Final Results
Velti PLC
28 March 2007
FOR IMMEDIATE RELEASE 28 March 2007
Velti plc
RESULTS FOR 2006: SUBSTANTIAL PROFIT GROWTH
Financial Highlights
• Revenue grew 122 per cent to €10.8 million (2005: €4.9 million).
• EBITDA grew 125 per cent to €4.3 million (2005: €1.9 million).
• Profit before tax grew 152 per cent to €2.7 million (2005: €1.1
million).
• Profit after tax and minorities grew 209 per cent to €2.2 million (2005:
€0.7 million).
• Earnings per share grew 129 per cent to 8.7 eurocents (3.8 eurocents in
2005).
Operational Highlights
• Won key new contracts from Vodafone, TIM Hellas.
• Launched operations in the UK market and opened a new office in New York.
• Managed a very successful mobile commerce program for Argos in the UK.
• Launched a mobile music community and m-ticketing program for Orange in
the UK
• Signed a significant new contract for providing real time traffic
information over mobile phones.
• Signed a major contract with Cosmote for mobile content management and
operation
Product Development
• Launched version 3.0 of Mobile Marketing Platform for Advertising
Agencies and Operators.
• Launched version 4.0 of Mobile Messaging, Content Aggregation and
Syndication Platforms.
Successful IPO in May 2006
• Raised €12.5 million net of costs to support company growth.
• Improved company profile has had positive effect on revenue cycle.
On outlook, David Mann, Chairman, stated:
'In 2007 Velti will maintain its primary focus of providing mobile content
solutions for mobile operators, advertising agencies and media groups. The Board
sees excellent prospects for delivering a further year of very strong growth.'
Alexandros Moukas, Chief Executive Officer added:
'We are delighted to have delivered strong growth across the entire business in
our first year as a public company. The geographical expansion in South Eastern
Europe will focus mainly on Turkey, Romania and Bulgaria. The offices in London
and New York are also expected to be areas of growth for Velti in 2007 and to
lead a more focused push towards mobile marketing and advertising.'
CONTACTS
Velti:
Alex Moukas, Chief Executive Officer +44 (0) 20 7633 5000
Pantelis Papageorgiou, Finance Director
Bankside: +44 (0) 20 7367 8888
Simon Bloomfield or Steve Liebmann
Oriel Securities: +44 (0) 20 7710 7600
Andrew Edwards
About Velti
Velti is a leading platforms and service provider that enables mobile marketing,
content and value added services. Velti works with mobile operators, advertising
agencies and media to deliver value added services.
Founded in 2000, Velti has offices in London, New York, Boston and Athens and is
already serving more than 100 corporate customers in 9 countries including
Vodafone, Orange, Cosmote, TIM, Q-Telecom, OTE, Turkcell, Verizon / Maxpreps and
Argos among others. Velti is a publicly traded company listed on the London
Stock Exchange (AIM).
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S REPORT
Introduction
We are pleased to make our maiden preliminary results announcement for the year
ended 31 December 2006, since Velti's Initial Public Offering on AIM in May
2006. 2006 has been a successful year for Velti in terms of delivering strong
financial results, the quantity and quality of its customers, product
development and strategic positioning.
Results and Financial Position
During 2006 Velti's revenue grew by 122 per cent to €10.8 million (2005: €4.9
million), profit before tax rose by 152 per cent to €2.7 million (2005: €1.1
million) and profit after tax and minorities increased by 209 per cent to €2.2
million (2005: €0.7million). Basic earnings per share were 8.7 eurocents (2005:
3.8 eurocents).
At the time of the IPO, €12.5 million after costs was raised in new equity,
enabling Velti to fund its rapid growth and the associated increase in working
capital and investment in the Company's technology infrastructure. Year end net
cash was €4.0 million (2005: net borrowings of €1.9 million).
Market and Positioning
Velti's primary focus is on providing mobile services to mobile operators,
advertising agencies, media groups and other large enterprises (the Company does
not sell directly to the end consumer). It enables its customers to monetise the
mobile channel and run effective mobile advertising and marketing campaigns.
