Half Yearly Report

RNS Number : 9683Y

Velti PLC

14 September 2009

 



For Immediate Release

14 September 2009

Velti plc  

2009 interim results show continued strong, profitable growth

Velti plc ('Velti', the 'Company' or the 'Group'), the global technology leader in the provision of mobile marketing and advertising solutions for advertising agencies, brands, mobile operators and media, today announces its results for the six months ended 30 June 2009. 

Financial Highlights

	Six months ended  30 June 2009  (unaudited) €'000	Six months ended  30 June 2008  (unaudited) €'000	% Change
Revenue	21,651	15,922	36
EBITDA	6,808	3,881	75
Adjusted EBITDA	7,228	4,468	62
Operating profit	3,571	2,013	77
Adjusted operating profit	3,991	2,600	54
Profit after tax	2,256	1,236	83
Adjusted profit after tax	2,704	1,823	48
Basic EPS (in Eurocents)	6.7	3.7	81
Adjusted EPS (in Eurocents)	8.0	5.5	45

Profit after tax and adjusted profit after tax are attributable to the equity shareholders of the Company (after minority rights). Adjusted figures are stated before cost of share based payments and the non-cash effect of foreign exchange rate movements

Highlights:

• Velti continues to achieve strong, profitable growth with improving margins due to the popularity of our recurring, performance-based solutions and success of our Software-as-a-Service (SaaS) model.
• Operating efficiencies and new contracts structure that focuses on limiting pass-through revenues, resulting in higher margins;
• Investment in global footprint bringing significant returns with successes in China, India, US and Europe through Velti's local ventures and partners in each geography;
• Global investments also position Velti to strongly benefit from renewed marketing spending in China, India, US and other major economies in the second half of 2009 and first half of 2010.
• Recent campaign wins from existing and new clients will benefit second half performance with pipeline continuing to expand;
• Acquisition and integration of Ad Infuse proceeding to plan with the first joint clients already won;
• Product integration of Ad Infuse's ad routing and ad serving technology gives Velti the industry's only SaaS-based, end-to-end solution for media and mobile operators.

• Major product development effort completed and launch planned for October. 

David Mann, Non-Executive Chairman, commented:

'Velti's investment in global expansion has provided the Company with access to many previously untapped markets through an operating presence which now extends across the US, Asia, Europe and the Middle East. Velti is well positioned to benefit from the next phase of market growth and development as the economy improves.'

Alex Moukas, Chief Executive Officer, said:

'In the past six months we have seen an increase in repeat business from our key markets as well as a broadening of our existing client base, with Velti now operating in 35 countries. Our recent acquisition, Ad Infuse, has strengthened our proposition for operators, agencies and brands, which will be critical to the future success of the mobile marketing industry. During the remainder of 2009 we will continue to build up momentum and grow the Company in a sustainable way with a strong focus on cash flow.'

  Statement of the Chairman and Chief Executive Officer

Introduction

During the first half of 2009, Velti made excellent progress, both strategically and financially, building on our position as the largest and most profitable mobile marketing technology player in the global mobile marketing and advertising market. 

We continue to see brands and advertising agencies re-focusing marketing and advertising spend on targeted and measurable media such as mobile, which give them much greater ability to gauge their returns on their spending. As a result, our market is continuing to grow despite a challenging global economic environment.

Velti is taking advantage of this trend by offering solutions to brands, agencies, and carriers around the world. Last year we completed a major investment in establishing a global footprint; this enables us to execute global and local mobile campaigns and provide SaaS solutions using our proprietary Mobile Marketing Platform (MMP). The Company is beginning to earn significant returns on this major investment.

Financial Results

Velti achieved strong, profitable growth for the six months ended 30 June 2009. Revenue for the period increased by 36 per cent to €21.7 million (6 months to 30 June 2008: €15.9 million). Adjusted EBITDA was up 62 per cent to €7.2 million (6 months to 30 June 2008: €4.5 million), while adjusted EBITDA margin increased to 33.3% (6 months to 30 June 2008: 28.6%)

After investing in global technology infrastructure in 2008, capital expenditure for 2009 will be significantly lower. Net capital expenditure (capex minus depreciation and amortisation) will be reduced even more, improving the cash flow profile. This yielded much lower net capex of 8% of revenue vs 23% of revenue in 2008 H1.

