Zamano Plc-Ord Shs : Zamano PLC - Final Results

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Press Release

12 March 2013

zamano PLC

('zamano', the 'Company' or the 'Group')

Final Results

zamano PLC (AIM:ZMNO, ESM:ZAZ), a leading provider of interactive applications and services to mobile devices, has today announced results for the 12 months ended 31 December 2012. 

Highlights:

·     Revenue of ?19.207M (up 28%, ?15.009M, 2011);

·     EBITDA of ?2.506M (up significantly on EBITDA of ?0.351M, 2011);

·     Operating profit of ?2.049M (operating loss of (?0.328M), 2011);

·     Pre-tax profit ?3.566M, after net benefit of debt settlement, (pre-tax loss of ?0.585M in 2011).

·     Net debt eliminated in 2012 (net cash of ?0.138M at 31 December 2012 versus net debt of ?4.381M at 31 December 2011);

John Rockett, Chairman, zamano commented: "The Group performed strongly in 2012 generating substantially increased Revenues, EBITDA and Pre and Post Tax earnings for the year. This coupled with the completion of a debt settlement agreement with our bank, puts the Group in its strongest financial position for a number of years. This outcome is as a result of the significant work undertaken since H2 2011 to stabilise and reposition the business. The Board's focus throughout 2013 and beyond will be to seek to broaden the Group's product-market base".

Pat Landy, CEO, zamano commented: "having successfully realigned its core activities, the Group delivered a strong operational and financial performance in 2012".

"In line with the on-going global growth in mobile usage and rapid adoption of smartphone devices, zamano is focusing its market development activities in 2013 on expanding its web and mobile offering to new emerging territories in Eastern Europe, the Americas and Asia. The Group will also explore ways to increase the depth of its product portfolio via joint ventures and licencing arrangements," he added.

- Ends -

For further information, please contact:

zamano plc

Pat Landy,   Chief Executive Officer

Tel: [phone] (O)

[phone] (M)

NCB Corporate Finance

Conor McCarthy / Shane Lawlor

Tel: [phone]

Cenkos Securities

Alan Stewart

Tel:  [phone] (O)

[phone](M)

Jon Fitzpatrick

Tel:  [phone]

Neil McDonald

Tel:  [phone]

Edelman

Karin O'Connor [phone]

Donnchadh O'Leary + 353 87 2820436

Chairman's statement

Zamano is very pleased to report on a year during which the Group made substantial progress at both operating and financial levels.

In my Chairman's Statement last year, I commented on the improving trend experienced in the second half of 2011 and stated that this should provide a good platform for growth during 2012. I am now pleased to confirm that those trends continued throughout the whole of 2012 and have enabled the Group to make significant strides on a number of fronts during the year.

In December, the completion of a debt settlement agreement with our bankers, carried out with the financial assistance of Pageant Holdings Limited, the Groups largest shareholder, effectively eliminated net debt from our balance sheet at 31 December 2012 (31 Dec 2012; Net cash ?0.138 million, 31 Dec 2011; Net debt ?4.381 million).

At an operating level, the Board is happy to announce that zamano has achieved excellent growth in EBITDA for the year ended 31 December 2012 with the EBITDA outturn of ?2.506 million significantly ahead of the corresponding EBITDA figure for 2011 of ?0.351 million.

Furthermore, an operating profit for the year of ?2.049 million compares very favourably with an operating loss of ?0.328 million in 2011. The net benefit of the once-off debt settlement arrangement with our bankers, mentioned previously, increased profit before tax for the year to ?3.566 million compared to a pre tax loss of ?0.585 million in 2011. As a result, profit after tax for year was ?3.510 million compared to a corresponding after tax loss of ?0.594 million in 2011.

Earnings per share for the year ended 31 December 2012 was ?0.036 compared to a loss per share of ?0.006 in 2011.

