15 May 2009 12:41
15 May 2009 iPoint-Media plc ("iPoint", the "Group" or the "Company") Final results for the year ended 31 December 2008
CHAIRMAN'S STATEMENT
During period under review, the Group focused on executing its strategy for thetelecoms, media, and content aggregation verticals, in particular workingclosely with Ericsson AB ("Ericsson"), a leading global vendor for the telecomsindustry.The Group experienced slippage with new contracts throughout 2008 as a resultof the major telecoms companies, in light of the downturn in the globaleconomy, taking longer to commit to prospective 3G video calling relatedprojects. Consequently, several significant contracts which were anticipated tobe signed during 2008 were delayed. As a consequence, the turnover for the yearended 31 December 2008 was significantly lower than expected and the lossbefore taxation for the same period was significantly greater than anticipated.
IPOINT'S BUSINESS
iPoint's business is developing live interactive video calling service creationplatforms that enable telecom and media companies to deploy a wide variety ofapplications and services over broadband internet and mobile networks. iPointhas developed a `Telco grade' video application platform that incorporates apowerful service creation environment (SCE). The SCE is based on a suite ofsoftware building blocks and pre-configured application templates that enablequick and easy deployment of video calling services over IP and 3G networks.
iPoint's business strategy is based on delivery to three verticals: telecoms, media and content aggregation. The Group's core technology and intellectual property are common to all these verticals.
During 2008, iPoint executed its strategy in the telecoms vertical by workingclosely with Ericsson and submitted proposals, together with Ericsson's marketunits, to tenders issued by leading telecom operators worldwide. Ericsson isthe world's leading vendor for the telecoms industry and the directors believethat by working closely with Ericsson, its presence can be leveraged togenerate sales of iPoint's video application platform known as Vitrage, whichcomplements the Video Gateway (VIG) of Ericsson. To date Ericsson has securedtwo tenders issued by telecom operators in Europe in which the Vitrage platformwill be used. In addition, during 2008, iPoint, together with Ericsson, built apipeline of potential tenders for projects with telecom operators in the CIS,Latin America (including Brazil) and Mexico and Southern Europe (includingTurkey). The directors expect some of these tenders to take place in 2009although some will be delayed until 2010 because of the impact of the globalrecession.iPoint has been in discussions with IBM and the media vertical has beenexpanded to provide user generated content and applications for the printingindustry, in addition to TV and mobile services already provided. iPoint'soffering will become a standard part of IBM's `Media Hub' solution in additionto video calling applications. A Memorandum of Understanding has been signedwith IBM Media and the integrated IBM-iPoint solution was displayed at theInternational Broadcasting Convention (IBC) in Amsterdam in September 2008. Asa result of the economic slowdown in the media market and the restructuring atIBM, iPoint did not succeed in achieving a significant proportion of therevenues expected from the media sector for the period under review. Theslowdown in advertising revenues has had a significant impact on the mediasector as a whole and budgets for new projects in particular. Consequently, thedirectors believe that revenues derived from the media vertical will continueto be affected during 2009.iPoint continued to pursue opportunities in the content aggregation vertical,primarily in the UK, Belgium and Germany. The Company has developed atechnology called `Glaze', creating an interface to existing web-based videochat and content delivery platforms, which enables subscriber connections from3G mobile to these services. As a result, the amount of work required tointroduce a 3G mobile service for this market is reduced and the overall valueproposition is more attractive. In February 2008, the Company has signed anMemorandum of Understanding with a Belgian platform provider in order to createa joint offering for this market.
FINANCIAL REVIEW
The Company generated revenues of £871,802 ($1,608,475) for the year ended 31December 2008 compared to £1,323,665 ($2,648,654) for the year ended 31December 2007 and gross profit of £706,927 ($1,304,281) compared to £1,117,133($2,235,383) in 2007. The results represent 32.5 per cent reduction in revenuesand 34.7 per cent reduction in gross profits.Revenues were still relatively modest and the year ended with a loss of £2,612,894 ($4,820,790) which includes an impairment of goodwill, from thepurchase of All New Video plc and the reverse takeover by iPoint USA Corp. ofthe Company, of £1,293,900 ($2,387,246). The loss per share for the year ended31 December 2008 is £0.023 ($0.0426) compared to £0.0064 ($0.0128) for the yearended 31 December 2007.The Company has a credit facility with United Mizrahi Bank Ltd ("the Bank").The repayment of the Company's debt to the Bank is guaranteed by Nisko ProjectsElectronics & Communications (1990) Ltd. ("Nisko") to a maximum of NIS3.5million. By a deed dated 25 August 2006 (as amended on 12 December 2008), Niskoagreed that it would not withdraw or otherwise impair the guarantee before 31December 2009.In light of current economic conditions, the directors implemented a costcutting plan during 2008 and in the first quarter of 2009, which resulted in areduction in expenses of over 30 per cent. The cost reduction plan was basedmainly on the reduction of salaries and in the number of employees in order toallow the Company to operate with lower costs while still supporting majorcontracts.