Today, Velti is the leading mobile services platform operator in its geographic
region with presence in Greece, Turkey, Bulgaria, Romania, Cyprus, Armenia,
Bosnia, the USA and UK.
The mobile services market is rapidly evolving. Velti, by being at the
intersection of operators, advertising agencies and media (content owners), is
uniquely positioned to benefit from these evolving business models. From an
initial novelty niche market with expensive content aimed at early adopters, the
market is forecast to follow other media markets in becoming a massive, brand
marketing and advertising sponsored medium.
Initial Public Offering
The Company successfully completed its IPO on AIM in early May. The management
and employees retain a significant shareholding in the company and the IPO has
enabled the company to diversify its investor base by attracting a number of
good quality UK institutional investors.
The IPO successfully delivered its principal aims, making Velti a
well-capitalised business and enabling it to complete two acquisitions during
the past 8 months. The non-financial benefits of public company status have
included the ability to attract great talent (numbering now more than 180 people
, including more than 110 technology staff) and exceptionally strong non-
executive members of the Board.
Acquisitions
In the UK, Velti has launched its UK office and acquired the assets of Digital
Rum, a leading and award winning mobile promotions provider. Since the year end,
Velti has acquired M-Telecom, the leading independent mobile value added
services and mobile marketing provider in Bulgaria with an estimated market
share of approximately 40 per cent. Both acquisitions are profitable and are
expected to be earnings per share enhancing on a fully diluted basis.
Strategy and Business Development
Investment in our data centres and product development infrastructure has been a
major feature of the past two years, resulting in significant revenue growth in
2006 and laying the foundation for continued growth in 2007. Over the next year
capital expenditure is expected to reduce to less than 18 per cent of total
revenue, significantly enhancing future free cash flow. As a result, we expect
our business model to generate positive free cash flows in 2007.
The Company's core strategy is to increase repeat business and revenue
visibility, to expand its presence in South East European markets and to
position itself in the UK and the US as a service provider aimed at delivering
mobile marketing and advertising solutions. We expect these markets to grow
significantly in the coming years. Carefully targeted acquisitions are expected
to contribute to this strategy for expansion.
London and New York Offices
Velti's experience in enabling the mobile channel for advertising agencies,
media and enterprises is driving its increasing presence in the US and UK
markets. The establishment and expansion of the London office and the opening of
a New York office are spearheading Velti's activities in the mobile marketing
market in these countries where strong growth is expected in the next few years.
These are primarily sales and business development offices with all the
implementation and the operation of the actual work run out of the company's
common data centre in Greece.
New Mobile Services Platforms
In late 2006 Velti has launched its latest version of its mobile services
platform that enables both mobile marketing and advertising capabilities. This
platform leverages the newly developed innovative solutions for services that
are expected to become increasingly important over the next few years including
mobile user generated content, mobile communities, location based services,
virtual world branded mobile solutions and proximity marketing. Further details
are provided in the Operational Review below.
Customers
Repeat business from major mobile operators, advertising agencies and media
groups has been an important contributor to revenue in 2006. Business from key
customers, Vodafone Greece and TIM Hellas, increased while new key customers
including Vodafone UK, Orange UK, Argos, Mothercare and Cosmote have been added
to the Company's portfolio.
Velti currently services around 100 corporate customers (2005: 50 customers)
while Velti's largest customer contributed in 2006 14 per cent to its revenues
(2005: more than 25 per cent).
Outlook
In 2007 Velti will maintain its primary focus of providing mobile content
solutions for mobile operators, advertising agencies and media groups. The
geographical expansion in South Eastern Europe will focus mainly on Greece,
Turkey, Romania and Bulgaria. The offices in London and New York are also
expected to be areas of growth for Velti in 2007 and to lead a more focused push
towards mobile marketing and advertising.
The Board sees excellent prospects for delivering a further year of very strong
growth.
