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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Burst Med Reg S | LSE:BRST | London | Ordinary Share | COM SHS USD0.01 (REGS) |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 31.25 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:4734T Burst Media Corporation 22 March 2007 22 March 2007 Burst Media Preliminary results for the twelve months ended 31 December 2006 Burst Media Corporation ("Burst" or "the Company"), the international online advertising services business, announces its preliminary results for the year ended 31 December 2006. Financial Summary *Revenues increased 9% to $23.5 million (2005: $21.6 million) *Burst Network's revenues up 4% to $21.9 million (2005: $21.1 million) *AdConductorTM revenues up 120% to $1.1 million (2005: $0.5 million) *Maiden contribution from newly launched Burst Direct division *Gross profit up 11% to $11.2 million (2005: $10.1 million) *Gross margin was 48% (2005: 47%) *Adjusted earnings before income taxes and depreciation and amortization ("EBITDA") was $2.4 million (2005: $3.4 million) *Net Income before tax (excluding equity-based compensation) was $2.7 million, down 21% (2005: $3.4 million) *Net cash at 31 December 2006 was $13.0 million (31 December 2005: $7.5 million) Commenting on the maiden full year results, CEO Jarvis Coffin said, "Burst Media has started 2007 with a strong sales pipeline and an increased sales capacity, which is essential to the Company's progress in what is a growing and fast moving market place. A lot of time, effort and resources have been invested in resolving the operational difficulties Burst faced during 2006, and the Board is confident that the Company, supported by a recently strengthened management team, is now in a far stronger position to capitalise on the exciting opportunities in the internet advertising market." Enquiries: Burst Media Tel: +44 (0) 20 7796 4133 or +1 781-852-5481 Jarvis Coffin, Chief Executive Susan Villare, Chief Financial Officer Hudson Sandler Tel: +44 (0) 20 7796 4133 Nick Lyon / James White Chairman's statement It has been a challenging year for Burst Media. We launched a new division of the Company, Burst Direct, and expanded staff presence in the U.K. and across the U.S. However, our maiden year as an AIM listed company was a disappointment to us and our investors as the performance of the Company was significantly below our initial expectations. The Board remains focused on ensuring that shareholders benefit from the opportunities that we believe exist for Burst Media within an Internet advertising industry that continues to be vibrant and growing. A summary of the financial results from the past year are as follows: *Revenue grew 9% to $23.5 million with the majority of this increase due to the Burst Network division, which saw revenues rise by 4% to $21.9 million. The AdConductor division saw revenues increase by 120% to $1.1 million while Burst Direct, launched in May 2006, made a small maiden contribution. *Gross profit was up 11% to $11.2 million and gross margin improved to 48%, from 47% last year. *Operating costs, excluding equity-based compensation charges of $2.6 million, were up 33% to $9.2 million due to the significant investments, primarily personnel related, made in all three divisions of the Company as management has sought to increase the capacity of the business. *Adjusted EBITDA for fiscal 2006 was $2.4 million. *Net cash at 31 December 2006 was $13.0 million compared to $7.5 million last year. The core business of Burst Media is Burst Network, which services the advertising needs of specialty publishers and brand advertisers. To fulfill the needs of additional web publishers not served by Burst Network, and to support advertisers who seek broad reach for direct response related campaigns, we introduced Burst Direct in 2006. This provided our advertisers with the flexibility to choose the appropriate network for their type of campaign, whether it is high consideration brand advertising provided through Burst Network, or direct response campaigns through Burst Direct. We encountered challenges in the form of sales conflicts that arose as a result of launching Burst Direct, which we believe affected performance in the core Burst Network business. We have taken steps to address those issues and continue to work to distinguish Burst's product offerings in the marketplace. The Board is pleased with the positive contribution made by Burst Direct in recent months. The enhancement of our AdConductor platform has led to increasing interest in the product and did yield some notable contract wins, such as Reed Business