RNS Number:9126F
QXL Ricardo PLC
18 October 2007
QXL ricardo plc
The Matrix Complex
PRESS RELEASE 91 Peterborough Road
London SW6 3BU
QXL ricardo plc - Interim results 18 October 2007
Stronger revenue growth and further geographic expansion
QXL ricardo plc ("QXL", the "Company" or the "Group", QXL.L) today announces its
results for the half year ended 30 September 2007. Comparisons for revenue and
trading profit are given below for both actual and pro forma performance as the
results of QXL Poland and its related Eastern European businesses have only been
consolidated since 10 August 2006.
Highlights
* Revenue up 198% to #30.6m and trading profit up 235% to #7.7m
* Particularly strong trading performance in the second quarter
* Launch of operations in Bulgaria and Romania
* Completion of acquisition of 30% stake in Molotok.ru, Russia's leading
online trading site
* Proposed change of company name to "Tradus plc"
Quarter Quarter Half year Half year
ended ended ended ended
30 Sept. 30 Sept. 30 Sept. 30 Sept.
2007 2006 2007 2006
Unaudited Unaudited Unaudited Unaudited
#millions #millions % Change #millions #millions % Change
Revenue
Actual 15.47 6.90 124% 30.64 10.29 198%
Pro forma 15.47 9.49 63% 30.64 19.67 56%
Trading profit
Actual 4.31 1.66 159% 7.74 2.31 235%
Pro forma 4.31 2.94 47% 7.74 6.07 28%
Profit before tax 3.68 1.39 165% 6.81 1.83 272%
Net profit 2.58 0.91 184% 4.75 1.27 274%
Commenting on the results, Christian Unger, Chief Executive Officer, said:
"For the second quarter of the year we achieved 63% year-on-year revenue growth
and 47% year-on-year trading profit growth on a pro forma basis. We believe that
our substantial investment in marketing has contributed to this strong trading
performance.
I am delighted with the recent launch of our operations in Bulgaria and Romania
and with our investment in Russia. We will continue to look for further
opportunities to develop our business geographically while expanding the range
of services we offer our members. We are also especially pleased with the
continued rapid development of our businesses in the Czech Republic and Hungary.
The Group remains extremely well positioned for further strong growth.
The recent appointments of Charles Burdick as an independent non-executive
director and Christian Maar as Chief Information Officer reflect our commitment
to securing the breadth and depth of expertise consistent with our increasing
scale and recent promotion to the FTSE 250 index."
For further enquiries please contact:
QXL ricardo plc
Alison Cabot, Investor Relations
Christian Unger, Chief Executive Officer
Robert Dighero, Chief Financial Officer
Tel: +44 (0) 20 7384 6310
Financial Dynamics
James Melville-Ross
Juliet Clarke
Matt Dixon
Tel: +44 (0) 20 7831 3113
Basis of preparation of pro forma data
1. The above pro forma analysis presents key operating and financial data
for the Group on a combined basis as if the Eastern European operations had been
owned throughout the comparative period rather than from the date the Group
achieved effective control. The results of Ceneo SA, acquired in a separate
transaction at a later date, have not been included in the pro forma results of
the Eastern European businesses and are not material.
2. The pro forma analysis is unaudited.
3. The entities comprising the Eastern European businesses had not prior
to their acquisition been consolidated into a single grouping since they had
different ultimate owners.
4. As stated in the prospectus dated 29 June 2006, prior to their
acquisition and consolidation into the Group's results from 10 August 2006, the
Eastern European businesses had limited financial and other formal control
processes that would usually be in place for the preparation of management and
financial accounts. As a result, limited reliance should be placed on their pro
forma figures, particularly as quarterly and half-yearly results had not
previously been prepared by these businesses and such results (unlike their
results for the financial year as a whole) had not been audited.
5. Certain costs included as costs of sales in Eastern Europe in the pro
forma period are presented as operating expenses in the current financial year
in line with the Group's accounting policies.
Principal activity
The principal activity of the Company and the Group is, and is expected to
continue to be, the provision of online consumer trading platforms in selected
European markets.
Interim management report
In order to present underlying trends more clearly, this interim management
report compares the first half and second quarter results to pro forma results
as though the results of QXL Poland and its related Eastern European businesses
had been consolidated for the whole of the comparative periods ended 30
September 2006.
Group revenue for the half year ended 30 September 2007 was #30.6 million, a 56%
increase compared to the same period last year and gross merchandise volume, the
value of goods traded through our sites, increased 55% to #474 million. The
second quarter showed particularly strong year-on-year growth, with the seasonal
dip in trading over the summer months being less pronounced than in 2006. For
the quarter ended 30 September 2007 revenue increased 63% and gross merchandise
volume increased 61% compared to the previous year. Our monetisation rate, being
our revenue as a percentage of our gross merchandise volume, remained relatively
steady at 6.5%.