These exceptional results are primarily due to a very strong revenue performance in our UK web and mobile marketing business (H1 and H2) and our web and mobile subscription business in Ireland (H1). Overall revenues at ?19.207 million for the year were 28% ahead of 2011 revenues of ?15.009 million.

While the overall Group performed strongly throughout the year, zamano did suffer some setbacks during 2012, particularly in our subscription and whitelabel businesses in Ireland. The introduction of a new code of practice in Ireland on 30 July after a costly legal battle in the High Court, has effectively eliminated our subscription revenues in Ireland. Following that decision, the Group has sought to reduce the impact of this revenue loss by the successful introduction of a number of new web and mobile services in Ireland during the final quarter of 2012. In relation to the legal case referred to above, I am pleased to inform shareholders that zamano and its co-plaintiffs have recently settled the High Court Plenary action which we were jointly taking against the Irish regulator, Comreg.

As stated in our interim results, in the US, the introduction of a new refund policy by one of our main carriers Verizon, together with AT&T's requirement to reclassify all services carried on their network has led to a gradual erosion of our traditional US revenues. We are currently working on the launch of a new web and mobile offering on a trial basis with other mobile operators in the US and early signs are encouraging.

zamano plc & subsidiaries

Chairman's statement (continued)

The effects on revenues and margins of market and regulatory changes similar to those outlined in the previous paragraphs, demonstrates the risks inherent in the Group's business. As a result, in 2013, zamano's strategic focus is on expanding the breadth of its geographical footprint, together with deepening its product portfolio. In this regard, since the turn of the year, we have launched web and mobile offerings in Eastern Europe and further launches in other market territories are being evaluated by our business development team. On the product side, we are currently trialling a new non-regulated service offering targeted at small owner-managed businesses and sporting organisations.

Undoubtedly, the year ended 31 December 2012 was a good year for the Group. The work done during H2 2011 to stabilise and reposition the business bore fruit in 2012 resulting in substantially increased Revenues, EBITDA and Pre and Post Tax earnings for the year. This coupled with the successful completion of the debt settlement agreement with our bank, puts the Group in its strongest financial position for a number of years. However, while these achievements are in themselves significant, the loss of our subscription based Irish business as a result of new regulation and the gradual erosion of our traditional US business means that our revenues are more concentrated than ever on the UK and Ireland. Therefore, the Board's focus throughout 2013 and beyond will be to seek to broaden the Group's product-market base, thereby reducing this risk. While we are conscious of the commercial and regulatory challenges confronting the business, the Board, nevertheless, believes that the Group can make further progress during the current financial year.

Having successfully overcome many challenges at business and operational level over the course of the past few years, the Group is now poised to grow and develop its range of web and mobile services. This achievement is very much due to the dedication and commitment of all of the Group's employees and I commend them for their considerable efforts in repositioning and restructuring the business.

John Rockett

Chairman

zamano plc & subsidiaries

Chief executive officer's statement

Introduction

The financial year ended 31 December 2012 was a period during which the Group made significant overall strides in operational and financial terms. In spite of a challenging commercial environment and the ongoing regulatory changes facing the business, Zamano successfully stabilised and repositioned its core business operations in the UK in particular and to a lesser extent, in Ireland.

While the UK and Ireland produced excellent financial results during 2012, the Group's activities were severely impacted by network operator changes in other market territories, namely, the US and Spain. Also, our subscription based web and mobile and whitelabel businesses in Ireland were severely impacted during the second half of the year, due to the introduction by Comreg of a new code of practice which specified a double opt-in process for subscribers to our premium rate SMS services. Overall, while the Group's financial performance was extremely good in 2012, Zamano continues to face certain commercial and regulatory challenges in its main markets.

At a strategic market level, the growth of smartphones continued at a significant pace during 2012. These market developments reflect the dynamic and vibrant nature of the mobile telephony industry. Smartphones are the key driver of our industry and are predicted to dominate virtually all forms of human interaction and commerce across the globe in the near term future.

