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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Teleunit | LSE:TLU | London | Ordinary Share | IT0003664080 | ORD EUR0.0125 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.35 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number : 6260E
Teleunit S.p.A
30 September 2008
30 September 2008
Teleunit SpA
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2008
Teleunit S.p.A., ("Teleunit" or "the Group"; stock code: TLU), the Italian telecom services provider, has announced its financial
results for the six months ended 30 June 2008.
Summary:
* Turnover of EUR27.0 million in line with expected decline in Premium Access traffic volumes (H1 2007: EUR45.4 million)
* Gross profit up 22% to EUR16.8 million and gross margin increased to 62% as a result of the added contribution of Neomobile to the
Group's revenue mix (H1 2007: EUR13.8 million; margin 30%)
* Consolidated net loss of EUR2.7 million (H1 2006: net loss of EUR0.8 million)
* Out of court settlement with Telecom Italia for EUR9.8 million; EUR7.1 million received to date
* Voice and Data Services division adds to product portfolio launching new ADSL offering "7Mega" and enters WLR ("Wholesale Line
Rental") market with "Teleunit 1"
* Neomobile launches in Brazil.
* Post period-end: Neomobile acquires Arena Mobile, the highly respected B2B supplier of Mobile Content;
* Post period-end: on Monday 29 September 2008 Teleunit signs new equity-only agreement with a leading Italian bank's Venture
Capital subsidiary (the "VCC") for the sale, for EUR10.0 million, of a 15.87% stake in Neomobile. The transaction is expected to close on 6
October 2008.
Commenting on the financial results, Gianfranco Cimica, Chief Executive Officer of Teleunit S.p.A, said:
"As reported in the post period-end developments of the 2007 Results and in subsequent RNS releases, 2008 will mark closure of an
important chapter in Teleunit's history. In Q1 the Group signed an out-of-court settlement with Telecom Italia for EUR 9.8 million over
long-standing receivables owed. With fewer distractions and working capital so far contributed, we have been able to renew our focus on
supporting our core operations and expanding the reach of the Group's most exciting projects. Neomobile continues to extend its global reach
and perform beyond expectations, successfully launching in brazil in the first semester. Moreover I am pleased to announce that yesterday
the Group signed a binding agreement with a leading VCC for the sale of a 15.87% stake in Neomobile. The deal gives Neomobile an equity
valuation of EUR63.0 million and will contribute EUR10.0 million in new cash to the Group's balance sheet. Despite the difficult times we
undoubtedly face, the Group's liquidity position is strong and I am confident that the future holds much promise for Teleunit."
About Teleunit SpA
Based in Perugia in Central Italy, Teleunit is a telecom services provider to both business and residential customers throughout Italy.
The Group operates in three distinct sectors: voice and data services (providing fixed line voice and data, wholesale, and wireless services
to customers across Italy) and premium access services. Through its subsidiary, Neomobile SpA, Teleunit is also an active player in the
Mobile Entertainment D2C arena. The Group is looking to expand its operations selectively in Italy and internationally. Teleunit listed on
AIM in May 2004, the first Italian company to complete a primary listing in London. For more information, please visit the website:
http://ir.teleunit.it
For further information, please contact:
Gianfranco Cimica, Chief Executive Officer, Teleunit SpA 00 39 075 528 3939
Oliver Rigby, Daniel Stewart & Company Plc 020 7776 6550
Chief Executive Officer's Review
On the 29th of May 2008, the Group signed an agreement with the VCC for the sale of a minority stake in Neomobile as part of a leveraged
buy-out operation. The original transaction gave Neomobile an Enterprise Value of EUR62.0 million, net of EUR13.0 million in new debt and
expenses of EUR1.0 million. The VCC was to pay EUR10.0 million for a 20% share, valuing Neomobile's equity at EUR50.0 million. The deal was
subject to approval from the Antitrust authority and raising of EUR13.0 million in new debt.
Raising the debt proved laborious as a result of the credit squeeze in the financial markets leading the parties to sign a new,
equity-only agreement. The new agreement now values Neomobile's equity at EUR63.0 million, in line with the Company's sustained growth and
attainment of quarterly objectives. For the same EUR10.0 million the VCC will receive a 15.87% stake. Neomobile's executives will receive a
12% stake for a contribution of EUR1.0 million via a non-proportionate increase in share capital. TLU will hold a 72.13% residual stake in
Neomobile valued at EUR45.4 million, representing a significant premium to the Group's current market valuation. Antitrust approval has been
received, and the transaction is expected to close on the 6th of October 2008 (for more information please see note 6).