David Mann Alexandros Moukas
Non-Executive Chairman Chief Executive Officer
OPERATIONAL REVIEW
Key accomplishments in 2006
Expansion in existing clients
In 2006, Velti has pushed forward on its mission to provide state of the art
solutions for mobile operator value added services platforms. The Company has
developed mission critical systems for content management, multi-channel content
delivery, multi-channel messaging delivery and these systems have been extended
with new features added for established clients such as Vodafone and TIM. Most
of the third party media and content providers that provide on-portal services
in these operators are doing so through Velti systems. New features have been
added such as integration with mobile TV, ringback tones, advanced security and
service bundling capabilities and integration with search engines such as Google
mobile.
Other existing Velti clients include smaller operators like Armentel and
Q-Telecom. These operators have smaller capital expenditure budgets and Velti's
business model has been adapted to provide full managed services on a
revenue-share basis. These clients have also used Velti as a provider of brand
enhancement and mobile marketing solutions with impressive results.
We are building campaign cases where brand enhancement activities surpass a
remarkable 11 per cent in subscriber-base participation and generate continuous
user participation and dialogue on average every three days. Such branding
activities also result in additional prepay customer acquisition for these
operators.
Other major enterprise customers that generated significant business in 2006
include CYTA (mobile operator in Cyprus), Intralot (top-three global supplier of
gaming and transaction processing systems), and major South Eastern European
banks (National Bank of Greece, ATE Bank and Eurobank EFG).
Expansion in new clients
In 2006 Velti became a provider of choice for content management and operation
for Cosmote, an operator part of the OTE Group which has presence in seven South
Eastern European countries and more than 10 million subscribers. Integration of
Velti systems with the operator's new mobile service delivery platform is
progressing well.
Through its subsidiary M-point, Velti has also made a strong push into location
based services with navigation and traffic alert systems for Vodafone, TIM and
Cosmote. In addition, the Company was awarded a major contract for providing
cross-operator traffic alert information.
Velti was a key integrator in Turkcell's (Turkey's largest mobile operator)
service delivery platform providing services for content rendering and
adaptation for different devices.
Significant business developments followed the acquisition of the assets of
Digital Rum, a leading and award winning mobile promotions provider in the UK.
Following the acquisition, VeltidR, the UK subsidiary of the Company, signed
contracts with Orange UK, Vodafone UK, Argos and others. Velti is expanding the
capabilities of the London office in order to service its existing clients and
to acquire new clients.
Velti will be significantly increasing its presence in the mobile marketing and
advertising space primarily through its New York and London offices. The overall
evolution of the company depends as much in the global developments in this area
as it does in regional development.
Other key accomplishments
In the area of product development, Velti has completed its Mobile Marketing
platform - a first of its kind worldwide to bring under the same umbrella,
mobile 'above the line' activities (WAP banner ads, SMS advertising), 'below the
line' activities (loyalty and branding programs, on pack promotions) and
multichannel media content delivery.
The Company has achieved connectivity for provision of value added services for
all the major Greek, Cypriot, Bulgarian, Armenian, UK and US operators, while c
onnectivity with Turkish and Romanian operators is planned for second quarter of
2007.
Product Development
Product development in 2006 has focused on two complementary activities.
The first is the continuous expansion of the mobile services portfolio. In this
direction, the Company has developed innovative solutions in services that are
going to become increasingly important over the next few years including mobile
user generated content, mobile communities, location based services, virtual
world branded mobile solutions and proximity marketing.
The second is the development of the next generation of the platform that makes
these services, and traditional mobile services, easily consumable and
addressable by large organisations. Velti's platform allows operators,
advertising agencies and media groups to quickly launch, market and support
mobile services through advertising budgets. While the end result and business
partner goals vary significantly, Velti's platform provides automated service
creation, launch and delivery to bring launch timeframes for such services down
to hours instead of weeks or months - which has been the norm in the industry.
The platform provides integrated budget and goal planning, execution and
monitoring capabilities so each major player that partners with Velti can have a
full solution and technology capability.
The Mobile Market
The last year has confirmed our views on the mobile value added market as a
field that is far from saturation and will continue to experience strong growth
in the future. The market in the region is also poised to grow faster because of
the lower mobile penetration, which however is going to reach northern European
levels in the next few years.
