16 March 2010

Embargoed until 7am                                                                                                                                                                                                            

WIN plc

("WIN" or "the Group")

Final Audited Results

For the year ended 31 December 2009

WIN plc (AIM: WNN), a leader in the provision of mobile centric interactive services on an enterprise scale is pleased to announce its final audited results for the year ended 31 December 2009.

Underlying profit before tax* for the year of £1.5m exceeded forecasts, with revenue up 10%. This was despite the difficult economic conditions of last year's recession. WIN has a strong balance sheet with no debt and cash at year end of £3.1m supporting increased investment. The final dividend has been increased by 10%.

FINANCIAL HIGHLIGHTS

·      Gross Profit of £10.4m (2008: £9.9m), up 5.8%

·      Turnover of £41.9m (2008: £38.1m), up 9.8%

·      Gross Margin of 24.9% (2008: 25.8%)

·      EBITDA* of £2.3m (2008: £2.8m), down 16.3%

·      Underlying profit before tax* of £1.5m (2008: £1.8m), down 19.3%

·      Reported profit before tax of £398,000 (2008: loss of £760,000)

·      Underlying EPS* of 11.9p (2008: 13.7p)

·      Final dividend increased by 10% to 1.1p, to make a total of 2.1p for the year (2008: 2p)

·      Cash generative with cash balances of £3.1m (2008: £3.4m) financing increased capital investment of £2.2m (2008: £1.7m)      

*before amortisation on acquired intangible assets of £652k (2008: £817k), impairment charges of £124k (2008: £1,377k), share-based payment charges of £32k (2008: £92k) and non-recurring items of £250k (2008: £278k)

OPERATING HIGHLIGHTS

Period of significant investment leading to productising of customer offerings and increased focus on sales delivery

·      Expanded Managed Services footprint launching new services for Vodafone, O2, Sony Ericsson and Cosmote Romania

·      Significant contract wins for Enterprise division including AA and Centrica

·      Reseller agreement signed with O2

·      Retained our position with the BBC following EU tender process

·      Continued development of Next Generation Messaging Platform, funded entirely from internally generated resources

·      Increasing messaging volumes with record number in December of 52.4m

Graham Rivers, CEO of WIN, commented:

"In 2009 we focused on reducing costs by completing the integration of our acquisitions and productising our offerings. We now have a set of leading mobile-centric products with strong potential to enable us to penetrate our core markets. We have continued to expand our business in the Managed Services and Enterprise markets, both of which had a particularly strong final quarter. In addition, we have maintained investment in developing our Next Generation Messaging Platform ('NGMP') which will represent a significant leap forward in technological capability and which we expect to go live towards the end of 2010. This initiative will increase both the capacity and speed of our messaging platform as well as allow us to address new markets.

WIN is financially strong with cash of over £3m at year end and no debt, in spite of increased capital expenditure of over £2m in 2009. The markets in which we operate are rapidly developing as demand for mobile services increases. With our enhanced sales resources and an improving pipeline of new business, we are on track to meet our expectations for 2010."

For further information, please contact:

About WIN

WIN is an innovator in mobile centric information, entertainment and interaction services offering organisations complete solutions from consultation and concept, through to design, development, implementation and on-going service and support.

The Company helps leading content owners, mobile operators, corporate enterprises and media & entertainment corporations reduce operational costs, deliver competitive advantage, generate new revenue streams, engage customers and create brand loyalty. Its services, whilst mobile-centric, embrace fixed telephony, internet, broadcast and on-demand technologies.

WIN's systems manage on average 40 million text messages and 4 million picture and video messages each month. Customers include Vodafone, O2, T-Mobile, Maxis, Sony Ericsson, the BBC, Yell.com, ADP, Fujitsu, Centrica, E-on, The Guardian, Blue Arrow and the AA.

Having listed in 2004, WIN has been in business for over 15 years, and has 112 employees based in 5 offices around the world. Headquartered in Buckinghamshire, UK, WIN has a global reach delivering services to over 20 countries, including Ireland, Germany, Austria, Romania, Greece, Africa, Malaysia, Thailand, Singapore, and the Caribbean.

WIN's vision is to be the leading enabler of mobile centric information, entertainment and interaction services

For more information please visit www.winplc.com

CHAIRMAN'S STATEMENT

We are pleased to report that 2009 was a year of further development and transformation such that WIN is now well-positioned to take advantage of the growing market opportunities within the mobile arena.