The VCC is a subsidiary of one of Italy's leading banks, and I am confident the endorsement provided by this important partner will
provide added impetus to Neomobile's continued growth. The financial commitment by the VCC is testament to the success the Company has
attracted over past years, and further confirms Neomobile as an key player in the booming global Mobile Content industry.
Turning to the Group's performance in the first half of the year, Neomobile continues to perform strongly, with period-on-period revenue
growth of 65% and gross margin increasing 5 points sequentially to 89 percent. On the other hand, turnover in the Premium Access Services
division fell by 80% to EUR5.9 million with respect to the comparable period last year (H12007: EUR29.4 million). This one-off substantial
reduction in revenue, anticipated by Management, reflects market sentiment surrounding the proposed new regulation to systematically block
access to premium numbers on all fixed line telephones. This revenue shortfall led the Premium Access segment to contribute gross profits of
EUR671,000 in the period under review versus EUR4.0 million in H12007. No further negative impacts are expected on the balance sheet, as the
impairment of the Group's associates have already been booked (please see FY2007 Results). Cushioning the impact of the PA segment's
downturn in H12008, Neomobile's first semester gross profit contribution almost doubled with respect to H12007 coming in at EUR14.1 million (H12007: EUR7.7 million). As a result, the Group
generated gross profits up 22% to EUR16.8 million on the back of gross margins up 32% to 62 percent.
The increase in administrative expenses from EUR3.4 million in H12007 to EUR4.8 million in H12008 is derived from an increase in
Neomobile personnel, which at period-end stood at 60 against a headcount of 25 at 30 June 2007.
Sales and marketing expenses in the first six months of 2008 came in at EUR9.2 million, an increase of EUR3.7 million with respect to
the EUR5.5 million spent in H12007. The lions' share of sales and marketing expenditure came from Neomobile, which in the first semester
spent EUR8.6 million. For every Euro invested in H12007 it generated EUR1.98 of gross profit versus the EUR1.61 generated in H12008. This is
a strong result considering the Company sustained buoyant growth in Italy and Turkey whilst undergoing advertising-intensive launches in
Spain and Brasil. With regards to Teleunit specifically, less costly customer acquisition methods in the period under review resulted in
marketing expenditures reduced by 62% from EUR1.6 million in H12007 to EUR0.6 million in H12008.
The EUR0.7 million decrease in other net operating expenses from EUR3.1 million in H12007 to EUR2.4 million in the current period can be
attributed to Company-wide cost cutting measures implemented since 2007 which have continued to yield results. This is despite an additional
contribution of EUR817,000 from Neomobile's growth in personnel and increased international exposure. Neomobile's EBITDA margin stood at 19%
in H12008 versus 21% in H12007, and we expect the margin to recover as the Company consolidates it's overseas operations, further refining
gross margin and advertising investments.
The Group's net debt at period-end stood at EUR11.3 million, reduced by EUR3.4 million with respect to the EUR14.7 million net debt
position as at year-end 2007. This decrease stems from a EUR2.6 million addition to cash reserves, which stood at EUR8.8 million as at 30
June 2008, and from the repayment of EUR1.2 million in short and long-term debt. We expect the Group's debt to be further reduced going
forward, and working capital bolstered in line with the one potential and the one now confirmed second semester developments: the sale of a
minority stake in Neomobile and the EUR2.7 million of new cash to be received from Telecom Italia following the AGCOM's decision, expected
on the 26th of November (please see note 5). No assurances can be provided at this stage in regards to the latter, although management
remains optimistic of a positive outcome for the Group.
Operational Review:
Voice and Data Services (VDS):
Segment revenues in H12008 came in at EUR5.3 million representing a EUR1.0 million decline on H12007 levels. Gross margin however
increased 5 points to 38% helping to taper the impact on gross profit which came in at EUR2.0 million, or EUR0.1 million lower than in the
comparable period last year.
In the first six months of the year, productivity levels increased by 20% with respect to H12007 with 3,230 new contracts generated
(H12007: 2,683). Post-churn, the total customer base at period-end, not including CPS customers, stood 9% higher with respect to year-end
2007 at 6,130. In order to retain customers the division introduced a new product in May of this year called "Teleunit 1", a Wholesale Line
Rental ("WLR") initiative. WLR is an evolution of the CPS offering, and Teleunit was one of the first operators to launch the service in
Italy. WLR customers benefit from receiving one single bill from Teleunit comprising line rental and traffic charges. This administrative
change permits the customer to disconnect from Telecom Italia, and imparts a greater degree of brand awareness for Teleunit services. As
testament to the popularity of the product, over 50% of new contracts acquired in the period were for Teleunit 1.
