 Chairman's Statement Introduction getmobile europe plc (the "Company") is a UK registered company whose shares are traded on AIM in London, and on Entry Standard in Frankfurt. In a trading update released on 26 June 2009 the Company reported that trading in our mobile phone contracts business had deteriorated and that when combined with planned losses in our new ecommerce initiatives a loss would be incurred for the 6 months to 30 June 2009. The trading update also noted that the Company was reviewing a possible sale of the mobile phone contracts business. In view of the continuing poor performance of the mobile phone contract business the board has concluded that it should either sell the business for modest consideration or alternatively continue to operate the business on a much reduced scale - we have already cut the cost base of the business. Sales discussions are underway with certain interested parties. There has been no improvement in trading since the update provided in June, and as a result the board has decided that it is appropriate to write off all acquisition goodwill in the Company and its subsidiaries (the "Group") along with the other intangible assets associated with the acquisition of the mobile phone contracts business. This has resulted in an exceptional impairment provision of EUR11.74 million. While encouraging progress is continuing to be made in our new ecommerce businesses they continue to absorb resources. However with cash balances of EUR10.73 million, and no debt, at 30 June 2009 our balance sheet remains strong. Results Sales fell from EUR48.98 million in the 6 months to 30 June 2008 to EUR16.88 million in the 6 months to 30 June 2009, a reduction of EUR32.10 million. Approximately EUR16 million of this reduction resulted from the planned cessation of low margin sales of phone handsets to third party wholesalers, with the balance reflecting primarily reduced activity in the mobile phones contract business where the number of contracts sold fell from 69,654 to 33,995, representing a fall of 51.2% in the number of contracts sold. Turnover in our early stage ecommerce business was EUR1.22 million (2008 EUR4,000) The reduction in the number of contracts and an associated decrease in margins reflects an overall smaller market for new and churning post paid mobile phone contracts due to reduced consumer demand and competition from low cost prepaid products. The Company estimates that the addressable post paid mobile phone contract market in Germany has reduced from between eight to nine million contracts to between five to six million contracts per annum. We have also seen increased credit denial rates to our customers by the mobile phone contract operators as a result of the recession and their concentration on maximizing their own direct sales channels. The Company incurred a group operating loss before taxation for the 6 months to 30 June 2009 of EUR11.91 million (2008: profit EUR1.65 million). This reflects the EUR11.74 million exceptional impairment provision against goodwill and intangibles and an EBITDA (Earnings before interest, tax, depreciation and amortisation) loss of EUR0.20 million (2008: EBITDA profit EUR1.62 million). The breakdown of our revenues was as follows: `Six months ended Year ended` `30 June 30 June 31 December` 2009 2008 2008 `Unaudited Unaudited Audited` `Revenues EUR m EUR m EUR m` `Sale of mobile phone contracts 15.66 32.54 76.93` and ancillary income `Sale of hand sets to third party - 16.40 24.40` distributors `New ecommerce initiatives 1.22 - 0.17` `Total revenue 16.88 48.94 101.50` The breakdown of EBITDA in the Group was as follows: `Six months ended Year ended` `30 June 30 June 31 December` 2009 2008 2008 `Unaudited Unaudited Audited` `EUR m EUR m EUR m` EBITDA `Mobile phone and handset trading 0.24 1.79 3.87` operating profit `Losses of new e-commerce (0.44) (0.17) (0.42)` initiatives `Cost of prospectus - Deutsche B? - (0.23)` listing `(0.20) 1.62 3.22` The loss per share for the 6 months ended 30 June 2009 was 126.11 Euro cents (2008: 13.06 Euro cents earnings). The adjusted loss per share after adding back the EUR11.74 million exceptional impairment provision was 1.82 Euro cents (2008: 13.06 Euro cents earnings). Pauldirekt, our closed community shopping business has progressed very satisfactorily and has grown its number of registered users from 15,000 at the end of December 2008 to 580,000 at the end August 2009 Premingo, our household contracts platform, is now operating at close to breakeven and management are examining how best to achieve its full potential. Our 25 % associated company investment in