Year-End Report Stable Current Business and Strong Growth in New Segments in the Coming Years
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06 YEAR-END REPORT Stable Current Business and Strong Growth in New Segments in the Coming Years • Full-year EBITDA was SEK 63.5 m (SEK 35.6 m) in 2006. • The Board of Directors considers that the company will The objective for 2006 was a minimum EBITDA of SEK 65 maintain its secure market positioning in its current business m. The actual is consistent with the established objective with retained high profitability. despite increased competition in Finland in the second half- year 2006. Aspiro’s biggest markets—Sweden and Norway— • To enable strong future growth, in the year, the Board took performed strongly in the year. Fourth-quarter EBITDA was the decision to concentrate on the mobile TV, music, mobile SEK 15.3 m (SEK 14.8 m). marketing, search services and community segments. In the next three years, Aspiro expects brisk growth in these • Earnings after tax were SEK 49.5 m (SEK 18.0 m) for the segments. These initiatives are expected to reduce year-2007 full year 2006 and SEK 12.6 m (SEK 8.6 m) for the fourth EBITDA by SEK 15-25 m. The Board expects these initiatives quarter. Earnings per share were SEK 0.26 (SEK 0.11) for to generate positive earnings in the financial year 2009. 2006 and SEK 0.07 (SEK 0.05) for the fourth quarter. The competitive situation in Finland has resulted in a SEK 35 KEY FIGURES OCT-DEC 2006 (2005) JAN-DEC 2006 (2005) m goodwill write-down relating to the Finnish companies. Based on estimated taxable earnings, Aspiro is posting a Net sales, SEK m 106.5 (124.7) 447.8 (407.9) deferred tax asset of SEK 35 m. EBITDA, SEK m 15.3 (14.8) 63.5 (35.6) Earnings after tax, SEK m 12.6 (8.6) 49.5 (18.0) • Full-year 2006 net sales were SEK 447.8 m (SEK 407.9 m), Earnings per share, SEK 0.07 (0.05) 0.26 (0.11) with acquired enterprises Mobile Avenue and Rubberduck Liquid funds, closing balance, SEK m 79.4 (89.4) 79.4 (89.4) contributing SEK 31.3 m and discontinued operations in the UK and Spain reducing sales by SEK 19.2 m. Aspiro has Cash flow from operating activities before changes consciously downscaled unprofitable non-strategic sales in in working capital, SEK m 17.3 (10.0) 58.3 (26.3) favor of improved margins. Fourth-quarter net sales were Figures in brackets are for the corresponding period of the previous year. SEK 106.5 m (SEK 124.7 m). • Aspiro will be focusing on its growth segments of mobile TV, music downloads, mobile marketing, search services and communities. In the fourth quarter, Aspiro launched music download services on three Scandinavian operators’ mobile portals, piloted a personal search service in Norway and rolled out a mobile marketing campaign alongside brewer Spendrups. • On 1 October, Aspiro acquired mobile TV company Rub- berduck, which contributed net sales of SEK 1.7 m. This acquisition had a marginal impact on earnings in 2006. After the end of the period, Rubberduck signed a contract with operator 3 regarding the delivery of its technology solution for 3’s mobile TV initiative in Sweden and Denmark. 2 Q4 in Brief Future mobile users will want to watch TV, listen to music, play games and chat with friends. These services have just started to appear on consumers’ mobile phones. They have been well received, as we and other market players have witnessed. That’s why we’re now concentrating sharply on mobile TV, music, communities and search ser- vices, a natural step considering the experience we have gained from the products we have been supplying to these same consumers over the past seven years. New technology and new usage patterns create entirely new opportunities; user-generated content is in focus right now. But mobile phone content won’t only be user-generated but also created and consumed round-the-clock in locations worldwide because users always have their mobiles with them. When it’s possible for anybody to start a TV broadcast from their own mobile camera, news and other events will reach the world in the blink of an eye. This will not merely mean the distinction between creators and consumers fading, but also how and when this happens. I’m convinced that the initiatives we’re pursuing in 2007, and the costs they imply, mean that we’re creating a very secure position in these exciting seg- ments, says Johan Lenander, Aspiro’s CEO. AsPIRO IN BRIEF Aspiro is the Nordic market leader in the distribution of mobile content services. Aspiro’s services enable consumers to watch TV on their mobiles, listen to music, socialize in communities, play games, etc. Sales are through part- nerships with mobile operators and media