2 Feb 2009 07:00
2 February 2009
AMINO TECHNOLOGIES PLC
FINAL RESULTS
FOR THE YEAR ENDED 30 NOVEMBER 2008
Amino Technologies plc ("Amino"; stock code: AMO), the Cambridge-based broadband network software and systems company, announces its audited final results for the year ended 30 November 2008.
These results incorporate the results of AssetHouse Technology Ltd from the date of acquisition, 9 June 2008.
Highlights:
Amino has continued to improve its profitability and made significant progress in delivery of its stated strategic plans
Profit before tax up £0.75m to £2.16m (2007: £1.41m).
Reduction in net cash of £2.63m to £14.44m (2007: £17.07m) reflects purchase of own shares and acquisition of AssetHouse.
The Group has successfully transitioned from MPEG-2 SD to MPEG-4 HD technology with a number of industry award winning and market leading products. The reduced demand for MPEG-2 SD products in this transition resulted in lower shipments in our important North American market, causing a 19% reduction in shipments to 484,000 (2007: 598,000). An additional 20,000 units were shipped under licence (2007: nil)
The appointment in June of Andrew Burke as CEO
Strategically significant acquisitions of AssetHouse and, after the year end, Tilgin IPTV
Licence and services sales up by 82%, MPEG-4 shipments increased by 93%
On outlook, Keith Todd, Non executive Chairman stated:
"The Board believes that Amino is well placed to continue to grow and to maintain a leadership position in IPTV. The appointment of Andrew Burke as CEO in June, together with the strategically important acquisitions of AssetHouse and Tilgin IPTV, significantly enhance Amino's position in its traditional market of set-top boxes and also gives us a stronger presence in the market for the software that drives IPTV systems."
About Amino
Through a combination of software, hardware and systems know-how, Amino Technologies plc (AIM: AMO) enables its customers to deliver and monetise a broad range of intelligent on-line video services for the home and business consumer.
The Company's award winning range of AmiNET™ products provides telecom, broadcast and hospitality firms with a 'front door' to IPTV: a range of software, middleware and set-top box systems that can be tailored to offer highly scalable and targeted systems.
Amino's 'AssetHouse' technology takes IPTV to the next level, allowing clients such as BT Vision to think like retailers and package, personalise and refresh extra revenue-generating services to viewers. For more information, please visit www.aminocom.com
CONTACTS
| Amino Technologies: | +44 (0)1954 234100 |
| Keith Todd, Non executive Chairman | www.aminocom.com |
| Andrew Burke, Chief Executive Officer | |
| Stuart Darling, Chief Financial Officer | |
| Financial Dynamics: | +44 (0)20 7831 3113 |
| James Melville-Ross/Nicola Biles | |
| KBC Peel Hunt Ltd. | +44 (0)20 7418 8900 |
| Julian Blunt |
CHAIRMAN'S STATEMENT
Introduction
It has been another year of progress and delivery against our stated strategic plans. The year ended 30 November 2008 was a year of substantial change for the business, so I am pleased that the Group has been able to report a result for the year in line with expectations.
One of the most significant developments was the announcement of a new CEO for the Group in the form of Andrew Burke. Andrew brings a wealth of experience in the Internet Protocol TV ("IPTV") space and has wasted no time in bringing fresh impetus to our plans, with strategic developments such as the acquisitions of AssetHouse and, after the year end, that of Tilgin IPTV, the set top box ("STB") business of Tilgin AB. These acquisitions enhance our position in the market for IPTV both in our traditional market of set top boxes, and also in building a substantial new presence in the market for the software that drives IPTV systems.
As such, we enter 2009 in a robust position. There can be no doubt that the well documented downturn in economic conditions will present challenges in the year ahead, but I am confident that with the business that we have today, we are well placed to strengthen our market position.