During the first half we secured two new medium term debt facilities, totaling approximately €10 million, from a special purpose vehicle backed by a group of institutional investors. The facilities were raised to provide funding for Ad Infuse and general financing for organic growth.

Strong Organic Growth

The momentum in revenue growth reflects increasing business and renewals from existing clients, as well as significant new client wins across our geographic footprint in Europe, Asia and the Americas. Overall, in the first half of 2009 Velti ran 1,037 mobile marketing campaigns globally.

Velti is experiencing strong demand from Mobile Network Operators seeking to strengthen customer relationships and loyalty.  New contracts were won during the period including Vodafone, Orange, Batelco, Cosmote, AVEA, Orascom-WIND, PT Smart Telecom (Indonesia), Vivatel, Cellular South (North America), Zain (Middle East and Africa) and Telefonica's Movistar.  

Movistar is a new customer and one of the largest mobile operators in Mexico with over 16.3 million subscribers, where Velti deployed its platform following a six month pilot phase. The first mobile campaign, for a Fortune 10 corporation, will be completed during the second half of the year. 

Agencies and brands continue to increase the allocation of marketing and advertising budgets to the mobile channel and this was reflected during the period with the acquisition of new customers such as Honda, Coca Cola, Nutella and Colgate. In the UK, we extended our mobile marketing service for Argos to activating the 2.5 million pre-paid phones it sells every year and we expect this to make a positive contribution to revenues for the second half.

The revenue growth from Ansible, the mobile agency joint venture with IPG, has continued compared to the first half of 2008, building momentum with existing clients as well as with significant new business wins. Whilst Ansible continues to be loss-making, it is moving towards profitability which we expect will be achieved by the end of 2010. 

We have also made significant progress in establishing relationships with advertising agencies such as Ogilvy, BBDO, Adel Saatchi & Saatchi, McCann Erickson, Momentum, Draftfcb and Lowe Worldwide. 

Global Expansion

The investment we have made to establish a global footprint, which includes offices and partnerships in diverse geographies including Brazil, China, Cyprus, India, the Middle East, Russia, UK, Mexico and across the USA, places Velti in a unique position to execute mobile marketing and advertising campaigns on behalf of global brands. 

The strategic investments in India and China, made last year, have resulted in significant progress in those countries where we have seen revenue increase during the first half of 2009. We expect this trend to continue into the second half and beyond.

Since Velti invested in April 2008, CASEE has increased the number of ads served from approximately 400 million per month to more than one billion per month, demonstrating the size and growth potential of the Chinese market. CASEE has also recently signed a potentially significant deal to become Google China's mobile marketing partner in the region, supporting its mobile search and mobile map offerings.   

HT Mobile Solutions, our joint venture with HT Media, owner of the Hindustan Times, is making excellent progress, having established connectivity with the major 10 mobile operators. Since our operational date in mid 2009, we have helped over 22 clients with their mobile marketing needs. As a result, we can now offer brands and advertising agencies access to approximately 400 million consumers in India where, according to Informa Telecoms & Media, the market is expected to grow to more than 500 million in 2010. 

Since the start of 2009, Velti has signed further reseller contracts supporting sales across the Asia-pacific region including Australia, China, Taiwan and Indonesia. 

Ad Infuse Acquisition 

In May 2009 Velti acquired Ad Infuse, the leading provider of personalised mobile advertising solutions based in San Francisco. The integration of Ad Infuse, including its personalisation and ad routing and ad serving technology into Velti's MMP, is proceeding according to plan. The first stage of integration was finished in July and the final stage will be completed around the end of September. As a result, Velti will offer the industry's only end-to-end, self-service solution for media planning, execution, campaign management, optimisation and analytics for mobile marketing and advertising campaigns. The impact of this will be to increase our share of business and average spend per advertising agency while scaling-up through technology, not people.

Velti continues to pursue a strategy of consolidation, seeking non dilutive transactions that are additive to Velti's technology offering and customer base.

Product Development

The integration of the Velti and Ad Infuse product lines is underway and will be fully completed by the end of September. Velti is retaining all of the Ad Infuse technology as well as technology teams and has also moved the senior product management position to San Francisco. The combination of strong Mobile Marketing technology from Velti with AdInfuse's strong ad-serving technology provides a unique breadth of capabilities in the mobile industry.