We have now established a strong base to drive future growth. The balance sheet is healthy and WIN continues to generate cash, allowing us to maintain a high level of investment. WIN has established a reputation with its customers as a leading and trusted partner and we have an excellent team in place. I would particularly like to thank Graham Rivers, his management team and all the staff of the company for delivering this strong performance against a backdrop of recession. We have emerged from the market uncertainty with a shared purpose and commitment which bodes well for our future.

2009 began with the distraction of the continuing offer period, from which we finally emerged in April. Following this, the management team has been able to complete the integration of the acquisitions, which involved the closure of our Budapest office and the rationalisation of our content services teams.

In the second half, we increased investment in our sales and marketing activities in our core Managed Services and Enterprise divisions, including the addition of dedicated resource in Europe. These two divisions have become the growth engines of the company and continue to drive our transition to higher margin business.We have also accelerated the productisation of our solutions, which can now be seen in greater detail on our new website, www.winplc.com.

These developments have included the recent signing of a contract to develop, host and manage the entire operator portal for Cosmote Romania, delivered through our 'Portal in a Box' product offering. We see good opportunities for similar solutions in other countries and we are pleased to announce that we have signed a memorandum of understanding for a similar solution for QTel in Qatar.

The Enterprise division has also benefited from our increased investment, reporting a record final quarter, and we continue to enjoy a strong pipeline in that market, particularly for our Enterprise Communicator product. In addition, we signed a reseller agreement with O2 during the period.

Our content services business performed strongly with continuing growth for handset manufacturers. However, the premium rate market continued to remain under pressure, being affected by ongoing restrictive regulations.

WIN has also expanded its international presence during the period. We now provide services in a number of European countries, with T-Mobile and Deutsche Telecom as key partners. In addition, we have expanded our lower cost development team in Kuala Lumpur and added to our base in Greece to service the emerging East European markets.

During the year we continued our investment into our Next Generation Messaging Platform (NGMP), which will provide leading-edge technology with greater reliability, substantially increased capacity and lower latency. On completion, this project will have cost approximately £3m, which we will have funded entirely from internal cash generation. We believe this investment is necessary if we are to maintain our competitive advantage in these fast changing markets.

WIN is increasingly recognised as a market leader and is widely seen as a reliable and trusted provider by major corporate enterprises and mobile network operators, as is evident from our recent contract successes. Cash generative, debt free and in an improving market position we are looking forward to the year ahead.

The Board's confidence in the future potential of the Company is reflected in its intention to declare a final dividend of 1.1p (2008: 1.0p), making a total of 2.1p for the year which will be payable on 4 June 2010 to shareholders on the register on 7 May 2010.

Today, we are announcing that Lance Moir intends to step down as CFO to focus on his increasing portfolio of non-executive appointments. Lance will remain as CFO until his successor has been appointed. We would like to thank him for his considerable contribution to the development of WIN over the past three years.

Finally, I would like to thank my predecessor, Richard Joyce, who stood down as Chairman in September for his dedication to WIN over the past seven years, including the initial flotation of the Company. Richard made an important contribution to the development of the business and all his efforts are greatly valued and appreciated.

Michael de Kare-Silver

Non-Executive Chairman

16 March 2010

CHIEF EXECUTIVE'S REPORT

OPERATIONAL REVIEW

During the year WIN has grown both its turnover and gross profit as we have expanded our depth and range of solutions, particularly in the Managed Service and Enterprise sectors.

The focus in the first half of the year was on integrating our acquisitions such that they are now fully assimilated into WIN. Since this time we focused on assembling our solutions into defined products with clear marketing collateral. This investment, together with increased sales resources, is leading to an improving pipeline.

We have also invested in our staff and during the year we implemented a leadership development programme, working in conjunction with Cranfield School of Management, and we will continue to invest in training and staff development in 2010. Our staff worked extremely hard to achieve the results we delivered in 2009 and I would like to take this opportunity to express my gratitude to them all for their energy and commitment to WIN.

Managed Services

Our Managed Services division provides content acquisition, management and merchandising services along with the technology platforms to support these services for different types of customer; including mobile operators, handset manufacturers and ISPs. Increasingly, we are providing solutions to customers who require the acquisition and merchandising of content as well as the platform to support and manage the service. 

An example of this is the provision of our Portal in a Box solution to Cosmote Romania. WIN is developing, hosting and managing the entire operator portal for Cosmote Romania as part of the initial phase of Deutsche Telecom's roll out of its Web 'n' Walk portal across Europe. In addition, we are supplying content through our local and international partners, including the managing and licensing of all content such as videos, music and games.

We are also pleased to announce today a similar agreement with Qatar Telekom, the market leading telecommunications organisation in Qatar, to service, operate and manage its new music portal. Scheduled for launch in April 2010 the objective is to increase customer average revenue per user ("arpu") through music sales employing our advanced marketing and technology retail experience. Qatar Telekom is part of QTel International, a group which has operations across 17 Countries in MENA and Asia covering over 50 million subscribers.