It is predicted that there will be approximately 5 billion active mobile users globally by 2015. This growth in mobile usage gives Zamano a larger inventory base to target and the rapid adoption of new smartphone devices provides us with an opportunity to upgrade the level of functionality provided to customers. In the light of this, Zamano is focusing its market development activities in 2013 on expanding its web and mobile offering to new emerging territories in Eastern Europe, the Americas and Asia. We will also explore ways to increase the depth of our product portfolio via joint ventures and licencing arrangements.

Market review

The Irish business performed quite well during the year ended 31 December 2012, primarily as a result of significant growth in activity in the web and mobile subscription segment and strong activity by our whitelabel clients during the first half of the year. This growth in activity was driven by clients anticipating the introduction by Comreg of its new code of practice on 5 June 2012. Irish sales of ?7.205 million for the year were 31% ahead of 2011 (?5.491 million), while gross profit at ?1.764 million was 19% ahead of the same period last year (?1.487 million).

In conjunction with Modeva, another leading participant in the premium rate SMS market in Ireland, and the Irish Phone Paid Services Association, an industry body, Zamano took a High Court action seeking a Judicial Review of certain aspects of the new code. As a result, we obtained a stay on the introduction of the double opt-in provisions of the code on 2 June 2012. This stay was, however, lifted on 25 July 2012, effective from 30 July 2012. Consequently Irish revenues in H2 were down on H1, although the full impact of the new code on our Irish revenues was offset to some degree by the run-off sales from our existing web and mobile subscriber base and by the introduction of new web and mobile services since

zamano plc & subsidiaries

Chief executive officer's statement (continued)

Market review (continued)

early August. The full effect of the new provisions of the code on our Irish revenues will not reveal itself until the first half of 2013.

The UK business which is essentially a web and mobile marketing operation, performed exceptionally well over the course of 2012. Sales for the year were ?9.426 million representing an increase of 94% over 2011 (?4.850 million). This translated into an excellent outcome at gross profit level, with UK gross profit at ?3.093 million for 2012, 152% ahead of 2011 (?1.229 million). While this business continues to perform well for Zamano, the proposed implementation of a new subscriber sign up system could have an  impact on UK revenues during the current year.

In other markets, our traditional US business has been gradually eroded by operator changes i.e. in February 2012, Verizon changed its refund policy which caused us to cease advertising to their client base and in June 2012, AT&T announced a requirement to reclassify all services carried on their network. While we benefitted to some extent from the run-off of these services during 2012, there will be virtually no revenue from these customers in 2013. In the meantime, we have, however, launched on a trial basis, a new web and mobile offering on other operator networks, which it is hoped will offset to some degree the lost revenue from Verizon and AT&T.

In our smaller territories, where our footprint is relatively modest, our Spanish business has been emasculated by the introduction by the mobile network operators of a new certification and opt-in process for subscribers. We re-entered the Australian market in late 2011/early 2012 but withdrew after a couple of months because of the uncompetitive nature of advertising rates and the introduction of tighter regulatory controls. In other markets, we launched web and mobile offerings in Eastern Europe since the year end, but it is too early to say how successful these initiatives will be.

Financial Review

As outlined in the Chairman's statement and in the earlier part of this statement, Zamano made significant advances in revenues, gross profit, EBITDA, profit before tax, profit after tax and earnings per share during 2012.

In particular, a strong revenue performance in our UK web and mobile marketing business (H1 and H2) and our web and mobile subscription and whitelabel businesses in Ireland during H1 drove revenues to ?19.207 million, 28% ahead of the 2011 figure of ?15.009 million. Gross profit for the year at ?5.424 million (28%) was three percentage points up on 2011 where the corresponding figures were ?3.721 million (25%). EBDITA at ?2.506 million was significantly ahead of the corresponding figure for 2011 of ?0.351 million.

