18 Aug 2009 07:00
18 August 2009
Amino Technologies plc
Interim Results for the six months ended 31 May 2009
Amino Technologies plc ('Amino' or the 'Company') (LSE: AMO), the Cambridge-based leader in digital entertainment solutions for IPTV, Internet TV and in-home multimedia distribution, announces its unaudited consolidated results for the period ended 31 May 2009.
Financial overview
Challenging economic conditions and slower than expected recovery in the US telco market resulted in a reduction in revenue of 12% to £12.80m (H108: £14.53m)
Gross profit of £4.54m (H108: £6.42m), reflecting lower revenue and the return of margins to normal levels
Acquisitions of Tilgin IPTV AB ('Tilgin IPTV') and AssetHouse contributed to a £1.84m increase in operating costs before exceptional items.
Operating loss before exceptional items of £3.10m (H108: Operating Profit £0.61m)
Loss Per Share (basic) of 6.53p (H108: Earnings Per Share 1.76p)
Encouraging current trading in first two months of H2
Balance sheet remains strong
Net assets of £27.12m
Net cash balances of £8.94m (30 Nov 2008: £14.4m) following acquisition of Tilgin IPTV (£2.71m) and loss in period
Operational overview
Plan to realise cost synergies from acquisitions accelerated and extended at end of H1
Underlying cost base reduced to c. £13m p.a. from high of c. £19m p.a. in December 2008
Decisive action taken to revitalise global sales and marketing efforts:
New Senior Vice Presidents ('SVPs') of Sales and Marketing appointed
North America sales tactics overhauled
Tilgin IPTV-enhanced feature set now winning business
Occupy a strong competitive position in our end-markets
Current trading suggests that the changes are working:
Significant new customer wins post period end demonstrate improving sales mix to higher priced MPEG-4 products
Commenting on the results Keith Todd, Amino Non-Executive Chairman, said:
"As previously indicated results for the first half were disappointing because we achieved lower revenues than expected. That was exacerbated by the expected increase in costs resulting from the acquisitions of Tilgin IPTV and AssetHouse. The management team has taken decisive action to address the sales issues and accelerated its cost reduction programme.
"It is encouraging that in the two months since the half year, order intake has been strong and some of the orders that were missed in the first half have now been received. Our cost actions have been completed and we now have a cost base that is comparable with the level prior to the AssetHouse and Tilgin IPTV acquisitions. The Board is expecting the strong order momentum to continue in the remaining months of this year and we expect that the second half will benefit strongly from the revenue growth strategies and cost cutting measures implemented."
For further information please contact:
| 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 / Matt Dixon / Nicola Biles | |
| KBC Peel Hunt Ltd: | +44 (0)20 7418 8900 |
| Jonathan Marren / Dan Webster |
About Amino
Amino specialises in digital entertainment solutions for IPTV, Internet TV and in-home multimedia distribution. Amino's range of software and set-top box systems can be tailored for telecom, broadcast and hospitality firms to offer highly scalable and targeted services. The award-winning AmiNET™ and Mood range is used by leading service operators in over 80 countries.
Amino's 'AssetHouse' technology enables content producers, telecoms companies, broadcasters and web TV firms to maximise opportunities through better services, targeted content and greater choice.
Listed on the London Stock Exchange AIM, symbol AMO. Amino's HQ is based near Cambridge, UK, with offices in the US, China and Sweden.
For more information, please visit www.aminocom.com
Chairman's Statement
Introduction
Our financial performance in the first half of the year was adversely affected by the global economic situation, which delayed a number of our customers' deployments in H1. Our recovery in the important US market, as it transitions to High Definition ("HD") was also slower than expected.
Furthermore, as expected, Amino's financial performance in H1 2009 was adversely affected by increased operating costs arising from the strategic acquisitions of AssetHouse, completed in June 2008, and Tilgin IPTV AB ('Tilgin IPTV'), completed in December 2008.
Put together, these factors led to a reduction in sales and gross profit in the period rather than the expected growth.
In contrast to the disappointing financial performance, the Group made significant advances in stability, performance and functionality of its MPEG-4 HD products which has generated encouraging new business since the period end and a strong sales pipeline for the second half and beyond. The acquisition of Tilgin IPTV has complemented Amino's award winning product portfolio and added new software functionality across its entire range contributing to the strong progress made.
