MGM Wireless reports strong 1H profit growth

MGM Wireless (ASX:MWR) said its preliminary accounting shows a close to tenfold gain in profit for 1H11, and that its revenue is now sufficient to fund its ongoing operations

School SMS services provider MGM Wireless (ASX:MWR) has forecast a 1H profit of $30,000 to $40,000.

The result would be a nearly tenfold increase on the $4800 profit earned in 1H10, and is an improvement on the company's initial guidance for the quarter.

In a statement, MGM Wireless said the higher forecast was down to reaching a critical mass whereby its multi-year subscription revenue is now sufficient to fund its ongoing operations.

The company expects revenue of $1.2 million for the half-year – a 20 per cent increase year-on-year. But it said delays in some New Zealand product approvals clipped growth to a degree.

The number of school customers fell 3.4 per cent to 560, as a result of renegotiations in New South Wales following the unwinding of an agreement with the State Department. But the renegotiated deals led to improved terms for the company that compensated for these losses.

MGM Wireless added that it had achieved cost savings during the half year, as a result of streamlining business processes in customer service, R&D, administration and sales.

MWR shares ended Monday's trading unchanged at $0.007.

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