In H12008 the division also implemented a number of new and lower cost sales channels. In addition to traditional agencies customers are
now being acquired via outbound call-centres, web forms and via direct web acquisition. Today the WLR service is sold exclusively via
outsourced outbound call-centres. A collateral benefit of the initiative is the enhanced consumer awareness of the Teleunit brand as a
result of the thousands of calls placed to potential customers daily. The division will be looking to selectively outsource new call centres
going forward.
Teleunit's flagship ADSL offering "tria" has retained its defining characteristics but has evolved to "7mega", giving customers
bandwidth of up to 7 megabytes per second. This new product is currently marketed exclusively online, where we can readily attract existing
ADSL customers seeking next generation connectivity. The web form initiative was launched in April and has proved to be the best performing
sales channel for acquiring ADSL VoIP customers in the period. As an evolution to the web form, at the end of June the division launched a
website to acquire customers directly online.
These new services and sales channels are to date performing beyond Management targets with initial results in H2 demonstrating a
significant up-trend: in the month of July alone the division had already acquired more than 40% of the total number of new contracts
generated in the whole of H1 2008. So far in the second semester new contracts acquired have surpassed customer loss rates and we expect the
new services developed in the period to reduce the elevated levels of churn witnessed in the first six months of the year.
Premium Access Services:
As forecast by Management, the impending change on the regulatory front has continued to impact the productivity of Service Centres
leading to H12008 revenues of EUR5.9 million versus the EUR29.4 million of H12007. Many Service Centres have abandoned the market,
anticipating the projected AGCOM decision (expected in November) to confirm the systematic blocking of all Premium numberings from fixed
line telephones.
Market sentiment has been severely impacted by these regulatory threats and we expect even a ruling favourable to the sector would be
unable to restore revenues or gross profit to prior years' levels. As previously reported, the division intends to remain in the market and
follow developments closely although a run down in the business is currently being implemented.
NEOMOBILE SpA:
Neomobile continues to perform beyond expectations with H12008 revenues reaching EUR15.9 million (H12007: EUR9.6 million). This 64%
increase can be attributed principally to strong performance in the Italian and Spanish markets. Italy's mobile network operators have
provided confirmation that Neomobile has now become the B2C market leader, and the player which has grown most significantly in the last
four consecutive quarters. Growth in Spain since launch has been fully in line with Management expectations with the Company becoming one of
the top 7 players in the market and one of the top three players in terms of media advertising spend.
The Company was also able to maintain a strong control on costs in the period under review, with H12008 direct costs of EUR2.0 million
remaining almost unchanged with respect to the EUR1.9 million of H12007. The 9 point rise in gross margin to 89% with respect to the first
half of 2007 and 5 point sequential rise (H12007: 80%; FY2007: 84%) result from two factors: first, the direct interconnection with network
operators that Neomobile now benefits from and secondly, due to a stronger integration into the market's provisioning chain, with more
content developed in house or acquired from out-sourced content developers in bulk to secure better economies of scale.
Although demand for traditional content services persist, the Company's H1 growth has been in part underpinned by a diversification of
its product offering towards Mobile 2.0. In February 2008 "Dindo Chat" was launched in Italy, whereby cross-channel subscription methods
allow users to gain access to chat and community services via WAP. This has contributed to customer loyalty and initial results are very
encouraging. As new, more evolved multimedia handsets are introduced on the market, Neomobile is keeping pace with the rapid transition
towards the provision of rich-media content such as videos, full track music, and interactive applications. In order to mitigate the risks
associated with SMS push services, the Company has also developed and launched in Italy an alternative billing platform for use on WAP
handsets. If the test proves successful, Neomobile intends to deploy rapidly this new platform across all geographical segments.
