Myriad Group AG (SIX: MYRN), a global leader in mobile technology having shipped over 3.5 billion software applications on more than 2 billion phones, today reported improved operating performance and a net profit of USD 0.1 million for the first half of 2010.
Simon Wilkinson, CEO of Myriad Group AG, commented: “Although revenues for the first half of 2010 were somewhat lower than in 2009, they were in line with plan. We are pleased with the improvements in profitability which enabled us to achieve positive net profit for the half year. Strong progress was also achieved in the delivery of our social messaging proposition where the securing of Telefonica’s territories in Latin America validates our strategy in this segment, as well as underpinning future revenue growth for the Group.”
Revenue reached USD 29.3 million for Q2 2010 compared to USD 30.7 million in Q2 2009. For the first half of 2010 revenues reached USD 57.9 million, a decline of 8% compared to first half of 2009 pro forma [1] revenue of USD 62.9 million.
The Device Solutions Division – which provides software and engineering services to leading manufacturers of mobile phones and other devices – reported revenue of USD 27.1 million for Q2 2010, an increase of 8% compared to USD 25.2 million for the same period last year. For the first half of 2010, revenue reached USD 52.6 million compared to USD 55.5 million for the same period last year. The lower revenues reflect the non-recurrence of one-off revenues in Q1 2009.
The Mobile Services Division – which provides social networking solutions and self-care services for mobile network operators – reported revenue of USD 2.2 million in Q2 2010, compared to USD 5.5 million in Q2 2009. For the first half of 2010, revenue amounted to USD 5.3 million compared to USD 7.5 million for the first half of 2009. Despite the stronger order intake in HY1, the decline in revenue reflects the slippage in order closure in Q2 to the second half of the year. Based on the current order backlog and pipeline, management is confident that the business will deliver an improvement in sales growth during the second half of 2010.
Gross Profit reached USD 21.6 million in Q2 2010, compared to USD 18.7 million in Q2 2009. For the first half of 2010, gross profit increased by 5% to USD 40.7 million compared to USD 38.7 million for the first half of 2009. The increase in the proportion of licenses versus services revenue year on year led to an improvement in the gross margin by 9 percentage points to 70% for the first half of 2010.
Total operating expenses for Q2 2010 amounted to USD 16.0 million compared to USD 15.4 million in Q2 2009. For the first half of 2010 operating expenses were USD 31.7 million or 55% of revenues compared to USD 30.3 million and 48% of revenues for the same period last year. The difference mainly arises from increased R&D spending in our pipeline of new products and solutions to support future growth, and investments in our sales force to drive new product revenues. As part of the efforts to optimize its cost base, a team of French based engineers were transferred from Myriad in July 2010 for a one-off expense of approx. USD 3.2 million. This should lead to annualized savings of about USD 2.8 million p. a. going forward.
Underlying operating profit, EBITDA was USD 8.1 million for Q2 2010, compared to USD 3.9 million (before restructuring costs) for Q2 2009. For the first half of 2010 EBITDA rose to USD 12.6 million reflecting EBITDA margin of 22%, compared to USD 11.5 million (before restructuring costs) and EBITDA margin of 18% in the first half of 2009. The EBITDA after restructuring charges in the first half of 2009 was USD 1.6 million with a margin of 3%. The improvement in EBITDA is mainly a result of the higher gross margins driven through increased license revenue mix, together with non-recurring grant income of USD 0.8 million.
EBIT for the first half of 2010 reached a positive USD 0.3 million, compared to an operating loss of USD 25.4 million in the first half of 2009. Amortisation of intangible assets was USD 11.9 million for the first half of 2010 compared to USD 12.1 million in the previous year period.
Net income for the first half of 2010 came to USD 0.1 million, compared to a net loss of USD 28.6 million for the first half of 2009.
Cash & cash equivalents , including short-term investments and marketable securities, were USD 21.9 million as of 30 June, 2010 (USD 17.2 million as of 31 March, 2010 and USD 38.0 million as of 31 December, 2009). The reduction in cash for the six months period primarily reflects the renegotiation of cash terms with Sagem Wireless.
Outlook
Simon Wilkinson adds: “In general, we keep our guidance for 2010 of a small decline in revenues of approximately 3-5% year on year, mainly due to currency fluctuations based on the weakening of the Euro against the US Dollar for the time being. Since the majority of our Euro income is balanced with Euro costs, we do not expect the Euro weakening to impact profitability. Given the strong profitability in the first half of the year, we are increasing our EBITDA margin guidance to 17-19% for 2010. However, as we are discussing the future terms of our relationship with Sagem Wireless, the outcome of these negotiations has the potential to impact our current 2010 guidance.
Longer-term we remain confident in our targeted revenue growth of 15-20% p. a. for fiscal years 2011/2012. Our recent deals (Telefónica USD 80-100 million over five years; USD 5 million for Java solutions used in Blu-ray players over two years), our planned product launches in 2010 and first half of 2011 and our strategic moves towards social networking and life services all provide the potential for sustained growth in the future.”
Information on Myriad’s Media and Analyst Briefing
Myriad’s CEO Simon Wilkinson and CFO James Bodha will present the H1 2010 results to members of the media and analysts in Zurich today.
