12 May 2010 09:44
iPoint-media plc ("iPoint-media", the "Group" or the "Company") Final Results for the year ended 31 December 2009
CHAIRMAN'S STATEMENT
During the period, the Company focused on implementing projects with mobile operators and creating new business opportunities for Vitrage, its leading video application platform for fixed line, 3G mobile operators and IP broadband users, in particular working closely with Telefonaktiebolaget L M Ericsson ("Ericsson") and Ericsson's market units globally. Several projects were delivered to Ericsson's customers during the period.
The Group experienced slippage with new contracts throughout 2009 as a resultof a major slowdown in the telecom industry and the global economy, resultingin customers taking longer to commit to prospective 3G video calling relatedprojects. Consequently, several significant contracts which were anticipated tobe signed during 2009 were delayed. As a result, turnover for the year ended 31December 2009 was significantly lower than expected and the loss beforetaxation for the same period was significantly greater than anticipated.
IPOINT'S BUSINESS
iPoint's business is developing enabling technology - service creating platformfor developing live interactive video calling services. These platforms enabletelecom operators and media companies to develop and deploy a wide variety ofapplications and services over broadband internet and mobile networks. Thedeliverable consists of a `Telco grade' video application platform thatincorporates a powerful service creation environment (SCE). The SCE is based ona suite of software building blocks and pre-configured application templatesthat enable quick and easy deployment of video calling services over IP and 3Gnetworks.
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 2009, iPoint executed its strategy in the telecoms vertical by workingclosely with Ericsson and implemented signed projects and submitted proposals,together with Ericsson's market units, to tenders issued by leading telecomoperators worldwide. Ericsson is one of the world's leading vendors to thetelecoms industry and the directors believe that by working closely withEricsson, its presence can be leveraged to generate sales of iPoint's videoapplication platform known as Vitrage, which complements the Video Gateway(VIG) of Ericsson. To date, the Group has delivered four projects with Ericssonto telecom operators in Europe and Asia in which the Vitrage platform is used,all of which were delivered in 2009. In addition, iPoint, together withEricsson, built a pipeline of potential tenders for projects with telecomoperators in Latin America Central and southeast Asia. The Ericsson channelcomprises approximately 20 distinct underlying projects (in various phases ofquotation/implementation) with revenues to the Group from each project in therange of $200,000 to $2,000,000.During the last quarter of 2009 the Group established a representative officein China in order to expand its market to Chinese customers from the telecomand media sectors. In addition, the Group signed a distribution agreement witha leading Chinese distributor which is active in the banking and communicationssectors.
The directors expect some of these tenders to be awarded in 2010 although some will be delayed until 2011 because of the impact of the global recession.
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-media's offering will become a standard part of IBM's `Media Hub'solution in addition to video calling applications. Based on the cooperationwith IBM, the Israeli Chief Scientist Office and IBM jointly granted iPoint thesum of NIS 500,000 in a special `Tafnit' program to cover the research anddevelopment costs of integrating Vitrage into IBM's Media Hub.As a result of the economic slowdown in the media market and the restructuringat IBM, 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 2010.During 2009 iPoint did not succeed in enlarging its revenues from the contentaggregators vertical although the Group continues to pursue opportunities tomarket its technology called `Glaze', creating an interface to existingweb-based video chat and content delivery platforms, which enables subscribersto connect from 3G mobile to these services.
Financial review
The Company generated revenues of £1,275,908 ($1,990,416) for the year ended 31December 2009 compared to £871,802 ($1,608,475) for the year ended 31 December2008 and gross profit of £1,065,509 ($1,662,194) compared to £706,927($1,304,281) in 2008. The results represent an increase of 46 per cent. inrevenue and 51 per cent. in gross profit. The delivery of several projects tomobile operators through Ericsson's market units during the period was a keyfactor in the improvement of the results.The year ended 31 December 2009 produced a net loss of £547,378 compared to £2,612,894 for the year ended 31 December 2008. The net loss of 2008 included £1,293,900 loss from impairment of goodwill compared to £nil in 2009. Thereduction in net loss in the year ended 31 December 2009 compared to 2008 wasachieved principally due to the increase in revenue and a 23% reduction inoperating expenses.Although revenues were still relatively modest, the Group has commenced certainprojects already which are due to complete in 2010 and the Directors believethat there are good growth prospects in iPoint's key markets and that theGroup's products and capabilities are well-matched to market requirements.