Information. These large contracts did take longer to complete than anticipated, resulting in less revenue being recognized in 2006 than expected. We invested in our sales capacity and our geographic presence during 2006. Within our Network division, we expanded our outside sales staff in Atlanta, GA, Chicago, IL, New York, NY, San Francisco, CA, and in London, U.K. Additionally, new offices were opened in Chicago, IL, Los Angeles, CA, and London, U.K. We expanded our office space in New York City, NY and at our headquarters in Burlington, MA, and opened an office in Albany, NY as headquarters to Burst Direct. Burst Media was awarded its seventh consecutive year of systems certification by BPA Worldwide and we remain the only advertising network with such certification. We are proud of our commitment to advertisers that ensures their campaign statistics are accurately being recorded and delivered. During the year, our Board sadly lost one of its members. Our non-executive Director David Ferrari passed away unexpectedly on 29 August 2006. David made important contributions during his time as a non-executive Director and we miss his sound advice. The Board appointed non-executive Director Steven Hill as Chairman of the Audit Committee to replace David. In the second half of 2006, the Board focused its efforts on improving the performance of Burst Media by strengthening its management team. I'm pleased to report that we believe the necessary steps have been taken to accomplish this, with the successful recent recruitment of a new Chief Financial Officer, Chief Marketing Officer, and Managing Director of the Burst Network business. We feel confident that Burst Media is moving in a direction that benefits the interests of our shareholders, customers, and employees. David Hanger Non-executive Chairman 22 March 2007 Chief Executive's statement Introduction Burst Media represents the advertising distribution needs of web publishers and online advertisers on a global basis with three distinct product offerings: its well-established Burst Network brand, the newly launched Burst Direct and its technology platform, Burst AdConductor. These three product offerings give publishers of all sizes the opportunity to use Burst Media to sell or manage their online display advertising. Overview Total revenues increased 9% to $23.5 million in 2006 as compared to $21.6 million the previous year. Adjusted EBITDA for 2006 was $2.4 million as compared to $3.4 million in 2005. Both numbers were broadly in line with the revised guidance provided by management in September 2006, although significantly below our expectations earlier in the year. Net Income before income tax, excluding equity-based compensation, was $2.7 million. Cash increased $5.5 million from the previous year and was $13.0 million at 31 December 2006. Burst Media sought to strengthen its future position in 2006 by expanding the Company's product offering and sales efforts. We launched a new division, increased headcount by 50%, principally in sales, and invested in the technology of our AdConductor enterprise software business. The Company also completed the roll-out of its new corporate identity to reinforce Burst's brand position in the marketplace. These activities were major undertakings that we believe will position the Company as a leader within our industry going forward. Online Reach Ad networks serve campaigns across a wide variety of sites that represent Internet traffic measured by individual visitors to a site, or "unique visitors." Burst Media reached 95 million unique monthly Internet visitors in the U.S. in December 2006, up 51% from 63 million unique visitors in December 2005, according to comScore MediaMetrix. This placed Burst Media as the 11th largest Internet property in the U.S. Burst Media reached 13 million unique monthly Internet visitors in the U.K. in December 2006, up 44% from 9 million in December 2005, according to comScore MediaMetrix. This placed Burst Media as the 17th largest Internet property in the U.K. Burst Network Burst Network celebrated its tenth year of operations in 2006. The Company's core product offering gives advertisers targeted access to tens of millions of monthly unique visitors. Advertisers are guaranteed full disclosure as to which sites their advertisements will appear on, from among 3,800 premium specialty-content websites that are segmented into more than 400 content channels. The advertisers can target by content, behaviour, demographics, geography, and time of day. The inventory of available advertising impressions for Burst Network grew steadily during 2006, as reflected in our growth to 56.8 billion