Against this backdrop, the Board accelerated and extended its plan to realise cost synergies from the acquisitions and has also restructured its sales and marketing team. The Group's underlying cost base has been reduced to c. £13m p.a., comparable to pre-acquisition levels, effective from 1 June, from a high of c. £19m after the acquisition of Tilgin IPTV in December 2008.
Profit and Loss
Revenue in the period was £12.80m compared with £14.53m in H1 2008. An increase in average selling price - as the sales mix transitions to MPEG-4 HD products - and currency benefits limited the reduction in revenue from the sale of set-top boxes to a fall of 12% to £12.12m against a 30% reduction in unit shipments to 178,000. Unit shipments in Europe were slightly ahead of the corresponding period last year at 146,000 units. Fees from support and expert services increased by £0.24m to £0.40m (H1 2008: £0.16m). Licence fees, all from the licensing of set-top box technologies, reduced by £0.29m to £0.28m (H1 2008: £0.57m).
Gross margin returned to a more normal level of 35.5%, as compared to the exceptionally high levels enjoyed in H1 2008 of 44.2%, primarily due to the inclusion of lower margin sales on Tilgin IPTV's Mood products. Reflecting the reduction in revenue and gross margin, gross profit in the period reduced to £4.54m compared with £6.42m in H1 2008.
As compared to H1 FY2008, pre-exceptional operating costs increased by £1.84m to £7.65m of which £0.67m resulted from the acquisition of Tilgin IPTV and £0.77m related to the acquisition of AssetHouse.
The Group incurred an operating loss of £3.10m before exceptional items, compared to a profit of £0.61m in H1 2008. Exceptional costs in relation to the reduction in operating cost base of £0.49m were recognised in the period and a further £0.21m will be recognised in H2. Operating loss after exceptional items was £3.60m (H1 2008: profit of £0.61m).
Net finance income of £0.04m (H1 2008: £0.48m) reflected lower interest rates and reduced net cash balances. Net loss after tax is £3.56m (H1 2008: profit £0.99m) leading to a loss per share of 6.53p (H1 2008: earnings per share of 1.76p).
Balance Sheet
The balance sheet remains strong with net cash balances of £8.94m and net assets, excluding intangibles, of £20.36m following the £2.72m investment in Tilgin IPTV and trading losses incurred in the first half.
Operational Performance
In addition to reducing the Group's underlying cost base, the Board has also identified and addressed other issues that have led to a lower than expected sales performance during the period. For example, much time has been spent revitalising our sales and marketing approach. A new 'SVP Marketing' was appointed in January and the former European Regional Sales Manager was appointed 'SVP Global Sales' in June.
Our sales tactics have also been revitalised, we have entered into joint marketing programmes with our key partners, and we have worked hard to re-energise and support our distribution network. Customer service has also been improved around the point of sale. There has also been an intensive focus on sales into the important US tier 3 market and this has started to reap benefits, particularly after the period end. In Western Europe, the focus has been on aggressively targeting tier 2 telecoms operators. Our offering around greater functionality, high service levels and price has led to some promising progress, so far in H2.
All of this effort has led to a more targeted and effective sales approach and we have started to see the benefits of this after the period end when we secured a number of significant new orders in various geographies. We have recently secured a number of important wins in the US to supply MPEG-4 - both SD and HD - set-top boxes, in Latin America for MPEG-2 set-top boxes and, in APAC, our licence partner has won significant new business for MPEG-4 HD set-top boxes in Vietnam.
Amino - Our Strategy, Our Markets and Our Positioning
For our telco customers, the rationale for IPTV remains as strong as ever. IPTV enables them to compete effectively against their satellite and cable competitors and provides additional Average Revenue Per User ('ARPU') and reduces customer churn. For all that IPTV is emerging slower than the cable and satellite markets, it is at an earlier stage and latest reports from MRG suggest that the IPTV market is on a compound annual growth trajectory of 12% between now and 2013. In our other markets of Hospitality, Enterprise and Education, demand remains despite the market downturn. And finally, new technology is driving the Internet TV sector increasingly rapidly, resulting in more consumers watching video online.
Our extensive experience, global deployments and award winning technology mean that we are well positioned to benefit from this growth and the recent progress indicates that we are on the right path with our strategy and market focus. As before, our strategy is threefold: to enhance our product line, to drive scale and to extend across the value chain, and we are making good progress in the execution of this strategy.
