FY 2010 Results

Aug 27, 2010

ASX RELEASE – Friday 27 August 2010

REVENUE UP 28% TO $75 MILLION

  • LOTTERY BUSINESS ACHIEVES RECORD SALES $66 MILLION UP 56%
  • NET LOSS AFTER TAX $7.3 MILLION IN LINE WITH FORECASTS
  • NET LOSS BEFORE TAX $7.0 MILLION INCLUDES LOSS $11.7 MILLION FROM SOFTWARE DISTRIBUTION DIVISION DUE TO ONCE-OFF WRITE DOWN AND RESTRUCTURING COSTS THAT ARE NOW COMPLETE
  • NET PROFIT BEFORE TAX $4.7 MILLION FROM REMAINDER OF THE BUSINESS, PREDOMINATELY INTERNET LOTTERIES
  • SOFTWARE DISTRIBUTION DIVISION IMPROVING STEADILY
  Manaccom Corporation Limited (ASX:MNL) today announced full year results that were in line with forecasts announced in April 2010. Internet lotteries reached record sales of $66 million, up 56% from the previous year, due to improvements made to the website and new marketing initiatives. The software distribution division was successfully restructured in April 2010 and improved results began to flow in the 4th quarter. This division is now in a far stronger position for the year ahead. The total dividend for the year was 0.5c per share fully franked.

Record Internet lottery sales drove the business through the restructuring process and the business has emerged in a much stronger position ready for FY 2011”, said CEO Mr Mike Veverka.

“As well as continuing our lottery growth in Australia, we are actively pursuing opportunities overseas, in particular the $60 billion US market and the $110 billion UK and European markets”, he said. “The software distribution division is in a far stronger position than one year ago. Sales are up, costs are down and 2011 is heading for a far better result”, he said. “I wish to thank all staff for their contribution throughout the year, and in particular the loyalty of key staff in the software distribution division throughout the restructuring process”, he said.   Restructuring Effects Once-off restructuring costs plus a write down of Manaccom Pty Ltd and Star System Solutions Pty Ltd made up the bulk of the $11.7 million loss contributed by the Software Distribution Division. The results are summarised below.  
  FY 2010  

Group

  Software Distribution Division   Remaining busines (Internet Lotteries)
  Revenue   $75 million   $9 million   $66 million
  Net Profit Before Tax   $7.0 million loss   $11.7 million loss   $4.7 million profit
  In 2007, the Company diversified into software distribution with the acquisition of Manaccom Pty Ltd for $5.1 million, followed by the acquisition of Star System Solutions Pty Ltd for $3.45 million. In  May  2009,  this  division  signed  a  key  distribution  agreement  with  McAfee  guaranteeing minimum royalties which led to significant losses. A new agreement was signed in April 2010 putting the division in a far stronger position for the year ahead.
  Shareholder Changes The 21% shareholding of former director, Mr Ian Mackay, was purchased by institutional investors, the CEO and by the Company in a recent share buy-back. The changes in major shareholders are summarised below.  
  Top 5 Shareholders   24 August 2010   31 August 2009
  1   CEO RELATED ENTITIES                       23%   IAN MACKAY RELATED ENTITIES          21%
  2   HSBC CUSTODY NOMINEES LIMITED 8%   CEO RELATED ENTITIES                       20%
  3   ANZ NOMINEES LIMITED                        8%   ANZ NOMINEES LIMITED                        6%
  4   NATIONAL NOMINEES LIMITED               5%   WARAWONG PTY LTD                           3%
  5   WARAWONG PTY LTD                           4%   MR ANTHONY BROWN                          2%
  Total Shares  

39,453,468

 

43,031,525

 

Balance Sheet Changes The effects of the once-off write down and restructuring costs on the balance sheet (most notably on the intangible assets) are summarised below.  
  Balance Sheet   30 June 2010   30 June 2009
  Current Assets   11,848,882   13,219,595
  Non-current Assets   6,839,263   13,806,102
  TOTAL ASSETS   18,688,145   27,025,697
  Current Liabilities   10,819,388   8,979,270
  Non-current Liabilities   1,488,432   3,809,291
  TOTAL LIABILITIES   12,307,820   12,788,561
  NET ASSETS   6,380,325   14,237,136
  Cash levels remain strong at $9.5 million.   About Manaccom In 2000, the Company sold its first lottery ticket on the Internet. In 2005 it made the leap into national lotteries with the acquisition of TMS Global Services Pty Ltd and subsequently developed the successful Ozlotteries.com website that is the backbone of the business today. Thousands of Australians each day play their lucky numbers in their favourite lottery games using this safe, secure and innovative website based on technology that has been in constant development for over 10 years. Just as travel, accommodation and car sales have made successful transitions to the Internet, lotteries are also going through an online transition and customers are finding the benefits offered by   www.ozlotteries.com to be a very convenient way to purchase their regular lottery tickets.
Growth in Manaccom’s lottery sales has gone from strength to strength rising from $25 million in 2008 to $42 million in 2009 and $66 million in 2010. This is driven by continuous website improvements in addition to various marketing initiatives such as the co-branded partnership with ninemsn since 2008. As well as continuing its growth in Australia, the Company is actively pursuing opportunities overseas, in particular the $60 billion US market and the $110 billion UK and European markets. The Company will hold its Annual General Meeting on Wednesday 27 October 2010 in Brisbane and all shareholders are encouraged to attend.   For further information: Mike Veverka CEO and Executive Director Ph: 07 3831 3705

Media Assets

 27082010.pdf