impressions for the full year in 2006, up from 46.6 billion impressions for 2005. The Burst Network experienced growth in revenue of 4% to $21.9 million compared to $21.1 million in 2005. This performance was disappointing, as the Company's historical growth rates had previously compared very positively to industry growth rates. There are several contributing factors: the launch of Burst Direct in conjunction with the rapid expansion in personnel and new offices stretched the operational capacity of the Company infrastructure; sales vacancies, now filled, impacted upon the important Christmas sales period; and there was a dramatic increase in the number of ad networks appearing in the market place, which increased competition. The Burst Network business continues to focus on the cost per thousand impressions, or CPM, model valued by brand advertisers who demand transparency regarding where their advertisements appear, and are willing to pay a premium for such awareness. This also benefits our network of specialty content publishers, who benefit from the premium price that this model commands. During the year, we increased the outside sales force for Burst Network from 7 to 15 people, most notably in Atlanta, GA, Chicago, IL, New York City, NY, San Francisco, CA, and London, U.K. We expect to see positive results from these investments in 2007. Notable advertisers in the Burst Network in 2006 included Adidas, Disney, Delta, ESPN, Expedia, Ford Motor Company, Monster Worldwide, Skechers and Vonage. We have been pleased with the progress we have made in the year in developing our U.K. presence. The Burst Network's U.K. office experienced a 91% growth in revenue in 2006 over 2005. Notable contract wins in 2006 included clients such as BT, Expedia UK, BSkyB, British Airways, Weight Watchers, Apple, O2, Samsung, Orange and Disneyland. In 2006, the Burst Network began to offer brands the ability to use video in their online advertising, through a partnership between Burst Media and PointRoll. This enables advertisers to use their existing video creative to capture the attention of the online audience with a brand message targeted to audiences across the Burst Network of sites. PointRoll developed its NetStream service initially for the exclusive use of the Burst Network. Burst Direct The goal of Burst Direct, which was launched in May 2006, is to enable Burst Media to provide alternative display advertising programs to web publishers to serve the needs of direct response advertisers seeking large audiences at cost effective, run-of-network rates. Burst Direct offers millions of impressions through over a thousand member publishers and through inventory relationships with large Internet portal sites. Direct marketing campaigns are aggressively managed to maximize the performance of each campaign, by employing advanced optimization technology, powered by Burst's AdConductor platform. Despite strong sales efforts, revenues for the Burst Direct business in its first year of operation were considerably lower than we expected. This reflected our inability to successfully deliver on the full volume of orders due to a combination of factors, including the need to better manage the inventory to support the campaigns being sold. In 2007, we will be continuing to focus on refining the Burst Direct model to address such issues. New initiatives for the acquisition of inventory and improvements to the sales process have already resulted in stronger revenue and outlook for this business. We expect 2007 results to capitalise on the rapid growth in this sector of the market. Between June 2006 and the end of December 2006, the number of websites in the Burst Direct ad network increased approximately 70% to nearly 2,500 sites. Whilst the launch of the division came later than planned during the year, which limited full year results, we were pleased to see the rate at which revenues have grown in recent months. Burst AdConductorTM AdConductor, Burst Media's ad serving platform, applies proven technology and more than 11 years of experience with building and running premium ad networks. As a market offering, AdConductor provides a one-stop solution that integrates sales, campaign management and financial business processes in order to serve the ad placement needs of large and multi-site web publishers. The two products offered by the AdConductor Division include Desktop, which enables small to medium size web publishers to manage their own advertising placement, and Enterprise which supports large multi-site publishers with a complete ad management system. Revenues in the AdConductor division were $1.1 million, which represents