The acquisitions of Tilgin IPTV and AssetHouse have been critical in helping us to deliver against these ambitions. Tilgin IPTV has added greatly to our set-top box functionality as well as some exceptional talent to boost our engineering resource. The teams have integrated well and the result is a highly marketable enhancement to the Amino product offering.
Outlook
Today we occupy a strong competitive position in all our end-markets, each of which is rapidly evolving. As this evolution continues to take shape, the Amino brand stands out as a strong force in the marketplace: particularly given the strengths Tilgin IPTV has added to our marketable product range.
It is encouraging that in the two months since the half year order intake has been strong and some of the orders that were missed in the first half have now been received. Our cost actions have been completed and we now have a cost base that is comparable with the level prior to the Asset House and Tilgin IPTV acquisitions. The Board is expecting the strong order momentum to continue in the remaining months of this year and we expect that the second half will benefit strongly from the revenue growth strategies and cost cutting measures implemented.
| Consolidated Income Statement For the six months ended 31 May 2009 | Notes | Six months ended 31 May 2009 Unaudited | Six months ended 31 May 2008 Unaudited | Year to 30 November 2008 Audited |
| £ | £ | £ | ||
| Revenue | 3 | 12,795,375 | 14,526,776 | 31,902,075 |
| Cost of sales | (8,257,057) | (8,107,345) | (18,529,562) | |
| __________ | __________ | __________ | ||
| Gross profit | 4,538,318 | 6,419,431 | 13,372,513 | |
| Selling, general and administrative expenses (non-exceptional) | (4,888,457) | (4,013,531) | (8,226,302) | |
| Selling, general and administrative expenses (exceptional) | 5 | (439,130) | - | - |
| Selling, general and administrative expenses | (5,327,587) | (4,013,531) | (8,226,302) | |
| Research and development expenses (non-exceptional) | (2,755,626) | (1,794,961) | (3,847,324) | |
| Research and development expenses (exceptional) | 5 | (51,672) | - | - |
| Research and development expenses | (2,807,298) | (1,794,961) | (3,847,324) | |
| __________ | __________ | __________ | ||
| Operating (loss)/profit | (3,596,567) | 610,940 | 1,298,887 | |
| Financial income | 35,302 | 487,487 | 870,016 | |
| Financial expenses | - | (3,855) | (6,857) | |
| __________ | __________ | __________ | ||
| (Loss)/profit before corporation tax | (3,561,265) | 1,094,572 | 2,162,046 | |
| Corporation tax (charge)/credit | (1,341) | (107,278) | 41,092 | |
| __________ | __________ | __________ | ||
| (Loss)/profit for the year attributable to equity holders | (3,562,606) | 987,294 | 2,203,138 | |
| __________ | __________ | __________ | ||
| Basic (loss)/earnings per 1p ordinary share | 6 | (6.53p) | 1.76p | 3.98p |
| Diluted (loss)/earnings per 1p ordinary shares | 6 | (6.53p) | 1.72p | 3.77p |
All amounts relate to continuing activities.
Consolidated statement of recognised income and expense for the six months ended 31 May 2009
| Notes | Six months ended 31 May 2009 Unaudited | Six months ended 31 May 2008 Unaudited | Year to 30 November 2008 Audited | |
| £ | £ | £ | ||
| Foreign exchange difference arising on consolidation | 12 | (25,878) | 92,729 | 591,223 |
| __________ | __________ | __________ | ||
| Net (expenses)/income recognised directly in equity | (25,878) | 92,729 | 591,223 | |
| __________ | __________ | __________ | ||
| (Loss)/profit for the period | (3,562,606) | 987,294 | 2,203,138 | |
| __________ | __________ | __________ | ||
| Total recognised income and expenses for the financial year | (3,588,484) | 1,080,023 | 2,794,361 | |
| __________ | __________ | __________ | ||
The accompanying notes are an integral part of these interim financial statements.
