To Consumers in the Nordic Region, the Rest of Europe and North America, and Is the Scandinavian Market Leader
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INTERIM REPORT, JANUARY - JUNE 2005 Aspiro sells mobile content services, direct to consumers in the Nordic region, the rest of Europe and North America, and is the Scandinavian market leader. Aspiro has a broad portfolio of attractive mobile services like games, ringtones, wallpapers, video clips, real music, text directory inquiries and sports scores. Its primary target group is mobile users aged 15 – 40. Sales are via advertising and partnerships with mobile operators and media corporations. Aspiro also accesses its users directly via its web and wap portals using recognized brands like Inpoc and Mobilehits. Aspiro was foun- ded in 1998 and has been quoted on the Stockholm Exchange O-list since 2001. As- piro employs approx 100 people, with its head offi ce in Sweden and local offi ces in Norway, Sweden, Denmark, the UK, Spain, Luxembourg, Estonia, Latvia, Lithuania and is represented by an agent in the US. ■ EBITDA before items affecting comparability was SEK 11.1 m page 3 ■ Better-than-expected sales in June page 4 ■ Cash fl ow from operating activities amounted to SEK 10.9 m page 6 Q2 ■ Johan Lenander becomes CEO, with Erik Mitteregger appointed Chairman page 6 2 Q2 IN BRIEF Second Quarter: EBITDA before Items Affecting Comparability of SEK 11.1 m ■ Second-quarter profit was better than expected, thanks to ■ Consolidated liquid funds were SEK 91.9 m (SEK 27.5 m) robust sales in June through Media Partners and a bigger at the end of the period. A SEK 6.9 m debt to Schibsted customer base in subscription services. Moreover, syner- ASA was fully amortized in the period. Second-quarter gies from the Schibsted Mobile acquisition had a positive cash flow from operating activities was SEK 10.9 m. effect already in the second quarter. ■ Former full-time Executive Chairman Johan Lenander was ■ Net sales in the second quarter were SEK 101.4 m (SEK appointed Aspiro’s CEO, and took up this position, in the 14.5 m), with Schibsted Mobile contributing SEK 48.5 m. period. Simultaneously, Erik Mitteregger was appointed Chairman. ■ Second-quarter EBITDA was SEK 8.0 m (SEK -10.7 m), with this figure subject to SEK 3.1 m (SEK -10.3 m) of ■ Because sales via wap expanded, seasonality over the restructuring expenses. Accordingly, EBITDA before items year has alleviated. Nevertheless Aspiro anticipates sales affecting comparability was SEK 11.1 m. remaining relatively high in July, August, December and January. ■ Revised acquisition analysis resulting from the adoption of IFRS leads to second-quarter operating profit/loss being subject to SEK 2.8 m of intangible assets amortization. ■ Profit/loss after tax for the second quarter was SEK 4.5 KEY FIGURES April - June 2005 January - June 2005 m (SEK -57.7 m) and earnings per share were SEK 0.02 Net sales, SEK m 101.4 (14.5) 171.9 (23.0) (-1.43). EBITDA, SEK m 8.0 (-10.7) 9.4 (-14.2) Operating profit/loss, SEK m 4.6 (-57.7) 3.4 (-63.5) ■ The integration between Aspiro and Schibsted Mobile Net earnings, SEK m 4.5 (-57.7) 4.0 (-63.5) was concluded in the period, and total restructuring Earnings per share, SEK 0.02 (-1.43) 0.03 (-1.63) expenses were SEK 6.9 m, SEK 3.1 m of which reduced Figures in brackets are for the corresponding period of the previous year. second-quarter profit/loss. The total estimated savings from restructuring are expected to generate annualized cost synergies of some SEK 9 m, with the full effect from the fourth quarter 2005. In addition, the acquisition is expected to generate significant revenue synergies. SALES AND EARNINGS 3 Figures in brackets are for the corresponding period of Schibsted Mobile. the previous year. The pro forma figures for the first The revised acquisition analysis resulting from the adop- quarter 2005 published below consolidate Schibsted tion of IFRS meant that second-quarter operating profit was Mobile from 1 January 2005 onwards. subject to amortization of SEK 2.8 m. In the second quarter, profit after tax was SEK 4.5 m (SEK -57.7 m). ADOPTION OF IFRS FROM 2005 The operational integration of Aspiro and Schibsted Mo- —REVISED ACQUISITION ANALYSIS bile was concluded in the period, with profits subject to SEK In its Consolidated Financial Statements, Aspiro has adopted 3.1 m (SEK 10.3 m) in final restructuring expenses relating to IFRS (International Financial Reporting Standards) from 2005 factors including severance pay to the previous CEO. onwards. The comparative year 2004 has been recalculated Earnings per share were SEK 0.02 (SEK -1.43) in the se- pursuant to these new Standards. cond quarter. Outstanding options imply no dilution. Only provisional acquisition analysis for the takeovers of Cellus and Schibsted Mobile were available coincident with the THE INTERIM PERIOD (JANUARY-JUNE) first-quarter 