In April of this year, in its first transatlantic move, Neomobile launched its services in Brazil. With a total population in excess of
184 million people, more than 50 million of which are between the ages of 18-30, and mobile penetration increasing fast, Brazil holds much
promise for Neomobile. Neomobile's global presence now extends to Italy, Spain, Turkey and Brasil, in which the total number of mobile
handsets are in excess of 300 million, and in which the Company continues to expand market share aggressively. Post period-end, the Company
acquired Arena Mobile, a global leader in the provision of B2B mobile content services with exposure in over 50 countries (see RNS release
of 22 September). Neomobile will continue to pursue actively its strategy of internationalisation and with its EUR6.5 million net cash
position at period-end, the Company intends to target up-and-coming players selectively in the mobile content industry to reduce costs
associated with international start-ups and to gain a faster time-to-market.
Outlook:
Neomobile's business model has now been confirmed and has proved successful for over more than 3 years. The prospects that lie ahead
with the advent of more evolved telecommunication technology inspires much confidence for the future.
Voice and Data Services customer acquisition began reaching record levels at the end of the period and has persisted into the second
semester. Management intends on keeping a close eye on levels of churn going forward, although we hope to significantly diminish customer
losses in the near future. The lost profitability in the Premium Access Services division is ultimately responsible for the loss we now
report. Management views this as a one-time only development and prospects for the Group's profitability remain encouraging in the medium
term.
An injection of EUR10.0 million in new cash from the Neomobile transaction will help strengthen Teleunit's balance sheet and contribute
additional working capital to support the Group's most exciting initiatives. The AGCOM decision expected in the near future has also the
potential to impact the Group's balance sheet favourably, and we look forward to updating the market when the Neomobile transaction closes
and as news regarding the AGCOM's decision becomes available.
Gianfranco Cimica 30 September 2008
Chief Executive Officer
Teleunit SpA
INCOME STATEMENT
For the six months ended 30 June 2008
in thousands of euro Note Six months ended Six months Year
30 June ended ended
30 June 31
December
2008 2007 2007
Sales revenue 2 27,024 45,358 87,310
Cost of sales (10,471) (31,552) (55,477)
Gross profit 16,553 13,806 31,834
Administrative expenses (4,803) (3,381) (7,526)
Sales and marketing expenses (9,150) (5,498) (14,106)
Other net operating expenses (2,358) (2,136) (9,448)
Total operating expenses (16,311) (11,015) (31,080)
Profit (loss) from operations 2 242 2,791 754
Amortisation and depreciation (2,660) (2,421) (5,067)
Charge from Impairment of - - (4,255)
associates
Financing (costs) (754) (811) (1,639)
Financing income 70 53 138
Profit (loss) before tax (3,102) (388) (10,070)
Taxation 3 426 (382) (20)
Net (loss)/profit for the (2,676) (770) (10,090)
period
Basic earnings per share (EUR) 4 (0,0144) (0.0041) (0.0543)
Diluted earnings per share 4 (0,0142) (0.0041) (0.0538)
(EUR)
BALANCE SHEET
As at 30 June 2008
in thousands of euro As at As at As at
30 30 31
June June December
2008 2007 2007
Assets
Property, plant and equipment 12,277 14,072 13,404
Intangible assets 3,099 3,107 3,093
Investments in subsidiaries and associates 1,456 5,720 1,421
Other investments 464 364 355
Deferred tax assets 1,631 1,128 1,014
Total non-current assets 18,927 24,390 19,287
Trade receivables 23,868 28,761 26,439
Non-trade receivables 2,372 3,596 2,494
Cash and cash equivalents 8,789 5,850 6,215
Assets classified as held for sale - - -
Other financial assets - - -
Total current assets 35,029 38,207 35,148
TOTAL ASSETS 53,956 62,597 54,435
Equity
Issued capital 2,334 2,334 2,334
Reserves 570 447 12,542
Share premium 731 12,542 467
Own shares (214) (214) (214)
Retained earnings (19) 6,724 (2,648)
Total Group equity 9,802 21,833 12,481
Equity attributable to third parties 1 (3) (3)
Total equity 9,803 21,830 12,478
Liabilities
Interest-bearing loans and borrowings 15,434 16,197 15,847
Employee benefits 278 363 258
Provisions 1,655 989 1,623
Deferred tax liabilities 1,045 1,146 1,064
Total non-current liabilities 18,411 18,695 18,792
Bank overdrafts 2,084 1,122 1,647
Interest-bearing loans and borrowings 2,571 3,989 3,365
Trade and other payables 20,329 15,437 17,296
Income tax payable 758 1,524 857
Total current liabilities 25,742 22,072 23,165
TOTAL EQUITY AND LIABILITIES 53,956 62,597 54,435
STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2008
in thousands of euro Share Capital Legal Reserve Share Premium Own shares Retained Earnings Total