Pro forma regional analysis
Pro forma Pro forma
Quarter Quarter Half year Half year
ended ended ended ended
30 Sept 30 Sept 30 Sept 30 Sept
2007 2006 2007 2006
Unaudited Unaudited Unaudited Unaudited
#000's #000's #000's #000's
Revenue
Western Europe 3,330 2,804 6,952 6,188
Eastern Europe 12,136 6,682 23,687 13,484
Total revenue 15,466 9,486 30,639 19,672
Gross merchandise volume*
Western Europe 63,126 48,477 133,394 108,630
Eastern Europe 173,984 98,636 340,776 197,157
Total gross merchandise volume 237,110 147,113 474,170 305,787
Monetisation** 6.5% 6.4% 6.5% 6.4%
* Gross merchandise volume is the estimated total value of goods traded through our sites
** Monetisation is defined as revenue as a percentage of gross merchandise volume
See note explaining "Basis of preparation of pro forma data" above.
Operating expenses (excluding non-trading expenses) for the half year ended 30
September 2007 were #21.9 million, with substantially higher marketing
expenditure compared to the previous year. This increased marketing expenditure
reflected significant brand building campaigns which we believe contributed to
the Group's strong trading performance. As a result, trading profit for the half
year increased 28% to #7.7m from #6.1 million in the same period last year and,
for the quarter ended 30 September 2007, increased 47% to #4.3 million compared
to #2.9 million for the comparative period. Given our recent progress, where the
Group identifies further opportunities to expand its geographical presence or to
grow its new markets more quickly we intend to allocate additional investment to
these opportunities. To the extent that the costs of such investments become
material, they will be presented separately from the costs of the more
established trading businesses.
Our Eastern European businesses, primarily in Poland, delivered a very strong
performance, with revenues of #23.7 million for the half year, representing a
76% increase over the same period last year. Revenue for the second quarter
increased to #12.1 million, representing an 82% increase compared to the same
period the previous year.
During the second quarter, our principal summer branding campaign, the
Allegro.pl airship, came to a close. This campaign generated extensive press
coverage and word of mouth discussion which we believe contributed to the strong
trading on Allegro over the summer months. We also continued our well publicised
sponsorship of the Allegro.pl Windsurfing Cup, Poland's premier windsurfing
event.
In order to increase focus on our core activities, we entered into an agreement
last month to outsource our Polish loyalty points programme. This arrangement,
which is expected to be launched in early 2008, will allow our members to be
part of a larger points system including other major retail partners and will
provide Allegro.pl with extensive off-line promotion.
At the end of the quarter our Eastern European platform successfully changed its
back-end database to Oracle. This major upgrade will enable us to provide
additional services to our members as well as providing a stronger platform for
future expansion.
Our Czech business, Aukro.cz, continues to exhibit very strong growth and during
the quarter we signed a key marketing deal with the Czech Republic's largest
portal, Seznam.cz, to help drive more traffic and users to the site. With our
business there now firmly established, we introduced listing fees on the Czech
site on 1 October 2007.
Half-yearly revenue in our Western European business was #7.0 million, a growth
rate of 12% over the comparative period. Growth in the second quarter was
stronger than in the first with revenue increasing to #3.3 million, 19% above
the quarter ended 30 September 2006. We were particularly pleased to see
increasingly strong trading levels in Switzerland, the largest business in our
West European region, which was supported by the branding campaign that
commenced earlier in the calendar year.
Exchange rate impact
Eastern European growth rates were supported by the year-on-year strengthening
of the Polish Zloty in the second quarter. Excluding this impact, Eastern
European revenues increased by 72% (instead of 76% on a reported basis) in the
half year and 75% (instead of 82%) in the second quarter.
Western European growth rates were negatively impacted by exchange rate
movements, mainly due to a weaker Swiss Franc, and were also impacted by the
closure of some smaller Western European operations over the past year.
Excluding these factors, Western European revenues increased by 19% (instead of
12% on a reported basis) in the half year and 24% (instead of 19%) in the second
quarter.
For the Group overall, excluding exchange rate effects, revenue would have
increased by 55% (instead of 56% on a reported basis) in the half year and 59%
(instead of 63%) in the second quarter.
Russia
On 18 July 2007, we signed a conditional arrangement to acquire a 30%
shareholding in Molotok.ru, the leading online trading site in Russia and on 8
October 2007 the acquisition of this stake was finalised. The Molotok site was
migrated onto our Eastern European platform on 11 October and the agreement
allows QXL to increase its stake to 51% depending on the future performance of
the business. Russia is a complex market but, with a population of over 140
million people and rapidly growing broadband penetration, it is a key
opportunity for us and we look forward to growing the business with the benefit
of the local expertise of the Molotok team.
Bulgaria and Romania
During the quarter we launched new sites in Bulgaria (Aukro.bg) and Romania
(Aukro.ro). Each operation has a local marketing and customer service team in
place and both are hosted on our Eastern European technology platform. Although
still at a very early stage, we are excited by these expansion opportunities and
will seek to leverage our existing online trading experience in these markets.
