Zurich, Switzerland – 07 September 2011 – Myriad Group AG (SIX Swiss Exchange: MYRN), a global leader in mobile technology having shipped over 3.8 billion software applications on more than 2.2 billion phones, today reported solid underlying core revenues of USD 35.1 million, and EBITDA2 of USD 7.3 million for the first half of 2011.
Simon Wilkinson, CEO of Myriad Group AG, commented: “We have achieved a solid underlying growth of 7% on a like-for-like basis, excluding the Sagem Wireless revenues. The business has responded positively in the last 6 months to build revenues from new accounts. Further, we continue to make good progress on reducing operating costs. The business ended the period with USD 16.4 million in cash, and Myriad’s cash reserves were boosted through the receipt in September 2011 of USD 12 million from legal settlement of its dispute with Openwave Systems Inc.”.
Revenue for the first half of 2011 amounted to USD 35.1 million compared to USD 57.9 million for the corresponding period in 2010. The decline is entirely due to the early termination of the contract with Sagem Wireless (in September 2010). Excluding Sagem Wireless revenues, revenue grew on a like-for-like comparison by 7%.
The Device Solutions Division – which provides software and engineering services to leading manufacturers of mobile phones and other consumer equipment – reported revenue of USD 29.5 million for the first half of 2011. Customers such as Cisco, Mediatek and Samsung continue to select Myriad as its partner of choice to power the consumer experiences of today and beyond.
The Mobile Services Division – which provides Social Network Services solutions and Self-Care services for mobile network operators – reported revenue of USD 5.6 million for the first half of 2011. The rollout of Myriad’s Mobile Social Network Services across Latin America with Telefónica commenced in the first quarter of 2011. Although deployment has been slower than initially expected, technical challenges have now been resolved and Myriad is confident that the expertise gained will enhance its ability to secure new customer wins, as well as increase the speed of future deployments.
During the trial and early adoption period to selective consumer segments in Latin America, about 60% of the customers activating the service subsequently migrated to a paid subscription. Following these strong initial results, Myriad is working closely with Telefónica to make the service available across the region, with a view to having all 13 operations live in 2011 .
Gross Profit was USD 25.7 million for the first half of 2011, compared to USD 40.7 million for the corresponding period in 2010. Gross margin, at 73.3%, improved by 2.9 percentage points compared to the previous year, driven by an increase in licence margin.
EBITDA (before restructuring charges and exceptional legal costs related to IP ownership rights) amounted to USD 7.3 million, reflecting an EBITDA margin of 20.7%, compared to USD 12.6 million and 21.8% margin in the first half of 2010.
Research & Development (R&D) costs, gross, declined to USD 9.9 million compared to USD 19.6 million in the previous year period (R&D costs net of capitalisation: USD 7.5 million and USD 16.6 million, respectively). Gross R&D as a percentage of revenue was 28.2% in the first half of 2011 compared with 33.8% in the corresponding period in 2010. The reduction in R&D expenses mainly reflects the cessation of R&D associated with Sagem Wireless together with the redeployment of engineering resources from Europe to China to reduce the cost of innovation in the Group.
Sales and marketing (S&M) expenses amounted to USD 5.5 million from USD 6.6 million in the first half of 2010. Myriad continues to invest strongly in sales and marketing throughout the world to strengthen relationships with key customers and secure new business. As a percentage of revenue, S&M expenses increased to 15.8% for the first half of 2011 compared with 11.4% for the same period last year.
General and administrative (G&A) expenses declined to USD 6.5 million from USD 8.5 million in the first half of 2010, as the company continues to optimise back office functions to drive a lowest cost-to-operate culture across the business. As a percentage of revenue, G&A increased to 18.5% compared with 14.6% for the first half of 2010 .
Managing the cost base
Myriad continued to reduce operational costs by a number of initiatives, notably through the migration of engineering resources to its China facility and the closure of non-core sites. Myriad thereby removed a further USD 3.7 million from its annualised cost base, in addition to the annualised cost savings program of USD 23.0 million the company initiated last year.
EBIT without exceptional charges (restructuring, integration costs and exceptional legal costs in conjunction with IP) came to USD 0.4 million in the first half of 2011 compared to USD 0.3 million in the previous year period.
Net result for the first half of 2011 was a net loss of USD 4.6 million (excluding the exceptional charges a net loss of USD 0.9 million) compared to a net profit of USD 0.1 million in the prior year period.
Balance sheet Myriad’s cash balance as of 30 June 2011 amounted to USD 16.4 million. Myriad’s balance sheet structure continues to be solid with shareholders’ equity of USD 63.4 million and an equity ratio of 49.1%. In September 2011 Myriad’s cash reserves were boosted through the receipt of USD 12 million relating to legal settlement of its dispute with Openwave Systems Inc. The exceptional legal costs of USD 1.2 million charged to the first half of 2011 were in conjunction with this legal settlement.