Shirtinator has performed well. Shirtinator is trading profitably and ahead of expectations at the time of investment. As separately announced on 29 September, we have purchased an additional 11.87% stake in Shirtinator to bring our overall investment to 36.87%. Depending on its continued performance and the price and availability of additional shares the Company would consider increasing this stake beyond 50% in due course. Financial Position Net assets as at 30 June 2009 were EUR10.24 million as compared to EUR22.65 million as at 31 December 2008, principally reflecting, the impact of the EUR11.74 million impairment provision. Cash balances as at 30 June 2009 were EUR10.73 million (31 December 2008: EUR9.03 million). The Group has no debt. Planned capital commitments of EUR0.77 million to Premingo and Pauldirekt in the second half of the year, the purchase of the additional 11.87% stake in Shirtinator, and the payment of the 2008 dividend on 2 July, when allied to anticipated operating losses and seasonal working capital requirements will lead to a reduced cash balance as at 31 December 2009. Business Development and Strategy In the past the primary focus of Getlogics GmbH our 64% warehousing and logistics subsidiary, and of Getperformance GmbH (our 100% subsidiary direct response advertising support company - which has recently changed its name from GetonTV GmbH) was the support of the mobile phone contract business. Their focus is now changing to the support of our other ecommerce companies and the generation of third party sales. Getlogics has invested in new warehousing in anticipation of the growth of the Pauldirekt. Getperformance has been successful in generating third party sales and the intention is to grow these businesses as independent profit centres. The Company intends to continue to invest selectively in e-commerce activities. However, until such time as we have greater clarity on the position of the core mobile contract business we intend to adopt a cautious approach and preserve our capital. In the case of Pauldirekt we are investigating the potential to introduce a third party investor to accelerate its next stage of development and validate the commercial value of the business model. Dividend The Company paid a final dividend in respect of the year ended 31 December 2008 of 6 cents on 2 July 2009. The directors do not intend to recommend the payment of an interim dividend for 2009. Outlook As noted above, in light of its continuing underperformance we have initiated discussion on the sale of our mobile phone contracts business. In addition the cost base has been reduced. The outlook for our remaining subsidiaries, Getperformance, Getlogics, Premingo and Pauldirekt appears promising in the medium term although, taken together, they are, in aggregate, likely to be loss making in 2009. Our associate Shirtinator is developing well and trading profitably. Our ecommerce management expertise allied to our cash resources facilitates the ongoing search for selective ecommerce investment opportunities. Pierce Casey Chairman Group Income Statement for the six months ended 30 June 2009 `Six months ended Year ended` `30 June 30 June 31 December` 2009 2008 2008 `Unaudited Unaudited Audited` `Notes EUR000's EUR000's EUR000's` `Revenue 2 16,882 48,984 101,458` `Cost of sales (13,145) (43,267) (90,192)` `Gross profit 3,737 5,717 11,266` `Administrative expenses excluding depreciationand` `amortisation (3,932) (4,096) (8,042)` `(Loss)/Earnings before interest, tax, depreciation and amortisation (195) 1,621 3,224` `Administrative expenses - depreciation and amortisation (180) (129) (248)` exceptional items 3 (11,742) - - `Total administrative expenses (15,854) (4,225) (8,290)` `Share of post tax profit of associates 35 43 101` `Group operating (loss)/profit from continuing operations 2 (12,082) 1,535 3,077` `Finance revenue 4 169 115 269` `Finance costs 4 - - (1)` `(Loss)/Profit from continuing operations before taxation (11,913) 1,650 3,345` `Income tax expense 6 (2) (480) (972)` `(Loss)/Profit for the period from continuing operations (11,915) 1,170 2,373` `(Loss)/Profit for the period attributable to:` `Equity holders of the parent (11,914) 1,234 2,513` `Minority interest (1) (64) (140)` `(11,915) 1,170 2,373` `Euro Cents Euro Cents Euro Cents` `(Loss)/earnings per share 7` `Basic and diluted (126.11) 13.06 26.60` `Adjusted and diluted (1.82) 13.06 28.98` Group Statement of Changes in Equity for the six months ended 30 June 2009 `Share capital Distributable reserves Shareholder Minority Total` `equity interest equity` `EUR000's EUR000's EUR000's EUR000's EUR000's` `At 1 