At operating level, an operating profit for 2012 of ?2.049 million compares very favourably with an operating loss in 2011 of ?0.328 million. Taking account of the once-off favourable adjustment arising from our bank debt settlement transaction, profit before tax for 2012 increased to ?3.566 million, compared to a pre-tax loss of ?0.585 million in 2011. Profit after tax at ?3.510 million for 2012, compared with an after tax loss of ?0.594 million in 2011, and earnings per share for 2012 at ?0.036 was well ahead of a loss per share in 2011 of ?0.006.

zamano plc & subsidiaries

Chief executive officer's statement (continued)

Financial review (continued)

Perhaps the most significant financial event of 2012 for Zamano was the conclusion of a debt settlement transaction with our bankers, carried out with the financial assistance of Pageant Holdings Limited, our largest shareholder. As a result, we were able to record once-off finance income in our profit and loss account for 2012 of ?1.835 million, and net bank debt was effectively eliminated, falling from net debt of ?4.381 million at 31 December 2011 to net cash of ?0.138 million at 31 December 2012. At gross debt level, gross debt at 31 December 2011 of ?4.541 million was reduced to gross debt of ?1.084 million at 31 December 2012. This strengthening of our balance sheet, will give the Group greater flexibility in financing its business development plans in the future.

Outlook

The year ended 31 December 2012 was a year of exceptional progress for the Group. A strong operating performance coupled with the successful completion in December 2012 of a debt settlement agreement with our bank puts Zamano in its strongest financial position for a number of years.

Nevertheless, the loss of our subscription based Irish web and mobile and whitelabel businesses and the erosion of our traditional US business, means that the Group's revenues are more concentrated than ever on the UK and Ireland. Consequently, it is essential that during 2013, Zamano broadens its territorial base and deepens its portfolio of customer services. Recent market expansion in Eastern Europe represents the start of our territorial expansion. On the product front, during the current year Zamano will continue to seek out product licencing and joint venture opportunities in web and mobile services in order to provide the Group with a portfolio of products which will underpin its territorial expansion.

Finally, in spite of the market and regulatory challenges which abound in the business, management believes that its continuing focus on product and market expansion in the areas of web and mobile services will result in an improvement in the ongoing prospects of the Group during 2013.

Pat Landy

Chief Executive Officer

zamano plc & subsidiaries

Condensed consolidated balance sheet

at 31 December 2012

		2012		2011
Assets		?'000		?'000
Non-current assets
Property, plant and equipment		50		57
Intangible assets		6,334		6,447
Deferred tax asset		137		69
Total non-current assets		6,521		6,573
Current assets
Trade and other receivables		3,127		4,200
Cash and cash equivalents		1,222		160
Total current assets		4,349		4,360
Total assets		10,870		10,933
Equity
Equity share capital		98		96
Share premium		13,494		13,442
Capital conversion reserve		1		1
Foreign currency translation reserve		(64)		(64)
Share-based payment and warrant reserve		236		3
Retained loss		(8,169)		(11,453)
Total equity		5,596		2,025
Liabilities
Non-current liabilities
Loans and borrowings		-		3,973
Total non-current liabilities		-		3,973
Current liabilities
Trade and other payables		4,067		4,358
Loans and borrowings		1,084		568
Current tax liabilities		123		9
Total current liabilities		5,274		4,935
Total liabilities		5,274		8,908
Total equity and liabilities		10,870		10,933