Results and finance
Amino achieved steady growth in profits for the year ended 30 November 2008 despite the substantial changes made during the year. Despite a 19% decrease in shipments caused by the transition from MPEG-2 to MPEG-4 product sales, revenue reduced by only 1% to £31.90m (2007: £32.25m) thanks to the increased contribution from our higher priced MPEG-4 HD solutions and a stronger US Dollar in the fourth quarter. A further mark of our progress was the increasing contribution from our licence and support revenues, which grew to £2.15m (2007: £1.01m).
Gross margins improved to 41.9% (2007: 35.1%) as a result of our continued pressure on costs and the benefits from the exchange rate movement. Group operating expenses increased to £12.07m (2007: £10.63m) in line with our strategy to extend our product line. Operating profit increased by £0.63m to £1.30m (2007: £0.67m) and profit before tax increased by £0.75m to £2.16m (£1.41m). The Group net cash stood at £14.44m as at 30 November 2008, down on the prior year (2007: £17.07m) having invested £1.42m in AssetHouse and a further £1.46m on share buy backs.
Strategy and competitive market position
Since taking the CEO's role back in June, Andrew has been very clear about his strategic plan for this business. In order to grow, we must focus on building our offering in three core areas: building scale, enhancing our product line and moving up the value chain. The two acquisitions we have completed since his appointment demonstrate strong progress in the successful implementation of our strategy.
AssetHouse gives us greater access to the Tier 1 operator market and significantly broadens our product offering beyond the STB arena where we have made our name. Tilgin IPTV also extends our product portfolio as well as providing greater scale. Furthermore, the progress we have made in getting our MPEG-4 HD product to market during the past year is a good example of the progress we are making in the organic STB business.
Board
Andrew Burke assumed the role of CEO of the Group from his position as non-executive director for Amino, a position which he had held for the previous 18 months. With his extensive knowledge of the IPTV marketplace, he is the ideal person to deliver the next phase of growth for Amino. Andrew took over the reins from Bob Giddy, who served as Amino's CEO for seven years and built the Group from a £2m to £32m revenue business. I would like to record the Board's thanks to Bob for his contribution and we wish him well with his future plans.
In January 2008, we also announced the appointment of Peter Murphy, who replaced Olivier Hopkes as a non-executive Director. Peter Murphy is a Chartered Accountant with considerable experience in the technology and consumer industries.
Staff
I would like, once again, to extend thanks on behalf of the whole Board to the employees of the Amino Group. The progress made during the past year has been thanks to their skill and dedication. Furthermore, we have expanded considerably with two acquisitions and it is a tribute to the new and existing members of staff that the integration of these organisations is being managed so quickly and effectively.
Outlook
These are uncertain times for the global economy and we do not assume that we will be entirely immune to the downturn. As yet, we have not seen any negative impact to our business, but we are taking particular care to ensure that we are monitoring the markets carefully such that we will be in a position to react to a downturn in our own business outlook, should it occur.
Our breadth of customer base with 738 customers in over 58 countries in the last year gives us good market visibility and a high level of sensitivity to our customer and end user behaviour. In addition, our robust balance sheet and broad market-leading offering give us confidence that we are well placed to deliver on our ambitions again in 2009 and beyond.
Keith Todd CBE
Non-Executive Chairman
CHIEF EXECUTIVE'S REPORT
Introduction
I am delighted to be able to announce a year of solid progress for Amino in my first year-end report to shareholders. Our intention has been to build Amino's presence in its core markets and also to enhance its offering both through excellence in research and development and acquisition where appropriate.
The results for the year ended 30 November 2008 demonstrate the progress we are making with this plan, but much remains to be done.
Market
These are interesting times for the IPTV industry. Video is being consumed over the Internet in new and exciting ways and more people are accessing video through their computers than ever before. In the UK, for example, the launch of the BBC's iPlayer service a little over a year ago has triggered a sea change in the way that we watch television in this country - with some 41m downloads in December alone. This trend has been replicated elsewhere around the world to the extent that 75% of the online population is now streaming video over the Internet. Whether it's the Olympics, President Obama's acceptance speech or short clips on YouTube, more and more of us are turning to our personal computers to watch video. This is the forerunner of this video content moving directly to the TV.