Offer for minority shares in ricardo.de AG
As previously announced, the tender offer for the shares in ricardo.de AG not
already owned by the Group closed on 17 August 2007 and the Group now owns
approximately 97.66% of the shares in ricardo.de AG. As the Group's
shareholding now exceeds 95%, the Company has commenced the process of
implementing a compulsory purchase of any remaining minority shareholders in
accordance with the provisions of the German Stock Corporation Act.
Board and management changes
On 1 October 2007 Charles Burdick was appointed as an independent non-executive
director. Mr Burdick has held several senior positions in the telecommunications
and media industries, most recently serving as Chief Executive Officer of HIT
Entertainment, the independent children's entertainment producer and
rights-owner. From 1996 to 2004 he worked for Telewest Communications serving as
Managing Director and Group Finance Director. Mr Burdick is currently a
non-executive director of Kaupthing Singer & Friedlander, Comverse Technologies
and CTC Media, a Russian television network. We believe his appointment provides
the Group with additional expertise in key areas of technology, media, the
Russian market and corporate governance.
Also on 1 October 2007 Christian Maar was appointed Group Chief Information
Officer, responsible for the Group's overall IT strategy. He joins QXL from
Arcandor-Primondo (formerly KarstadtQuelle) where he served as Chief Information
Officer, eCommerce, having previously worked at Oracle and at IBM. Mr Maar has
extensive experience in eCommerce, eProcurement and the re-engineering of IT
platforms to reflect changes in technologies and customer behaviour.
New corporate name
The Board is proposing to change the name of the Company to "Tradus plc". The
Board believes that as the Group continues to expand its services and markets,
it is important to have a corporate name that is distinct from its various
operating brands. At the same time, the new name reflects the Group's core
purpose of facilitating online trading amongst its community of members. An
extraordinary general meeting to consider the change of name is expected to be
held on 21 November 2007.
Outlook
We believe we are well positioned to continue delivering strong growth - in the
near-term principally from our existing markets and over the longer term
increasingly from our investments in new markets. Our recent launches in Romania
and Bulgaria fulfilled our stated expansion plan for 2007 but we continue to
look for new opportunities and are pleased to have improved materially our
presence in the key Russian market through our partnership with Molotok. We look
forward to building on these investments and driving future growth in these and
other new markets.
Financial review
The Financial Services Authority has implemented the EU Transparency Directive
into the UK by replacing some of the old Listing Rules with a set of new
Disclosure and Transparency Rules which apply for half-years ending after 20
July 2007. UK listed groups that report under IFRS must now apply IAS 34 in
their half-yearly reports for the first time. The Listing Rules and Disclosure
and Transparency Rules apply to UK companies with shares or debt listed on a
regulated market, which in the UK means those listed on the main market. The
Company has therefore prepared condensed consolidated half-yearly financial
information in accordance with IAS 34 "Interim financial reporting".
Consequently the format and presentation of these results differs in some
respects to previous quarterly results statements made by the Company.
Unless otherwise stated, financial comparisons in this financial review relate
to actual, not pro forma, results and the results of acquired companies are only
included from the date of their acquisition. Where relevant and useful to
understand the Group's underlying financial position better, pro forma
comparatives have also been provided.
Revenue
For the half year ended 30 September 2007, revenue increased 198% to #30.6
million from #10.3 million in the half year ended 30 September 2006. This
year-on-year increase was primarily due to the consolidation of the Eastern
European businesses as well as year-on-year increases in transaction volumes and
gross merchandise volume conducted through the Group's websites.
On a pro forma basis, revenue increased 56% compared to the half year ended 30
September 2006, comprising 76% growth in Eastern Europe and 12% in Western
Europe.
Cost of sales and gross profit
Cost of sales have increased to 3.3% of revenue compared to 1.9% in the
comparative period due to stronger growth in payment services which have higher
cost of sales. As a result, gross profit increased by 194% to #29.6 million in
the half year from #10.1 million in the half year ended 30 September 2006.
Operating expenses (excluding non-trading expenses as detailed below)
Sales and marketing expenses for the half year increased 207% to #17.3 million
from #5.6 million in the half year ended 30 September 2006. This increase was
primarily due to the inclusion of sales and marketing expenditure in our Eastern
European region. As a percentage of revenue, sales and marketing costs were 56%
compared to 55% in the comparative period the previous year. In the second half
we expect sales and marketing costs to increase slightly, but to decrease as a
percentage of revenue.
During the first half year approximately #200,000 of costs were incurred in
establishing new markets (including Russia and Ukraine). To the extent that the
cost of developing new markets becomes material, it will be presented separately
from the cost of the more established trading businesses.