zamano plc & subsidiaries

Condensed consolidated statement of changes in equity

for the year ended 31 December 2012

					Foreign	Share-based
			Capital		currency	payment and
	Equity share	Share	conversion	Retained	translation	warrant	Total
	capital	premium	reserve	earnings	reserve	reserve	Equity
	?'000	?'000	?'000	?'000	?'000	?'000	?'000
At 1 January 2012	96	13,442	1	(11,453)	(64)	3	2,025
Total comprehensive profit for the year
Profit for the year	-	-	-	3,510	-	-	3,510
Other comprehensive income
Currency translation adjustment	-	-	-	-	-	-	-
	______	_______	______	_______	______	_______	______
Total comprehensive profit for the year	-	-	-	3,510	-	-	3,510
	______	_______	______	_______	______	_______	______
Other transactions
Issue of equity share capital	2	52	-	-	-	-	54
Transfer of share option reserve	-	-	-	(226)	-	226	-
Issue of warrants	-	-	-	-	-	9	9
Share based payment	-	-	-	-	-	(2)	(2)
	______	_______	______	_______	______	_______	______
At 31 December 2012	98	13,494	1	(8,169)	(64)	236	5,596
	______	_______	______	_______	______	_______	______
At 1 January 2011	96	13,442	1	(11,371)	(65)	517	2,620
Total comprehensive loss for the year
Loss for the year	-	-	-	(594)	-	-	(594)
Other comprehensive income
Currency translation adjustment	-	-	-	-	1	-	1
	______	_______	______	_______	______	_______	______
Total comprehensive loss for the year	-	-	-	(594)	1	-	(593)
	______	_______	______	_______	______	_______	______
Other transactions
Issue of equity share capital	-	-	-	-	-	-	-
Transfer of share option reserve Share based payment	- -	- -	- -	512 -	- -	(512) (2)	- (2)
	______	______	______	______	______	_______	______
At 31 December 2011	96	13,442	1	(11,453)	(64)	3	2,025
	______	_______	______	_______	______	_______	______

zamano plc & subsidiaries

Condensed consolidated cash flow statement

for the year ended 31 December 2012

		2012		2011
		?'000		?'000
Cash flows from operating activities
Profit/(loss) before tax		3,566		(585)
Adjustments to reconcile profit for the year to
net cash inflow from operating activities
Depreciation		46		83
Amortisation of intangible assets		413		598
Share-based payments credit		(2)		(2)
Decrease/(increase) in trade and other receivables		1,073		(2,102)
(Decrease)/increase in trade and other payables		(293)		1,215
Finance income		(1,843)		(5)
Finance expense		326		262
Cash generated from operations		3,286		(536)
Interest paid		(197)		(94)
Income tax (refunded)/paid		(8)		30
Net cash inflow from operating activities		3,081		(600)
Cash flows from investing activities
Settlement of deferred consideration on
acquisition of subsidiaries		-		(267)
Purchase of property, plant and equipment		(39)		(32)
Purchase of intangible assets		-		(5)
Capitalisation of internally generated intangible assets		(300)		(330)
Interest received		9		5
Net cash outflow from investing activities		(330)		(629)
Cash flows from financing activities
Proceeds from issue of share capital		54		-
Repayment of debt		(1,743)		(1,335)
Net cash outflow from financing activities		(1,689)		(1,335)
Net increase/(decrease) in cash and cash equivalents		1,062		(2,564)
Cash and cash equivalents at 1 January		160		2,724
Cash and cash equivalents at 31 December		1,222		160

zamano plc & subsidiaries

Notes to the condensed consolidated preliminary financial information

for the year ended 31 December 2012

1     Basis of preparation

The condensed consolidated preliminary financial information, included in the preliminary financial results announcement, which should be read in conjunction with the statement of accounting policies contained in the 2011 Annual Report, has been derived from the consolidated financial statements for the year ended 31 December 2012, which have been prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union ("EU") and effective as at 31 December 2012.  

The condensed consolidated preliminary financial information presented herein does not constitute the Company's statutory financial statements for the years ended 31 December 2012 and 2011, with the meaning of Regulation 40(1) of the European Communities (Companies: Group Accounts) Regulations, 1992 of Ireland, insofar as such Group accounts would have to comply with disclosure and other requirements to those Regulations.  The statutory financial statements for the year ended 31 December 2012, together with the independent auditor's report thereon, will be filed with the Irish Registrar of Companies following the Company's Annual General Meeting and will also be available on the Company's website,www.zamano.com.  Statutory financial statements for the year ended 31 December 2011 have been filed with the Irish Registrar of Companies.  The auditor's report on those financial statements was unqualified.   