| Consolidated Balance Sheet As at 31 May 2009 | Notes | As at 31 May 2009 Unaudited | As at 31 May 2008 Unaudited | 30 November 2008 Audited |
| Assets | £ | £ | £ | |
| Non-current assets | ||||
| Intangible assets | 7 | 6,756,588 | 1,092,805 | 3,431,236 |
| Property, plant and equipment | 8 | 1,207,210 | 1,075,061 | 982,964 |
| Deferred income tax assets | 1,575,027 | 1,719,000 | 1,719,000 | |
| Trade and other receivables | 9 | 204,927 | 163,450 | 203,101 |
| _________ | _________ | _________ | ||
| 9,743,752 | 4,050,316 | 6,336,301 | ||
| _________ | _________ | _________ | ||
| Current assets | ||||
| Inventories | 6,068,064 | 3,755,662 | 5,059,627 | |
| Trade and other receivables | 9 | 8,347,472 | 8,186,434 | 13,576,759 |
| Derivative financial instruments | 452,676 | 92,000 | - | |
| Cash at bank and in hand | 8,935,255 | 19,002,631 | 14,443,582 | |
| _________ | _________ | _________ | ||
| 23,803,467 | 31,036,727 | 33,079,968 | ||
| _________ | _________ | _________ | ||
| Total assets | 33,547,219 | 35,087,043 | 39,416,269 | |
| _________ | _________ | _________ | ||
| Capital and reserves attributable to equity holders of the business | ||||
| Called-up share capital | 11 | 578,930 | 578,430 | 578,430 |
| Shares to be issued | - | 27,751 | 27,751 | |
| Share premium | 126,375 | 104,249 | 104,249 | |
| Capital redemption reserve | 6,200 | 6,200 | 6,200 | |
| Other reserves | 16,388,755 | 16,388,755 | 16,388,755 | |
| Retained earnings | 10,021,902 | 12,596,847 | 13,555,105 | |
| _________ | _________ | _________ | ||
| Total equity | 12 | 27,122,162 | 29,702,232 | 30,660,490 |
| _________ | _________ | _________ | ||
| Current liabilities | ||||
| Borrowings | 12,502 | 12,502 | 12,502 | |
| Trade and other payables | 10 | 6,412,555 | 5,290,999 | 8,732,415 |
| Current tax liabilities | - | 81,310 | - | |
| Derivative financial instruments | - | - | 10,862 | |
| _________ | _________ | _________ | ||
| Total liabilities | 6,425,057 | 5,384,811 | 8,755,779 | |
| _________ | _________ | _________ | ||
| _________ | _________ | _________ | ||
| Total equity and liabilities | 33,547,219 | 35,087,043 | 39,416,269 | |
| _________ | _________ | _________ |
The accompanying notes are an integral part of these interim financial statements.
The interim financial statements on pages 5 to 19 were approved by the board of directors on 18 August 2009 and were
signed on its behalf by:
Andrew Burke Stuart Darling
Director Director
| Consolidated Cash Flow Statement As at 31 May 2009 | Notes | Six months ended 31 May 2009 Unaudited | Six months ended 31 May 2008 Unaudited | Year to November 2008 Audited |
| £ | £ | £ | ||
| Cash flows from operating activities | ||||
| Cash (used in)/ generated from operations | 13 | (1,405,284) | 2,323,884 | 155,859 |
| Corporation tax (paid) | (1,341) | (25,968) | (277) | |
| __________ | __________ | __________ | ||
| Net cash (used in)/generated from operating activities | (1,406,625) | 2,297,916 | 155,582 | |
| __________ | __________ | __________ | ||
| Cash flows from investing activities | ||||
| Acquisition of subsidiary - net of cash acquired | (2,472,696) | - | (881,908) | |
| Purchase of intangible fixed assets | (1,234,325) | (383,464) | (1,597,919) | |
| Purchase of property, plant and equipment (PPE) | (368,550) | (142,149) | (228,416) | |
| Interest received | 36,337 | 477,133 | 854,865 | |
| Interest paid | - | (3,855) | (6,857) | |
| Proceeds from exercise of employee share options | - | 560 | 253,297 | |
| __________ | __________ | __________ | ||
| Net cash (used in) investing activities | (4,039,234) | (51,775) | (1,606,938) | |
| __________ | __________ | __________ | ||
| Cash flows from financing activities | ||||
| Repurchase of own shares | - | (322,400) | (322,400) | |
| Loan made to Employee Benefit Trust for purchase of shares | - | - | (1,137,302) | |
| Repayments of borrowings | - | (24,727) | (24,727) | |
| __________ | __________ | __________ | ||
| Net cash (used in) financing activities | - | (347,127) | (1,484,429) | |
| __________ | __________ | __________ | ||
| Net (decrease)/increase in cash and cash equivalents | (5,445,859) | 1,899,014 | (2,935,785) | |
| Cash and cash equivalents at start of the period | 14,443,582 | 17,065,867 | 17,065,867 | |
| Effects of exchange rate fluctuations on cash held | (62,468) | 37,749 | 313,500 | |
| __________ | __________ | __________ | ||
| Cash and cash equivalents at end of period | 8,935,255 | 19,002,630 | 14,443,582 | |
| __________ | __________ | __________ |
Notes to the interim financial statements
Six months ended 31 May 2009
1 General information
Amino Technologies plc ('the Company') and its subsidiaries (together 'the Group') specialises in IPTV software technologies and hardware platforms that enable delivery of digital programming and interactivity over IP networks, including the internet.