Technology and development costs for the half year increased 122% to #3.2
million from #1.4 million for the half year ended 30 September 2006. This
increase resulted primarily from the inclusion of our Eastern European
businesses and continued investment in the Group's systems to support the growth
of trading on our platforms, including the upgrade of our Eastern European
database to Oracle. As a percentage of revenue, technology costs were 11% in the
half year, down from 14% in the comparative period, as a result of the
consolidation of the Eastern European businesses where technology costs benefit
from larger scale and lower staff costs. We have started our investment in
additional data centre capacity and as a result expect technology costs to
increase as a percentage of revenue during the rest of the financial year.
General and administrative costs for the half year increased 97% to #1.5 million
from #745,000 in the comparative period as we expanded our corporate
infrastructure to accommodate the significant enlargement of the Group's trading
activities. However, as a percentage of revenue, general and administrative
costs decreased to 4.8% from 7.2% in the comparative period. Going forward, we
expect general and administrative costs to remain relatively steady as a
percentage of revenue in the short term, but to decrease in the longer term.
Overall operating expenses therefore increased 181% to #21.9 million in the half
year from #7.8 million in the previous year.
Trading profit
As a result of the above, we recorded a trading profit of #7.7 million in the
half year ended 30 September 2007 compared to a trading profit of #2.3 million
in the half year ended 30 September 2006. On a pro forma basis, trading profit
for the half year increased 28% compared to #6.1 million in the previous year
and pro forma trading margin decreased from 31% to 25%.
Non-trading income and expenses
International Financial Reporting Standards ("IFRS") do not allow the
recognition of items as "exceptional" in the principal financial statements, but
the Group will, in addition to its IFRS obligations, continue to report "
non-trading items" separately for the purpose of calculating a "trading profit"
which it believes provides a better measure of performance of the Group's
underlying trading operations than does operating profit.
Other operating income
During the half year the Group received a net #361,000 of deferred payments
relating to the sale of a non-trading Swedish subsidiary in 2005. In the
comparative period ending 30 September 2006, the Group had received #1,054,000
as repayment of a loan to QXL Poland before that entity was re-acquired.
Share-based payments
In the half year ended 30 September 2007, the Group recorded a share-based
payment charge, as required by IFRS2, of #490,000 compared to #609,000 in the
half year ended 30 September 2006. The decrease was primarily due to a one-time
charge in the comparative period related to the resignation of Mark Zaleski as
CEO.
Taxes on share options
The Group has accrued for expected future employer's taxes incurred on the
exercise of shares options by employees. During the half year ended 30 September
2007, the Group expensed #202,000 related to taxes on share options. These
charges relate primarily to movements in QXL's share price and not to the
Group's trading.
Amortisation of intangible assets
The Group has recognised goodwill in its consolidated balance sheet (principally
as a result of the acquisition of the Eastern European businesses) and according
to IFRS3 has separately identified and valued intangible assets arising on
acquisition. The goodwill is subject to an annual impairment review, but the
intangible assets are depreciated over their estimated useful economic life. As
a result, the Group recorded a charge of #956,000 in the half year ended 30
September 2007 compared to a charge of #238,000 in the comparative period, since
the Eastern European businesses were only re-consolidated on 10 August 2006.
Operating profit
Operating profit in the half year ended 30 September 2007 was #6.5 million
compared to #1.8 million in the comparative period.
Reconciliation of trading profit to operating profit
Half year Half year
ended ended
30 Sept. 30 Sept.
2007 2006
#'000 #'000
Gross profit 29,625 10,092
Operating expenses (excluding non-trading expenses*):
Sales and marketing (17,266) (5,617)
Technology and development (3,150) (1,421)
General and administrative (1,469) (745)
Total operating expenses (excluding non-trading expenses*) (21,885) (7,783)
Trading profit 7,740 2,309
Other operating income 361 1,054
Share based compensation charges (490) (609)
Taxes on share options (202) (95)
Amortisation of intangibles arising on acquisition (956) (238)
Restructuring costs - (651)
Operating profit 6,453 1,770
* Non-trading expenses are those items that do not arise from the underlying performance of the Group and
are itemised separately to provide a better measure of trading performance.
Interest
Net interest receivable of #360,000, primarily interest on bank deposits, was
recorded in the half year ended 30 September 2007 compared to #61,000 in the
half year ended 30 September 2006.
Tax
During the half year, the Group recorded a tax charge of #2.0 million primarily
related to tax on profits in Poland. Going forward we expect the effective tax
rate to reduce slightly. In the half year ended 30 September 2006, the Group
recorded a tax charge of #524,000 also primarily related to tax on profits in
Poland.
Minority interest
Profit attributable to minority interests was #14,000 during the half year ended
30 September 2007, compared to #37,000 in the half year ended 30 September 2006.
Profit attributable to equity shareholders
Profit attributable to equity shareholders for the half year ended 30 September
2007 was #4.8 million compared to #1.3 million in the comparative period.