Consolidation of the data centre needs of Velti and Ad Infuse is also underway and will be completed by year end, bringing more savings in future capex investments for serving operators and publishers, as well as brands and agencies needs. Consolidation in terms of product lines, support and outsourcing activities is also going to result in savings in 2010.

In the Product Development area the Company has focused its efforts on the integrated Campaign and Media Planning Offering. The latest release of the Velti platform will enhance our capabilities in terms of incorporating and measuring different mobile or traditional media inventories into integrated campaigns that include mobile interaction activities.  In addition, Velti has expanded its ad server product to incorporate an Apple iPhone SDK including banner, text and interstitial ads as well as access to iPhone operating system controls for ad serving purposes.

Group Corporate Structure

Given the Group's ever-increasing geographical diversity, the Board is reconsidering the appropriateness of continuing with a group holding company structure domiciled in the UK. It is currently actively exploring the merits of re-organising the Group structure and re-domicile the Company in the Republic of Ireland, with the Group's subsidiaries realigned under a Jersey company. Should the Board decide to proceed with such a move, shareholders will be sent further explanatory documentation at that time. Any such change will in no way affect the service we offer our UK clients, for whom, as before, the full world-wide resources of the Group will continue to be applied.

Current Trading and Outlook

Our pipeline remains robust and, with good visibility into the second half, we continue to forecast strong revenue growth and margin expansion.

The Board is pleased with Velti's performance in the first half. The Company has achieved considerable growth and the Directors believe this will be maintained during the traditionally stronger second half enabling the Company to achieve its financial goals for the year. 

Financial Review

For the six months ended 30 June 2009 Velti delivered a solid financial performance that is reflected in strong revenue growth, improved gross profit margins and positive operating cash flows. Both gross and net capital expenditure were significantly reduced compared to last year. The Company achieved strong growth, despite an overall declining economic activity and integration costs relating to the acquisition of Ad Infuse.

Revenue for the period increased by 36 per cent to €21.7 million (6 months to 30 June 2008: €15.9 million). Gross profit increased by 63 per cent to €11.8 million (€7.2 million during the first half of 2008) delivering a margin of 54 per cent (45 per cent in the first half of 2008). The improvement in margins reflects operating efficiencies and a lower level of pass-through revenues in mobile marketing campaigns for mobile network operators compared to the first half of 2008. In the second half of 2009, we expect to complete a number of these campaigns which, will significantly boost profits and cash flow with gross margin for the year as a whole expected to slightly increased compared to 2008. 

Operating expenses as a percentage of revenue increased from 33 per cent in the first half of 2008 to 38 per cent in 2009. The increase is related mainly to corporate development activities and to integration costs of approximately €0.20 million related to the acquisition of Ad Infuse. 

Adjusted EBITDA was up 62 per cent to €7.2 million (6 months to 30 June 2008: €4.5 million) and adjusted operating profit rose by 54 per cent to €4.0 million (6 months to 30 June 2008: €2.6 million) after recognition of share based payments of €0.4 million. Stated operating profit increased by 77 per cent to €3.6 million (€2.0 million during the first half of 2008), delivering an improved operating margin of 16 per cent (13 per cent in the first half of 2008). Adjusted profit after tax rose by 48 per cent to €2.7 million (6 months to 30 June 2008: €1.8 million).

Following the high level of capital expenditure in 2008 depreciation and amortisation charges increased by 68 per cent to €3.2 million in 2009 (€1.9 million for the first half of 2008). In 2009 investing activities in infrastructure have slowed down as planned reflecting a broader offering suite and more diverse geographic footprint and total capital expenditure was €5.0 million in the first half of 2009 compared to €7.0 million in the same period of 2008. Net capital expenditure as a percentage of revenue fell from 36 per cent in the first half of 2008 to approximately 8 per cent in the first half of 2009. Adjusted basic earnings per share grew by 45 per cent to 8.0 Eurocents (5.5 Eurocents in 2008). The taxation charge for the period was calculated at a tax rate of 17.5 per cent, which represents the estimated group tax rate for 2009 as a whole.

