Although over the past years the Group has increased its revenue in comparison to the respective prior year, the Group suffered a drop in sales revenue in fiscal year 2006/2007 for the first time since 2002.
At EUR 32.7 million the group sales revenue was 8.7% below that of the prior year. The main reason for this drop was the difficult situation in the retail trade, which caused problems for the whole industry. In addition to this, the retail trade experienced fundamental changes in the field of multimedia software, particularly in the USA.
Together with the lower income resulting from this, it was the increase in research and development expenditure in particular that likewise led to a decrease in EBIT from EUR 8.2 million to EUR 3.1 million. Additional staff had been hired in this business segment in order to bring the myGOYA, Catooh and mufin Internet services to completion. While the first two services named were launched as planned in the course of the fiscal year, the launch of mufin was delayed until the end of 2007 due to unexpected technical challenges. The Group intends to use the above services to help strengthen its profile as an Internet service provider even further. Contrary to the prevailing trend in the retail trade, the Company registered revenue growth of 29% in the field of direct business over the period 2006/2007.
With the acquisition of Xara Group Ltd., a UK-based graphics specialist, in January 2007, the Group has added vector graphics to its image processing division and at the same time further expanded its Internet presence in Great Britain and the USA. The Company further acquired the remaining 34% of the shares in its subsidiary m2any GmbH. The ownership situation needed to be adjusted to reflect the fact that there is considerable need for investment in marketing the music recognition and music recommendation technology over the coming years and that investment will be borne by the Group alone.