We also launched a suite of three mobile applications for the Vodafone 360 platform. These included Pocket Doctor, a medical guide; Lottery, providing draw information and winning numbers; and Snow and Ski, providing information on ski conditions in resorts across the world. These are a best of breed set of applications delivering a strong user experience, and are a significant endorsement of our capabilities.

Our transformation to a higher value-added services company is demonstrated by the increasing contribution from our Managed Services division, which grew by 9% during the period to £6.1m (2008: £5.6m). Managed Services now provides 58% of our overall gross profit (2008: 57%).

We have also renewed a number of our current services, albeit some at lower margins than before, which places emphasis on us generating new sales to maintain our current growth momentum. To this end we have made strong progress during the period. Our content services operator and handset business grew by 20% during the period. Also, our Play Now service for Sony Ericsson is now live in 22 countries across Europe and Asia. In addition, we now provide managed services for Samsung in two countries, with more planned.

The market for continuing new business remains attractive and we are well positioned to take advantage of the opportunities, particularly in the operator market where we see increased pressures on the major operators to outsource services in order to reduce costs. We also see good opportunities in Europe and beyond, to sell managed services into markets where the major operators do not have sufficient scale to develop their own solutions. These opportunities are for larger scale projects than we have traditionally targeted and therefore associated lead times are longer, such that we cannot be certain when sales are likely to close and so the progress from new sales in 2010 is expected to be reflected in the second half the year.

Enterprise

The Enterprise business provides solutions to major companies which allow them to improve efficiency, reduce costs, increase customer loyalty and attract new customers. Sales of our Enterprise Communicator and Contact products have been particularly encouraging during the period.

Gross profit in this sector increased by 12% during the period to £1.7m (2008: £1.5m) and the Group has seen new sales increase.

Sales growth was held back in the first half by the general economic environment, with margins coming under pressure as we retained existing business. However, we saw an increase in the rate of sales in the fourth quarter and the year ended very strongly. We expect further good progress in the growth of the enterprise market in the coming year and we have increased the sales effort dedicated to this sector accordingly.

To this end we are pleased to announce that WIN has recently signed a channel distribution agreement with Telefonica O2 UK for its complete enterprise solutions portfolio. The WIN portfolio will be sold into Telefonica O2's existing corporate customer base, as well as to its prospective clients, demonstrating the significant growth potential for WIN's services.

New Media

The New Media sector provides aggregation and billing services to content owners, principally through the use of premium rate solutions as well as managed services and other solutions to agencies, media businesses and broadcasters.

The Premium Rate proportion of overall gross profit fell from 20% to 18% although it still represents 67% of our total turnover, driven by a strong performance in Greece. In the UK continuing high regulatory standards together with the economic environment led to a fall in profitability and towards the end of the year we switched off a number of clients for regulatory breaches. In Greece, however, the overall business grew as the market for Mobile-Terminated billing continued to develop. As expected, we are already seeing increased competition with consequent margin impact in that market. This segment of the business now represents a much lower absolute level for the group and so any further declines are likely to have less impact on the Group, although recent results have shown slower rates of decline.

In media and broadcast we expanded our relationship with the BBC, where we have successfully retained our position following an EU tendering process. The BBC's recent Picture Messaging Day gives an example of the successful work we have been doing with the client. During this event the BBC received five times the average monthly volume of MMS messages on a single day, demonstrating the capacity and resilience of our solution.

FINANCIAL REVIEW

Turnover increased by 9.8% to £41.9m, driven by the new MT market in Greece and growth in Managed Services and Enterprise, and gross profit increased by 5.8% to £10.4m. Consequently gross margins fell to 24.9% from 25.8%, largely due to lower margins in the Enterprise and Premium Rate markets as well as the amount of the Greek business.

Administrative expenses excluding amortisation of acquired intangible assets were £9.4m (2008: £9.9m). Within this figure, ongoing cash costs were £8.1m (2008: £7.1m), the increase being due to higher staffing levels, particularly in sales, a more prudent provision against bad debt and a non-recurring foreign exchange gain in the prior year. We expect costs in 2010 to remain around this level as our focus will now be on increasing productivity from existing staff. During the year we completed the integration of our acquisitions which resulted in redundancy charges of £0.15m (2008: £0.12m). We expect the savings from this rationalisation to be re-invested in ongoing costs.