Advertising revenue is following this trend and telecoms operators around the world are very aware that doing nothing about online video is simply not an option. They face increasing competition on all fronts from the traditional cable and satellite service providers as well as the new breed of IPTV and Over-the-Top ("OTT Internet video") offerings. Enabling video over the internet is a key way to help these operators to continue to build end user revenue (ARPU), accelerate market share and reduce customer churn.
At the same time, consumers are becoming more demanding. They want the content they like and they want to view it in different ways, through different devices. Operators need to understand the consumers' needs and buying preferences better if they are going to win the battle for market share in IPTV.
However, the current IPTV market offers interested buyers many different solutions from multiple suppliers. The big question for operators is how to make the most of these options to make sure that the IPTV solution they choose is complete, open and sustainable.
Strategy
Our ambition is to help those companies make sense of this complex market with a complete offering which enables them to deliver market leading IPTV services to their end customers, drawing on the skills and knowledge of the best of the ecosystem suppliers.
Followers of the Amino story will be familiar with the three pronged strategy that we have put in place to enable us to deliver this ambition. We want to build scale, to enhance our product line and to move up the value chain - and we have made positive strides in all three areas during the past year.
Operational Efficiency
A lot of work has been undertaken internally to ensure that our market proposition is strengthened and well communicated to our customer base. In order to ensure that we present a clear and coherent position, we have worked hard on developing our brand during the year and this is progressing well, to the extent that we are now seen as offering much more than just set top boxes to the industry. Furthermore, from 1 December 2008 we have now reorganised the business into three business units: devices, client software and enterprise solutions to ensure transparency and accountability in terms of business contribution. Finally, we are driving quality and efficiency through seeking ISO9001 compliance complemented by new management information systems.
Acquisitions
The new divisional structure partly arose as a result of the strategically significant acquisition of AssetHouse in June last year. AssetHouse brings our customers greater visibility of their consumers' viewing behaviours and preferences so that targeted content can be delivered. We call this offering 'full circle TV'. AssetHouse has now been fully integrated into the Amino Group and in September we saw our first licence sale when we sold our AssetFactory offering to Sezmi, the US based TV 2.0 service provider.
After the year end, we also completed the acquisition of Tilgin IPTV a Scandinavian business which develops and sells a range of MPEG-4 HD set-top boxes, which are highly complementary to our own. The acquisition will enable us to extend our customer reach, notably in the Nordic market. The combination has also strengthened our channel relationships with the likes of Ericsson and Nokia Siemens Networks. We have already developed an excellent working relationship with the Tilgin team and are now seeing encouraging signs of customer traction, winning new business in the two months since we acquired the business.
Research and development
Our research and development team has been busier than ever during the past year - not only successfully rolling out our new MPEG-4 HD offering to the market, but also many other exciting new developments.
In September, at the annual International Broadcasting Conference we announced the digital media roadmap for the unique Amino and AssetHouse IPTV solution. At the same conference we unveiled our new Plug-In Personal Video Recorder (PVR) technology for our set top boxes.
We also announced collaborations with the market leading middleware provider, Minerva, obtaining certification for our MPEG-4 SD and our MPEG-4 HD PVR to run alongside Minerva's iTVManager Platforms. This means that operators can deploy IPTV services with confidence, knowing that leading providers of IPTV STBs and middleware have worked together to deliver fully tested, carrier-class solutions. We also collaborated with content management software provider Cilutions to promote "out-of-the-box" digital signage and IPTV applications for enterprise customers.