Cash generated from operations amounted to €0.7 million in 2009 compared to €3.4 million in 2008 with the decrease stemming from increased working capital requirements. It should be noted that operating cash flow in the first half of 2008 was helped by a cash collection from a major campaign in South East Europe of €3.0 million that was delayed from December 2007 to early 2008. During the period under review, the increase in receivables reflects the growth in the business; expressed as a percentage of the rolling 12-month revenue, receivables were on a par with 30 June. 

Velti's balance sheet as at 30 June 2009 reflects a strong net asset position of €42.0 million and a net debt position of €7.6 million, following the acquisition of Ad Infuse announced on 12 May 2009. The Company continues to fund capital expenditure from bank debt whilst retaining cash balances, which were €11.5 million at 30 June 2009 (30 June 2008: €10.0 million), to fund working capital needs.  

On 1 July 2009, we announced that we had secured two new medium term debt facilities, of which approximately €7 million had been drawn down at the end of the period, from a special purpose vehicle backed by a group of institutional investors. The drawn down amount of these new facilities is included in non-current borrowings as at 30 June 2009. The associated equity arrangement fee will be amortised over the period of the loans. 

CONDENSED CONSOLIDATED INCOME STATEMENT
	Six months ended 30 June 2009 (unaudited) €'000	Six months ended 30 June 2008 (unaudited) €'000	Year ended  31 December 2008 (audited) €'000
Revenue	21,651	15,922	52,450
Cost of revenue	(9,898)	(8,697)	(30,466)
Gross profit	11,753	7,225	21,984
Other operating income	-	50	133
Selling expenses	(4,652)	(3,382)	(7,812)
Administrative expenses	(3,530)	(1,880)	(6,824)
Operating profit before foreign exchange losses	3,571	2,013	7,481
Net foreign exchange losses	(28)	-	(1,130)
Finance costs	(591)	(359)	(884)
Finance income	32	161	101
Share of loss of associates	(268)	(221)	(61)
Profit before tax	2,716	1,594	5,507
Tax	(475)	(371)	(1,278)
Profit after tax	2,241	1,223	4,229
Attributable to:
Equity shareholders of the parent	2,256	1,236	4,263
Minority Interest	(15)	(13)	(34)
	2,241	1,223	4,229
Basic Earnings per share  (in Eurocents):	6.7	3.7	12.7
Diluted Earnings per share  (in Eurocents):	6.3	3.6	12.1

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
	Six months ended 30 June 2009 (unaudited) €'000	Six months ended 30 June 2008 (unaudited) €'000	Year ended  31 December 2008 (audited) €'000
Exchange differences on translation of foreign operations	(11)	(61)	988
Net income/(expense) recognised directly in equity	(11)	(61)	988
Profit/(loss) for the period	2,241	1,223	4,229
Total recognised income/(expense) for the period	2,230	1,162	5,217

  CONDENSED CONSOLIDATED BALANCE SHEET

	30 June 2009 (unaudited) €'000	30 June 2008(unaudited) €'000	31 December 2008 (audited) €'000
ASSETS
Non-current assets
Property, plant and equipment	2,597	2,101	2,439
Intangible assets	17,164	12,074	15,316
Investments in associates	3,588	3,695	3,734
Goodwill	6,585	2,899	2,704
Deferred tax asset	1,242	-	1,080
	31,176	20,769	25,273
Current assets
Receivables and prepayments	41,188	19,713	31,145
Restricted investments	-	27	-
Cash and cash equivalents	11,451	10,021	10,287
	52,639	29,761	41,432
TOTAL ASSETS	83,815	50,530	66,705
SHAREHOLDERS' EQUITY
Share capital	2,477	2,432	2,449
Share premium account	23,057	21,788	22,285
Shares to be issued	1,651	-	-
Share-based payment reserve	1,564	910	1,564
Merger reserve	1,071	1,071	1,071
Currency translation reserve	726	(312)	737
Accumulated profit	10,906	5,638	8,665
Total shareholders' equity	41,452	31,527	36,771
Minority interest	277	353	292
Total Equity	41,729	31,880	37,063
LIABILITIES
Non-current liabilities
Borrowings	7,641	3,315	2,550
Retirement benefit obligations	215	165	188
Deferred tax liability	3,060	1,076	2,650
	10,916	4,556	5,388
Current liabilities
Trade and other payables	21,252	11,221	14,302
Current income tax liabilities	158	428	134
Borrowings	9,760	2,445	9,818
	31,170	14,094	24,254
Total liabilities	42,086	18,650	29,642
TOTAL EQUITY & LIABILITIES	83,815	50,530	66,705