OPERATIONAL HIGHLIGHTS DURING THE PERIOD
Material achievements for the Company in the year ended 31 December 2008 were:
* Signed agreement with DTMS, a leading German carrier, and additional two
content aggregators in the UK. Services are expected to go on air during
the 2nd quarter of 2009.
* Leading European telecom operators have concluded trials of various video
applications with positive results. Some of these operators are Ericsson
customers.
* A memorandum of understanding signed with IBM to create a joint offering of
IBM's media hub with User Generated Content- aquisition, modulation and
publishing) by iPoint. In addition IBM will offer new media applications to
the printing media.
* An integrated IBM-iPoint offering was developed and was displayed at the
International Broadcasting Convention in September 2008.
* 3G video dating application was developed to enhance the product portfolio.
* Ericsson and iPoint-media jointly demonstrated new 'GOliveCare' product at
Mobile World Congress 2009. GOliveCare is a new live interactive mobile
video solution for healthcare providers.
* Signed a memorandum of understanding with a leading developer of web-based
video chat and content delivery to create a joint offering for this
vertical where the company will provide the 3G mobile access technology.
OUTLOOK AND STRATEGY
The global economic slowdown is having a significant impact on the media sector and the Company expects this to adversely affect development of the Group's products in this market for 2009. Accordingly, we plan to focus our main efforts for the coming year in the telecoms and content markets, with particular emphasis being placed on our existing cooperation within the telecoms market with Ericsson.
In 2009, iPoint has been, and will continue to, focus on securing projecttenders from telecom operators through Ericsson and deploying the solutions,especially in territories which are expected to present growth of the relevantverticals - Brazil, Russia, India and China. Ericsson's relationship with manytelecom operators has provided iPoint with access to tenders for projectsworldwide.
In March, the Company announced that following an extensive trial period, a major mobile operator has selected the Company's vitrage platform to provide interactive video calling services over its newly deployed 3G/UMTS network through the Company's partnership with Ericsson Turkey & Israel.
Existing entertainment business with content aggregators is progressing with new contracts expected to contribute to the revenue stream in the upcoming months. The cooperation with IBM for the media vertical represents great potential for the long-term future and provides access to new potential verticals for new media (printing and newspapers) which are currently being addressed by IBM.
I wish to thank our team for their commitment, professionalism and creativity.
iPoint remains utterly committed to its core values: total quality andinnovation, increasing its revenues and developing its relationships withpartners and customers.E SagiChairmanFURTHER ENQUIRIES:iPoint-media plc +(0) 972 544 450 667 Muki Geller
John East & Partners Limited +44 (0) 20 7628
2200
David Worlidge / Bidhi Bhoma
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2008
Notes 2008 2007 £ £ Revenue 871,802 1,323,665 Cost of sales (164,875) (206,532) Gross profit 706,927 1,117,133 Research and development (695,499) (484,715) Selling and marketing (822,551) (617,285) Administrative expenses (507,058) (810,116) Impairment to goodwill (1,293,900) - Loss from ordinary activities before income tax (2,612,081) (794,983)and finance costs Net finance (costs) / income (813) 111,705 Loss before income tax (2,612,894) (683,278)
Tax on loss on ordinary activities 2 -
- Net loss for the year (2,612,894) (683,278) Loss per share - basic and diluted 3 (0.023) (0.0064)CONSOLIDATED BALANCE SHEETAS AT 31 DECEMBER 2008 Notes 2008 2007 £ £ ASSETS Non-current assets Intangible assets 157,871 1,451,771 Property, plant and equipment 63,249 138,203 Non-current receivables - 1,848 221,120 1,591,822 Current assets Trade receivables 157,896 258,714 Other receivables 55,171 45,083 Cash and cash equivalents 4 65,163 1,133,824 278,230 1,437,621 TOTAL ASSETS 499,350 3,029,443 EQUITY AND LIABILITIES Share capital and reserves Issued capital 530,789 528,418 Share premium 3,050,777 3,039,066 Other reserves 322,760 395,564 Merger reserve 854,146 854,146 Reverse acquisition reserve 1,098,894 1,098,894 Retained earnings (6,211,295) (3,671,205) Translation reserve (152,161) (80,714) TOTAL EQUITY (506,090) 2,164,169 Non-current liabilities 51,008 43,757 Current liabilities Trade and other payables 380,983 535,243 Related party 25,513 144,893 Deferred income 71,136 112,682 Short-term borrowings 476,800 - Finance lease obligations - 28,699 Total current liabilities 954,432 821,517 TOTAL LIABILITIES 1,005,440 865,274 TOTAL EQUITY AND LIABILITIES 499,350 3,029,443