On 14 August 2009 the Group announced a Subscription Offer (with priority to existing shareholders) of £1,727,000 in Units comprising:
* 7,040,000 placing shares at 4 pence per Ordinary Share; and
* £1,408,000 8% Unsecured Loan Notes due in 2013 with 14,960,000 Bonus Shares
at par.
On 13 November 2009, the Group announced that it had received applicationsunder the Open Offer and the Subscription Offer amounting to £1,090,412 andextended the closing date of the Subscription Offer to 15 February 2010. On 17February 2010, the Group announced that it had received applications under theOpen Offer and the Subscription Offer amounting to £1,727,000, the maximumaggregate amount that could be raised under the Open Offer and the SubscriptionOffer.The Bonus Shares are not capable of being sold, transferred or pledged to anythird party for a period of one year from issue and for a period of a furtheryear in respect of 50% of these Bonus Shares.Nisko Investments Ltd agreed not to withdraw or otherwise impair Nisko'sguarantee of iPoint Media Ltd's overdraft facility with United Mizrahi Bank Ltdfor the duration of the term of the Loan Notes issued by the Group(for a periodof 4 years from date of issue), up to NIS 1,970,000 (the "Guarantee"). Theabove undertaking shall replace Nisko's existing undertaking (provided inDecember 2008) not to withdraw or otherwise impair the guarantee (in an amountof NIS 3,500,000) until 31 December 2009.
Operational highlights during the period
Material operational achievements for the Group in the year ended 31 December 2009 were:
* Ericsson and iPoint-media jointly demonstrated the new 'GOliveCare' product
at the Mobile World Congress 2009. GOliveCare is a new live interactive mobile video solution for healthcare providers. * In March 2009, the Group announced that following an extensive trial
period, a major mobile operator has selected the Group's Vitrage platform
to provide interactive video calling services over its newly deployed 3G/
UMTS network through the Group's partnership with Ericsson Turkey & Israel.
* In October 2009, the Group was awarded a patent which covers key elements
of its video distribution technology, known as `Vitrage'. The unique video
proxy technology is the basis for the video application platform and enables large scale video distribution and transparent connectivity and switching of multiple video sources.
* During 2009 the Group succeeded to deliver, through Ericsson's marketing
channel, four projects and several trials with European and Asian mobile
operators.
* In December 2009 a Chinese national MobileTV operator selected the Group's
new product GOliveStudio (based on the Vitrage video application platform
and the GOliveTV application) for immediate deployment. The purchase of the
GOliveStudio will enable the MobileTV Operator's production workstations to
manage, audit and publish video interactive show settings and production.
Outlook and Strategy
In 2010, iPoint will be focusing on completing the sales cycle and deployingits solutions with several operators through Ericsson. Several trials withEricsson are ongoing or have been concluded successfully. The directors believethat several projects through Ericsson will materialise during 2010.The Group faces a challenging year in 2010 due to the uncertainty of therevenue streams and the significant delay in revenues that has occurred duringthe first half of 2010. The ability of the Group to continue its operationalexistence is subject to the fulfillment of the Group's forecasts and/or itsability to raise funds in the short term. In addition costs could be reducedshould the forecasted revenue streams not be achieved.Our strategic decision to open a representative office in China is importantfor the Group and we're happy to have been selected by a leading Chinesenational MobileTV Operator so soon after we started activities in China andhope that it is an indication of the large potential of the Chinese market forour Vitrage video application platform.The outlook of the media vertical looks promising with the new product of theGOlivestudio that was initially developed for the Chinese market and now mightapproach the media market in Europe. With the collaboration with IBM, the Groupexpects new opportunities to be presented.