The consolidated financial statements and the condensed consolidated preliminary financial information were approved by the Board of Directors on 11 March 2013. 

The financial information is presented in Euro ("?") rounded to the nearest thousand, being the functional currency of the parent Company and its subsidiaries.  It has been prepared on the historical cost basis of accounting, except for share based payments, which are based on fair value determined at the grant date of the relevant share option.

The condensed consolidated preliminary financial information includes the results and financial position of the Company and all of its subsidiary undertakings.  All significant intercompany account balances, transactions, and any unrealised gains and losses or income and expenses arising from intercompany transactions have been eliminated in preparing the financial information.

The preparation of the condensed consolidated preliminary financial information requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results could differ materially from these estimates.  In preparing this financial information, the significant judgements made by management in applying the Company's accounting policies and the key sources of estimation uncertainty are the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2011.

zamano plc & subsidiaries

Notes (continued)

1     Basis of preparation(continued)

The accounting policies applied in the condensed consolidated preliminary financial information are the same as those applied in the consolidated financial statements as at and for the year ended 31 December 2011, as set out on pages 17 to 20 of the 2011 Annual Report.   There were no new standards or amendments to standards which were mandatory for the first time for the financial year beginning 1 January 2012 which had a significant impact on the financial information.

The directors have considered the latest cashflow projections in light of the revised facilities which were restructured prior to the end of 2012.  Having regard to the group's projected earnings over the next 15 months from the balance sheet date, the directors consider that it continues to be appropriate to prepare the financial statements on a going concern basis.

2     Operating segments

Following a review of the group's operations during the year, the segment structure as set out in the table below was implemented and consequently the 2011 segment disclosures, as previously reported in the 31 December 2011 financial statements, were restated.  The group is now managed based on three reportable segments which are defined based on geographical markets as follows:  Republic of Ireland (ROI), United Kingdom (UK) and United States of America (USA). It also has sales in other jurisdictions but these are not deemed to be standalone reportable segments under the requirements of IFRS 8 and are classified as "other locations" in the table below.  Previously the group reported under the segments of business to business "B2B" and direct to consumer "D2C."

The company's sales consist of the development, promotion and distribution of mobile content and interactive services directly to consumer and also facilitating the communication and interaction between businesses and consumers on mobile phone through a range of value-added mobile applications.

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 ("CODM").

The following tables present revenue and profit/ (loss) and certain assets and liability information regarding the group's reportable segments:

zamano plc & subsidiaries

Notes (continued)

2   Operating segments (continued)

Year ended 31 December 2012

	ROI	UK	USA	Other locations	Total
	?'000	?'000	?'000	?'000	?'000
External revenue	7,205	9,426	2,149	427	19,207
Operating Results	1,794	3,093	464	103	5,424

*Unallocated expenses relate payroll costs, amortisation of intangibles and central overheads such as rent, administration, overhead costs which are not allocated to individual reportable segments.

zamano plc & subsidiaries

Notes (continued)

2     Operating segments (continued)

As at 31 December 2012				Other
	ROI	UK	USA	locations	Total
	?'000	?'000	?'000	?'000	?'000
Segment assets	7,417	1,615	146	15	9,193
Unallocated assets*					1,677
Total assets					10,870
Segment liabilities Unallocated liabilities*	2,938	1,009	30	90	4,067 1,207
Total liabilities					5,274

Other segment information	Unallocated	Total
	?'000	?'000
Capital expenditure
Property, plant and equipment	39	39
Intangible assets	300	300
Other
Depreciation	46	46
Amortisation	413	413
Share-based payment credit	(2)	(2)

* The unallocated assets principally relates to intangibles and group cash and deferred tax.  The unallocated liabilities principally relate to loan liabilities.

zamano plc & subsidiaries

Notes (continued)

2     Operating segments (continued)

Year ended 31 December 2011

(As restated)	ROI	UK	USA	Other location
	?'000	?'000	?'000	?'000	?'000
External revenue	5,491	4,850	3,559	1,109	15,009
Operating results	1,487	1,229	795	210	3,721
Unallocated expenses*					(4,049)
Operating loss					(328)
Net finance expense					(257)
Loss before tax					(585)
Income tax expense					(9)
Net loss for year					(594)