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

	Share Capital	Share Premium	Shares to be issued	Share Based Payment Reserve	Merger Reserve	Currency Translation  Reserve	Accumulated Profits/(losses)	Total shareholders' equity	Minority Interests	Total
	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000
Balance at  1 January 2008 (audited)	2,388	21,788	-	398	1,071	(251)	4,402	29,796	326	30,122
Share capital issued	44	-	-	-	-		-	44	-	44
Minority interest	-	-	-	-	-	-	-	-	27	27
Issue of share awards	-	-	-	512	-	-	-	512	-	512
Translation reserve	-	-	-	-	-	(61)	-	(61)	-	(61)
Profit for the period	-	-	-	-	-	-	1,236	1,236	-	1,236
Balance at  30 June 2008 (unaudited)	2,432	21,788	-	910	1,071	(312)	5,638	31,527	353	31,880
Share capital issued, net of expenses	17	497	-	-	-	-	-	514	-	514
Minority interest	-	-	-	-	-	-	-	-	(61)	(61)
Translation reserve	-	-	-	-	-	1,049	-	1,049	-	1,049
Issue of shares awards	-	-	-	654	-	-	-	654	-	654
Profit for the period	-	-	-	-	-	-	3,027	3,027	-	3,027
Balance at  31 December 2008 (audited)	2,449	22,285		1,564	1,071	737	8,665	36,771	292	37,063
Share capital issued	28	772	-	-	-	-	-	800	-	800
Minority interest	-	-	-	-	-	-	-	-	(15)	(15)
Shares to be issued			1,651	-	-	-	-	1,651		1,651
Issue of share awards	-	-	-	-	-	-	-	-	-	-
Translation reserve	-	-	-	-	-	(11)	-	(11)	-	(11)
Profit for the period	-	-	-	-	-	-	2,241	2,241	-	2,241
Balance at  30 June 2008 (unaudited)	2,477	23,057	1,651	1,564	1,071	726	10,906	41,452	277	41,729

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

	Six months ended  30 June 2009 (unaudited) €'000	Six months ended  30 June 2008 (unaudited) €'000	Year ended 31 December 2008 (audited) €'000
Cash flows from operating activities
Cash generated from operations	1,398	3,700	4,556
Interest paid	(491)	(309)	(551)
Tax paid	(175)	(8)	(951)
Net cash (used in)/generated from operating activities	732	3,383	3,054
Cash flows from investing activities
Purchase of property, plant and equipment	(306)	(754)	(1,590)
Purchase of Intangible Assets	(4,772)	(6,837)	(11,427)
Acquisition of subsidiaries and associates net of cash acquired	(1,205)	(2,187)	(2,315)
Disposal of property, plant and equipment	-	550	133
Interest received	32	161	101
Net cash used in investing activities	(6,251)	(9,067)	(15,098)
Cash flows from financing activities
Long-term borrowings	8,769	4,264	2,550
Net proceeds from issue of ordinary shares	-	43	61
Net payment of borrowings	(2,086)	(218)	8,103
Net cash from financing activities	6,683	4,089	10,714
(Decrease)/Increase in cash and cash equivalents	1,164	(1,595)	(1,329)
Movement in cash and cash equivalents
At beginning of period	10,287	11,616	11,616
(Decrease)/Increase	1,164	(1,595)	(1,329)
Effect of exchange rate fluctuations on cash held	-	-	-
At end of period	11,451	10,021	10,287

  Notes

1. Accounting policies and basis of preparation

The interim condensed consolidated financial information of Velti plc (the Company) has been prepared in accordance with International Accounting Standard 34 Interim financial reporting, under the historical cost convention and in accordance with the accounting policies set out in the financial statements for the year ended 31 December 2007. The interim condensed consolidated financial information does not constitute statutory financial statements within the meaning of Section 240 of the Companies Act 1985. The interim condensed consolidated financial information include the results of Velti plc and entities controlled by Velti plc (its subsidiaries) forming the Company (see note 6).  