During the period, the Group acquired control of Amino Communications AB (formerly Tilgin IPTV AB), a company specialising in IPTV software technologies and hardware platforms.
The Company is a public limited company which is listed on the Alternative Investment Market (AIM) of the London Stock Exchange and is incorporated and domiciled in the UK.
2 Basis of preparation
The financial information has been prepared in accordance with all International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations that had been published by 31 May 2009 as endorsed by the European Union (EU). The accounting policies adopted are consistent with those of the financial statements for the year ended 30 November 2008, as described in those financial statements.
Exceptional items are disclosed and described separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the Group. They are material items of income or expense that have been shown separately due to the significance of their nature or amount.
In preparing these interim financial statements the Board has not sought to implement the early adoption of IAS 34 "Interim financial reporting".
The figures for the six-month periods ended 31 May 2009 and 31 May 2008 have not been audited. The figures for the year ended 30 November 2008 have been extracted from, but do not constitute, the consolidated financial statements of Amino Technologies plc for that year. Those financial statements have been delivered to the Registrar of Companies and included an auditors' report, which was unqualified and did not contain a statement under Section 237 Companies Act 1985.
3 Revenue
The Group has only one class of business segment, being the development and sale of broadband network software and systems (which has been analysed into four revenue streams as shown in the second table below). All revenues, costs, assets and liabilities relate to this segment.
The secondary, geographical analysis of revenue is as follows:
| Six months ended 31 May 2009 Unaudited | Six months ended 31 May 2008 Unaudited | Year to 30 November 2008 Audited | ||||
| £ | £ | £ | ||||
| United Kingdom, Europe and Africa | 10,457,760 | 8,399,124 | 19,015,627 | |||
| North America | 1,809,340 | 4,436,256 | 9,707,217 | |||
| South America | 37,065 | 1,620,158 | 1,437,554 | |||
| Asia Pacific | 491,210 | 71,238 | 1,741,677 | |||
| __________ | __________ | __________ | ||||
| 12,795,375 | 14,526,776 | 31,902,075 | ||||
| __________ | __________ | __________ | ||||
| Further analysis of revenue by stream is given below. | ||||||
| Six months ended 31 May 2009 Unaudited | Six months ended 31 May 2008 Unaudited | Year to 30 November 2008 Audited | ||||
| £ | £ | £ | ||||
| Product | 12,119,788 | 13,789,483 | 29,726,573 | |||
| License | 279,328 | 573,541 | 1,786,724 | |||
| Support | 305,961 | 138,268 | 363,291 | |||
| Expert services | 90,298 | 25,484 | 25,487 | |||
| __________ | __________ | __________ | ||||
| 12,795,375 | 14,526,776 | 31,902,075 | ||||
| __________ | __________ | __________ | ||||
4 Financial risk management
The Group had the following current assets and liabilities denominated in currencies other than sterling.
