26 September 2012

Zurich, Switzerland – 26 September 2012 – Myriad Group AG (SIX Swiss Exchange: MYRN), the company powering billions of rich mobile social and web experiences on any connected device, today reported revenues of USD 25.1 million.

The Company successfully completed the acquisition of Synchronica Plc during the first half of 2012 to consolidate its global leadership in white-label mobile social messaging. In this category, Myriad now serves more network operators than any other service provider.

The integration has been rapid and Myriad is already seeing the benefits translating into early increases in subscriber numbers. Although legacy device revenues have declined in line with managements’ expectations, the rate of growth in new product segments has been slower than predicted.

One of the major goals was to remove duplicated costs arising from integrating the businesses. Myriad’s focus on this area has led to a reduction of USD 22.0 million of annualised cost in the few short months since the acquisition.

In order to complete the integration and related rationalisation of Synchronica and to ensure Myriad has sufficient funds to execute its growth strategy, the Group is today launching a fully underwritten rights issue for CHF 10.0 million (USD 10.8 million) which is expected to be completed by mid-October. Each existing shareholder has the right to exercise his statutory subscription rights at a ratio of 1 new share for every 14 existing shares held.

Erik Hansen, Chairman, of Myriad Group AG, commented: “Recent progress on our key customer service deployments together with the underwritten fund raising, should enable us, with both speed and scale, to consolidate our position as a global leader in mobile social messaging.

 

Revenue for the first half of 2012 amounted to USD 25.1 million compared to USD 35.1 million for the corresponding period in 2011. The decline reflects lower demand for legacy device software as feature phone volumes decline and service deployment in a number of operator accounts was slower than anticipated.

The Device Solutions Division – which provides software and engineering services to leading manufacturers of mobile phones and other consumer equipment – reported revenue of USD 14.0 million for the first half of 2012. Key established customers or new bookings include: Mediatek, Samsung, Cisco, LG and Comcast.

The Mobile Services Division – which provides Social Messaging Services solutions (including the newly acquired Synchronica business) and Self-Care services for mobile network operators – reported revenue of USD 11.1 million for the first half of 2012. The pooling of Myriad and Synchronica experience and expertise in regional markets has immediately resulted in improved effectiveness in account support and service delivery which management expects to translate to stronger subscriber numbers and ultimately revenues. Key established customers or new bookings include: Orange, Telefonica, Softbank Mobile, Vodafone and America Movil.

Adjusted Gross Profitwas USD 12.3 million for the first half of 2012, compared to USD 25.7 million for the corresponding period in 2011. Gross margin declined by 24 percentage points to 49% due to the rise in lower margin MSD services as a proportion of overall revenues.

EBITDA(before restructuring charges and exceptional acquisition / legal costs) amounted to a USD 6.3 million loss and EBITDA margin of (25)% for the period. This compares with USD 7.3 million profit and 21% margin in the first half of 2011.

Research & Development (R&D) costs pre capitalisation and restructuring, increased to USD 10.4 million compared to USD 9.9 million in the previous year. As a percentage of revenue, R&D was 41.5% in the first half of 2012 compared with 28.2% in the corresponding period in 2011. The increase in R&D expenses as a percentage of revenues reflects a combination in the continued heavy investment in Myriad social messaging solutions as well as the one-off rationalisation of platforms post integration of the Synchronica business.

Sales and marketing (S&M)costs pre restructuring, amounted to USD 5.2 million in the first half of 2012. As a percentage of revenue, S&M expenses increased by 4.9 percentage points compared with the same period last year.

General and administrative (G&A) pre restructuring, doubtful debt and depreciation expenses increased to USD 6.0 million from USD 5.9 million in the first half of 2012.

Managing the cost base

Myriad has reduced the combined cost base through the consolidation of engineering, sales and back office teams. In all 210 employees have been exited to date resulting, together with other measures, in USD 22.0 million in annualised savings. Myriad currently employs around 550 people in its worldwide operations.