Profit per ordinary share
Following the 20-for-1 share split, which took effect on 18 December 2006,
profit per ordinary share has been restated for comparative periods. Profit per
ordinary share has been calculated in accordance with IAS 33. The Group's basic
and diluted profit per ordinary share for the half year ended 30 September 2007
were 10.8p and 9.2p respectively, compared to 3.4p and 3.0p respectively for the
half year ended 30 September 2006.
Acquisitions
ricardo.de AG
During the half year the Group acquired 401,159 shares in ricardo.de AG at a
cost of #3.8 million resulting in an increase in goodwill for the Group of #3.7
million. As a result, the Group's shareholding in ricardo.de AG increased by
4.82%. As at the close of business on 30 September 2007, the Group owned
8,128,840 shares in ricardo.de AG representing a total of 97.66% of the issued
share capital of ricardo.de AG.
Cash flow and balance sheet
The Group's cash position improved by #1.9 million during the half year ended 30
September 2007.
Major non-operating cash inflow movements were:
* #361,000 related to deferred consideration from the sale of a
non-trading Swedish subsidiary in 2005;
* #1.4 million raised through the issue of shares following the exercise
of employee share options;
and the major non-operating cash outflow movement was:
* #3.8 million relating to the purchase of shares in ricardo.de AG.
During the half year, the Group also invested heavily in hardware and software
relating to its new data centre capacity resulting in total capital expenditure
for the period of #2.9 million.
Financing and treasury
The Group's cash position at 30 September 2007 was #20.6 million compared to
#11.7 million a year earlier. The bulk of the Group's cash balances are held in
Sterling, Euro, Swiss Franc and Polish Zloty denominated floating rate deposits.
Issues of shares
On 15 June 2007, 916,175 ordinary shares were issued following the exercise of
share options by employees and former employees of the Group. On 28 June 2007, a
further 1,831,099 ordinary shares were issued to Wouwer Investeringen B.V. and
Tomasz Dudziak. These shares represent a proportion of the Retained Shares and
Deferred Settlement Shares (as defined in the Polish settlement agreement dated
29 June 2006) and rank pari passu in all respects with the existing issued
ordinary shares of the Company. A further 4,026,780 ordinary shares may be
issued by the Company on various dates up to July 2009 in accordance with the
terms of the Polish settlement agreement.
Principal risks and uncertainties
The Group is subject to various risks and uncertainties that might affect the
financial performance of the Group. The board formally reviews the Group's
principal risks and uncertainties on an annual basis and looks at specific
issues as they become relevant during the year. The principal risks and
uncertainties for the remaining six months of the financial year are discussed
below. Further details of the Group's risk profile can be found in our Annual
Report.
Operating environment
The Group operates in the relatively fast growing internet commerce sector and
an increasing proportion of our business is located in the emerging markets of
Eastern Europe. The Group's growth is, to a large extent, dependent on
continuing growth in this sector in the markets in which the Group operates.
Economic or political volatility in these markets, corruption and deficiencies
in the legal or regulatory systems to which the Group is subject could have a
material adverse effect on the Group's development and financial performance.
Over time we expect to see a steady reduction in the very high growth rates in
Poland, our most important market, and if this reduction is faster than market
expectations it could have a material impact on our financial results.
Technology
The Group is critically dependent on the efficient and uninterrupted operation
of its communications and computer systems (and the systems of some of its
service providers). Although we expect the recent appointment of a Group Chief
Information Officer to strengthen our technology operations, we are also aware
that our increasing presence in markets such as Russia may increase the
likelihood of attempted sabotage of the Group's systems. In addition, although
we are investing heavily in additional data centre capacity, much of this will
not be operational until later in the financial year.
Competition
The e-commerce market is rapidly evolving and intensely competitive. We remain
very conscious that our continued expansion activities will expose us to greater
competition, especially where we choose to expand into new territories where
there may already be an established player. As a result, we may be required to
devote more resources to marketing and promotional campaigns and adopt more
aggressive pricing policies than otherwise planned.
Legal and regulatory issues
The Group continues to receive claims that it has infringed the intellectual
property rights of various third parties as a result of branded or counterfeit
items being sold by members on the Group's sites. During the period under
review, the Group has also faced claims from national regulators that the Group
should take additional steps to control the actions of sellers on its sites in
order to improve the level of protection offered to consumers. The Group does
not believe that it has a general legal responsibility for the actions of its
sellers but over time these claims may directly or (through consequential
changes made to the operation of the Group's sites) indirectly impact the
results of the Group.
Personnel
The Group depends heavily on the continued services of its personnel and the
leadership provided by senior and middle management. The Group expects to
continue to review its management and remuneration structures and to make
further appointments in the next six months to ensure that it has the depth of
expertise needed to sustain the development of the business, to minimize the
damage that would be caused by the loss of any particular individual and to
assist with the retention and training of staff.
Currency fluctuation
The Group's multi-national operations expose it to a variety of financial risks
including those relating to foreign currency exchange rates. The most
significant financial risk occurs on the translation of the results of our
foreign operations, especially Poland, into sterling on consolidation.