The enablement of the mobile value added services channel for all these
companies remains a task that requires significant technology expertise and
managed services capabilities. New capabilities, such as location based
services, proximity marketing, user generated mobile video and media, are added
every month within the world of mobile value added services.
Velti is focusing on generating repeatable revenue from established and
profitable services while investing in new service and geographic expansion to
drive future growth. The Company has managed to establish repeatable and
increasing streams of revenue growth from the provision of technology platforms
and supporting managed services to operators thus achieving strong visibility
and profitability.
Business Model
Velti has the platforms, the operational capability and the staff to provide
flexible solutions to its customers. Currently, mobile operators need to launch
as many new services as possible with reduced capital investments and
advertising agencies have started exploring scalable ways of integrating the
mobile into their campaigns, Velti provides flexible alternatives to the
platform licensing model, by offering a complete outsourcing solution. Business
models where Velti provides managed services and is embedding itself in the
revenue sharing chain are truly scalable and flexible.
Mobile Services Platform
The mobile future is going to be about the ability to deliver in hours a set of
activities comprising a complete user experience - in addition to the automation
of a commoditised activity (such as mobile banner ad management or WAP site
creation). We continue to innovate in terms of new mobile services,
infrastructure planning and management platforms needed for advertising
agencies, operators and media.
Our platforms provide a full lifecycle management including planning, execution
and monitoring. We have streamlined and automated more than 60 mobile marketing
activities from WAP site creation, banner ad management, on-pack promotion
templates for FMCGs, to branding and loyalty solutions for mobile operator
clubs. We have added new activities such as proximity marketing, user generated
content and location based services, introducing them gradually to our mobile
operator and advertising agency partners. We believe that it is these kinds of
applications that make the mobile different and useful, rather than considering
the device a mini web browser with banner ads.
Currently the state of mobile advertising has been limited to enabling mobile
search and placement of WAP banner ads inventory across operator and third party
portals. This has led to a variety of marketplaces or one-off deployments at
operators with minimal traction and volume, disparate standards and capabilities
and has added more complexity rather than ability to drive volumes.
Velti's platform enables 'above the line' activities in a way that can address
all the existing operator portal and third party mobile advertising marketplaces
making them suitable for an ad agency to drive volume easily and transparently.
'Below the line' activities are also important as they provide differential
marketing capabilities to ad agencies that go beyond commoditised, low margin
banner ad buying.
FINANCIAL REVIEW
In the financial year ended 31 December 2006 revenue reached €10.8 million,
posting an increase of 122 per cent compared with 2005 (€4.9 million). The
increase in revenue was fuelled by organic growth in both the Telco and
non-Telco segments which in turn was pinpointed by repeat business with existing
clients and by an expanding client base.
Operating expenses excluding depreciation, amortisation and the cost of share
awards (€0.07 million) were €6.44 million representing an increase of 117 per
cent compared with 2005 (€3.0 million) in support of the increase in revenue.
Depreciation and amortisation reached an amount of €1.3 million (€0.5 million in
2005) reflecting the significant product development and infrastructure projects
undertaken both in 2005 and 2006. Operating profit increased by 119 per cent to
€3.0 million (€1.4 million in 2005) which despite the increase of 141 per cent
in the depreciation and amortisation charge, delivered an operating margin of 28
per cent, on a par with 2005.
The net interest charge for the year was €0.2 million, a decrease of €0.1
million reflecting the strengthening of the net cash position to €4.0 million
(net debt of €1.9 million in 2005).
Profit before tax for 2006 was €2.7 million representing an increase of 152 per
cent over 2005 (€1.1 million). The taxation charge for the year, inclusive of a
deferred tax expense of (€0.5 million) was €0.6 million (€0.4 million in 2005)
(calculated at an effective tax rate of 22 per cent (33 per cent in 2005). Basic
earnings per share were €0.087 (€0.038 in 2005).
The balance sheet at 31 December 2006 was substantially strengthened as a result
of raising €12.5 million net, by floating on AIM in May 2006. The funds raised
from the IPO were used during the year to repay €2.6 million of high coupon
debt, to fund increased working capital requirements that resulted from the
robust growth in revenue and to finance the product development efforts and the
investment in Group's infrastructure.