EBITwithout exceptional charges (restructuring, integration costs and exceptional acquisition/legal costs) came to a loss of USD 17.3 million in the first half of 2012 compared to a profit of USD 0.4 million in the first half of 2011.

Net resultfor the first half of 2012 was a net loss of USD 23.3 million (excluding the exceptional charges a net loss of USD 17.2 million) compared to a net loss of USD 4.6 million in the prior half year period.

Balance sheetMyriad’s cash balance as at 30 June 2012 amounted to USD 9.7 million.  Myriad’s balance sheet structure as at 30 June 2012 included shareholders’ equity of USD 58.3 million and an equity ratio of 37.8% (before the latest rights issue, also announced today).

Outlook 2012  The second half of 2012 represents a key period for Myriad to begin to drive more significant subscriber take up of services in Latin America, India and Africa following a heavy period of deployment. The outlook for stronger second half revenues (underpinned by a full 6 months contribution from the Synchronica customer accounts), combined with the cost saving benefits of the consolidation of operations since acquisition, lead management to expect a significant improvement in profitability in the second half of the year compared to the first half.

 

Interimconsolidatedincomestatement

in USD ‘000		HY 2012 unaudited	HY 2011 unaudited
License revenue		10,702	21,334
Service revenue		14,437	13,732
Total revenue		25,139	35,066
Cost of revenues		(12,825)	(9,375)
Gross profit before amortisation and restructuring		12,314	25,691
Gross margin % before amortisation and restructuring		49.0%	73.3%
Amortisation of intangible assets		(10,015)	(6,229)
Gross profit before restructuring		2,299	19,462
Research and development, net of capitalized costs		(7,529)	(7,510)
Sales and marketing		(5,198)	(5,525)
Doubtful debt expense		(245)	(163)
General and administrative1		(5,967)	(5,851)
Other income/(expense)		310	615
EBITDA before restructuring charges and exceptional acquisition / legal costs		(6,315)	7,257
EBITDA margin		(25.1%)	20.7%
Restructuring and integration costs		(1,174)	(2,439)
Acquisition costs		(4,289)	-
French social plan costs not reimbursed by Sagem Wireless		(631)	-
Exceptional legal costs		-	(1,244)
EBIT		(23,380)	(3,282)
EBIT without exceptional charges		(17,286)	401
Financial result, net		(1,143)	(1,550)
Income tax benefit		1,210	280
Net loss for the period		(23,313)	(4,552)

Note: (1) G&A expenses shown in the table exclude deprecation costs of USD 956,000 and USD 627,000 for HY 2012 and HY 2011, respectively. Segment information HY 2012

 

 

Balance sheet information as of 30 June 2012 / 31 Dec 2011

 

 

Information on Myriad’s Media and Analyst Briefing

Myriad will present its 1^st Half Year results to members of the media, investors and analysts today.

Media & Analyst conference – 26 September 2012 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 2012 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

 

Contacts

James Bodha                                     Gary McManus Chief Financial Officer                                 Investor Relations

Tel: +41 44 823 8900                        +41 44 823 8900

Email: investor_relations@myriadgroup.com

 

About Myriad

Myriad is chosen by leading OEMs and network service providers to power rich mobile social and web experiences – from the most basic to the smartest connected device through a single, scalable platform.

Today, over 2.5 billion mobile users rely on Myriad software. Myriad apps often provide users with their first taste of the Internet, and with our proven technology embedded in every Android device we are on target to help our partners power the next billion users.

We operate worldwide, with offices in Switzerland, France, Germany UK, USA, Canada, Mexico, India, UAE, China, South Korea, Taiwan, Japan, Philippines and Australia. Headquartered in Zurich, Switzerland, Myriad is listed on the SIX Swiss Exchange (SIX Symbol: MYRN).

For more information please visit our website: www.myriadgroup.com. You can also follow us on twitter@MyriadGroup and view our YouTube Channel - YouTube.com/myriadgroupmarketing.