26 Mar 2008 07:00
Embargoed Release: 07:00 Wednesday 26 March 2008
iPoint-media plc (`iPoint' or `the Company') Final Results for the year ended 31 December 2007 iPoint (AIM: IPNT), a leading provider of live interactive video applicationsand delivery platforms for web, mobile and media, announces its audited resultsfor the year ended 31 December 2007.
Chairman's statement
Overview
iPoint's business focuses on developing live interactive video callingtechnologies that enable telecom and media companies to deploy a wide varietyof applications and services over broadband internet and mobile networks.iPoint has developed a `telco grade' video application platform thatincorporates a powerful service creation environment (`SCE'). The SCE is basedon a suite of software building blocks and pre-configured application templatesthat enable quick and easy deployment of video calling services over internetprotocol (`IP') and 3G networks.2007 was an exciting year for the Company with major achievements in severalareas. iPoint continued its penetration of the telecom industry, securing newmobile operator and value added/premium entertainment aggregator customers. TheCompany also signed a marketing cooperation agreement with Ericsson, which willmarket the Company's Vitrage video services platform to its mobile operatorcustomer base.
Operational review
In addition to iPoint's successes in the telecom market, the Company expandedits video service offerings into the broadcast and media industry with theintroduction of its `GOliveTV' solution. GOliveTV, which utilises the sametechnology and intellectual property as Vitrage, enables media and broadcastcompanies to develop new types of interactive participation TV show formatsthat incorporate moderated user generated content (`UGC') from viewers with 3Gmobile phones and internet webcams. During the year the Company securedGOliveTV deals with the BBC and Singapore-based MediaCorp. Moderated UGC in thetelevision industry has the potential to provide significant revenues foriPoint and will be the second growth engine for the Company after Vitrage.In the second half of 2007, iPoint also expanded the range of its products andservices by introducing new vertical market-orientated solutions based onVitrage. `GOliveBanking', an interactive video services solution for thefinance industry was adopted by a mid-sized European bank, and `GOliveCare', aninteractive healthcare solution, was implemented at Southampton Primary CareTrust to enhance the care provided to its customers.The Company has also converted its business model from a software licensingmodel (i.e. one-off purchases of a platform) to a leased license model withlong-term managed service agreements, which generate recurring revenues fromminimum fixed monthly payments with monthly fees based on usage. Factoring inyearly customer usage increases, managed service agreements have the potentialto generate greater revenues in subsequent years. With such agreements rangingfrom three to five years, the new business model should result in increasedlong-term revenue generation, though it may place some short-term pressure onrevenue recognition and cash flow.The new business model has been favourably received by many of the Company'scustomers, especially in the media and telecom sectors, in which companies areaccustomed to operational expense-based models in place of large one-offcapital expenditures. It further benefits these customers by enabling them tofocus on their core business rather than the integration and implementation ofnew technological solutions. iPoint's new managed services business model hasbeen accepted by most of the Company's customers including IBM and Orange.
Financial review
The Company generated revenues of ‚£1,323,665 ($2,648,654) for the year ended 31December 2007 compared to ‚£899,177 ($1,656,464) for the year ended 31 December2006 and gross profit of ‚£1,117,133 ($2,235,383) compared to ‚£657,625($1,290,518) in 2006. The results represent 45.8 per cent. growth in revenuesand 59.5 per cent. growth in gross profits. The loss per share for the yearended 31 December 2007 is ‚£0.0064 ($0.0128) compared to ‚£0.0062 ($0.0114) forthe year ended 31 December 2006.Although revenues were still relatively modest in 2007 and the year ended witha pre-tax loss of ‚£683,278 ($1,367,239) compared to ‚£508,488 ($936,737) for theyear ended 31 December 2006, the Directors believe there are strong growthprospects in iPoint's key markets and the Company's products and capabilitiesare well-matched to the growing requirements of the markets it serves.
Acquisition of All New Video Plc (`All New Video')
During 2007, the Company completed the acquisition of All New Video andsuccessfully integrated it into a business unit of iPoint. The business unit isdedicated to providing managed services to leading customers in the telecom andmedia markets. The Board expects the synergies between the two companies toprovide iPoint with new opportunities in the media sector.
Key achievements
During 2007, iPoint succeeded in increasing the variety of products it offersand the range of customers and market sectors it caters to. The Company alsocontinued to strengthen its position with major customers in the 3G market,including telecom operators, content aggregators and media broadcasters.