Looking ahead
The second half of 2011 will be a critical period when Myriad expects to complete deployment of the Mobile Social Network services under the Telefónica agreement and to see the first revenue contribution from these services. There are also a number of other key innovations completing their field trials which the company expects will lead to the development of long-term growth opportunities for the business.
Interim consolidated income statement
|
in USD ‘000
|
|
HY 2011
unaudited
|
HY 2010
unaudited
|
|
License revenue
|
|
21,334
|
38,130
|
|
Service revenue
|
|
13,732
|
19,760
|
|
Total revenue
|
|
35,066
|
57,890
|
|
Cost of revenues
|
|
(9,375)
|
(17,155)
|
|
Gross profit before amortisation and impairment
|
25,691
|
40,735
|
|
Gross margin % before amortisation and impairment
|
73.3%
|
70.4%
|
|
Amortisation of intangible assets
|
|
(6,229)
|
(11,860)
|
|
Gross profit
|
|
19,462
|
28,875
|
|
Research and development, net of capitalized costs
|
|
(7,510)
|
(16,647)
|
|
Sales and marketing
|
|
(5,525)
|
(6,596)
|
|
Doubtful debt expense
|
|
(163)
|
(20)
|
|
General and administrative1
|
|
(6,478)
|
(8,475)
|
|
Other income
|
|
615
|
3,139
|
|
EBITDA before restructuring charges
and exceptional legal costs related to IP
|
|
7,257
|
12,595
|
|
EBITDA margin
|
|
20.7%
|
21.8%
|
|
Restructuring and integration costs
|
|
(2,439)
|
-
|
|
Exceptional legal costs
|
|
(1,244)
|
-
|
|
EBIT
|
|
(3,282)
|
276
|
|
EBIT without exceptional charges
|
|
401
|
276
|
|
Financial result, net
|
|
(1,550)
|
(143)
|
|
Income tax benefit / (expense)
|
|
280
|
(71)
|
|
Net (loss)/profit for the period
|
|
(4,552)
|
62
|
Note:
(1) G&A expenses include deprecation costs of USD 0.6m and USD 0.5m for HY 2011 and HY 2010, respectively.
Segment information HY 2011
|
In USD ‘000
|
|
Device Solutions
|
Mobile Services
|
Total Myriad Group
|
|
1st Half Year
|
|
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
|
License revenue
|
|
20,022
|
36,476
|
1,312
|
1,654
|
21,334
|
38,130
|
|
Service revenue
|
|
9,494
|
16,129
|
4,238
|
3,631
|
13,732
|
19,760
|
|
Total revenue
|
|
29,516
|
52,605
|
5,550
|
5,285
|
35,066
|
57,890
|
|
Gross profit1
|
|
22,773
|
38,100
|
2,918
|
2,635
|
25,691
|
40,735
|
|
Gross margin
|
|
77.2%
|
72.4%
|
52.6%
|
49.9%
|
73.3%
|
70.4%
|
|
EBITDA before restructuring charges and exceptional legal costs
|
|
10,100
|
16,723
|
(2,843)
|
(4,128)
|
7,257
|
12,595
|
|
EBITDA margin
|
|
34.2%
|
31.8%
|
NA
|
NA
|
20.7%
|
21.8%
|
|
Restructuring and integration costs
|
|
(1,954)
|
-
|
(485)
|
-
|
(2,439)
|
-
|
|
Exceptional legal costs related to IP
|
|
(1,244)
|
-
|
-
|
-
|
(1,244)
|
-
|
|
EBITDA
|
|
6,902
|
16,723
|
(3,328)
|
(4,128)
|
3,574
|
12,595
|
Note:
(1) Gross profit before amortization and impairment
Balance sheet information as of 30 June 2011 / 31 Dec 2010
|
in USD ‘000
|
|
|
30 June 2011
|
31 Dec 2010
|
|
Current assets
|
|
|
62,007
|
64,361
|
|
includes Cash and cash equivalents
|
|
|
16,401
|
33,737
|
|
Non-current assets
|
|
|
66,953
|
64,404
|
|
includes Intangible assets
|
|
62,016
|
60,038
|
|
Total assets
|
|
128,960
|
128,765
|
|
Total liabilities
|
|
|
65,579
|
66,785
|
|
Total equity
|
|
|
63,381
|
61,980
|
|
Equity ratio
|
|
|
49.1%
|
48.1%
|
Information on Myriad’s Media and Analyst Briefing
Myriad will present its 1st Half Year results to members of the media, investors and analysts today.
Media & Analyst conference – 7 September 2011 at 09:30 a.m. CET
ConventionPoint, SIX Swiss Exchange, Zurich, Switzerland
For more information please contact investor_relations@myriadgroup.com
The Half Year Report 2011 as well as the presentation slides for the Media & Analyst conference are available on the company’s website:
http://www.myriadgroup.com/Investors/Financial-Publications.aspx