Consistent with the majority of other international companies, the results of
the Group's foreign operations are translated into sterling at the average
exchange rates for the period concerned. The balance sheets of foreign
operations are translated into sterling at the closing exchange rates. It is our
policy not to hedge currency translation through foreign exchange contracts or
currency swaps. The Group results as stated in Sterling are therefore
vulnerable to movements in the Polish Zloty against Sterling in particular.
However such movements have no impact on the Group's operations.
QXL ricardo plc - Half year results
Consolidated income statement
Half year Half year Year
ended ended ended
30 Sept. 30 Sept. 31 March
2007 2006 2007
Unaudited Unaudited Audited
#000's #000's #000's
Revenue 30,639 10,288 36,429
Cost of sales (1,014) (196) (623)
Gross profit 29,625 10,092 35,806
Other operating income 361 1,054 1,110
Sales and marketing expenses (18,451) (6,006) (19,924)
Technology and development expenses (3,325) (1,473) (4,282)
Administrative expenses (1,757) (1,897) (3,180)
Operating profit 6,453 1,770 9,530
Net interest receivable 360 61 221
Profit before taxation 6,813 1,831 9,751
Taxation (2,049) (524) (2,888)
Profit for the period 4,764 1,307 6,863
Profit attributable to minority interests 14 37 52
Profit attributable to equity shareholders for the period 4,750 1,270 6,811
4,764 1,307 6,863
Profit per equity share (basic & diluted)
Weighted average number of ordinary shares outstanding 44,151,113 37,258,640 39,497,870
Net profit per share (basic) - pence 10.8 3.4 17.2
Weighted average number of ordinary shares (diluted) 51,696,772 43,265,240 46,526,069
Net profit per share (diluted) - pence 9.2 3.0 14.6
Operating expenses above can be analysed as:
Sales & marketing (before non-trading expenses) (17,266) (5,617) (18,267)
Sales & marketing share-based payments (152) (116) (231)
Sales & marketing taxes on share options (77) (35) (108)
Costs relating to business closures - - (125)
Amortisation of intangible fixed assets (956) (238) (1,192)
Total sales & marketing expenses (18,451) (6,006) (19,924)
Technology & development (before non-trading expenses) (3,150) (1,421) (4,029)
Technology & development share-based payments (50) (24) (53)
Technology & development taxes on share options (125) (28) (201)
Total technology expenses (3,325) (1,473) (4,282)
Administrative expenses (before non-trading expenses) (1,469) (745) (1,860)
Administrative share-based payments (288) (469) (638)
Administrative taxes on share options - (32) (31)
Restructuring costs - (651) (651)
Total administrative expenses (1,757) (1,897) (3,180)
Consolidated balance sheet
At At At
30 Sept. 30 Sept. 31 March
2007 2006 2007
Unaudited Unaudited Audited
#000's #000's #000's
Assets
Non-current assets:
Intangible assets 44,544 41,160 41,275
Property, plant and equipment 4,516 2,589 2,826
Financial assets 115 2 110
Deferred tax assets 295 - 717
Trade and other receivables 135 15 14
49,605 43,766 44,942
Current assets:
Inventories 4 12 3
Deferred tax assets - 495 -
Trade and other receivables 6,942 4,062 6,139
Cash and cash equivalents 20,630 11,660 18,766
27,576 16,229 24,908
Total assets 77,181 59,995 69,850
Liabilities
Current liabilities:
Current tax liability (1,010) - (2,979)
Borrowings - - (54)
Trade and other payables (8,988) (7,295) (6,145)
Provisions for liabilities and charges (662) (346) (506)
(10,660) (7,641) (9,684)
Non-current liabilities:
Borrowings (314) (210) (268)
Other non-current liabilities - (131) -
(314) (341) (268)
Total liabilities (10,974) (7,982) (9,952)
Net assets 66,207 52,013 59,898
Capital and reserves
Ordinary shares 2,271 2,043 2,134
Share premium 9,994 262,966 896
Other reserves 65,072 34,329 74,366
Retained (deficit) (11,193) (247,422) (17,619)
Shareholders' equity 66,144 51,916 59,777
Equity minority interests 63 97 121
Total equity 66,207 52,013 59,898
Statement of changes in shareholders' equity
Share Share Unissued Special Merger Retained Shareholders
capital premium share reserve reserve earnings/ equity
capital (deficit)
Group #'000 #'000 #'000 #'000 #'000 #'000 #'000
At 1 April 2006 1,767 240,648 - - 9,137 (248,867) 2,685
Consideration for 274 23,271 25,192 - - - 48,737
acquisitions
Costs associated - (980) - - - - (980)
with issue of
shares
Share options:
Proceeds from 2 27 - - - - 29
shares issued
Value of employee - - - - - 610 610
services
Profit for the - - - - - 1,270 1,270
period
Exchange - - - - - (435) (435)
adjustments