corporations, through proprietary web and wap pages and advertising, mainly in print media, through brands like Inpoc, Cellus, Mobilehits and Boomi. Aspiro was incorporated in 1998, and is a small-cap company listed on the Nordiska Börsen marketplace in Stockholm. In 2006, Aspiro generated revenues of SEK 448 m, and has an employee headcount of some 130. Aspiro is headquartered in Sweden, with market office presences in Norway, Sweden, Finland, Denmark, Estonia, Latvia and Lithuania. Aspiro AB Investor Relations Östermalmsgatan 87 D SE-114 59 Stockholm Sweden Tel: +46 (0)8 410 00610 Fax: +46 (0)8 441 1910 www.aspiro.com [email protected] Q4 in Brief 3 Figures in brackets are for the corresponding period of business segment, has been a sharper profitability focus. Aspiro the previous year. The acquired enterprise Mobile Avenue has designated subscription services, text-based directory has been consolidated from 1 January 2006 onwards and inquiries, the major Nordic operators and Aspiro Channels as Rubberduck from 1 October 2006 onwards. key strategically. Sales in these segments in the second half-year SALES AND EARNINgs increased by 26% year on year. As a natural consequence of this orientation, Aspiro has CURRENT REPORTING PERIOD (OcTOBER-DECEMBER) chosen to eliminate unprofitable activities in some advertis- Net sales in the fourth quarter 2006 were SEK 106.5 m (SEK ing and Media Partner channels. This reduced sales in these 124.7 m), of which acquired enterprises Mobile Avenue and segments by 36% in the second half-year 2006, but helped Rubberduck contributed SEK 8.9 m and discontinued opera- profitability improve significantly, particularly in advertising in tions in the UK and Spain reduced sales by SEK 3.2 m. Sweden and Norway. Finland progressed more weakly than expected, due to For the full year 2006, EBITDA was SEK 63.5 m (SEK 35.6 sustained intense competition on a market where Aspiro is not m). The objective for 2006 was minimum EBITDA of SEK 65 the market leader. Aspiro enjoys a very strong market position m. The improved profitability in 2006 is the result of the down- in the other Nordic countries. Fourth-quarter EBITDA was scaling of unprofitable advertising and media partner channels SEK 15.3 m (SEK 14.8 m). in favor of more profitable Aspiro Channels and liquidations in Fourth-quarter earnings after tax were SEK 12.6 m (SEK the UK and Spain. Additionally, cost and revenue synergies re- 8.6 m). After an impairment test, due to the competitive situa- sulting from consummated acquisitions and price and cost opti- tion in Finland, goodwill relating to the acquisitions of Finnish mizations could be realized, as were price increases on services enterprises Mobile Avenue and Boomi was written down by including the Norwegian text-based directory inquiries service. SEK 35 m. On the basis of estimated future taxable earnings, a Earnings after tax for the twelve-month period were SEK cautious valuation of deferred tax assets attributable to deduc- 49.5 m (SEK 18.0 m). Earnings per share for the same period tible loss carry-forwards has been conducted. A deferred tax before and after dilution were SEK 0.26(SEK 0.11). asset of SEK 35 m has been accounted. Earnings per share for the fourth quarter before and after MARKET dilution were SEK 0.07 (SEK 0.05). Aspiro considers that the total Nordic market for mobile con- tent services* grew by an average of 15% in 2006. The demand THE YEAR 2006 AND AcHIEVEMENT OF GOALS for traditional services like ringtones, images and games has Net sales in 2006 were SEK 447.8 m (SEK 407.9 m), of which not expanded to the same extent. acquired enterprises Mobile Avenue and Rubberduck contri- In 2007, Aspiro also expects the total mobile content servi- buted SEK 31.3 m and discontinued operations in the UK and ces market to remain in high growth. Particularly, the demand Spain reduced sales by SEK 19.2 m. for music, videos and search services is expanding. Aspiro Since early 2006, the strategy, in the mobile downloads expects the demand for ringtones, images and games to reduce. Additionally, Aspiro expects the demand for new types of ser- vice to increase substantially when the 3G subscriber base and penetration of more sophisticated handsets, resulting from the Quarterly Sales and Profit, 2005-2006 build-out of 3G, attain critical mass in Aspiro’s target groups. Aspiro expects this to occur around year-end 2007. NET SALES, SEK m PROFIT, SEK m 150 25 MOBILE DOWNLOAD SERVICES 120 20 Aspiro’s largest markets, Norway and Sweden, progressed very robustly throughout 2006. Subscription services in these 15 90 countries and the text-based directory inquiries service in Nor- 60 10 way were especially successful.