Existing business with content aggregators is slowing down and it is more difficult to assess the outlook of this vertical.
I should like to thank all of our team for their commitment, professionalismand creativity, which has placed iPoint as a frontier technology pioneer in thebroadcast and media sector.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(CEO)
Libertas Capital Corporate Finance Limited +44 (0) 207 569
9650 Nomad and Broker
Andrew McLennan/Thilo Hoffmann
Appendix
Consolidated Income Statement
For the Year ended 31 December 2009
2009 2008 Notes £ £ Revenue 1,275,908 871,802 Cost of sales (210,399) (164,875) Gross profit 1,065,509 706,927 Research and development (498,458) (695,499) Selling and marketing (604,422) (822,551) Administrative expenses (458,495) (527,590) Other costs (2008- impairment of goodwill) -
(1,293,900)
Loss from ordinary activities before income (495,866) (2,632,613) tax and finance costs Net finance (costs)/income (51,512) 19,719 Loss before income tax (547,378) (2,612,894)
Tax on loss on ordinary activities - -
Net loss for the year (547,378) (2,612,894)
Other comprehensive income/(expense) Translation difference on overseas operations 49,557 (71,447) Total comprehensive loss for the year (497,821) (2,684,341) Loss per share - basic and diluted (0.4)p (2.3)p Consolidated Balance SheetAs at 31 December 2009 2009 2008 £ £ ASSETS Non-current assets Intangible assets 188,200 157,871 Property, plant and equipment 36,493 63,249 224,693 221,120 Current assets Trade receivables 278,831 157,896 Other receivables 50,985 55,171 Cash and cash equivalents 545,424 65,163 875,240 278,230 TOTAL ASSETS 1,099,933 499,350 EQUITY AND LIABILITIES Share capital and reserves Issued capital 593,933 530,789 Share premium 3,577,075 3,050,777 Other components of equity 448,175 322,760 Merger reserve 854,146 854,146 Reverse acquisition reserve 1,098,894 1,098,894 Retained earnings (6,758,673) (6,211,295) Translation reserve (102,604) (152,161) TOTAL EQUITY (289,054) (506,090) Non-current liabilities Borrowings 430,371 51,008 Current liabilities Trade and other payables 441,636 380,983
Amounts owed to related parties 6,644 25,513
Deferred income 149,877 71,136 Borrowings 360,459 476,800 Total current liabilities 958,616 954,432 TOTAL LIABILITIES 1,388,987 1,005,440 TOTAL EQUITY AND LIABILITIES 1,099,933 499,350
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2009
2009 2008 Notes £ £
Cash flows from operating activities
Cash receipts from customers 1,235,735 920,320 Cash paid to suppliers and employees (1,702,869) (2,355,388) Cash absorbed by operations (467,134) (1,435,068) Interest paid (25,933) (1,845) Interest received 170 21,564 Net cash outflow from operating (492,897) (1,415,349) activities
Cash flows from investing activities
Purchase of equipment (23,510) (23,866)
Exchange differences on fixed assets 4,603 (13,982)
depreciation and cost
Proceeds from sale of equipment - 4,459 Net cash outflow used in investing (18,907) (33,389)
activities
Cash flows from financing activities
Proceeds from issue of shares 581,541 -
Proceeds from issue of loan notes 888,870 -
Less: costs of issue (337,489) (3,286) Exercise of share options - 6,708 Payment of finance leases - (28,699)
Net cash inflow/(outflow) used in 1,132,922 (25,277)
financing activities Exchange differences 49,557 (71,446) Net increase/(decrease) in cash and cash 670,675 (1,545,461) equivalents Cash and cash equivalents brought (411,637) 1,133,824 forward Cash and cash equivalents carried 259,038 (411,637) forward Represented by: Cash balances 545,424 65,163 Short-term borrowings (286,386) (476,800) 259,038 (411,637)
Share capitalShare premiumOther components of equityTranslation reserveReverse acquisition reserveMerger reserveRetained earningsTotal