I was delighted to see these advancements recognised by the industry during 2008. At the Telco TV conference in November, our all digital MPEG-4 HD product won "Best Customer Premise Equipment" and "Best in Show" awards. The same product then collected a prestigious Global "Good Design" award from the world-renowned Chicago Athenaeum Museum, becoming the only UK company to receive the accolade for electronics product design.
New customer wins and partnerships
These strides in innovation have also been recognised by our customer and partner base in 2008. One of the most exciting new business wins during the year was the sale of our AssetFactory offering to Sezmi, since this was the first sale that AssetHouse had achieved as part of the Amino Group. We had further positive news from the US in November, when we announced the first deployment of our AminNET530 set top boxes in the North American market with systems integrator partner LTS. November also saw our all digital MPEG-4 HD technology selected by Lumexis Corporation, the provider of in-flight airline entertainment systems, to provide 100% digital HD IPTV to the passengers of a major global airline.
We also announced several landmark distribution agreements during the latter stages of the year, including a global co-operation agreement with Ericsson. A major contract with Estonian national operator Elion to deploy our MPEG-4 HD PVR products was also secured.
In December we reached an important milestone with the sale of our two millionth AmiNET™ STB. Reaching this milestone was a strong vindication of our leading product range which is now deployed in over 80 countries worldwide.
Market Prospects
There can be no doubt that these are challenging times for the global economy. We are unlikely to be immune from this downturn, but believe that we are well positioned to continue to benefit from the long term prospects that this market offers. We have a number of factors in our favour - a broad geographic reach, a large and loyal customer base, a strong balance sheet and healthy gross margins.
We believe that these attributes position us well, not only to weather the downturn but also to strengthen our market share in the year ahead. New markets are emerging, notably in the Far East, network capability is improving all the time and, perhaps most importantly, end-users are consuming video online like never before and are becoming increasingly demanding in the level of service that they require.
We understand the market, we have a highly relevant proposition and we are ready for the next wave of this constantly evolving sector. We also believe that we have the appropriate strategy to drive shareholder value in this market. Our three pronged strategy will see us:
drive scale, enabling us to sell more products to a broader range of customers;
expand our product line, to ensure that we have the most complete product offering to sell to our customers;
extend across the value chain: thereby further increasing the loyalty and longevity of our customers. We believe that we are set fair to continue to deliver these plans through the strength of our organic offering, but also through carefully selected acquisitions.
Andrew Burke
Chief Executive Officer
CHIEF FINANCIAL OFFICER'S REPORT
Basis of preparation
This is the first year that the Group has prepared its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS).
Also for the first time, the Group's financial statements incorporate the results of AssetHouse Technology Ltd ("AssetHouse") from the date of acquisition, 9 June 2008. The acquisition of Tilgin IPTV ("Tilgin") was completed on 1 December 2008 and therefore after the end of the financial period, so its results are not incorporated.
Results for the year
I am pleased to report that the Group has continued to improve its profitability despite the transition in demand for MPEG-4 HD from MPEG-2 SD technologies which resulted in lower shipments in our North American market. Whilst shipments of devices decreased by 19% to 484,000 (2007: 598,000), revenue reduced by only 1.1% to £31.90m (2007: £32.25m) primarily due to further transition in sales mix to higher priced MPEG-4 HD (single stream and PVR) products and a stronger US$ in the fourth quarter. Shipments of MPEG-HD devices increased to 89,000 (2007: 46,000). The Group benefited in the reduction in the US$ exchange rate from an average of $2.00 in FY2007 to and average of $1.89 in FY2008. 86% of sales in the year were denominated in US$, 12% were denominated in Euro.
Revenue from license, support and expert services grew by £0.99m to £2.18m (2007: £1.19m) representing 6.8% (2007: 3.7%) of turnover, underlining the contribution from our acquisition of AssetHouse. License revenue increased to £1.79m (FY2007: £0.86m) generated from a broad range of sources including partnerships for devices in the emerging markets and from the license of AssetHouse's technology of £0.31m (2007: £nil). Support revenues also increased by £0.21m to £0.36m (2007: £0.15m).