Balance at 1 January 2007 2,334 467 12,542 (214) 7,473 22,602
Profit 2007 allocated to - - - - - -
reserve
Own shares acquired - - - - - -
Net profit/(loss) 2007 - - - - (10,089) (10,089)
Other - - - - (32) (32)
Balance at 31 December 2007 2,334 467 12,542 (214) (2,648) 12,481
Balance at 1 January 2008 2,334 467 12,542 (214) (2,648) 12,481
Loss 2007 allocated to 138 (5,411) 5,273 -
reserves
Net profit/(loss) H1 2008 - - - - (2,678) (2,678)
Other - - - - - -
Balance at 30 June 2008 2,334 605 7,131 (214) (54) 9,802
STATEMENT OF CASH FLOWS
For the six months ended 30 June 2008
in thousands of euro Six months ended Six months ended Year to 31 December
30 June 30 June 2007
2008 2007
Operating activities
Net profit/(loss) for the (2,676) (770) (10,090)
period
Adjustments for:
Depreciation and amortization 2,656 2,422 5,015
Employee benefits 33 69 (3)
Deferred tax (635) (335) (304)
Share of results of associates - - (18)
after tax
Gain from disposal of assets 195 - (334)
classified as held for sale
Loss from impairment of (78) - 4,255
associates
Other - 621 1,265
(506) 2,007 (214)
(Increase)/Decrease in trade 2,572 (2,073) 249
receivables
(Increase)/Decrease in 122 111 1,213
non-trade receivables
Increase in trade and other 3242 87 1,415
payables and income tax
Income tax paid (309) (17) (243)
Retirement benefits payment (14) (102) (50)
Other 17 - -
Cash flow from operating 5,124 13 2,370
activities
Cash flow from investing
activities
Purchase of property, plant (903) (1,315) (2,559)
and equipment
Proceeds from sale of fixed 21 1,305 (3)
assets
Purchase of intangible assets (864) (1,529) (2,287)
Proceeds from assets (1) - 1,740
classified as held for sale
(Purchase)/Sale of investments (35) 309 -
in associates
Purchase of other investments - -
Cash flows from investing (1,781) (1,230) (3,109)
activities
Financing activities
Proceeds from loans and (1207) (2,049) (2,686)
borrowings
Proceeds from the issue of - - -
share capital
Increase in share premium (net - - -
of unsubscribed amount)
Payment of transaction costs - - -
Purchase of own shares - - -
Dividends paid - - -
Cash flow/(outflow) from (1207) (2,049) (2,686)
financing activities
Net increase/(decrease) in 2,136 (3,266) (3,425)
cash and cash equivalents
Cash and cash equivalents (net 4,569 7,994 7,994
of overdrafts)
at 1 January
Cash and cash equivalents (net 6,705 4,728 4,569
of overdrafts)
at period end
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
(a) Statement of compliance
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and its interpretation
adopted by the International Accounting Standards Board (IASB).
The financial statements derive from the books of account of the company, prepared in accordance with Italian GAAP to which appropriate
adjustments have been applied.
(b) Basis of preparation
The financial statements are presented in thousands of euro and have been prepared on the historical cost basis except for derivative
financial instruments and employee benefit obligations, which are stated at their fair value.
The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that
affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the
results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized 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.
The accounting policies have been applied consistently to all periods presented in these financial statements. This decision has been
taken by management on the premise of better presentation and more accurate classification of elements contained in the income statements.
2. Segmental Information
The following tables provide gross profit information regarding these main business segments:
In thousands of euro
H1 2007
VDS PA NeoMo Unallocated TOTAL
Sales 6,343 29,371 9,644 - 45,358
Cost of sales (4,226) (25,382) (1,944) - (31,552)
Gross profit 2,118 3,989 7,700 - 13,806
Operating expenses - - - - (11,015)
Profit from operations - - - - 2,791
TOTAL Amort & Dep - - - - (2,421)
EBITDA - - - - 370
In thousands of euro
H1 2008
VDS PA NeoMo Unallocated TOTAL
Sales 5,294 5,867 15,863 - 27,024
Cost of sales (3,280) (5,196) (1,995) - (10,471)
Gross profit 2,014 671 13,868 - 16,553
Operating expenses - - - - (16,311)
Profit from operations - - - - 242
TOTAL Amort & Dep - - - - (2,660)
EBITDA - - - - (2,418)
3. Taxation
Two taxes are applicable to the company:
* Corporate income tax (IRES) at the rate of 27.5%
* Regional tax (IRAP) at the rate of 3.90% for Teleunit and 4,90% for Neomobile
The difference in tax rates arises from the different basis for the two taxes. Although Teleunit reported a loss in the first half of
2008, it registered net tax income from consolidation of its subsidiaries of EUR945,000 and net deferred tax assets of EUR577,000 amounting
to EUR1,522,000. Neomobile generated taxable income and therefore had a net tax expense of EUR1,096,000. The net effect is that the Group
registered a current tax credit for the period in the amount of EUR426,000.