2. Segment information

The Company's operations are segmented into three major areas:

• Mobile Marketing and Advertising: Development of mobile marketing and advertising solutions for mobile operators, advertising agencies, brands and media groups. This includes business solutions and software platforms that enable Velti's customers to run integrated mobile marketing campaigns, monetize content and inventory in a multichannel strategy and advertise through the mobile channel. In this area, the revenue model has a fixed, set up fee component and a variable, activity based component, including performance-based and revenue share agreements.  

• Platforms and Services, Operators: The provision of platforms, integration and managed services to mobile operators. This includes software platforms, integration and managed services that enable content management and delivery to different multimedia channels and triple-play value added services. The revenue model comprises of license fees, professional services, reselling components and support services.

• Platforms and Services, Enterprises: The provision of platforms, integration and managed services to financial institutions and other private and public sector enterprises. This includes content management and delivery to different multimedia channels, and process automation and mobile banking activities. The revenue model comprises of license fees, professional services, reselling components and support services.

Revenue by business segment:

	Six months ended 30 June 2009 (unaudited) €'000	Six months ended 30 June 2008 (unaudited) €'000	Year ended 31 December 2008 (audited) €'000
Mobile marketing and advertising	15,317	10,005	40,122
Platforms and services - enterprises	2,704	3,275	5,542
Platforms and services - operators	3,630	2,642	6,786
Total	21,651	15,922	52,450

Operating profit by business segment:

	Six months ended 30 June 2009 (unaudited) €'000	Six months ended 30 June 2008 (unaudited) €'000	Year ended 31 December 2008 (audited) €'000
Mobile marketing and advertising	2,634	1,513	5,504
Platforms and services - enterprises	144	61	527
Platforms and services - operators	793	439	1,450
Total	3,571	2,013	7,481

3. Borrowings

	30 June 2009 (unaudited)€'000	30 June 2008 (unaudited) €'000	31 December 2008 (audited) €'000
Current
Current portion of long-term debt  (within 1 year)	750	-	750
Short-term loans	9,010	2,445	9,068
	9,760	2,445	9,818
Non - current
Long-term portion of long-term debt	1,500	-	2,250
Long-term loans	6,141	3,315	300
	7,641	3,315	2,550
Total borrowings	17,401	5,760	12,368

To provide funding for Ad Infuse and general financing for the future, Velti has secured two new medium term facilities totaling approximately €10 million. The first facility is a bullet term facility denominated in US dollars, of an amount of approximately €7.25 million ($10 million) and a term of twenty seven months. The term facility was fully drawn down as at 30 June 2009. The second facility is a revolving facility denominated in Euro of an amount of €2.75 million and a tenor of twenty one months. Out of the revolving facility, no amount was drawn down as at 30 June 2009. The facilities are being provided by a special purpose vehicle backed by a group of institutional investors. As an arrangement fee, the Company has issued 875,000 new shares of 5p each to the group in lieu of cash. The cost price was set at 160.5p, the price at the date of the loan agreements and the total has been charged against the balance of the non-current borrowings and will be amortised through the income statement over the duration of the term facility (27 months).

  4. Deferred shares award plan

The Company adopted a share incentive plan on 26 April 2006. Under this Plan, any employed director or any employee of the Company is eligible to receive awards under the plan. The deferred shares award (DSA) entitles the participant to acquire shares when the DSA vests by paying an amount of no less than the nominal value per share. The vesting period is two years. Deferred shares are forfeited if the participant leaves the Company before the DSA vests.

Details of the awards outstanding at the end of the period are as follows:

	Number of awards	Weighted average exercise price in GBP
Outstanding at the beginning of period	1,704,272	0.05
Granted during the period	-	0.05
Forfeited during the period	(14,750)	-
Exercised during the period	-	-
Expired during the period	-	-
Outstanding at the end of the period	1,689,522	0.05

In the period ended 30 June 2009, the Company recognized a total expense of €419,978. The expense for the period ended 30 June 2008 was €512,000.