*Unallocated expenses relate to payroll costs, amortisation of intangibles and central overheads such as rent and office overhead costs which are not allocated to individual reportable segments.

zamano plc & subsidiaries

Notes (continued)

2     Operating segments (continued)

As at 31 December 2011				Other
(As restated)	ROI	UK	USA	locations	Total
	?'000	?'000	?'000	?'000	?'000
Segment assets	7,628	2,252	368	17	10,265
Unallocated assets*					668
					______
Total assets					10,933
					______
Segment liabilities Unallocated liabilities*	3,292	797	209	60	4,358 4,550
					______
Total liabilities					8,908
					_______

Other segment information	Unallocated	Total
	?'000	?'000
Capital expenditure
Property, plant and equipment	32	32
Intangible assets	335	335
Other
Depreciation	83	83
Amortisation	598	598
Share-based payment credit	(2)	(2)

* The unallocated assets principally relates to intangibles, cash of the group and deferred tax.  The unallocated liabilities principally relate to loan liabilities.

zamano plc & subsidiaries

Notes (continued)

2     Operating segments (continued)

Geographical information

The following tables present revenue, assets and capital expenditure based on the geographical

location of customers and assets.

Year ended 31 December 2012

			Rest of
			Europe		of world	Total
	?'000	?'000	?'000	?'000	?'000	?'000
Revenue
Sales to external customers	7,205	9,426	318	2,149	109	19,207
	_______	_______	______	______	______	______
Other segment information
Non-current assets	6,384					6,384
(excluding deferred tax)
	________	_________	_______	_______	_______	_______

Year ended 31 December 2011

				Rest of			Rest
		ROI	UK	Europe		USA		of world		Total
		?'000	?'000	?'000		?'000		?'000		?'000
Revenue
Sales to external customers		5,491	4,850	949		3,559		160		15,009
		_______	_________	_______		_______		________		_______
Other segment information
Non-current assets
(excluding deferred tax)		6,504	-	-		-		-		6,504
		________	_________	_______		_______		________		_______

zamano plc & subsidiaries

Notes (continued)

3          Earnings/(loss) per share

Basic earnings/(loss) per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighed average number of ordinary shares outstanding during the year.  Diluted earnings per share amounts are calculated by dividing the net loss attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year 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 loss per share computations:

		2012	2011
		?	?
	Basic EPS	?0.036	(?0.006)
	Diluted EPS	?0.036	(?0.006)

zamano plc & subsidiaries

Notes (continued)

4          Adjusted earnings per ordinary share

The following reflects adjusted earnings per share based on adjusted net income:

	2012	2011
	?	?
Adjusted basic EPS	?0.040	?0.005
Adjusted diluted EPS	?0.040	?0.005
	_________	_________
Adjusted net income is calculated as:	2012	2012
	?'000	?'000
Profit/(loss) after tax	3,510	(594)
Share-based payments (credit)	(2)	(2)
Amortisation, net of tax	346	598
Redundancy costs, net of tax	22	459
	_________	_________
	3,876	461
	_________	_________

Reconciliation of reported operating loss across segments to "core" earnings before interest, tax, depreciation amortisation and non-recurring charges (Adjusted EBITDA).  "Adjusted EBITDA" includes results of the D2C and B2B segments only.  Costs associated with once off redundancy legal are also excluded.

	2012	2011
	?'000	?'000
Reported operating profit/(loss)	2,049	(328)
Depreciation	46	83
Share-based payment credit	(2)	(2)
Amortisation of intangible assets	413	598
	_________	_________
Reported EBITDA	2,506	351
Redundancy and restructuring	26	524
Newsworthie costs	-	383
Non-recurring legal fees	569	-
	_________	_________
Adjusted EBITDA	3,101	1,258
	_________	_________

zamano plc & subsidiaries

Notes (continued)

5          Impairment of goodwill

Goodwill arising from business combinations in prior years has been tested

for impairment.  Based on this test, the directors have determined that no impairment charge is required (2011: ?Nil)in the year.  Details regarding the underlying assumptions for the impairment review are laid out below.

