RNS Number:0327S
Phorm Inc
10 April 2008
Phorm, Inc. ("Phorm" or the "Company")
Preliminary Results
Phorm (AIM: PHRM and PHRX), the advertising technology company, today announces
its preliminary results for the year ended 31 December 2007.
Operational Highlights:
Year to 31 December 2007
* Reorganisation of the Company from 121Media, Inc. to Phorm, Inc
completed
* Focus on preparation of OIX and Webwise technology and development
of relationships with ISPs, publishers and advertisers
* Successful $30 million equity fundraising completed
* Several senior appointments made
Q1 2008
* OIX and Webwise successfully launched in February 2008
* Exclusive agreements announced with ISPs BT, Talk Talk and Virgin
Media, representing nearly 70% of the UK broadband user base
* Consumer trials are expected to begin in the near term, followed by
roll-out across these networks
* Significant progress made with the advertising and publishing community
* Advanced talks with other ISPs both in the UK and internationally
* Independent report by Ernst & Young published, supporting Phorm's
commitment to privacy protection
* Positive initial feedback received from a number of regulatory bodies
* Successful $65 million equity fundraising completed
Executive Chairman's statement
Introduction:
During the year under review, Phorm made significant progress, both in terms of
its corporate development and in executing the Company's Internet Service
Provider (ISP) relationship strategy, providing a solid foundation on which to
take the business forward to the next stage of its development. As a result of
our hard work, I am extremely happy to report that on 14 February 2008, we
announced exclusive agreements with BT, Talk Talk and Virgin Media, further
details of which I have provided below.
Results and financial position:
In line with our previous decision to focus the Company's efforts entirely on
implementing our strategy of developing our proprietary technology platform and
building ISP relationships, advertising revenue ceased in 2006. Operating
losses for the year were $32.8 million (2006: $11.6 million) reflecting
continued investment in business infrastructure, technology, people and systems.
The operating loss includes a non-cash share based payment charge of $8.9
million (2006:$1.5 million). Losses after taxation were $32.2 million (2006:
$11.5 million). Loss per share was $2.74 (2006: $1.13).
During the course of 2007, the Company benefited from continuing support from
its investors. In February 2007, Morgan Stanley Principal Investments invested
$5 million in the Company and in June 2007, we carried out an institutional
placing which raised $30 million before expenses. This considerable support
underpinned the rapid progress of the Company.
I am also pleased to report that on 19 March 2008 we announced the completion of
a further institutional equity fundraising which raised an additional $65
million for the Company before expenses. In these current times of uncertainty
in the financial markets, the fact that we were able to raise significant funds
is testament to the strength and potential of our business model.
Our balance sheet at 31 December 2007 showed net assets of $15.1 million (2006:
$3.2 million) with cash and cash equivalents of $16.6 million (2006: $3.8
million) and virtually no debt. Together with these existing cash resources, the
additional funds raised will enable the Group to embark on its next phase of
development.
Net cash used in operating activities was $22.4 million (2006: $8.3 million),
principally due to the operating costs incurred (less non-cash share-based
payment charges). This cash usage was principally funded by the equity
fundraising in the year (net of issue costs) of $35.2 million (2006: $11.7
million).
People:
Over the course of 2007, a number of high profile executives joined Phorm. On
21 May 2007, we announced three senior board appointments; Firstly, David Dorman
joined us as a Non Executive Director having been an advisor to the Company
since July 2006. He is currently senior advisor and partner at global private
equity firm Warburg Pincus and was previously Chairman and Chief Executive
Officer of AT&T Corp. Before that, he was Chief Executive Officer of Concert,
the global venture created by AT&T and British Telecommunications. David serves
as Non Executive Chairman on the Board of Motorola Inc, and serves on the Boards
of CVS Corporation, LLC, and YUM! Brands, Inc.
Christopher Lawrence also joined us as a Non Executive Director. Christopher is
currently Co-Head of Investment Banking, Rothschild Inc. (North America), and
was previously Chief Strategic Officer of Credit Suisse Group as well as a Vice
Chairman of Credit Suisse First Boston.
We also announced that Virasb Vahidi had joined the Board as Chief Operating
Officer. Virasb is an international business executive with a distinguished
career encompassing senior finance, strategy and planning roles in global
companies including AT&T Corp. and American Airlines, Inc.
On 1 October 2007, we announced another senior appointment to our Board. Stephen
J Heyer joined the Board as a Non Executive Director. A seasoned and innovative
leader,
operator, marketer, brand builder and strategist, Steve is currently the
Co-Chairman and CEO of Fathom Studios and Vice Chairman of Mistral Acquisition
Company. Steve was CEO of Starwood Hotels & Resorts Worldwide, and joined
Starwood from The Coca-Cola Company, where he served as President and COO. Prior
to joining Coca-Cola, Steve was President and COO of Turner Broadcasting System,
Inc., and a member of AOL Time Warner Inc.'s Operating Committee. Previously,
Steve was President and COO of Young and Rubicam, Inc. Steve is a member of the
Board of Directors of Lazard Ltd and Lazard Group, Mistral Acquisition Company,
the National Collegiate Athletic Association and the Special Olympics.