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2008
Notes 2008 2007 £ £
Cash flows from operating activities
Cash receipts from customers 920,320 1,579,087 Cash paid to suppliers and employees (2,355,388) (1,983,773) Cash absorbed by operations (1,435,068) (404,686) Interest paid (1,845) (30,954) Interest received 21,564 49,713 Net cash outflow from operating activities (1,415,349)
(385,927)
Cash flows from investing activities Acquisition of subsidiary, net of cash required - (47,228) Purchase of equipment (23,866) (7,059)
Exchange differences on fixed assets (13,982)
-depreciation/cost
Proceeds from sale of equipment 4,459
-
Net cash outflow used in investing activities (33,389)
(54,287)
Cash flows from financing activities
Proceeds from issue of shares - 2,286,900 Less: costs of issue (3,286) (199,376) Exercise of share options 6,708 77,990 Payment of finance leases (28,699) (33,588) Net cash flows used in financing activities (25,277) 2,131,926 Exchange differences (71,446) (62,222) Net (decrease)/increase in cash and cash (1,545,461) 1,629,490equivalents Cash and cash equivalents brought forward 1,133,824
(495,666)
Cash and cash equivalents carried forward 4 (411,637) 1,133,824 Represented by: Positive cash balances 65,163 1,133,824 Short term borrowings (476,800) - (411,637) 1,133,824
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2008
Share Share Share-based Translation Reverse Merger Retained Total capital premium payments reserve acquisition reserve earnings reserve £ £ £ £ £ £ £ £ At 1 475,586 718,369 452,989 27,444 1,098,894 108,490 (3,045,352) (163,580)January 2007 Shares 17,325 2,269,575 - - - - - 2,286,900issued in year for cash Shares 2,718 161,656 - - - -
- 164,374issued in year for services Shares 27,217 - - - - 762,080 - 789,297issued on acquisition Exercise of 5,572 72,418 (57,425) - - 57,425 77,990share options Costs of - (182,952) - - - (16,424)
- (199,376)share issue Exchange - - - (108,158) - - - (108,158)adjustments Loss for - - - - - - (683,278) (683,278)the year At 31 528,418 3,039,066 395,564 (80,714) 1,098,894 854,146 (3,671,205) 2,164,169December 2007 Shares 91 9,909 - - - - - 10,000issued in year for services Shares 23 637 - - - - - 660issued on acquisition of ANV Exercise of 2,257 4,451 (72,804) - - - 72,804 6,708share options Costs of - (3,286) - - - - - (3,286)share issue Exchange - - - (71,447) - - - (71,447)adjustments Loss for - - - - - - (2,612,894) (2,612,894)the year At 31 530,789 3,050,777 322,760 (152,161) 1,098,894 854,146 (6,211,295) (506,090)December 2008
NOTES TO THE PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008
1. Basis of Preparation
These financial statements have been prepared in accordance with InternationalFinancial Reporting Standards, International Accounting Standards andInterpretations (collectively IFRS) issued by the International AccountingStandards Board (IASB) as adopted by European Union ("adopted IFRSs"), and arein accordance with IFRS as issued by the IASB.The financial information set out above does not constitute the Company'sstatutory accounts for the years ended 31 December 2007 and 2008, but isderived from those accounts. Statutory accounts for 2007 have been delivered tothe Registrar of Companies and those for 2008 will be delivered following theCompany's Annual General Meeting. The Auditors have reported on those accounts;their reports were unqualified and did not contain statements under theCompanies Act 1985, sections 237(2) or (3).
2. Tax on ordinary activities
2008 2007 £ £ Income statement
Current tax on income for the period -
-
Factors affecting the tax charge
2008 2007 £ £ Loss on ordinary activities before taxation (2,612,894)
(683,278)
Aggregate of loss on ordinary activities before (744,675) (201,310) taxation multiplied by domestic tax rate-UK: 28.5% (2007:30%), Israel: 27% (2007: 29%).