January 2008 1,364 20,126 21,490 18 21,508` `Profit for the period 1,234 1,234 (64) 1,170` Other movements: `Group equity attributable to 122 122` minority interest `Share based payments 30 30 30` `Dividend paid (945) (945) (945)` `At 30 June 2008 1,364 20,445 21,809 76 21,885` `Profit/(loss) for the period 1,279 1,279 (76) 1,203` Other movements: `Group equity attributable to 3 3` minority interest `Dividends paid (472) (472) (472)` `Share based payments 30 30 30` `At 31 December 2008 1,364 21,282 22,646 3 22,649` `Loss for the period (11,914) (11,914) (11,914)` Other movements: `Group equity attributable to minority 45 45` interest `Share based payments 31 31 31` `Dividend declared and approved (567) (567) (567)` `At 30 June 2009 1,364 8,832 10,196 48 10,244` Group Balance Sheet as at 30 June 2009 `Six months ended Year ended` `30 June 30 June 31 December` 2009 2008 2008 `Unaudited Unaudited Audited` `Notes EUR000's EUR000's EUR000's` `Non current assets` `Intangible assets 252 11,807 11,960` `Property, plant and equipment 409 231 284` `Investment in associated 5 425 128 41` `companies` `Other investments 150` `Deferred tax asset - 182 65` `1,236 12,348 12,350` `Current assets` `Inventories 1,021 2,382 1,756` `Trade and other receivables 3,476 11,071 11,592` `Overseas tax paid in advance 314 289 -` `Cash and cash equivalents 10,733 9,719 9,028` `15,544 23,461 22,376` `Total assets 16,780 35,809 34,726` `Current liabilities` `Trade and other payables 6,268 13,375 11,526` `Corporation and overseas taxes 268 549 296` `Other financial liabilities - - 150` `6,536 13,924 11,972` `Non current liabilities` `Deferred tax - - 105` `Net assets 10,244 21,885 22,649` Equity attributable to equity holders of the `parent` `Called up share capital 1,364 1,364 1,364` `Distributable reserves 8,832 20,445 21,282` `Group shareholders equity 10,196 21,809 22,646` `Minority interest 48 76 3` `10,244 21,885 22,649` Group Statement of Cash Flows for the six months ended 30 June 2009 `Six months ended Year ended` `30 June 30 June 31 December` 2009 2008 2008 `Unaudited Unaudited Audited` `EUR000's EUR000's EUR000's` Operating activities `(Loss)/profit for the period (11,915) 1,170 2,373` Adjustments to reconcile profit for the year to net cash inflow from operating activities `Tax on continuing operations 2 480 972` `Net finance revenue (169) (115) (268)` `Net profit on sale of - (15) (15)` associates `Share of post tax profits of (35) (43) (101)` associates `Impairment of goodwill and 11,742` other intangibles `Depreciation and impairment of 76 45` `property, 104` plant and equipment `Amortisation of intangible 104 84 144` assets `Share-based payments 32 30 60` `Decrease/(increase) in 735 (673) (47)` inventories `Decrease /(increase) in trade 8,216 1,906 1,493` and other receivables `(Decrease)/increase in trade (6,164) 1,214 310` and other payables `Cash generated from operations 2,624 4,083 5,025` `Income taxes paid (320) (96) (438)` `Net cash flow from operating 2,304 3,987 4,587` activities Investing activities `Interest received 169 115 269` `Dividend from associate 22 145` `Sale of property, plant and - 21` equipment `Sale of associates - 68 68` `Investment in associates (390) - -` `Investment in subsidiary undertakings net of cash (125) (19) (17)` acquired `Other investment (150) - -` `Payments to acquire property, (125) (68) (201)` plant and equipment `Payments to acquire (88) (150)` intangibles (excluding goodwill) `Net cash flow from investing (599) 8 135` activities Financing activities `Interest paid - - (1)` `Dividends paid to equity - - (1,417)` shareholders of the parent `Net cash flow from financing - - (1,418)` activities `Increase/(decrease) in cash 1,705 3,995 3,304` and cash equivalents `Cash and cash equivalents at 9,028 5,724 5,724` the beginning of the year `Cash and cash equivalents at 10,733 9,719 9,028` the period end Notes to the Financial Information `1. Basis of preparation` The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union other than IAS 34 ("Interim Financial Reporting") and as applied in accordance with the provisions of the Companies Act 2006. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 December 2008. The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2008. The financial information contained in this interim statement does not amount to statutory financial statements within the meaning of section 435 Companies Act 2006. The financial statements for the year ended 31 December 2008, from which information has been extracted, were prepared under IFRS and have been delivered to the Registrar of Companies. The report of the auditors was unqualified in accordance with section 495 Companies Act 2006 and did not contain a statement under sections 498 (2) or (3) Companies Act 2006. `2. Revenue and segmental analysis` The Group's revenue, operating profit by destination and source, were all derived from external customers in the European Union where its net assets are located. All revenues arose in the Group's German businesses. `3. Exceptional items` `Six months ended Year ended` `30 June 2009 Unaudited 30 June 2008 Unaudited 31 December 2008` `Audited` `EUR000's EUR000's EUR000's` `Impairment of goodwill 11,378 - -` `Impairment of other 364 - -` intangibles `11,742 - -` As noted in the Chairman's Statement there is uncertainty as to the future profitability of the Group's mobile telephone contracts business and following a review of the impact of this it has been concluded that the value of the Group's goodwill and other associated intangibles assets is impaired and these assets have been written off as at 30 June 2009. `4. Finance revenues and costs` `Six months ended Year ended` `30 June 2009 Unaudited 30 June 2008 Unaudited 31 December` 2008 `Audited` `EUR000's EUR000's EUR000's` Finance revenue `Bank interest receivable 65 115 269` `Write back of provision for 104 - -` finance fee 169 115 269 `Finance costs - bank interest - - (1)` payable 169 - (1) `5. Investment in associated companies` `Six months ended Year ended` `30 June 30 June 31 December` 2009 2008 2008 `Unaudited Unaudited Audited` `EUR000's EUR000's EUR000's` `At 1 January 41 137 137` `Cost of investments 390 10 -` `Disposal of investments (19) (62) (52)` `Share of profits after tax 35 43 101` `Dividend received (22) (145)` `At end of period 425 128 41` `6. Income tax expense` `Six months ended Year ended` `30 June 30 June 31 December` 2009 2008 2008 `Unaudited Unaudited Audited` `EUR000's EUR000's EUR000's` Current income tax: `UK corporation tax - 43 90` `Foreign tax 41 267 445` `Current income tax charge 41 310 535` `Amounts over provided in previous years - UK - - (3)` `Amounts under provided in previous years - Foreign - - 48` `Total current income tax 41 310 580` Deferred tax: `Origination and reversal of temporary differences (39) 170 392` `Tax charge in the income statement 2 480 972` Tax charge in the income statement is disclosed as follows: `Income tax expense on continuing operations 2 480 972` 2 480 972 As at 31 December 2008 a deferred tax asset of EUR65,000 (30 June 2008: EUR182,000), relating to historic losses carried forward in the Company's German subsidiary getmobile AG and tax adjustments in relation to its former silent partners investors, was recognised and included in non current assets. As at 31 December 2008 a deferred tax liability of EUR105,000 (June 2008: EURnil) in relation to intangible fixed asset value adjustments on acquisition was included in non current liabilities. Both of these balances have been released in full in the period to 30 June 2009 due to utilisation of losses forward, the write off of the associated intangible fixed assets and the uncertainty of future recoverability of the remaining portion of the deferred tax asset. `7. (Loss) earnings per share` `Six months ended Year ended` `30 June 30 June 31 December` 2009 2008 2008 `Unaudited Unaudited Audited` `EUR000's EUR000's EUR000's` `(Loss) Profit for period for basic and diluted earnings per share (11,914) 1,234 2,513` `No. No. No.` `000's 000's 000's` `Weighted average number of ordinary shares for basic, adjusted 9,447 9,447 9,447` and diluted EPS `Basic and diluted (loss) earnings per share (cents) (126.11) 13.06 26.60` `Adjusted and diluted (loss) earnings per share (1.82) 13.06 28.98` (cents) The calculation of adjusted loss or earnings per share is based on the loss or profit attributable to equity holders of the parent used for the calculation of basic loss or earnings per share as set out above, adjusted by adding back the exceptional impairment provision of EUR11,742,000 (Year ended 31 December 2008: adding back the costs associated with the issue of a prospectus of EUR225,000), as the directors believe this is an appropriate measure of underlying performance. `8. Interim report` This interim financial information was approved by the Board of Directors on 28 September 2009. This report will be sent to all shareholders and copies will be available from the Company's registered office - 4th Floor, 74 Chancery Lane, London WC2A IAD and on the Company's website - www.getmobile-europe.com. This information is provided by RNS The company news service from the London Stock Exchange END IR DVLFLKKBBBBF
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