At the same time, we announced the hiring of Stratis Scleparis as Group Chief
Technology Officer (CTO). Stratis has over 20 year's experience in
communications, IT and emerging technology and joined us from BT Retail, part of
BT Group plc, where he was CTO.
Furthermore, on 15 January 2008, we appointed Greg Meyer as Senior Vice
President, Global Product Development, who joined from Atlas, a division of
aQuantive, where he was SVP Product and Technology.
The expertise and experience that these people have brought to Phorm is proving
invaluable as our business gains further traction throughout the markets in
which we operate and underlines our commitment to employing the best possible
people to deliver upon our strategy.
Strategy and business update:
2007 can be characterised as a year of building the foundations for our future
success. In May, we completed the reorganisation of the Company from 121Media,
Inc. to Phorm, Inc. We also invested considerable time and funding in our
technology and key infrastructure as well as internal processes that will enable
us to deliver a first class and highly scalable platform, in addition to
significantly strengthening our team.
I am delighted that the hard work and dedication of the team was rewarded soon
after the year end, when on 14 February 2008, we announced exclusive agreements
with three major UK ISPs - BT, Talk Talk and Virgin Media, which represent
nearly 70% of the UK internet market, to adopt our online advertising platform,
the Open Internet Exchange (OIX), and a consumer internet feature, Webwise.
Implementation is on track and consumer trials are expected to begin in the near
term, followed by roll-out across these networks.
Furthermore, we continue to be in advanced discussions with a number of other
ISPs, both in the UK and internationally, and following extensive due diligence
we have moved into the trial phase with a number of them. It is worth noting
that we believe we are selected as the preferred partner by leading ISPs over
our competitors based on the capabilities of our technology, our team and our
approach to privacy. We will provide an update on these discussions in due
course, when appropriate.
In addition, since announcing the launch of OIX and Webwise on 14 February 2008,
Phorm has continued to make significant progress with the publishing and
advertising community and is delighted with the enthusiastic response it has
received to date.
A key differentiator of Phorm's technology is our ability to dispel the myth
that in order to provide relevant advertising on the internet you need to store
data. The fundamental principles behind our platform support the highest
standards in user privacy and anonymity:
* Phorm will not and cannot ever store any personal information which can
identify a user
* Users will have a clear choice whether to turn Webwise on or off
* Our technology complies with all relevant data protection and privacy laws
including RIPA (Regulation of Investigatory Powers Act) and the
Data Protection Act
It is very pleasing to see that our commitment to these principles, and to open
and transparent disclosure, has been recognised by leading privacy advocate
Simon Davies, Managing Director of privacy consultancy 80/20 Thinking and
director of Privacy International. Mr Davies and 80/20 Thinking recently
conducted an interim Privacy Impact Assessment of our technology.
Also, as part of our commitment to the privacy of internet users, we
commissioned Ernst & Young to conduct an independent examination of our systems
and assertions. The following components of our privacy programme were examined:
* Phorm's privacy policy, controls and procedures
* Phorm's compliance with its stated privacy policy
* Phorm employees' privacy policy training and compliance
* Data retention, integrity and security policies and procedures.
The resulting attestation report we received from Ernst & Young confirmed that
our systems have been designed specifically to protect the identity and other
sensitive information of consumers - a great validation of our offering.
Furthermore, we have initiated a dialogue with the Information Commissioner's
Office who are pleased with the way that we have engaged with technical experts
and concerned individuals following the announcement of the service. We have
also met with many other leading stakeholders in the area of online privacy, to
share details of our technology and the response to date has been very
encouraging.
Finally, during the course of 2007, we appointed leading global professional
services firm Deloitte & Touche LLP as auditor to Phorm.
Outlook:
We have made an exceptionally positive start to 2008 with the announcement of
agreements with three key UK ISPs, but there is still a lot of work that needs
to be done before we reach critical mass in the UK market. We will work closely
with our ISP partners to ensure a smooth and timely roll out of our platform
whilst continuing discussions with other potential partners at the ISP,
advertiser and publisher level as well as developing our international
programme. We have built an excellent team and a market leading technology
platform and, as a result, we look forward with great optimism to the
opportunity that lies ahead for our company.