At 30 Sept. 2006 2,043 262,966 25,192 - 9,137 (247,422) 51,916
At 1 April 2007 2,134 896 25,192 40,037 9,137 (17,619) 59,777
Deferred 91 7,784 (7,875) - - - -
consideration for
acquisitions
Share options:
Proceeds from 46 1,314 - (1,419) - 1,419 1,360
shares issued
Value of employee - - - - - 490 490
services
Profit for the - - - - - 4,750 4,750
period
Exchange - - - - - (233) (233)
adjustments
At 30 Sept. 2007 2,271 9,994 17,317 38,618 9,137 (11,193) 66,144
2007 2006
Group #'000 #'000 #'000 #'000
Shareholders' equity at 30 Sept. 66,144 51,916
Minority interest at 1 April 121 68
Profit for the period 14 37
Change in shareholding in ricardo.de AG (61) (11)
Exchange adjustments (11) 3
Minority interest at 30 Sept. 63 97
Total equity at 30 Sept. 66,207 52,013
Consolidated cash flow statement
Half year Half year Year
ended ended ended
30 Sept. 30 Sept. 31 March
2007 2006 2007
Unaudited Unaudited Audited
# 000's # 000's # 000's
Cash flows from operating activities
Cash generated from operations 10,036 3,868 10,183
Interest received 370 66 243
Interest (paid) (5) (4) (8)
Tax (paid) (3,650) (1,407) (552)
Cash inflow from operating activities 6,751 2,523 9,866
Cash flows from/(used in) investing activities
Consideration (paid) for acquisitions (3,786) (1,917) (3,319)
Cash acquired with acquisitions - 8,462 8,549
Disposal of subsidiaries 361 - 93
Part repayment of intercompany loan - - 1,054
Proceeds from sale of intangible fixed assets - 17 19
Proceeds from sale of plant, property and equipment - - 6
(Purchase) of intangible fixed assets (454) - (54)
(Purchase) of plant, property and equipment (2,448) (568) (1,463)
Cash (outflow)/inflow from investing activities (6,327) 5,994 4,885
Cash flows from financing activities
Net proceeds from issue of ordinary share capital 1,360 57 580
Short-term borrowings - - 94
Cash inflow from financing activities 1,360 57 674
Effect of exchange rate fluctuations on cash held 80 (183) 72
Net increase in cash and cash equivalents 1,864 8,391 15,497
Cash and cash equivalents at 1 April 18,766 3,269 3,269
Cash and cash equivalents at end of period 20,630 11,660 18,766
Notes
1. Basis of preparation
The financial statements have been prepared in accordance with EU Endorsed
International Financial Reporting Standards ("IFRS") and the Companies Act 1985
applicable to companies reporting under IFRS. The Group has adopted all of the
standards and interpretations issued by the International Accounting Standards
Board and the International Financial Reporting Interpretations Committee that
are relevant to its operations. This condensed interim financial information for
the half year ended 30 September 2007 has been prepared in accordance with the
Disclosure and Transparency Rules of the Financial Services Authority and IAS
34, 'Interim financial reporting'. The interim condensed financial report should
be read in conjunction with the annual financial statements for the year ended
31 March 2007.
The financial information contained in this announcement does not constitute
statutory accounts within the meaning of section 240 of the Companies Act 1985.
The Group's auditors have made a report on the statutory accounts of the Group
in respect of the financial year ended 31 March 2007, which was unqualified and
did not contain a statement under section 237(2) or section 237(3) of that Act.
Statutory accounts for the year ended 31 March 2007 will be delivered to the
Registrar of Companies during October 2007 following their approval by
shareholders at the Group's Annual General Meeting.
This half-yearly financial report has not been audited or reviewed by the
Group's auditors.
2. Accounting policies
The accounting policies adopted are consistent with those of the annual
financial statements for the year ended 31 March 2007, as described in the
annual financial statements for the year ended 31 March 2007.
As at the date of approval of this interim management report, the following
standards and interpretations were in issue but not yet effective:
* IFRS7, Financial Instruments: Disclosures;
* IFRS8, Operating Segments;
* IFRIC 8, Scope of IFRS 2;
* IFRIC 9, Reassessment of embedded derivatives;
* IFRIC 10, Interim Financial Reporting and Impairment;
* IFRIC 11, IFRS2: Group and Treasury share transactions; and
* IFRIC 12, Service concession arrangements.
The Directors do not anticipate that the adoption of these standards and
interpretations in future reporting periods will have a material impact on the
Group's results.