2005 Interim Report, implying that no intangible Net sales amounted to SEK 171.9 m (SEK 23.0 m) for the six- assets were accounted separately from goodwill. The definitive month period, of which Schibsted Mobile contributed SEK 65.4 division of the acquisition price enabled the identification and m (Mar-Jun). evaluation of trademarks and brands, technology and cont- EBITDA was SEK 9.4 m (SEK -14.2 m) for the first half- racts with media partners. The revised acquisition analysis year, a figure subject to SEK 6.9 m (SEK 10.3 m) of restructur- have resulted in acquisition values of previously accounted ing expenses arising coincident with the acquisition of Schib- consolidated goodwill reducing by SEK 33.2 m. The acquisi- sted Mobile. tion value of other intangible assets has increased by SEK 46.1 Revised acquisition analysis resulting from the adoption of m, and a deferred tax liability of SEK 12.9 m has been accoun- IFRS meant the six-month period operating profit/loss being ted. subject to amortization of SEK 5.0 m. Profit after tax for the This recalculation has resulted in operating profit/loss six-month period was SEK 4.0 m (SEK being subject to SEK 2.2 m of amortization for the first quarter -63.5 m). 2005 and SEK 2.8 m for the second quarter. Operating profit Earnings per share were SEK 0.03 (SEK -1.63) for the half- for the second half-year 2004 was subject to amortization of year. Outstanding options imply no dilution. SEK 3.8 m. The revised acquisition analysis do not affect con- solidated cash flow and EBITDA. More information relating to the adoption of IFRS is published in the Comments on the Accounts. SALES AND EARNINGS CURRENT REPORTING PERIOD (APRIL-JUNE) Net sales for the second quarter were SEK 101.4 m (SEK 14.5 m), of which Schibsted Mobile (Inpoc), which was acquired in the first quarter, contributed SEK 48.5 m. Sales growth was favorable in the period with robust growth in June due to factors including increased sales via wap portals and an expansion of the subscription services customer base. Traditionally, the second quarter is Aspiro’s weakest in sales terms, but because of increased sales via wap, sales seasonality through the year has been mitigated. Moreover, underlying growth contributed to second-quarter net sales being comparable with the previous quarter’s of SEK 102.2 m pro forma. EBITDA in the second quarter was SEK 8.0 m (SEK -10.7 m), a figure subject to SEK 3.1 m (SEK 10.3 m) of restructuring expenses. Accordingly, EBITDA before items affecting comparability was SEK 11.1 m. EBITDA for the first quarter 2005 was SEK 1.4 m. The improved EBITDA is partly a result of synergy gains achieved from the acquisition of 4 SALES PRO FORMA SALES AND PROFIT BY SALES CHANNEL, Q2 2005 Earnings Net of Acquired enterprise Schibsted Mobile has been consolidated Sales Channel Net Sales from 1 March 2005 onwards. This transaction results in Aspiro Direct Expenses* Media Partners, SEK m 57.7 26.4 generating annualized sales of over SEK 400 m, with some 100 employees. The following table illustrates the group’s pro Advertising, SEK m 24.3 5.5 forma sales and earnings for the first half-year, as if Schibsted Aspiro channels, SEK m 19.4 13.9 Mobile had been consolidated from 1 January 2005 onwards. SALES AND PROFIT BY GEOGRAPHICAL MARKET, Q2 2005 Earnings Net of CONSOLIDATED INCOME STATEMENT JANUARY - JUNE 2005 Geographical Market Net Sales Direct Expenses* SCHIBSTED ASPIRO Nordic region, SEK m 84.2 36.1 SEK 000 MOBILE PRO FORMA Rest of Europe, Operating revenues US and Canada, SEK m 17.2 9.7 Net sales 96,996 203,467 * Net sales less expenses for purchased content, advertising and revenue sharing. Other operating revenues 266 1,458 Total 97,262 204,925 SALES BY PRODUCT GROUP, Q2 2005 Operating expenses Product Group Net Sales, SEK m Services and goods for resale -18,755 -34,444 Music 29.2 Other external expenses -49,581 -112,604 Image/video 15.7 Personnel expenses -17,559 -37,442 Information services 16.0 Depreciations and write-downs of Games 17.9 tangible fixed assets -721 -1,135 Community services 5.1 Amortization and write-down of Other 17.5 intangible fixed assets -211 -5,785 Other operating expenses -88 -808 Profit before restructuring expenses 10,347 12,707 ASPIRO SALES BY SALES CHANNEL Restructuring expenses -2,718 -6,857 Operating profit 7,629 5,850 ■ Media partners, 57% Net financial income/expense -240 -888 ■ Advertising, 24% ■ Profit after financial items 7,389 4,962 Aspiro channels, 19% Tax - 1,549 Net profit for the period 7,389 6,511 BY GEOGRAPHICAL MARKET Earnings per share (SEK) - 0.04 ■ Nordic region, 83% ■ Rest of Europe, US and Canada, 17% SALES Sales in June were better than expected, with positive progress BY PRODUCT GROUP due to factors including robust growth on Aspiro’s, and several media partners’, wap portals, and the brisk expansion of the ■ Music, 29% subscription services customer base.