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31DECEMBER
2009 £ £ £ £ £ £ £ £ At 1 January 528,418 3,039,066 395,564 (80,714) 1,098,894 854,146 (3,671,205) 2,164,169 2008 Shares issued 91 9,909 - - - - - 10,000 in year for services Shares issued 23 637 - - - - - 660 on acquisition Exercise of 2,257 4,451 (72,804) 72,804 6,708 share options Share issue - (3,286) - - - - - (3,286) costs Total - - - (71,447) - - (2,612,894) (2,684,341)comprehensive income for the year At 31 December 530,789 3,050,777 322,760 (152,161) 1,098,894 854,146 (6,211,295) (506,090) 2008 Shares issued 53,776 527,765 - - - - - 581,541 in year for cash Equity - - 162,412 - - - - 162,412 component of loan notes Shares issued 9,326 72,652 - - - - - 81,978 in year for services Shares issued 42 1,164 - - - - - 1,206 on acquisition of ANV Issue of share - - 23,705 - - - - 23,705 options Share issue - (75,283) (60,702) - - - - (135,985) costs Total - - - 49,557 - - (547,378) (497,821) comprehensive income for the year At 31 December 593,933 3,577,075 448,175 (102,604) 1,098,894 854,146 (6,758,673) (289,054) 2009 The financial information in this announcement, which was approved by the Boardon 11 May 2010, does not comprise statutory accounts for the purpose of Section435 of the Companies Act 2006 for the years ended 31 December 2008 or 2009. Ithas been extracted from the Company's consolidated accounts for the period to31 December 2009.The statutory accounts for the year ended 31 December 2008 have been deliveredto the Registrar of Companies and included an audit report which wasunqualified and did not contain statements under s237(2) or (3) of theCompanies Act 1985. The statutory accounts for the year ended 31 December 2009will be delivered to the Registrar of Companies in due course.
Whilst the information in this announcement has been prepared in accordance with recognition and measurement criteria of International Financial Reporting Standards (IFRSs) this announcement in itself does not give sufficient information to comply with IFRSs.
EXTRACT FROM THE NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
Accounting policies
Basis of preparation
These financial statements have been prepared in accordance with InternationalFinancial Reporting standards and IFRIC interpretations issued and effective orissued and early adopted as at the time of preparing these statements (March2010) and with those parts of the Companies Act 2006 applicable to companiesreporting under IFRS. The financial statements have been prepared under thehistorical cost convention and a summary of the more important accountingpolicies 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.The Group elected to disclose its cash flows from operating activities usingthe direct method that requires the disclosure of gross cash receipts and grosscash payments to be disclosed. Additionally, IAS 7 encourages the use of thedirect method for the reporting of operating cash flows.This year the Group adopted IFRS 8 "Operating Segments", which replaces IAS 14segment Reporting. The standard is applied retrospectively. The accountingpolicy for identifying segments is now based on internal management reportinginformation that is regularly reviewed by the chief operating decision maker.In contrast, IAS 14 required the Group to identify two sets of segments(business and geographical) based on risks and rewards of the operatingsegments. This change has resulted in the UK and Israel being identified asseparate operating segments for the Group. The Group had adopted IAS I Revised`Presentation of Financial Statements' during the year.
No separate income statement is presented for the company as provided by section 408, Companies Act 2006.