Gross margins improved to 41.9% (2007: 35.1%) contributing to an increase in gross profit of 18.2% to £13.37m (2007: £11.31m). Gross margin on device sales improved by 4.34% to 40.58% (2007: 36.24%) due to further reductions in component prices and the sterling value of component costs which were generally acquired when the US$ was weaker and sold after the US$ had strengthened.
Operating expenses increased by 13.6% to £12.08m (2007: £10.63m) in line with the Group's strategy to extend its product line and extend along the value chain. Of the £1.45m increase in operating costs, £0.65m related directly to the purchase of AssetHouse. Sales, general and administrative expenses increased by £0.82m to £8.23m (2007: £7.41m). Research and development expenses, which are stated after net capitalisation of development costs of £1.08m (2007: £nil), increased by £0.62m to £3.85m (2007: £3.23m). On a like for like basis, research and development costs increased by £1.70m, £1.37m related to devices and £0.33m to AssetHouse. The value of the increased investment in development has started to be recognised with the prestigious awards made to the Group's MPEG-4 HD devices which are critical to the Group's further success.
At the year-end, headcount was 133 (2007: 100). The average number of employees during the year was 119 (2007: 107).
Operating profit increased by £0.63m to £1.30m (2007: £0.67m), net interest received by £0.12m to £0.86m (2007: £0.74m) and profit before tax increased by £0.75m to £2.16m (2007: £1.41m).
Corporation tax receivable for the year is £0.04m (2007: receivable £0.93m). Usually, through utilising unrecognised tax losses to relieve taxable trading profits, the Group would expect to pay corporation tax at the prevailing rate only on net interest received. However, this year the corporation tax charge on net interest is mitigated by enhanced tax relief for research and development expenditure and research and development tax credits payable in the case of AssetHouse. In the previous year, the Group received research and development tax credits of £0.93m in respect of expenditure incurred in FY2005 and FY2006.
Due to the exceptional corporate tax credit in 2007, profit after tax reduced by £0.14m to £2.20m (2007: £2.34m) and basic earnings per share reduced to 3.98p (2007: 4.18p).
Balance Sheet
The Group has a strong balance sheet. Total equity of £30.66m (2007: 28.98m) is equivalent to 53p per share (2007:50p per share).
Net current assets of £24.32m (2007: £25.02m) provide the Group with a strong working capital base. The primary components of net current assets are net cash balances of £14.44m (2006: £17.07m), trade receivables of £12.23m (2007: £9.92m), stock of £5.06m (2007: £2.66m) and trade and other payables of £8.73m (2007: £5.37m).
The reduction in net cash balances of £2.63m in the year to £14.44m (2007: £17.07m) reflects the purchase of shares for cancellation for £0.32m, the purchase of ordinary shares by the Employee Benefits Trust for £1.14m and the acquisition of AssetHouse Technologies plc for £1.42m.
Trade receivables of £12.23m (2007: £9.92m) represent 38.3% (2007: 30.8%) of revenues in the year, reflecting the Group's traditionally strong fourth quarter. 75% of trade receivables at 30 November are insured. Trade receivables over 60 days at 30 November but not provided for amounted to only £1.50m (2007: £1.04m) of which, as at 30 January, all but £0.30m had been collected.
$11.17m (£7.25m) of net current assets are denominated in US$ and €1.39m (£1.15m) are denominated in Euro which were restated at the balance sheet date at $1.54 and €1.21 at the balance sheet date. Also at the balance sheet date, the Group had unsettled forward foreign exchange contracts of $7m at an average rate of $1.55 and €1.5m at a rate of €1.19.
As at 30 November 2008, the Group had approximately £30m of tax losses available to carry forward to set against future taxable profits, of which losses of £6m are recognised by the deferred tax asset of £1.70m and £24m of tax losses remain unrecognised. At the current rate of corporation tax, the unrecognised deferred tax asset is £6.7m.