Total assets were €22.1 million at 31 December 2006 (2005: €8.0 million). Of the
total assets, €7.2 million were held in non-current assets, €9.0 million were
held in trade debtors and prepayments and €5.9 million were cash and cash
equivalents. Equity increased by €15.3 million to €16.3 million and total
liabilities decreased by €1.3 million to €5.8 million.
Consistent with our strategy, as stated during our IPO, in 2006, significant
effort and capital were committed mainly to the development of the common data
centre and of the mobile marketing platform. Out of total capital expenditure
incurred in the year, approximately €1.3 million were spent in development of
the next versions of the mobile services platforms that have been released and
are already live at customers, €2 million were spent in software licences and
outsourced products for the data centre and €0.8 were spent in data centre
equipment. The company has brought forward capital expenditure earmarked for
2007 into 2006, to accelerate the implementation of its data centre investment
plan in order to facilitate the increased needs of its customers. Capital
expenditure in 2007 will be less than originally projected, and no more than 18
per cent of revenues.
Accounts receivable and prepayments increased by €6.3 million primarily because
of four large, long-term mobile development projects, worth €4.2 million, whose
payment terms are based either on key milestones of delivery or completion.
Payment for €3.2 million of these projects is expected in 2007 and the balance
in 2008. The company expects an improvement in 2007 receivables and therefore
working capital because of a higher contribution of mobile services as opposed
to mobile integration projects in its revenue mix.
Net cash outflow from operations was €0.7 million while free cash outflow from
operations was €6.6 million reflecting the significant investments in product
development and infrastructure. At 31 December 2006, net cash was €4.0 million
compared to a net debt position of €1.9 million at 31 December 2005. We expect
the company to generate positive free cash flows in 2007.
CONSOLIDATED INCOME STATEMENT
Note Year ended 31 Year ended 31
December 2006 December 2005
€'000 €'000
Revenue 10,816 4,884
Cost of revenue (3,907) (1,892)
Gross profit 6,909 2,992
Other income 25 -
Selling expenses (1,974) (537)
Administrative expenses (1,947) (1,077)
Other expenses (4) (7)
Operating profit 3,009 1,371
Finance expense, net (169) (282)
Share of loss of associates (108) (6)
Profit before tax 2,732 1,083
Tax (603) (356)
Profit after tax 2,129 727
Minority interest 117 -
Profit after minority 2,246 727
interest
Basic earnings per share 4 8.7 3.8
(in Eurocents):
Fully diluted earnings per 4 8.5 3.8
share (in Eurocents):
CONSOLIDATED BALANCE SHEET
Note 31 December 31 December
2006 2005
€' 000 €' 000
ASSETS
Non -current assets
Property, plant and equipment 1,342 307
Intangible assets 4,841 1,773
Investment in associates 448 1
Goodwill 599 -
Deferred tax assets - 228
7,230 2,309
Current assets
Receivables and prepayments 8,968 3,231
Available for sale investment 27 26
Cash and cash equivalents 5,867 2,467
14,862 5,724
Total assets 22,092 8,033
EQUITY
Share capital 2,125 1,375
Share premium account 11,613 -
Share based payment reserve 66 -
Merger reserve 1,071 1,071
Accumulated profit / (losses) 741 (1,481)
Total shareholders' equity 15,616 965
Minority interest 663 -
Total equity 16,279 965
LIABILITIES
Non-current liabilities
Borrowings 3 750 2,431
Retirement benefit obligations 102 64
Deferred tax liability 229 -
1,081 2,495
Current liabilities
Trade and other payables 3,565 1,921
Deferred Income - 666
Current income tax liabilities 86 40
Borrowings 3 1,081 1,946
4,732 4,573
Total liabilities 5,813 7,068
Total equity and liabilities 22,092 8,033
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
based
Share Share payment Minority Merger Retained
Capital Premium reserve Interests Reserve Earnings Total
€'000 €'000 €'000 €'000 €'000 €'000 €'000
Balance at 1,238 - - 1,025 (2,122) 141
31 December 2004
Share options exercised 137 - - - 85 - 222
Transfer to - - - (39) 39 -
retained earnings
Deferred tax adjustment - - - - - 18 18
Share issue expenses - - - - - (143) (143)