a growth of 120% from the previous year. AdConductor successfully signed 21 new contracts in 2006 with an aggregate value over the life of the contracts of $2.5 million. The bulk of these contracts are two-year agreements, providing a strong base for 2007. Significant 2006 wins and contract renewals include F&W Publishing, Reed Business Information and TACODA. Burst AdConductor had a good start to 2007 with a new contract win from Reed Business Affiliate Network that will use our AdConductor system to deliver and manage their online advertising across their U.S. network of business to business websites. The growth in display advertising and the need to manage its distribution on a targeted basis has resulted in a strong pipeline for 2007. During 2006, several important enhancements were made to the AdConductor platform to increase performance, competitiveness, and reporting capabilities. Specifically, we: *Created a platform for sharing advertising inventory between AdConductor clients and Burst, referred to as the Burst Audience Backplane; *Developed the technology and business rules for running performance-based advertising campaigns to support the creation of the Burst Direct business and *Implemented Behavioural Targeting capability, and the ability to target individuals who show interest in a specific order. Outlook The Company has entered 2007 with a strong sales pipeline and a significant increase in sales capacity. At the end of 2006, Burst Media decided to make significant changes to its management team. This will bring new experience into the Company and support the management of its individual business units. Susan Villare joined the Company as Chief Financial Officer from MatrixOne, a NASDAQ listed company acquired by Dassault Systemes, where she was CFO of their Enovia division. David Cooperstein has accepted the new role of Chief Marketing Officer for Burst Media. Mr. Cooperstein brings over 15 years of Internet and New Media experience to the Company, most recently from the social networking site Gather.com. Don Byrnes is Burst Media's new Managing Director for the Burst Network business, bringing over 25 years of sales experience in the advertising and publishing industries. This new management team will focus on improving the Company's growth in revenue, its financial discipline and its strategic marketing efforts. In 2007, the Company will continue to invest in its ad management technology and service offerings to stay ahead of the rapid pace of development in the industry and to continue to provide tools that help improve sales performance and productivity. The Board believes that the Company is now in a better position to capitalise on the opportunities that continue to exist in the online advertising industry and remains focused on taking all steps to increase results and shareholder value. Jarvis Coffin Chief Executive Officer 22 March 2007 Condensed Financial Statements (in thousands, except share amounts) Balance Sheets (unaudited) 2006 2005 ------- ------- ASSETS: CURRENT ASSETS Cash and cash equivalents $ 13,012 $ 7,462 Accounts receivable, less allowance for doubtful accounts of $220 in 2006 and $200 in 2005 5,565 5,336 Prepaid expenses and other current assets 761 288 ------- ------- Total current assets 19,338 13,086 PROPERTY AND EQUIPMENT, NET 747 224 OTHER ASSETS 623 223 ------- ------- $ 20,708 $13,533 ======= ======= LIABILITIES AND STOCKHOLDERS'/MEMBERS' EQUITY (DEFICIT): CURRENT LIABILITIES: Due to publishers $3,500 $3,978 Other current liabilities 1,377 942 ------- ------- Total current liabilities 4,877 4,920 OTHER LONG TERM LIABILITIES: 56 13 ------- ------- Total liabilities 4,933 4,933 ------- ------- REDEEMABLE PREFERRED MEMBERSHIP UNITS: Series C units, 2,519,580 economic and participating units issued and outstanding at December 31, 2005 - 15,000 ------- ------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS'/MEMBERS' EQUITY (DEFICIT): Series A units, 8,762,782 economic units issued and outstanding at December 31, 2005, of which 8,729,016 are participating units in 2005. - 946 Series B units, 1,400,000 economic and participating units issued and outstanding at December 31, 2005 - 3,000 Common stock, $.01 par value; 150,000,000 shares authorized, 82,928,562 shares at issued and outstanding December 31, 2006 829 - Additional paid-in capital 25,092 - Deferred equity-based compensation - 8 Accumulated deficit (10,146) (10,354) ------- ------- Total stockholders'/members' equity (deficit) 15,775 (6,400) ------- ------- $ 20,708 $13,533 ======= ======= Consolidated Statements of Operations (unaudited) (in thousands, except share amounts) 2006 2005 -------- -------- Revenue $23,477 $21,561 Cost of revenue 12,251 11,436 -------- -------- Gross profit 11,226 10,125 -------- -------- Operating Expenses: Sales and marketing 5,309 3,977 General and administrative 2,360 1,788 Technology and product development 1,514 1,149 Equity-based compensation 2,584 - -------- -------- Total operating expenses 11,767 6,914 -------- -------- Income/(loss) from operations (541) 3,211 -------- -------- Other Income: Interest income 520 166 Other income 159 38 -------- -------- Total other income 679 204 -------- -------- Net income before income tax benefit 138 3,415 -------- -------- Income tax benefit 70 - -------- -------- Net income $ 208 $ 3,415 ======== ======== Basic earnings per share $ 0.00 $ 0.07 ======== ======== Fully diluted earnings per share $ 0.00 $ 0.07 ======== ======== Shares Used in Calculating: Basic earnings per share 73,350,634 50,813,915 ======== ======== Fully diluted earnings per share 73,498,934 50,813,915 ========= ========= Consolidated Statements of Operations (unaudited) Adjusted EBITDA (in thousands) 2006 2005 --------- ------ Net income $ 208 $3,415 --------- ------ Adjustments: Equity-based compensation 2,584 - Interest income (520) (166) Income tax benefit (70) - Depreciation and amortization 212 105 --------- ------- Total adjustments 2,206 (61) --------- ------- Adjusted EBITDA(1) $2,414 $3,354 ========= ======= Adjusted EBITDA(1) as percentage of Revenue 10% 16% ========= ======= (1) "Adjusted EBITDA" (earnings excluding equity-based compensation before interest income, taxes, deprecation and amortization) is a non-GAAP financial measure. Burst Media believes adjusted EBITDA provides meaningful insight into the Company's ongoing economic performance and therefore uses adjusted EBITDA internally to assist in evaluating and managing the Company's operations. Consolidated Statements of Cash Flows (unaudited) (in thousands, except share amounts) 2006 2005 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 208 $ 3,415 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 212 105 Deferred income taxes (409) - Bad debt 34 88 Equity-based compensation 2,584 4 Accretion of discount on Series C units - 2 Deferred rent 47 - Changes in: Accounts receivable (263) (2,643) Prepaid expenses and other current assets (473) (129) Other assets (4) (56) Due to publishers (478) 1,077 Other current liabilities 435 387 Net cash provided by operating activities 1,893 2,250 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (731) (165) Cost of acquiring trademarks and other properties (26) - Repayments of note receivable from member 34 21 Net cash used in investing activities (723) (144) CASH FLOWS FROM FINANCING ACTIVITIES Stock option exercises 645 - Common stock issued, net of expenses 3,318 - Series C units preference settlement 421 - Repayments of capital lease obligation (4) (4) Net cash provided by (used in) financing activities 4,380 (4) Net Increase in cash and cash equivalents 5,550 2,102 Cash and cash equivalents, beginning of year 7,462 5,360 Cash and cash equivalents, end of year $ 13,012 $ 7,462 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION During the year ended December 31, 2006, the Company paid cash in the amounts of $1 for interest and $381 for taxes. There was no cash paid for interest or taxes during the years ended December 31, 2005. NON-CASH FINANCING ACTIVITIES The Company issued 63,745,150 common shares in exchange for the Series A, B and C membership units upon conversion to a C Corporation during the year ended December 31, 2006. The Company issued 14,235,667 common shares in settlement of a Series C membership unit holders' preference during the year ended December 31, 2006. Notes to Consolidated Condensed Financial Statements (unaudited) (in thousands except share amounts) 1. Basis of Presentation The consolidated condensed financial statements of Burt Media Corporation ("Burst" or "the Company") have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and include the accounts of BURST Media UK Limited, Burst's wholly-owned subsidiary. All intercompany balances and transactions have been eliminated. Certain information and note disclosures, which are normally included in annual financial statements prepared in accordance with U.S. GAAP, have been omitted. The consolidated statements reflect all adjustments which are, in the opinion of management, necessary to present fairly the Company's financial position and the results of operations. Certain previously recorded amounts have been reclassified to conform to the current period presentation. 