| Six months ended 31 May 2009 Unaudited | Six months ended 31 May 2008 Unaudited | Year to 30 November 2008 Audited | |||||||||||
| £ | £ | £ | |||||||||||
| Trade & other receivables denominated in foreign currency | 6,792,059 | 7,743,803 | 13,136,791 | ||||||||||
| Cash balances denominated in foreign currency Trade & other payables denominated in foreign currency | 1,157,304 (2,133,800) | 467,827 (1,806,152) | 1,291,238 (6,007,118) | ||||||||||
| _________ | _________ | _________ | |||||||||||
| Net current assets denominated in foreign currency | 5,815,563 | 6,405,478 | 8,420,911 | ||||||||||
| Outstanding forward contracts | 4,940,193 | 3,846,543 | 5,767,718 | ||||||||||
| Percentage of current assets not matched by forward contracts | 15% | 40% | 32% | ||||||||||
5 Exceptional items
| Six months ended 31 May 2009 Unaudited | Six months ended 31 May 2008 Unaudited | Year to 30 November 2008 Audited | ||
| £ | £ | £ | ||
| Restructuring costs | 490,802 | - | - | |
| _________ | _________ | _________ | ||
| 490,802 | - | - | ||
| _________ | _________ | _________ | ||
The exceptional costs in the period amounting to £490,802 are in relation to two tranches of restructuring within the group, which primarily comprise redundancy costs. The first tranche was to streamline the sales and administrative functions of Amino Communications AB on acquisition. The second tranche was for additional group restructuring at the end of the period.
6 (Loss)/earnings per share
| Six months ended 31 May 2009 Unaudited | Six months ended 31 May 2008 Unaudited | Year to 30 November 2008 Audited | |
| £ | £ | £ | |
| (Loss)/earnings attributable to shareholders | (3,562,606) | 987,295 | 2,203,138 |
| _________ | _________ | _________ | |
| Weighted average number of shares (Basic) | 54,578,067 | 55,984,489 | 55,373,030 |
| _________ | _________ | _________ | |
| Weighted average number of shares (Diluted) | 54,578,067 | 57,362,560 | 58,512,459 |
| _________ | _________ | _________ |
The calculation of basic earnings per share is based on (loss)/profit after taxation and the weighted average number of ordinary shares of 1p each in issue during the period.
For diluted (loss)/earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary share options. The group has only one category of dilutive potential ordinary share options: those share options where the exercise price is less than the average market price of the company's ordinary shares during the period. There is no dilutive effect in respect of the period ended 31 May 2009 as the Group was loss making.
7 Intangible assets
| Net book value | As at 31 May 2009 Unaudited £ | As at 31 May 2008 Unaudited £ | As at 30 November 2008 Audited £ | |
| Goodwill: | ||||
| Goodwill relating to SJ Consulting Limited | 273,612 | 348,738 | 278,738 | |
| Goodwill relating to AssetHouse Technology Limited Goodwill relating to Tilgin IPTV AB | 1,420,895 1,932,679 | - - | 1,420,895 - | |
| _________ | _________ | _________ | ||
| Total goodwill | 3,627,186 | 348,738 | 1,699,633 | |
| Software licences | 587,787 | 640,111 | 646,898 | |
| Development costs | 2,091,700 | 103,956 | 1,084,705 | |
| Acquired intellectual property | 449,915 | - | - | |
| _________ | _________ | _________ | ||
| 6,756,588 | 1,092,805 | 3,431,236 | ||
| _________ | _________ | _________ | ||
8 Property, plant and equipment
| As at 31 May 2009 Unaudited £ | As at 31 May 2008 Unaudited £ | As at 30 November 2008 Audited £ | ||
| Computer Software & Equipment | 461,439 | 285,005 | 271,722 | |
| Office and Other Equipment | 125,281 | 107,152 | 77,612 | |
| Leasehold Improvement | 620,490 | 682,904 | 633,630 | |
| _________ | _________ | _________ | ||
| Net book amount | 1,207,210 | 1,075,061 | 982,964 | |
| _________ | _________ | _________ |
9 Trade and other receivables
| As at 31 May 2009 Unaudited £ | As at 31 May 2008 Unaudited £ | As at 30 November 2008 Audited £ | |||
| Current assets: | |||||
| Trade receivables | 6,887,866 | 7,814,632 | 12,232,520 | ||
| Less: provision for impairment of receivables | (43,215) | (550,251) | - | ||
| _________ | _________ | _________ | |||
| Trade receivables (net) | 6,844,651 | 7,264,381 | 12,232,520 | ||
| Other receivables | 323,927 | 16,131 | 176,649 | ||
| Corporation tax receivable | 54,038 | - | 41,369 | ||
| Prepayments | 1,124,856 | 905,922 | 1,126,221 | ||
| _________ | _________ | _________ | |||
| 8,347,472 | 8,186,434 | 13,576,759 | |||
| _________ | _________ | _________ | |||
| Non current assets: | |||||
| Other receivables | 204,927 | 163,450 | 203,101 | ||
| _________ | _________ | _________ | |||
Other receivables comprise rent deposits.