Media & Analyst conference 1 September 2010
09:30 a. m. CET
SIX Swiss Exchange ConventionPoint, Zurich, Switzerland
The Financial Statements for the six-month period ended 30 June 2010 are available on the company’s website:
http://www.myriadgroup.com/Investors/Financial-Publications.aspx
Investor Calendar
Q3 / 9 months 2010 Results 10 November 2010
Consolidated statements of operations
|
in USD ‘000
|
|
Q2 2009
unaudited
|
Q2 2010
unaudited
|
H1 2009
unaudited
Pro forma1
|
H1 2010
unaudited
|
|
License revenue
|
|
13,946
|
19,680
|
29,844
|
38,130
|
|
Service revenue
|
|
16,769
|
9,665
|
33,101
|
19,760
|
|
Total revenue
|
|
30,715
|
29,345
|
62,945
|
57,890
|
|
Cost of revenues
|
|
(12,062)
|
(7,702)
|
(24,252)
|
(17,155)
|
|
Gross profit
|
18,653
|
21,643
|
38,693
|
40,735
|
|
Gross margin
|
60.7%
|
73.8%
|
61.5%
|
70.4%
|
|
Research and development,
net of capitalized costs
|
|
(8,417)
|
(8,202)
|
(15,688)
|
(16,647)
|
|
Sales and marketing
|
|
(2,579)
|
(3,259)
|
(5,361)
|
(6,596)
|
|
Bad debt expense
|
|
(225)
|
(208)
|
(225)
|
(20)
|
|
General and administrative2
|
|
(4,418)
|
(4,517)
|
(9,238)
|
(8,475)
|
|
Other income/(expense), net
|
|
726
|
2,400
|
2,952
|
3,139
|
|
EBITDA3
|
|
3,940
|
8,087
|
11,533
|
12,595
|
|
EBITDA margin
|
|
12.8%
|
27.6%
|
18.3%
|
21.8%
|
|
Restructuring and integration costs
|
|
|
|
(9,941)
|
-
|
|
EBITDA
|
|
|
|
1,592
|
12,595
|
|
Amortisation of intangible assets
|
|
|
|
(12,097)
|
(11,860)
|
|
Impairment of intangible assets
|
|
|
|
(14,449)
|
-
|
|
EBIT (loss/profit from operations)
|
|
|
|
(25,354)
|
276
|
|
Financial result, net
|
|
|
|
(2,514)
|
(143)
|
|
Income tax expenses
|
|
|
|
(688)
|
(71)
|
|
Net (loss)/profit for the period
|
|
|
|
(28,556)
|
62
|
Note:
1) Pro forma reflects the H1 2009 results including Purple Labs contribution for the entire six months period.
2) Includes depreciation charges of $0.2m in Q2 2009, $0.2m in Q2 2010 and $0.4m in H1 2009, $0.5m in H1 2010.
3) EBITDA in H1 2009 before restructuring charges. No restructuring charges in H1 2010.
Segment information
|
In USD ‘000
|
|
Device Solutions Division
|
Mobile Services Division
|
Total Myriad Group
|
|
Six months ended 30 June,
|
|
2009 1
|
2010
|
2009 1
|
2010
|
2009 1
|
2010
|
|
License revenue
|
|
27,653
|
36,476
|
2,191
|
1,654
|
29,844
|
38,130
|
|
Service revenue
|
|
27,817
|
16,129
|
5,284
|
3,631
|
33,101
|
19,760
|
|
Total revenue
|
|
55,470
|
52,605
|
7,475
|
5,285
|
62,945
|
57,890
|
|
Cost of revenues
|
|
(22,206)
|
(14,505)
|
(2,046)
|
(2,650)
|
(24,252)
|
(17,155)
|
|
Gross profit
|
|
33,264
|
38,100
|
5,429
|
2,635
|
38,693
|
40,735
|
|
Gross margin
|
|
60.0%
|
72.4%
|
72.6%
|
49.9%
|
61.5%
|
70.4%
|
|
EBITDA before restructuring charges
|
|
10,723
|
16,723
|
810
|
(4,128)
|
11,533
|
12,595
|
|
EBITDA margin
|
|
19.3%
|
31.8%
|
10.8%
|
(78.1%)
|
18.3%
|
21.8%
|
|
Restructuring and integration costs
|
|
(9,941)
|
-
|
-
|
-
|
(9,941)
|
-
|
|
EBITDA
|
|
782
|
16,723
|
810
|
(4,128)
|
1,592
|
12,595
|
Note:
1) Pro forma reflects the H1 2009 results including Purple Labs contribution for the entire six months period.
Balance sheet information
|
in USD ‘000
|
|
|
|
31.12.2009
audited
|
30.06.2010
unaudited
|
|
Current assets
|
|
|
|
62,591
|
55,295
|
|
includes Cash and cash equivalents
|
|
|
33,235
|
21,136
|
|
includes short-term investments, marketable securities
|
|
|
4,718
|
798
|
|
Non-current assets
|
|
|
109,303
|
88,684
|
|
includes intangible assets
|
|
|
|
105,558
|
85,237
|
|
Total assets
|
|
|
|
171,894
|
143,979
|
|
Total liabilities
|
|
|
|
75,334
|
57,138
|
|
Includes Interest-bearing loans and borrowings
|
|
|
|
8,655
|
6,777
|
|
Total equity
|
|
|
|
96,560
|
86,841
|
|
Equity ratio
|
|
|
|
56.2%
|
60.3%
|