3. Segment Information
Eastern Western Head Office
Europe Europe Operations Total
#000's #000's #000's #000's
Half year ended 30 Sept. 2007
Revenue 23,687 6,952 - 30,639
Operating profit 6,516 (1,880) 1,817 6,453
Half year ended 30 Sept. 2006
Revenue 4,100 6,188 - 10,288
Operating profit 1,441 135 194 1,770
4. Purchase of non-current assets
During the half, the Group spent a total of #6,841,000 on the purchase of
non-current assets, comprising:
* #2,378,000 on computer hardware
* #70,000 on other tangible assets
* #301,000 on computer software
* #153,000 on other intangible assets
* #3,786,000 on shares in ricardo.de AG
5. Related party transactions
In accordance with the terms of the Polish settlement agreement dated 29 June
2006 1,831,099 ordinary shares of 5p each in the Company were issued to Wouwer
Investeringen B.V. and Tomasz Dudziak on 28 June 2007. These shares represent a
proportion of the Retained Shares and Deferred Settlement Shares (as defined in
the Polish settlement agreement) and rank pari passu in all respects with the
existing issued ordinary shares of the Company.
As at 30 September 2007 a total of #108,000 which was outstanding at the time of
completion of the Polish settlement agreement, remained owing to Group companies
from certain directors of the Group's Polish subsidiaries.
6. Events occurring after the balance sheet date
On 18 July 2007, we signed a conditional arrangement to acquire a 30%
shareholding in Molotok.ru, the leading online trading site in Russia and on 8
October 2007 the acquisition of this stake was finalised. The shareholders have
together invested approximately #2.5 million of cash into the business (of which
QXL provided approximately #750,000). The agreement allows QXL to increase its
stake to 51% if certain targets are met for an additional contribution which
also depends on the future performance of the business.
#'000
Purchase consideration:
Contribution of software licence 520
Cash paid 747
Direct costs relating to acquisition 222
Total purchase consideration 1,489
Fair value of net assets acquired (see below) (977)
Goodwill 512
The goodwill is attributable to the workforce of the acquired business and the leading market position
of the business in the Russian market. A provisional assessment of the assets and liabilities acquired
as of 8 October 2007 is as follows:
Carrying
Fair value value
#'000 #'000
Cash and cash equivalents 2,441 2,441
Property, plant and equipment 2 2
Intangible assets 805 520
Inventories - -
Trade and other receivables 49 49
Trade and other payables (39) (39)
Net assets 3,258 2,973
Joint venture share not acquired (70%) (2,281)
Net assets acquired 977
Cash outflow on acquisition:
Purchase consideration settled in cash 969
Cash and cash equivalents acquired (732)
Cash outflow on acquisition 237
The fair value of the intangible assets, the software licence and the membership database is based on
market estimates.
Statement of directors' responsibilities
The directors' confirm that this condensed set of financial statements has been
prepared in accordance with IAS34 as adopted by the European Union, and that the
interim management report herein includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8.
The directors of QXL ricardo plc are listed in the QXL ricardo plc Annual report
for 31 March 2007, with the exception of the following changes:
* Christian Unger was appointed Chief Executive Officer and as a
director on 30 April 2007.
* Philip Rowley joined the Board as a non-executive director on 1 June
2007.
* Charles Burdick joined the Board as a non-executive director on 1
October 2007.
A list of current directors is maintained on the QXL ricardo plc website:
http://www.qxl.co.uk/contents/uk/qxlmediacenter/board.htm
By order of the Board
Christian Unger
Chief Executive
Robert Dighero
Finance Director
Background on QXL ricardo plc
QXL ricardo is a leading European provider of online consumer trading platforms
and offers its services in eleven European countries. The QXL platform connects
buyers and sellers 24 hours a day, seven days a week in a safe, efficient, and
entertaining environment. A wide selection of merchandise and services is
available on its sites, ranging from computer software and hardware to clothing,
household items, cars and collectibles. QXL is a publicly listed company. Its
shares are listed on the Official List of the London Stock Exchange and are
included in the FTSE 250 index of leading shares.
QXL's principal websites are:
Bulgaria www.aukro.bg Poland www.allegro.pl
www.ototmoto.pl
Czech Republic www.aukro.cz www.otodom.pl
www.ceneo.pl
Denmark www.qxl.dk www.payu.pl
www.paygsm.pl
Hungary www.teszvesz.hu www.platnosci.pl
www.istore.pl
Norway www.qxl.no
Romania www.aukro.ro
Russia www.molotok.ru Switzerland www.ricardo.ch
Ukraine www.aukro.ua UK www.qxl.co.uk
Forward-looking statements
This document may contain forward-looking statements that relate to the Group's
plans, objectives, estimates and goals. The Group's business is subject to
numerous risks and uncertainties, including risks associated with: technology,
litigation and regulation, growth of the online commerce market, and
competition. These and other risks and uncertainties could cause the Group's
actual results and developments to be materially different from those expressed
or implied by any of these forward-looking statements.
Copies of this document are available from the Company's registered office - The
Matrix Complex, 91 Peterborough Road, London SW6 3BU and will be available on
QXL's website, www.qxl.com.
This information is provided by RNS
The company news service from the London Stock Exchange
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