Net profit for the year - - - - - 727 727
Balance at 1,375 - - - 1,071 (1,481) 965
31 December 2005
Minority interest - - - 780 - - 780
Deferred tax adjustment (24) (24)
Share capital increase 750 11,771 - - - - 12,521
Share based payment - - 66 - - - 66
reserve
Share issue expenses - (158) - - - (158)
Net profit for the year - - - (117) - 2,246 2,129
Balance at 2,125 11,613 66 663 1,071 741 16,279
31 December 2006
CONSOLIDATED CASH FLOW STATEMENT
Note Year ended Year ended
31 December 31 December
2006 2005
€'000 €'000
Cash flows from operating activities
Cash generated from operations 7 (713) 899
Interest paid (348) (243)
Tax paid (178) (255)
Net cash (used in)/generated from operating
activities (1,239) 401
Cash flows from investing activities
Purchase of property, plant and equipment (1,181) (230)
Purchase of intangible assets (3,747) (1,987)
Purchase of non available-for sale (556) -
investments
Disposal of available-for sale investments - 31
Interest received 148 6
Government grants received - 1,250
Net cash used in investing activities (5,336) (930)
Cash flows from financing activities
Net proceeds from issue of ordinary shares 12,521 222
Long-term borrowings (1,681) -
Borrowings (865) 2,675
Finance lease payments - (15)
Net cash from financing activities 9,975 2,882
Increase in cash and cash equivalents 3,400 2,353
Movement in cash and cash equivalents
At beginning of year 2,467 114
Increase 3,400 2,353
At end of year 5,867 2,467
Notes
The financial information in this announcement does not constitute statutory
accounts as defined in section 240 of the Companies Act 1985. Financial
information for the previous financial year ended 31 December 2005 has been
derived from the financial statements of Velti SA. The auditors have indicated
that they intend to give an unqualified report, and will not contain any
statement under section 237(2) or (3) of the Companies Act 1985, on the
statutory financial statements for the year ended 31 December 2006. Copies of
the Company's report and financial statements will be sent to shareholders
shortly and will be available at the registered office of the company: 110
Cannon Street, London, EC4N 6AR, United Kingdom
1. General information
Velti plc was incorporated 2 September 2005 (as Brightmanner plc) in the United
Kingdom under the Companies Act 1985. Velti plc had not traded in the period to
31 December 2005. On 9 March 2006, the company changed name from Brightmanner
plc to Velti plc. The nature of the Group's operations and its main activities
are described in the Chairman and Chief Executive's report.
2. Group reorganisation
Prior to 20 April 2006, Velti SA was the parent Company of the Group. On 20
April 2006, pursuant to a group reorganisation in preparation for a proposed
Initial Public Offering , 19,019,335 shares of 5 pence each were issued by the
Company (being Velti plc) and were allotted and issued, all credited as fully
paid, to the shareholders of Velti SA in consideration for the entire issued
share capital of Velti SA. The Company thereby became the holding company of the
Group.
The Group resulting from the group reorganisation is regarded as a continuing
entity. Accordingly, the consolidated financial information for the year ended
31 December 2006, together with the comparative figures, has been prepared as if
the current Group structure had been in existence throughout the years presented
by using the principles of merger accounting.
On 26 April 2006, the Company adopted the Velti plc Share Incentive Plan, which
will provide share based incentives to employees. This will not exceed 10 per
cent of the Company's ordinary share capital, over three years.
On 3 May 2006, 10,000,000 ordinary shares of 5 pence were allotted at a premium
of 95 pence per share, pursuant to the initial Public Offering.
3. Borrowings
31 December 2006 31 December 2005
€'000 €'000
Current
Current portion of long-term debt
(within 1 year) 750 427
Short-term loans 1,081 1,519
1,831 1,946
Non - current
Long-term portion of long-term debt - 1,286
Long-term loans - 1,145
- 2,431
Total borrowings 1,831 4,377
The current portion of long term debt will be repaid in 2007 in 3 instalments:
a) €150,000 on 31 January 2007, €300,000 on 30 April 2007 and c) €300,000 on 30
September 2007.