10 Trade and other payables
| As at 31 May 2009 Unaudited £ | As at 31 May 2008 Unaudited £ | As at 30 November 2008 Audited £ | ||
| Trade payables | 3,111,920 | 2,385,110 | 4,307,050 | |
| Social security and other taxes | 267,499 | 162,418 | 215,729 | |
| Other payables | 158,747 | 66,870 | 6,838 | |
| Accruals | 2,659,421 | 2,520,108 | 3,579,174 | |
| Deferred income | 214,968 | 156,493 | 623,624 | |
| _________ | _________ | _________ | ||
| 6,412,555 | 5,290,999 | 8,732,415 | ||
| _________ | _________ | _________ |
11 Called-up share capital
| Ordinary shares of 1p each | As at 31 May 2009 Unaudited | As at 31 May 2008 Unaudited | As at 30 November 2008 Audited |
| £ | £ | £ | |
| Authorised | |||
| Nominal value | 1,000,000 | 1,000,000 | 1,000,000 |
| _________ | _________ | _________ | |
| Number | 100,000,000 | 100,000,000 | 100,000,000 |
| _________ | _________ | _________ | |
| Allotted, called-up and fully-paid | |||
| Nominal value | 578,930 | 578,430 | 578,430 |
| _________ | _________ | _________ | |
| Number | 57,893,052 | 57,843,050 | 57,843,050 |
| _________ | _________ | _________ |
In respect of the acquisition of SJ Consulting Limited the Company issued 50,002 ordinary shares on 20 January 2009 (the third anniversary of the acquisition date) at a price of £0.45p.
12 Statement of changes in equity
| Share Capital £ | Share premium £ | Shares to be issued £ | Other reserves £ | Capital redemption reserve £ | Profit and loss £ | Total £ | |
| At 1 December 2007 (Audited) | 584,130 | 79,749 | 68,667 | 16,388,755 | - | 11,862,663 | 28,983,964 |
| Profit for the period | - | - | - | - | - | 987,295 | 987,295 |
| Issue of ordinary shares - shares to be issued | 500 | 24,500 | (25,000) | - | - | - | - |
| Forfeiture of shares to be issued | - | - | (17,334) | - | - | - | (17,334) |
| Impact of movement in share price on shares to be issued | - | - | 1,418 | - | - | - | 1,418 |
| Exercise of employee share options | - | - | - | - | - | 560 | 560 |
| Repurchase and cancellation of own shares | (6,200) | - | - | 6,200 | (322,400) | (322,400) | |
| Share option compensation charge | - | - | - | - | - | (24,000) | (24,000) |
| Foreign exchange on consolidation | - | - | - | - | - | 92,729 | 92,729 |
| _________ | _________ | _________ | _________ | _________ | _________ | _________ | |
| At 31 May 2008 (Unaudited) | 578,430 | 104,249 | 27,751 | 16,388,755 | 6,200 | 12,596,847 | 29,702,232 |
| _________ | _________ | _________ | _________ | _________ | _________ | _________ | |
| Profit for the period | - | - | - | - | - | 1,215,843 | 1,215,843 |
| Exercise of employee share options | - | - | - | - | - | 252,737 | 252,737 |
| Share option compensation charge | - | - | - | - | - | 128,486 | 128,486 |
| Purchase of own shares by ESOP trust | - | - | - | - | - | (1,137,302) | (1,137,302) |
| Foreign exchange on consolidation | - | - | - | - | - | 498,494 | 498,494 |
| _________ | _________ | _________ | _________ | _________ | _________ | _________ | |
| At 30 November 2008 (Audited) | 578,430 | 104,249 | 27,751 | 16,388,755 | 6,200 | 13,555,105 | 30,660,490 |
| _________ | _________ | _________ | _________ | _________ | _________ | _________ | |
| Loss for the period | - | - | - | - | - | (3,562,606) | (3,562,606) |
| Issue of ordinary shares - shares to be issued | 500 | 22,126 | (27,751) | - | - | - | (5,125) |
| Exercise of employee share options | - | - | - | - | - | 1,920 | 1,920 |
| Share option compensation charge | - | - | - | - | - | 53,361 | 53,361 |
| Foreign exchange on consolidation | - | - | - | - | - | (25,878) | (25,878) |