Kent Ertugrul
Chairman & Chief Executive
10 April 2008
Phorm, Inc
Consolidated income statement
Year ended 31 December 2007
Year ended 31 December 2007 Year ended 31
December 2006
Before After Before
After
share Share share share
Share share
based based based based
based based
payment payment payment payment
payment payment
expense expense expense expense
expense expense
$ $ $ $
$ $
Continuing operations
Revenue - - - 1,272,254
1,272,254
Cost of sales (294,098) - (294,098) (403,306)
- (403,306)
Gross (loss)/profit (294,098) - (294,098) 868,948
- 868,948
Research and development (3,082,736) (716,301) (3,799,037) (476,658)
(161,978) (638,636)
Sales and administrative
expenses (20,584,528) (8,151,646) (28,736,174) (10,460,630)
(1,371,156) (11,831,786)
Operating loss (23,961,362) (8,867,947) (32,829,309) (10,068,340)
(1,533,134) (11,601,474)
Investment income 688,843
82,312
Financing expense (8,816)
(16,186)
Loss before tax (32,149,282)
(11,535,348)
Tax on loss on ordinary
activities (3,941)
(12,705)
Net loss for the year (32,153,223)
(11,548,053)
Attributable to equity
holders of the parent (32,153,223)
(11,548,053)
Basic and diluted loss
per share ($) (2.74)
(1.13)
Phorm, Inc
Consolidated balance sheet
31 December 2007
2007 2006
$ $
Assets
Non-current assets
Property, plant and equipment 661,172 128,614
Total non-current assets 661,172 128,614
Current assets
Other receivables 1,350,235 594,063
Cash and cash equivalents 16,557,681 3,804,771
17,907,916 4,398,834
Total assets 18,569,088 4,527,448
Current liabilities
Trade payables (529,370) (156,736)
Other payables (1,896,270) (578,856)
Obligations under finance leases (15,104) (39,077)
Provisions (621,114) (492,742)
Total current liabilities (3,061,858) (1,267,411)
Non-current liabilities
Obligations under finance leases (5,486) (11,303)
Provisions (395,978) (24,245)
Total-non current liabilities (401,464) (35,548)
Total liabilities (3,463,322) (1,302,959)
Net assets 15,105,766 3,224,489
Equity
Common shares 12,136 11,217
Additional paid in capital 54,220,477 18,706,233
Warrants - 300,300
Translation reserve (329,206) (280,896)
Accumulated deficit (38,797,641) (15,512,365)
Stockholders' equity 15,105,766 3,224,489
Phorm, Inc
Consolidated cash flow statement
Year ended 31 December 2007
Year ended Year ended
31 December 31 December
2007 2006
$ $
Net cash used in operating activities
Net cash used in operating activities (22,374,122) (8,290,238)
Income tax paid (3,941) (12,705)
Net cash used in operating activities (22,378,063) (8,302,943)
Cash flows used in investing activities
Interest received 688,843 82,312
Purchase of property, plant and equipment (722,308) (174,572)
Net cash used in investing activities (33,465) (92,260)
Cash flows from financing activities
Finance lease interest paid (8,816) (16,186)
Repayment of obligations under finance leases (41,609) (44,760)
Proceeds from issue of shares, net of $1,399,799
expenses 35,214,863 11,690,387
Net cash flows from financing activities 35,164,438 11,629,441
Net increase in cash and cash equivalents 12,752,910 3,234,238
Cash and cash equivalents brought forward 3,804,771 570,533
Cash and cash equivalents carried forward 16,557,681 3,804,771
Phorm, Inc - Notes to the Preliminary Announcement of Results
1. Basis of preparation
The preliminary results for the year ended 31 December 2007 are an abridged
statement of the full Annual Report, which was approved by the Board of
Directors on 10 April 2008. The financial statements contained in the Annual
Report have, for the first time, been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and
Article 4 of the EU IAS Regulations, and on a historical basis, except for
certain financial instruments that have been measured at fair value in
accordance with applicable IFRS. The accounting policies applied by the Group in
the preparation of the financial statements for the year ended 31 December 2007
are consistent with those published by the Group in its interim results for the
six months ended 30 June 2007 which are available on the Company's website,
www.phorm.com. The Auditors' Report on the financial statements for the year
ended 31 December 2007 was unqualified. The Annual Report for the year ended 31
December 2007 will be made available on the Company's website, www.phorm.com.
The financial information included in this preliminary announcement does not
itself contain sufficient information to comply with IFRS.
The preparation of the preliminary results requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the balance sheet date, and
the reported amounts of revenue and expenses during the reporting period. Actual
results could vary from these estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision
affects only that period or in the period of the revision and future periods if
the revision affects both current and future periods.
For Phorm Enquiries:
Kent Ertugrul (Chairman & Chief Executive) +44 20 7638 9571
Lynne Millar (Chief Financial Officer)
Citigate Dewe Rogerson +44 20 7638 9571
Simon Rigby
Justin Griffiths
Canaccord Adams Limited +44 20 7050 6500
(Nominated Adviser)
Mark Williams
Andrew Chubb
About Phorm:
Phorm is an innovative technology company specialising in delivering
behaviourally and contextually targeted advertising while preserving users'
personal privacy and security.
Phorm's partners include leading Internet Service Providers (ISPs), Publishers,
Ad Networks and Advertisers.
Phorm is a Delaware, US incorporated company, with offices in New York and
London. The Company was admitted to the AIM market of the London Stock Exchange
in 2004 and has over 100 employees.
For more information, please visit: www.phorm.com
This information is provided by RNS
The company news service from the London Stock Exchange
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