4. Earnings per share
31 December 2006 31 December 2005
€'000 €'000
Profit attributable to equity holders of
the Company 2,246 727
Weighted average number of ordinary
shares in issue 25,721,472 19,091,335
Basic earnings per share (€ per share) 0.087 0.038
Fully diluted earnings per share (€ per
share) 0.085 0.038
The potentially dilutive instruments on issue are 810,000 shares.
5. Share capital
The Company's issued share capital consists of 29,091,335 ordinary shares of 5
pence each. The ordinary shares confer voting rights as well as the right to the
company's assets upon liquidation.
Prior to 20 April 2006, Velti SA was the parent company of the Group. On 20
April 2006, pursuant to a group reorganisation in preparation for the proposed
Initial Public Offering, 19,019,335 shares of 5 pence each were issued by the
Company (being Velti plc) and were allotted and issued, all credited as fully
paid, to the shareholders of Velti SA in consideration for the entire issued
share capital of Velti SA. The Company thereby became the holding company of the
Group.
Deferred shares award plan
The Group adopted a share incentive plan on 26 April 2006. Under this Plan, any
employed director or any employee of the Group is eligible to receive awards
under the plan. The Deferred Shares Award (DSA) entitles the participant to
acquire shares when the DSA vests by paying an amount of no less than the
nominal value per share. The vesting period is 2 years. Deferred shares are
forfeited if the participant leaves the Group before the DSA vests.
The awards outstanding at 31 December 2006 had a weighted average exercise price
of €0,07, and a weighted average remaining contractual life of 18 months. Awards
were granted on 12 September 2006 and on 8 November 2006. The aggregate of the
estimated fair values of the awards granted on those dates is €450,000.
In the year ended 31 December 2006 the Group recognised total expense of €66,000
in respect of awards granted in the year.
6. Subsidiaries
Velti plc owns 100 per cent of the share capital of Velti SA and 100 per cent of
the share capital of Velti DR Limited. Velti SA owns 79.51 per cent of Velti
North America Inc (formally Retaine Inc) and 99.99 per cent of the share capital
of Velti Center for Innovation SA ('VCI'). In turn, VCI has a 50 per cent
holding in M-Point SA and a 45 per cent holding in N Squared SA which are
consolidated on the basis of majority control of the Board of Directors of those
companies.
Subsidiaries are consolidated from the date on which control is transferred to
the Group. They are de-consolidated from the date that control ceases.
7. Cash (used in) / generated from operations
Year ended Year ended
31 December 31 December
2006 2005
€'000 €'000
Net profit 2,129 727
Adjustments for:
Tax expense 603 356
Interest income (148) (6)
Interest expense 348 290
Depreciation 151 69
Amortisation of intangible assets 1,153 473
Recognition of grants (666) (584)
Post-retirement benefits - 28
Share of loss of asscociates 108 6
Non cash expenses 347
Fair value gain on available-for-sale investment - (2)
4,025 1,357
Changes in working capital:
Receivables and prepayments (6,274) (648)
Trade and other payables 1,497 195
Pensions and other post-retirement obligations 39 (5)
(4,738) (458)
Cash (used in) / generated from operations (713) 899
8. Post balance sheet event
On 22 March 2007, the Company acquired the entire share capital of Rekanak Ltd,
the sole shareholder of M-Telecom OOD ('M-Telecom'), a leading mobile value
added services provider in Bulgaria. The total consideration shall range between
€1,010,000 and €2,560,000 depending on M-Telecom achieving certain profitability
targets for 2007 and 2008. The consideration will be satisfied a) partially in
cash at acquisition date, by a payment of €480,000, and b) the remaining in cash
or Velti shares (at the Company's discretion) in two instalments, payable at 30
April 2008 and at 30 May 2009.
This information is provided by RNS
The company news service from the London Stock Exchange
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