The key achievements for iPoint in the year ended 31 December 2007 were:
* The introduction of the GOliveTV platform * The selection of the Vitrage platform by a medium-sized European retail bank to deploy an interactive video call centre
* The delivery of iPoint's internet-based solution in December 2007 to the
Southampton City Primary Care Trust in the UK to provide remote medical services for its patients via web and 3G mobile * The execution of agreements with tier-one partners, including IBM and Orange * Two successful placings which raised approximately ‚£2.3 million of new funds for the Company at a price of 33p per share
* The successful sales penetration of targeted European telecom operators,
aggregators and media companies including the BBC
* The establishment of comprehensive communications and marketing channels
with leading blue chip companies including Ericsson, Siemens, and Unisys
* Obtaining major reference customers such as Ericsson's hosting centre,
Vodacom, Orange and the BBC
Outlook and Strategy
2007 was an encouraging year for iPoint in penetrating new market sectors. In2008, iPoint will focus on establishing itself within the broadcast and mediasector. The Board believes that participants in this market are eager tocapitalise on the growing popularity of UGC and offer new TV show formats,where viewers can enter live TV sessions or record their own unique content viaa unified web/mobile interface. iPoint is well positioned to exploit thegrowing video calling applications market through its partnership with keystrategic global market-leading businesses. The Board also believes that theCompany's growing list of top-tier solution partners will help advance a numberof exciting projects, which it expects to announce over the course of thecurrent year.I would like to thank the entire iPoint team for their commitment,professionalism and creativity. Their dedicated service has made iPoint one ofthe leading technology pioneers in the delivery of video applications for themobile broadband media market.
iPoint remains fully committed to its core values of total quality and innovation, increasing its revenues and expanding its relationships in its key markets. iPoint is constantly striving to deliver the most innovative technology including its unique video solutions platform to the telecom and media markets, together with its premium quality services.
The Board looks forward to the future with confidence.
E SagiChairman26 March 2008For further information:iPoint-media plc +(0) 972 544 450 667 Muki Geller +44 (0) 7802 356614 Clive Garston John East & Partners Limited +44 (0) 207 628 2200 David Worlidge/Bidhi Bhoma Hansard Group +44 (0) 207 245 1100 Vikki Krause GROUP INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2007
2007 2006 Notes ‚£ ‚£ Revenue 1,323,665 899,177 Cost of sales 206,532 198,646 Gross profit 1,117,133 700,531 Research and development 484,715 351,743 Selling and marketing 617,285 384,618 Administrative expenses 810,116 413,966
Loss from ordinary activities before (794,983) (449,796)income tax and finance costs
Net finance income/(costs) 111,705 (58,692) Loss before income tax (683,278) (508,488)
Tax on loss on ordinary activities 2 - -
Net loss for the year (683,278) (508,488) Loss per share - basic and diluted 3 0.0064 0.0062GROUP BALANCE SHEETAS AT 31 DECEMBER 2007 2007 2006 Notes ‚£ ‚£ ASSETS Non-current assets Intangible assets 1,451,771 462,871
Property, plant and equipment 138,203 41,428
Non-current receivables 1,848 6,133 1,591,822 510,432 Current assets Trade receivables 258,714 325,158 Other receivables 45,083 102,964
Cash and cash equivalents 4 1,133,824 26,024
1,437,621 454,146 TOTAL ASSETS 3,029,443 964,578 EQUITY AND LIABILITIES
Share capital and reserves
Issued capital 528,418 475,586 Share premium 3,039,066 718,368 Other reserves 395,564 452,989 Merger reserve 854,146 108,490
Reverse acquisition reserve 1,098,894 1,098,894
Retained earnings (3,671,205) (3,045,353) Translation reserve (80,714) 27,444 TOTAL EQUITY 2,164,169 (163,582) Non-current liabilities 43,757 40,248 Current liabilities Trade and other payables 535,243 321,183 Related party 144,893 84,892 Deferred income 112,682 160,147 Short-term borrowings - 521,690 Finance lease obligations 28,699 - Total current liabilities 821,517 1,087,912 TOTAL LIABILITIES 865,274 1,128,160
TOTAL EQUITY AND LIABILITIES 3,029,443 964,578
GROUP CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2007
2007 2006 Notes ‚£ ‚£
Cash flows from operating activities
Cash receipts from customers 1,579,087 637,390 Cash paid to suppliers and employees (1,983,773) (1,123,162) Cash absorbed by operations (404,686) (485,772) Interest paid (30,954) (49,254) Interest received 49,713 940 Net cash outflow from operating activities (385,927)
(534,086)
Cash flows from investing activities Acquisition of subsidiary, net of cash (47,228)
-required Purchase of equipment (7,059) (27,924) Net cash outflow used in investing (54,287) (27,924)activities
Cash flows from financing activities
Proceeds from issue of shares 2,286,900 1,004,671 Less: costs of issue (199,376) (378,226) Exercise of share options 77,990 - Payment of finance leases (33,588) - Net cash flows used in financing activities 2,131,926 626,445 Exchange differences (62,222) 27,444 Net increase/(decrease) in cash and cash 1,629,490 91,879equivalents Cash and cash equivalents brought forward (495,666)