Equity
Issued share capital reduced by 0.57m ordinary shares in the year to 57.84m (2007: 58.41m) following the company acquisition and cancellation of 0.62m shares and the issue of 0.05m shares in respect of deferred consideration on the second anniversary of the purchase of SJ Consulting Limited.
In June, the Employee Benefits Trust ("EBT") acquired 2.05m ordinary shares for £1.14m. At the year end, the EBT held 3.30m (2007: 2.34m) ordinary shares representing 6% (2007: 4%) of the issued share capital. Also at the year end, the total number of options granted primarily to current and former employees was 6.73m (2007: 4.36m).
Purchase of AssetHouse
On 9 June 2008, Amino acquired AssetHouse for £1.42m. Additionally, there is a cash earn-out mechanism offering an additional consideration of 50% of any saving in corporation tax realised by Amino from utilisation of AssetHouse's tax losses. As at 30 November 2008, AssetHouse had approximately £18m of tax losses available to carry forward to set against future taxable profits. At the current rate of corporation tax, the maximum additional consideration payable is approximately £2.5m, which has not been recognised at the balance sheet date.
Post balance sheet event - Purchase of Tilgin IPTV
On 1 December 2008, Amino acquired Tilgin IPTV for £2.71m, being the initial consideration and transaction costs, on a debt-free basis payable in cash on completion. Additionally, there is a capped cash earn-out mechanism offering an additional maximum consideration of SEK15.0 million (approximately £1.25m) based on unit sales above 175,000 in financial year 2009.
Summary
The Group has a strong balance sheet with assets primarily made up of cash and trade debtors. The investment in new MPEG-4 HD products together with technologies and products gained through the acquisition of AssetHouse and Tilgin means that the Group is well placed to grow. Profits in the short to medium term are expected to be sheltered by the considerable tax losses carried forward.
Stuart Darling
Chief Financial Officer
Consolidated income statement
For the year ended 30 November 2008
| Notes | Year to 30 November 2008 £ | Year to 30 November 2007 £ | |
| Revenue | 31,902,075 | 32,253,156 | |
| Cost of sales | (18,529,562) | (20,945,251) | |
| __________ | __________ | ||
| Gross profit | 13,372,513 | 11,307,905 | |
| Selling, general and administrative expenses | (8,226,302) | (7,406,511) | |
| Research and development expenses | (3,847,324) | (3,226,990) | |
| __________ | __________ | ||
| Operating profit | 1,298,887 | 674,404 | |
| Financial income | 870,016 | 967,903 | |
| Financial expense | (6,857) | (230,831) | |
| __________ | __________ | ||
| Net financial income | 863,159 | 737,072 | |
| __________ | __________ | ||
| Profit before corporation tax | 2,162,046 | 1,411,476 | |
| Corporation tax credit | 41,092 | 932,573 | |
| __________ | __________ | ||
| Profit for the year attributable to equity holders | 2,203,138 | 2,344,049 | |
| __________ | __________ | ||
| Basic earnings per 1p ordinary share | 2 | 3.98p | 4.18p |
| Diluted earnings per 1p ordinary share | 2 | 3.77p | 4.08p |
Consolidated balance sheet
as at 30 November 2008
| | Notes | 30 November 2008 £ | 30 November 2007 £ | |
| Assets | | | | |
| Non-current assets | | | | |
| Property, plant and equipment | | 982,964 | 1,118,891 | |
| Intangible assets | | 3,431,236 | 960,778 | |
| Deferred income tax assets | | 1,719,000 | 1,719,000 | |
| Trade and other receivables | | 203,101 | 163,450 | |
| | | _________ | _________ | |
| | | 6,336,301 | 3,962,119 | |
| | | _________ | _________ | |
| Current assets | | | | |
| Inventories | | 5,059,627 | 2,659,659 | |
| Trade and other receivables | 3 | 13,576,759 | 10,720,082 | |
| Cash and cash equivalents | | 14,443,582 | 17,065,867 | |