2. Re-incorporation and Initial Public Offering Burst was originally organized in January 1996 as a New York limited liability company (Burst Media LLC). On April 10, 2006, Burst was reincorporated under the laws of the State of Maryland. The re-incorporation changed the form of the entity from a Limited Liability Corporation (LLC) to a C Corporation. Burst acquired 100% of the assets and liabilities of the Burst LLC in exchange for all of Burst's outstanding capital stock (equivalent to 63,745,150 shares of $0.01 par value common stock) which was thereupon distributed to members of Burst LLC on a pro rata basis in connection with its dissolution on April 11, 2006. The exchange has been recorded at the Company's historical carrying value on the date of conversion. On April 21, 2006, the Company issued 3.5 million new shares of common stock on the AIM market of the London Stock Exchange at $1.47 per share, generating $3.3 million in proceeds. These proceeds are recorded net of the issue costs (legal, commissions and other) totalling $1.8 million in cash. The stock trades on the AIM market under the symbol "BRST". Prior to the Initial Public Offering ("IPO") on April 21, 2006, the operations of Burst LLC were governed by its amended and restated operating agreement dated January 31, 2000. The amended and restated operating agreement provides for the issuance of membership units that entitled each series of membership to certain rights and obligations. 3. Equity-Based Compensation For the year ended December 31, 2005, Burst LLC elected to account for equity-based compensation plans using the intrinsic value method as set forth in APB Opinion No. 25, "Accounting for Stock Issued to Employees" as permitted by SFAS No. 123, "Accounting for Stock Based Compensation". As such, compensation expense was recognized if, on the grant date, the fair value of the underlying unit exceeded the exercise price. Under SFAS No. 123, the Company disclosed the pro-forma net income (loss) as if the fair-value method defined in SFAS No.123 had been applied. Compensation expense associated with option grants to non-employees was measured using a fair value method in accordance with SFAS No. 123 and related interpretations. Had compensation expense been recorded based on the fair value method set forth under SFAS No. 123, the change in the Company's net income (loss) would have been immaterial for the year ended December 31, 2005. SFAS No.123(R), "Share-Based Payment", requires the use of an option pricing model for estimating fair value, which is amortized to expense over the vesting periods of an option grant. As such pro-forma disclosure of fair value recognition is no longer an alternative. The Company has applied the provisions of SFAS No. 123(R) to the financial statements for the year ended December 31, 2006. Burst applied the modified prospective application transition method as permitted by this statement. As such, financial statements for prior periods to the effective date of this statement will not be restated. 4. Foreign Currency The financial accounts of Burst Media UK Limited are measured using the local currency as the functional currency. The assets and liabilities of this subsidiary are generally translated into U.S. dollars at the current exchange rates as of the balance sheet dates, and revenues and expenses are translated at average rates each month. Burst also conducts certain transactions denominated in foreign currencies. Net foreign currency transaction gains were $137 and $20 for the years ended December 31, 2006 and 2005, respectively and are included in Other income in the accompanying consolidated statements of operations. 5. Earnings per common share Basic and diluted earnings per share for the years ending December 31 are calculated as follows: 2006 2005* -------- -------- Numerator: Net income used in calculating basic and diluted earnings per share $208 $3,415 ======== ======== Denominator: Weighted average number of common shares outstanding. 73,350,634 50,813,915 Effect of dilutive securities - stock options 148,300 - -------- -------- Shares used in calculating diluted earnings per share 73,498,934 50,813,915 ======== ======== *Share count used in determining earnings per share for the year ended December 31, 2005 are affected for the 5 for 1 stock exchange, which occurred at the date of the IPO (April 21, 2006). See further discussion of the Company's IPO in Note 2. Antidilutive options outstanding were 868,222 at December 31, 2006. There were no antidilutive options outstanding at December 31, 2005. This information is provided by RNS The company news service from the London Stock Exchange END FR DGGZFRMLGNZM
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