Effects of: Expenditure not allowable for tax purposes 569,179
61,196
Unrelieved tax losses and other deductions arising 196,422 140,114
Capital allowances for period in excess of depreciation 11,221
- Movement in tax losses (32,422) - Other tax adjustments 275 - 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 2008 the Group has tax losses carried forward of approximately £3,361,984 in iPoint-Media Ltd, £581,531 in All New Video UK Limited and £489,067 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.
The weighted average number of shares in the year were:
2008 2007 Number Number Basic 113,162,943 106,565,539
Dilutive ordinary shares from share options/warrants -
- Total diluted 113,162,943 106,565,539 £ £ Loss attributable to equity shareholders (2,612,894)
(683,278)
Basic and diluted loss per share (0.023) (0.0064)4. Cash and cash equivalents 2008 2007 £ £ Cash at bank and in hand 65,163 1,133,824Cash 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 2008was £65,163 (2007: £1,133,824).
The interest rate applicable on deposit a/c is Prime less 0.5%
For the purpose of the cash flow statement, cash and cash equivalents comprise the following at 31 December 2008:
2008 2007 £ £ Cash at bank and in hand 65,163 1,133,824 Short term borrowings (476,800) - (411,637) 1,133,824
The Group's short term borrowings are guaranteed by Nisko Investments, a shareholder of the Company
The credit quality of cash at bank included in cash and cash equivalents, assessed by reference to ratings awarded by international credit rating agencies, is analysed as follows:
2008 2007 £ £ A- or equivalent 65,163 1,133,824 65,163 1,133,824
At the year end the carrying amounts of the group's cash at bank and in hand were denominated in the following currencies:
2008 2007 £ £ British pound 48,551 731,135 US dollar - 45,942 Euro 20,429 9,202 Israeli Shekel (3,817) 347,545 65,163 1,133,8245. Related party transactionsDuring the year ended 31 December 2008 the Group paid £57,413 (2007: £nil) toNisko Investments, a major shareholder of the group, for management servicesprovided and £49,262 (2007: 32,954) for rent on its premises. As at 31 December2008 the Group owed Nisko Investments £25,513 (2007: £144,893). This isdisclosed within other payables note 15.On 17 January 2006 the Company issued 2,500,000 warrants with an exercise priceof 1 penny per Ordinary Share. 625,000 of these warrants were issued to each ofClive Garston, director and the following past directors: Norman Fetterman,Malcolm Coleman and Brian Leader Cramer. These warrants have been exercisedduring 2007.The Company had (until 31 December 2008) a credit facility of NIS 7 million (£1,261,693) with United Mizrahi Bank Ltd ("the Bank"). The repayment of theCompany's debt to the Bank is guaranteed by Nisko investments. On December2008, the Company announced that it had been notified by the directors of Niskoinvestments that they had resolved to extend the period during which it willnot withdraw or otherwise impair the guarantee until 31 December 2009 and tolimit the guarantee up to NIS 3.5 million. Accordingly the credit facility withthe bank is now NIS 3.5 million (£630,846)
The Company has been notified that the shareholders of Nisko have now passed the relevant resolutions regarding the extension referred to above.
During the year, the Group paid fees amounting of £5,050 (2007:£74,419) toHalliwells LLP. Clive Garston is a member of Halliwells LLP. During the year2008, the group paid fees amounting of £12,857 to its Israeli lawyers Gross,Kleinhendler' Hodak, Halevy, Greenberg & Co, Simon Marks was an employee ofGross, Kleinhendler' Hodak, Halevy, Greenberg & Co until 28 February 2009.
All related party transactions took place at arm's length.
Remuneration paid to directors is given in note 3 of the financial statements. The remuneration of directors is decided by the remuneration committee.
6. Post balance sheet events
On 27 January 2009 the Company issued an aggregate of 8,208,000 Ordinary Shares in respect of £380,000.
On 5 February 2009 Nisko Investments Ltd (Nisko Investments) sold 875,000ordinary voting shares of the Company, equivalent to 0.72% of the issued votingshare capital, and following this sale, holds 42,471,983 ordinary shares in theCompany, equivalent to 34.89% of the issued voting share capital of the Company
7. Dividend
The Directors do not propose the payment of a dividend for the year ended 31 December 2008.
8. Supplementary Information
The Report and Accounts for the year ended 31 December 2008, contain supplementary information consisting of condensed unaudited results for the Group presented in US Dollars.
9. Copies of Report and Accounts
Copies of the Report and Accounts will be posted to shareholders shortly, willbe available from the Company's registered office Liberty House, New GreenhamPark, Newbury, Berkshire RG19 6HW and will be available from the Company'swebsite www.ipoint-media.com.
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