| | | _________ | _________ | |
| | | 33,079,968 | 30,445,608 | |
| | | _________ | _________ | |
| Total assets | | 39,416,269 | 34,407,727 | |
| | | _________ | _________ | |
| Capital and reserves attributable to equity holders of the business | | | | |
| Called-up share capital | | 578,430 | 584,130 | |
| Shares to be issued | | 27,751 | 68,667 | |
| Share premium | | 104,249 | 79,749 | |
| Capital redemption reserve | | 6,200 | - | |
| Other reserves | | 16,388,755 | 16,388,755 | |
| Retained earnings | | 13,555,105 | 11,862,663 | |
| | | _________ | _________ | |
| Total equity | | 30,660,490 | 28,983,964 | |
| | | _________ | _________ | |
| Liabilities | | | | |
| Current liabilities | | | | |
| Borrowings | | 12,502 | 37,229 | |
| Trade and other payables | 4 | 8,732,415 | 5,386,534 | |
| Derivative financial instruments | | 10,862 | - | |
| | | _________ | _________ | |
| Total liabilities | | 8,755,779 | 5,423,763 | |
| | | _________ | _________ | |
| Total equity and liabilities | | 39,416,269 | 34,407,727 | |
| | | _________ | _________ | |
Consolidated cash flow statement
for the year ended 30 November 2008
| | | Notes | Year to November 2008 | Year to November 2007 |
| | | | £ | £ |
| Cash flows from operating activities | | | | |
| | | | | |
| Cash generated from operations | | 5 | 155,859 | 1,901,106 |
| Corporation tax (paid)/received | | | (277) | 914,186 |
| | | | _________ | _________ |
| Net cash generated from operating activities | | | 155,582 | 2,815,292 |
| | | | _________ | _________ |
| Cash flows from investing activities | | | | |
| Acquisition of subsidiary – net of cash acquired | | | (881,908) | - |
| Purchases of intangible fixed assets | | | (1,597,919) | (408,677) |
| Purchases of property, plant and equipment | | | (228,416) | (183,423) |
| Interest received | | | 854,865 | 913,552 |
| Interest paid | | | (6,857) | (230,831) |
| Proceeds from exercise of employee share options | | | 253,297 | 2,540 |
| | | | _________ | _________ |
| Net cash (used in)/generated from investing activities | | | (1,606,938) | 93,161 |
| | | | _________ | _________ |
| Cash flows from financing activities | | | | |
| Proceeds from issuance of ordinary shares | | | - | 16,000 |
| Repurchase of own shares | | | (322,400) | - |
| Loan made to employee benefit trust for purchase of shares | | | (1,137,302) | - |
| Repayments of borrowings | | | (24,727) | (7,397,569) |
| | | | _________ | _________ |
| Net cash used in financing activities | | | (1,484,429) | (7,381,569) |
| | | | _________ | _________ |
| | | | | |
| Net decrease in cash and cash equivalents | | | (2,935,785) | (4,473,116) |
| | | | | |
| Cash and cash equivalents at beginning of year | | | 17,065,867 | 21,658,769 |
| Effects of exchange rate fluctuations on cash held | | | 313,500 | (119,786) |
| | | | _________ | _________ |
| Cash and cash equivalents at end of year | | | 14,443,582 | 17,065,867 |
| | | | _________ | _________ |
1 Basis of preparation
The preliminary announcement for the year ended 30 November 2008 is audited and has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union as at 30 November 2008. On 11 August 2008, along with its interim results, the Group reported on the impact of IFRS on its results for the year ended 30 November 2007, and set out its principal accounting policies under IFRS.The financial information in this preliminary announcement does not constitute the Group's statutory accounts for the year ended 30 November 2008 or the year ended 30 November 2007, but is derived from those accounts.The Group's statutory accounts for the year ended 30 November 2007, prepared under UK GAAP have been delivered to the Registrar of Companies; the report of the auditors on these accounts was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985.