(587,545)
Cash and cash equivalents carried forward 4 1,133,824 (495,666) Represented by: Positive cash balances 1,133,824 26,024 Short term borrowings - (521,690) 1,133,824 (495,666)
Group Statement of changes in equity
for the year ended 31 December 2007
Share Share Share-based Translation Reverse Merger Retained Total capital premium payments reserve acquisition earnings reserve reserve ‚£ ‚£ ‚£ ‚£ ‚£ ‚£ ‚£ ‚£
At 1 January 2006 2,212 452,989 1,358,414
(2,536,864) (723,249)
Shares issued in 286,302 718,369 1,004,671year for cash Share issued on 189,284 6,429,883 6,619,167acquisition Reverse (2,212) (259,520) (5,943,167) (6,204,899)acquisition Costs of share (378,226) (378,226)issue Exchange 27,444 27,444adjustments Loss for the year (508,488) (508,488) At 31 December 475,586 718,369 452,989 27,444 1,098,894 108,490 (3,045,352) (163,580)2006 Shares issued in 17,325 2,269,575 2,286,900year for cash Shares issued in 2,718 161,656 164,374year for services Shares issued on 27,217 762,080 789,297acquisition Exercise of share 5,572 72,418 (57,425)
57,425 77,990options Costs of share (182,952) (16,424) (199,376)issue Exchange (108,158) (108,158)adjustments Loss for the year (683,278) (683,278)
As at 31 December 528,418 3,039,066 395,564 (80,714) 1,098,894 854,146 (3,671,205) 2,164,1692007
Notes to the financial statements
1 Basis of preparation
These financial statements have been prepared in accordance with InternationalFinancial Reporting Standards and IFRIC interpretations and with those parts ofthe Companies Act 1985 applicable to companies reporting under IFRS. Thefinancial statements have been prepared under the historical cost conventionand a summary of the more important accounting policies is set out below.The preparation of financial statements in conformity with generally acceptedaccounting principles requires the use of estimates and assumptions that affectthe reported amounts of revenues and expenses during the reporting period.Although these estimates are based on management's best knowledge of theamount, event or actions, actual results ultimately may differ from thoseestimates.During the year, the Group elected to disclose its cash flows from operatingactivities using the direct method that requires the disclosure of gross cashreceipts and gross cash payments to be disclosed. Additionally, IAS 7encourages the use of the direct method for the reporting of operating cash
flows.2. Corporation tax 2007 2006 ‚£ ‚£ Income statement
Current tax on income for the period -
-
Factors affecting the tax charge
2007 2006 ‚£ ‚£
Loss on ordinary activities before taxation (638,278) (508,488)
Aggregate of loss on ordinary activities before (201,310) (162,716) taxation multiplied by domestic tax rate - UK:
30% (2006:30%), Israel: 29% (2006: 31%)
Effects of: Expenditure not allowable for tax purposes 61,196
38,606
Unrelieved tax losses and other deductions 140,114 124,110arising Current tax charge - -No deferred tax asset has been recognised as the Directors cannot be certainthat future profits will be sufficient for this asset to be realised. As at 31December 2007 the Group has tax losses carried forward of approximately ‚£1,887,487 in iPoint-media Limited, ‚£515,000 in All New Video (UK) Limited
and ‚£280,000 in iPoint-media plc.3. Loss per share
The basic loss per share is calculated by dividing the loss attributable to equity shareholders by the weighted average number of shares in issue. In calculating the diluted loss per share, share options outstanding have been taken into account where the impact of these is diluted. Warrants and share options were excluded from the calculation of the total diluted number of shares as the impact of these is anti-dilutive.
2007 2006 Number Number Basic 106,565,539 81,991,356
Dilutive Ordinary Shares from share options/ -
-warrants Total diluted 106,565,539 81,991,356 ‚£ ‚£ Loss attributable to equity shareholders (683,278)
(508,488)
Basic and diluted earnings per share (0.0064) (0.0062)4 Cash and cash equivalents 2007 2006 ‚£ ‚£ Cash at bank and in hand 1,133,824 26,024Cash at bank and in hand earns interest at floating rates based on daily bankdeposit rates. The fair value of cash and cash equivalents at 31 December 2007was ‚£1,133,824 (2006: ‚£26,024).
The interest rate applicable on funds on deposit is LIBOR less 0.5 per cent.
For the purpose of the cash flow statement, cash and cash equivalents comprise the following at 31 December 2007:
2007 2006 ‚£ ‚£ Cash at bank and in hand 1,133,824 26,024 Short term borrowings - (521,690) 1,133,824 (495,666)
The Group's short term borrowings are guaranteed by Nisko Projects Electronics and Communications (1990) Ltd, a shareholder of the Company.
5. Dividends
No dividends have been declared for the year ended 31 December 2007.
6. Copies of the Report and Accounts
Copies of the Report and Accounts for the year ended 31 December 2007 will besent to shareholders in due course and will be available from the Company'sregistered office and from John East & Partners Limited at 10 Finsbury Square,London EC2A 1AD. The Report and Accounts include a notice of the Company'sannual general meeting which will be held on 28 May 2008.
IPOINT MEDIA PLC