| _________ | _________ | _________ | _________ | _________ | _________ | _________ | |
| At 31 May 2009 (Unaudited) | 578,930 | 126,375 | - | 16,388,755 | 6,200 | 10,021,902 | 27,122,162 |
| _________ | _________ | _________ | _________ | _________ | _________ | _________ |
13 Cash (used in)/generated from operations
| Six months ended 31 May 2009 Unaudited | Six months ended 31 May 2008 Unaudited | Year to 30 November 2008 Audited | |||
| £ | £ | £ | |||
| (Loss)/profit before corporation tax | (3,561,265) | 1,094,572 | 2,162,046 | ||
| Adjustments for: | |||||
| Amortisation charge | 349,301 | 165,521 | 385,874 | ||
| Depreciation charge | 233,500 | 186,712 | 379,322 | ||
| Goodwill impairment charge | - | 70,000 | 140,000 | ||
| Loss on disposal of tangible fixed assets | - | 1,267 | 1,597 | ||
| Share-based payment charge | 53,361 | (24,000) | 104,486 | ||
| Fair value (gain)/loss on derivative financial instruments | (463,538) | (92,000) | 10,862 | ||
| Financial income - net | (36,337) | (483,632) | (863,159) | ||
| Exchange differences | 106,519 | 63,335 | 262,149 | ||
| (Increase) in inventories | (1,008,437) | (1,096,003) | (2,399,968) | ||
| Decrease/(increase) in trade and other receivables | 5,240,131 | 2,533,647 | (2,741,446) | ||
| (Decrease)/increase in trade and other payables | (2,318,519) | (95,535) | 2,714,096 | ||
| _________ | _________ | _________ | |||
| Cash (used in)/generated from operations | (1,405,284) | 2,323,884 | 155,859 | ||
| _________ | _________ | _________ | |||
14 Business Combinations
On 1 December 2008, the group acquired 100% of the share capital of Tilgin IPTV AB, a company specialising in IPTV software technologies and hardware platforms, for an initial cash consideration of £2.72m.
The acquisition has been accounted for using the purchase method as required by IFRS 3.
Details of provisional net assets acquired and provisional goodwill are as follows:
| £ | |||||
| Purchase consideration: | |||||
| -Cash paid | 2,477,026 | ||||
| -Direct cost relating to the acquisition | 238,247 | ||||
| __________ | |||||
| Total purchase consideration | 2,715,273 | ||||
| Fair value of net assets acquired (see below) | (782,594) | ||||
| __________ | |||||
| Goodwill | 1,932,679 | ||||
| __________ | |||||
The assets and liabilities arising from the acquisition are as follows:
14 Business Combinations (continued)
| Book value £ | Fair value adjustment £ | Accounting policy adjustment £ | Fair value £ | |||
| Cash and cash equivalents | 4,330 | - | - | 4,330 | ||
| Intangible fixed assets | 2,009,360 | - | (1,495,171) | 514,189 | ||
| Tangible fixed assets | 21,263 | 78,850 | - | 100,113 | ||
| Inventories | 917,440 | (112,887) | - | 804,553 | ||
| Trade and other receivables | 307,843 | - | - | 307,843 | ||
| Trade and other payables | (788,383) | (16,078) | - | (804,461) | ||
| Deferred tax | - | (143,973) | - | (143,973) | ||
| ________ | __________ | ________ | __________ | |||
| Net assets acquired | 2,471,853 | (194,088) | (1,495,171) | 782,594 | ||
| __________ | __________ | __________ | __________ | |||
The fair value adjustments include an adjustment to capitalised development costs to align accounting policies and a write down of inventories.
The intangible fixed asset balance relates to acquired technology.
The provisional goodwill arising on the acquisition of Tilgin IPTV AB is attributable to the technical skills of the acquired business workforce, and the anticipated future operating synergies from the combination.
The acquisition contributed revenues of £2.75m and net loss of £0.57m for the period 1 December 2008 to 31 May 2009.