2 Earnings per share
| Year to 30 November 2008 | Year to 30 November 2007 | ||
| Earnings attributable to ordinary shareholders | 2,203,138 | 2,344,049 | |
| _________ | _________ | ||
| Weighted average number of shares (Basic) | 55,373,030 | 56,056,327 | |
| _________ | _________ | ||
| Weighted average number of shares (Diluted) | 58,512,459 | 57,465,699 | |
| _________ | _________ | ||
| Earnings per share basic | 3.98p | 4.18p | |
| _________ | _________ | ||
| Earnings per share diluted | 3.77p | 4.08p | |
| _________ | _________ | ||
The calculation of basic earnings per share is based on profit after taxation and the weighted average of ordinary shares of 1p each in issue during the period.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group has two categories of dilutive potential ordinary shares; share options where the exercise price is less than the average market price of the Company's ordinary shares during the year and deferred ordinary shares in respect of the acquisition of SJ Consulting Limited.
3 Trade and other receivables
| As at 30 November 2008 £ | As at 30 November 2007 £ | |
| Current assets: | ||
| Trade receivables | 12,232,520 | 9,920,886 |
| Less: provision for impairment of receivables | - | (283,634) |
| _________ | _________ | |
| Trade receivables (net) | 12,232,520 | 9,637,252 |
| Other receivables | 176,649 | 96,743 |
| Corporation tax receivable | 41,369 | - |
| Prepayments | 1,126,221 | 986,087 |
| _________ | _________ | |
| 13,576,759 | 10,720,082 | |
| _________ | _________ | |
4 Trade and other payables
| As at 30 November 2008 £ | As at 30 November 2007 £ | |
| Trade payables | 4,307,050 | 1,910,724 |
| Social security and other taxes | 215,729 | 181,741 |
| Other payables | 6,838 | 30,166 |
| Accruals | 3,579,174 | 2,773,878 |
| Deferred income | 623,624 | 490,025 |
| _________ | _________ | |
| 8,732,415 | 5,386,534 | |
| _________ | _________ |
5 Cash generated from operations
| Year to 30 November 2008 £ | Year to 30 November 2007 £ | ||
| Profit before corporation tax | 2,162,046 | 1,411,476 | |
| Adjustments for: | |||
| Amortisation charge | 385,874 | 266,824 | |
| Depreciation charge | 379,322 | 390,856 | |
| Goodwill impairment charge | 140,000 | 46,575 | |
| Loss on disposal of property, plant and equipment | 1,597 | 112 | |
| Share-based payment charge | 104,486 | 50,533 | |
| Loss on derivative financial instruments | 10,862 | - | |
| Financial income - net | (863,159) | (737,072) | |
| Exchange differences | 262,149 | (33,799) | |
| (Increase)/decrease in inventories | (2,399,968) | 1,148,703 | |
| (Increase) in trade and other receivables | (2,741,446) | (2,457,085) | |
| Decrease in trade and other payables | 2,714,096 | 1,813,984 | |
| _________ | _________ | ||
| Cash generated from operations | 155,859 | 1,901,106 | |
| _________ | _________ | ||
6 Business combinations
On 9 June 2008, the Group acquired 100% of the share capital of AssetHouse Technology Limited, a company specialising in Digital Rights Management software for a cash consideration of £13. In addition, the Group also took an assignment of secured loan stock for a consideration of £1.38m less the amount of certain other creditors of the company.
7 Events after the balance sheet date
The Group acquired 100% of the share capital of Tilgin IPTV, a company specialising in IPTV software technologies and hardware platforms, for an initial cash consideration of £2.71m on 1 December 2008.