D2C Cash-generating unit

Goodwill arising from business combinations in prior years has been allocated in its entirety to the D2C cash generating unit and reviewed for impairment.

The recoverable amount of the goodwill unit has been determined based on a value-in-use calculation using cash flow projections based on EBITDA less capitalised research and development costs from financial budgets approved by senior management covering a one year period which have been rolled on for a further 4 year period.  The pre tax discount rate applied to cash flow projections is 13.9%.

Key assumptions used in value-in-use calculations

The calculation of value-in-use for the group is most sensitive to the

following assumptions:

· projected cashflows for 2013 through to 2017; and

· discount rate

Discount rates

Discount rates reflect management's estimate of the risks specific to the group.  In determining the appropriate discount rate, management has considered the average cost of capital for the group.

EBITDA

Forecast EBITDA estimates are principally based on management's experience of and expectation for the group.

The principal assumption used within the cash flows is that EBITDA will grow at 3% per annum from FY2013.

No reasonable change in the assumptions would result in an impairment to the carrying value of goodwill.

zamano plc & subsidiaries

Notes (continued)

6          Related party disclosures

Compensation of key management

	2012	2011
	?'000	?'000
Short-term employee benefits	651	740
Share-based payments	(2)	(2)
Pension benefits	8	23
	_________	_________
	657	761
	_________	_________

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the group, and includes the executive and non-executive directors and certain members of senior management.

Related party transactions

During the prior year Zamano Solutions Limited, a subsidiary of the company, entered into a services agreement with Mr. Nick Furlong.  Mr. Furlong is a director of Pageant Holdings Limited ("Pageant") and his family are the beneficial owners of Pageant which in turn owns 29.34% of the issued ordinary share capital of the company as at 31 December 2012.  Under the terms of the arrangement Mr. Furlong purchased advertising space through an independent advertising broker in respect of which Zamano Solutions Limited will manage the collection of any subscription revenues generated from the advertising spend on his behalf in return for a fee.  The agreement required that Zamano Solutions Limited reimbursed Mr. Furlong the amount of advertising expenditure that he incurred and an additional return subject to the advertising spend generating sufficient revenues.  During the period the company paid ?500,500 to Mr. Furlong under the terms of the agreement.  There were no amounts due to him at 31 December 2012 (31 December 2011: ?192,500). 

During December 2012, Pageant acquired the company's existing loan for ?2.1m.  Under the terms of the company's arrangement with Pageant, the company paid an amount of ?1.1m on the signing of the agreement.  The company must meet minimum repayments for the balance due to Pageant by specified dates or additional penalty payments will be charged.  The total amount, including interest at 25%, to be repaid by 31 December 2013 is ?1.3m.

In December 2012 the Company issued 1,800,000 new ordinary shares to Pageant at a price of 3.0 cent per share.  The Company also issued warrants to Pageant pursuant to which Pageant will be entitled to acquire an additional 1,533,333 new ordinary shares at a price of 3.0 cent per share for the period up to 30 June 2014.

zamano plc & subsidiaries

Notes (continued)

7          Litigation

In the normal course of business, the group is involved in various legal proceedings with third parties, the outcome of which is uncertain.  Where appropriate, provision is made in the financial statements based on the directors' best estimate of the potential outcome of such proceedings. It is the policy of the group to rigorously defend all legal actions taken against the group.

8          Subsequent events

There were no significant events after the balance sheet date which would require the adjustment of, or disclosure in, this preliminary financial information.

9          Approval of consolidated financial statements

The consolidated financial statements were approved and authorised for issue by the board of directors on 11 March 2013.                                                                          

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