5. Earnings per share

	30 June, 2009  (unaudited)€'000	30 June, 2008  (unaudited)€'000	31 December, 2008 (audited) €' 000
Profit attributable to equity holders of the Company	2,256	1,236	4,263
Weighted average number of ordinary shares in issue	33,790,804	33,219,523	33,478,484
Weighted average number of ordinary shares including dilutive effect of outstanding share awards	35,480,326	34,616,869	35,084,245
Basic earnings per share (Eurocents per share)	6.7	3.7	12.7
Diluted earnings per share (Eurocents per share)	6.3	3.6	12.1
Adjusted earnings per share1 (Eurocents per share)	8.0	5.5	20.0

(1) Figures stated before cost of share based payments and the non cash effect of foreign exchange

  6. Subsidiaries and Associates

Subsidiaries are consolidated from the date on which control is transferred to the Company. They are de-consolidated from the date that control ceases. Goodwill arising upon acquisition of subsidiaries and associates during the period amounted to €3.85 million. 

In May 2009, Velti Plc acquired 100% of share capital of Ad Infuse a company incorporated in USA 

Companies	Proportion Held	Country of Operation	Nature of Activities
Velti SA	100.00%	Greece	Mobile marketing & advertising
Velti dR Limited	100.00%	UK	Mobile marketing & advertising
Velti M-Telecom Limited	100.00%	UK	Mobile marketing & advertising
M-Telecom EOODD	100.00%	Bulgaria	Holding company
Velti North America Holdings Inc	100.00%	USA	Holding company
Ansible Mobile LLC	50.00%	USA	Mobile marketing & advertising
Velti Platforms & Services Limited	100.00%	Cyprus	Mobile marketing & advertising
VCI SA	100.00%	Greece	Incubator
Velti MMT	100.00%	Russia	Mobile marketing & advertising
Velti UMMS	100.00%	Ukraine	Mobile marketing & advertising
Velti North America Inc	86.33%	USA	Mobile marketing & advertising
Velti Services Ltd	100.00%	British Virgin Islands	Mobile marketing & advertising
Velti Mobile Ltd	100.00%	British Virgin Islands	Mobile marketing & advertising
Mpoint SA	50.00%	Greece	Mobile marketing & advertising
CASEE	33.00%	China	Mobile marketing & advertising
Ad Infuse	100.00%	USA	Mobile marketing & advertising
HT Mobile Solutions Ltd	35.00%	India	Mobile marketing & advertising

  7. Cash Generated From (Used in)/ Operations

	Six months ended  30 June, 2009 (unaudited) €'000	Six months ended  30 June, 2008  (unaudited) €'000	Year ended  31 December, 2008 (audited) €'000
Net profit	2,241	1,223	4,229
Adjustments for:
Tax expense	475	371	1,278
Interest income	(32)	(162)	(101)
Interest expense	591	359	884
Depreciation	385	270	547
Amortisation of intangible assets	2,853	1,598	3,438
Unrealised foreign exchange losses	-	2	1,130
Share based payments	419	573	1,166
Share of (profits)/loss of associates	269	221	61
Non cash provisions	39	-	759
	7,240	4,455	13,391
Change in working capital:
Receivables and prepayments	(10,042)	(3,864)	(15,179)
Trade and other payables	4,151	3,087	6,299
Pensions and other post-retirement obligations	49	22	45
	(5,842)	(755)	(8,835)
Cash generated from operations	1,398	3,700	4,556

About Velti

Velti is the world's leading mobile marketing and advertising company. With operations in 35 countries, Velti can reach an estimated two billion consumers. Velti was founded in 2000 and it has been at the heart of the global mobile industry ever since, providing some of the world's biggest companies with the technology platform and support to deliver innovative mobile campaigns to their customers. Whatever the goal of a mobile campaign: to raise brand awareness; acquire new customers; inspire loyalty or directly drive revenues - Velti helps brands, advertisers, media agencies, publishers, and operators to meet their business objectives. For more information, visit www.velti.com.

For further information, please contact:

Bankside Consultants Simon Bloomfield [e-mail] [phone] Steve Liebmann [e-mail] [phone]  Andy Harris [e-mail] [phone]	Velti Alex Moukas, Chief Executive Officer [phone] Pantelis Papageorgiou, Finance Director [phone] Nick Miles, PR Manager [e-mail]  [phone]
RBC Capital Markets Sarah Wharry [e-mail] [phone]

 

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