Going concern
The Group incurred a net loss of £547,000 during the year ended 31 December2009 and the results of the first six months of 2010 are well below expectationand will not be profitable. The unused cash proceeds of the Group as at 30April 2010 totalled approximately £663,000 (which include a short-termborrowings, guaranteed for the next four years by Nisko Investments Ltd , up tothe amount of NIS 1,970,000 ).The Group faces a challenging year in 2010 due to the uncertainty of therevenue streams and the significant delay in revenues that has occurred duringthe first half of 2010. The aforementioned factors indicate the existence of amaterial uncertainty which may cast significant doubt about the Group's abilityto continue as a going concern. The ability of the Group to continue itsoperational existence is subject to the fulfilment of the Group's forecasts and/or its ability to raise funds in the short term. In addition costs could bereduced should the forecasted revenue streams not be achieved. The directors,after reviewing the forecasted revenues and having considered the Group'sability to raise funds in the short term and taking into account thepossibility of reducing costs, adopt the going concern basis in preparing theaccounts.Notes1. 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.
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: 2009 2008 Number Number Basic 124,581,644 113,162,943 £ £ Loss attributable to equity shareholders (547,378) (2,612,894) ========= ========= Basic and diluted loss (0.4)p (2.3)p per share ========= =========
Loss for the year attributable to parent company
The loss for the financial year dealt within the financial statements of theparent company iPoint Media plc was £223,895 (2008: £10,005,579). As permittedby section 406 Companies Act 2006, no separate income statement is presented inrespect of the company.2. Cash and cash equivalents 2009 2008 £ £ Group Cash at bank and in hand 545,424 65,163 ========= ======
The interest rate applicable on the deposit account base rate is less 0.5% Forthe purpose of the cash flow statement, cash and cash equivalents comprise thefollowing at 31 December 2009. 2009 2008 £ £ Cash at bank and in hand 545,424 65,163 Short-term borrowings (286,386) (476,800) ------------------- ------------------ 259,038 (411,637) ========= =========
The Group's short-term borrowings are guaranteed by Nisko Investments up to 1,970,000 NIS (approximately £322,359), a shareholder of the Company. E Sagi is a director of both companies.
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:
2009 2008 £ £ A - or equivalent 545,424 65,163 ========= ========= Cash 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 2009was £545,424 (2008: £65,163).
At the year end the carrying amounts of the Group's cash at bank and in hand were denominated in the following currencies:
2009 2008 £ £ British pound 477,649 48,551 US dollar 45,376 - Euro 15,742 20,429 Israeli Shekel 6,657 (3,817) 545,424 65,163Company Cash at bank and in hand 441,678 2853. Post balance sheet eventsOn 17 February 2010, the Company announced that it has received applicationsunder the Open Offer and the Subscription Offer amounting to £1,727,000, themaximum aggregate amount that could be raised under the Open Offer and theSubscription Offer. The Group raised £1,090,000 of the £1,727,000 before 31December 2009.
During the first quarter of 2010, the Group issued 1,050,000 options to six employees of iPoint-Media Limited. The grant date for 150,000 options was 28 January 2010, and a further 900,000 options were issued on 8 March 2010.
On 13 April 2010, a further 350,000 options were exercised into350,000 shares(150,000 options with an exercise price of 0.25p per share and 200,000 with anexercise price of 2.38p per share) .
On 22 April 2010, the board approved issuance of 2,500,000 options to the CEO of the Group with the following terms:
In any financial year, in which the Company achieves or exceeds theconsolidated profit figures for the group set out in the optimistic forecastsas presented to and approved by the board of directors of the Company inrespect of such financial year (the "Optimistic Forecast"), as reflected in itsaudited financial statements for such financial year, the exercise price foreach option that vests in such financial year shall be equal to the nominalvalue of the Ordinary Shares.In any financial year in which the Company achieves 75 percent or more of theOptimistic Forecast, as reflected in its audited financial statements for suchfinancial year, the exercise price for each option that vests in such financialyear shall be as follows:in 2010 - £0.03;
in 2011 - the average mid-market closing price of the Ordinary Shares during January 2011, but in any event not less than £0.03;
in 2012 - the average mid-market closing price of the Ordinary Shares during January 2012, but in any event not less than £0.03.
In any financial year in which the Company achieves less than 75 percent of theOptimistic Forecast, as reflected in its audited financial statements for suchfinancial year, then the options that vest in such financial year shall lapse. 3 10
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