Charges for amortisation of intangible assets under IFRS fell from £1.2m to £1.1m, of which the element relating to internally developed intangible assets remained consistent with 2008 at £0.5m; the charge for this category of intangible assets is expected to continue to increase. In particular, we anticipate beginning to amortise and depreciate NGMP from the fourth quarter with an annualised cost of some £0.6m. There was also an impairment charge of £124,000 relating to carried goodwill for WIN Interactive. The charge for share-based payments fell to £0.03m (2008: £0.09m). In addition, there were non-recurring costs of £0.25m relating to redundancies and costs incurred in relation to the offer period.

Interest income fell due to lower average cash balances and lower prevailing interest rates. Reported profit before tax was £0.4m (2008: £0.8m loss) and underlying profits were £1.5m (2008: £1.8m), principally due to the planned increase in costs.

On an underlying basis the effective tax rate fell to 17.2% (2008: 23.2%) reflecting greater use of research and development tax credits, use of losses carried forward and an increasing percentage of overseas income.

Stated basic earnings per share increased from (3.6)p to 5.5p. On an underlying basis, adjusted earnings per share were 11.9p (2008: 13.7p).

Trading cash generation remained strong during the year and increased to £2.2m (2008: £2.0m) due to strong working capital management such that cash balances at year end were £3.1m (2008: £3.4m) after capital expenditure of £2.2m (2008: £1.7m) and dividend payments of £0.2m. The figure for capital expenditure includes £1.2m on our Next Generation Messaging Platform. The project has a total estimated cost of some £3m and we therefore expect that our total capital expenditure will increase further during 2010.

In January 2010 we announced the earn-out settlement in relation to the Pocket Group acquisition, which resulted in the issue of 377,341 shares and a cash payment of £151,451. A further payment of up to £100,000 may be payable in July 2010, depending on the results of the former Pocket Group business in the first half of 2010.

OUTLOOK

WIN has made further substantial development during 2009 and is financially strong with cash of over £3m at year end and no debt, in spite of increased capital expenditure of over £2m in 2009. The markets in which we operate are rapidly developing as demand for mobile services increases. With our enhanced sales resources and an improving pipeline of new business, we are on track to meet our expectations for 2010.

Consolidated Income Statement

for the year ended 31 December 2009

Consolidated Statement of Changes in Equity

for the year ended 31 December 2009

Consolidated Statement of Financial Position

at 31 December 2009

Consolidated statement of cash flows

for the year ended 31 December 2009

Notes 

1-Segment reporting

All revenue was derived from the Group's principal activity. The Group is organised in three distinct business divisions based on products and services, as adopted by the board and senior management of the Group in the year ended 31 December 2008. Accordingly the segmentation between Managed Services, Enterprise and New Media is based on the Group's management and internal reporting structure. The management only reviews turnover and gross profit in these segments. The majority of the operating costs and assets relate to the major platforms of the business which operate across all segments and so there is no meaningful allocation of these assets. Only direct costs such as sales costs can be directly attributed to the primary segments, but as these may be redeployed to meet business needs, no analysis below gross profit has been provided. For each of the strategic business units, the Chief Operating Decision Maker reviews internal management reports on a monthly basis.

The operations in each of the Group's reportable segments are the same as explained in the audited accounts for the year ended 31 December 2008. There have been no changes to the basis of segmentation or the measurement basis for the segment profit or loss since 31 December 2008.

Geographical destination of revenue is disclosed as the secondary segment.

2-Expenses and auditors' remuneration

Auditors' remuneration:

3-Earnings per share

Earnings per share are calculated by dividing the profit on ordinary activities attributable to shareholders by the weighted average number of shares in issue during the year. The weighted average number of shares in the diluted earnings per share calculation is the figure used in the basic earnings per share calculation adjusted by the number of shares deemed to be issued for no consideration.

Adjusted earnings per share at 11.9p (2008: 13.7p) are calculated by taxing the underlying profit at the effective rate of 17.2% (2008: 23.2%).

4-Trade and other receivables

5-Trade and other payables

6-Other

The financial information set out above for the years ended 31 December 2009 and 31 December 2008 does not constitute statutory accounts as defined in Section 395 of the Companies Act 2006, but is derived from those accounts which have been audited and which have an unqualified audit report, which does not contain statements under section 498(2) or (3) of the Companies Act 2006.  Whilst the financial information included in this announcement has been compiled in accordance with International Financial Reporting Standards ("IFRS") this announcement itself does not contain sufficient financial information to comply with IFRS.  A copy of the statutory accounts for 2008 has been delivered to the Registrar of Companies and those for 2009 will be posted to shareholders in due course. 

This announcement was approved by the board of directors on 16 March 2010.

A copy of this announcement is available from the Company's website at www.winplc.com

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