4. Earnings per share
4.1 Basic earnings per share
The calculation of basic earnings per share for the six months ended 30 June 2008 and 2007 have been determined as net profit/(loss)
attributable to ordinary shareholders divided by the weighted average number of ordinary shares for each period.
Net profit attributable to ordinary shareholders
Six months Six months
ended ended
30 June 30 June
in thousands of euro 2008 2007
Net profit (loss) attributable to ordinary (2,676) (770)
shareholders
4.2 Diluted earnings per share
Diluted earnings per share are calculated by dividing the profit for the period attributable to shareholders of the Company by the
weighted average number of ordinary shares outstanding during the period adjusted for the effects of all potentially dilutive shares (e.g.
employees stock options).
Weighted average number of ordinary shares
Six months Six months
ended ended
30 June 30 June
in thousand of shares 2008 2007
Issued ordinary shares at the beginning (0.0125 EUR 185,944 185,944
per share)
Effect of shares purchased to be cancelled - -
Weighted average number of ordinary shares 185,944 185,944
in euro
Basic (loss)/earnings per share (0.01439) (0.00414)
Weighted average number of ordinary shares (diluted)
in thousands of shares Six months Six months
ended ended
30 June 30 June
2008 2007
Issued ordinary shares at 31 December 185,944 185,944
Effect of shares purchased to be cancelled - -
Effect of share option agreements 1,690 2,241
Weighted average number of ordinary shares 187,634 188,185
(diluted) at 30 June
Diluted earnings per share (0.01419) (0.00409)
5. Credit risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Under this policy, investments
are made only in liquid securities or financial assets.
At the balance sheet date of 30th June 2008 the only material concentration of credit risk was with Telecom Italia S.p.A. ("Telecom
Italia"), the main client of the Group.
The potential credit risk at balance sheet date amounted to EUR2,704,765,08 (VAT incl.):
As previously reported, the Group signed an extra judicial agreement with Telecom Italia in March 2008 in respect of long-standing
uncollected receivables, providing for the payment of EUR9.8 million to the Group. To date, EUR7,095,951 has been received with the
remaining EUR2.7 million to be collected following a positive ruling by the AGCOM (Italy's "OFCOM"). On the 26th of September the Group
received a letter from the AGCOM requesting a further meeting with the parties on the 5th of November. The decision is then expected on the
26th of November when the "CIR" (Comitato per le Infrastrutture e le Reti) convene. The Group is likely to receive an official
communication with the outcome soon after this date. A further update will be provided as soon as there are any developments.
6. Subsequent events
On the 29th of September 2008, Teleunit signed a Purchase and Sale Agreement with a Major Italian bank's Venture Capital subsidiary (the
"VCC"). The transaction sees the partial disposal of 15.87% of the share capital of the Group's subsidiary Neomobile S.p.A. for a total cash
consideration to the Group of EUR10 million. Neomobile was established on 31st January 2007 following the spin-off of the Group's Mobile
Content Services ("MCS") segment. As at 30 June 2008 the Company had Net Assets of EUR6.4 million (as at 31 December 2007: EUR4.7 million).
In the first six months of 2008 Neomobile generated EUR15.9 million in revenues and EUR1.6 million in net profits (FY2007: revenues of
EUR22.8 million; net profit of EUR2.8 million).
The Transaction comprises the following operations:
* The creation of a New Company (the "Newco") of which Teleunit will hold a 72.13% stake;
* The entry of the VCC into the Newco with EUR10 million for a 15.87% stake. The entry of Neomobile's Managers, who have presided
successfully over the dynamic and profitable growth in the business, into the Newco with EUR1.0 million for a 12% stake via a
non-proportional increase in share-capital;
The closing of the Transaction is expected to take place on 6 October 2008.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAPNNAAFPEFE
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