26 Sep 2007 11:37
Immediate Release: Wednesday 26 September 2007
iPoint-media plc ("iPoint" or "the Company") Interim Results For the six month period ended 30 June 2007
Chairman's Statement
During the six month period ended 30 June 2007, the Company completed the acquisition of All New Video plc ("All New Video") and changed its business model such that it now provides ongoing `managed services' to its customers in the telecommunications and media industry.
Acquisition of All New Video
All New Video offers a wide range of video services across both fixed line and mobile telephony platforms. iPoint operates in the same market segment as All New Video and, prior to the acquisition, the two companies had been working together on a number of projects on behalf of a number of mutual clients. The business of All New Video has been fully integrated within iPoint and iPoint's business is now better placed to serve its customers as a result of the synergies between iPoint's technology and the sales and marketing ability of All New Video's UK-based team.
New business model
The Company undertook a conversion of its business model from software licensing (i.e. one-off purchases of a platform) to a leased license model with long-term managed service agreements. This new business model should result in increased long-term revenue generation, though it may place some short-term pressure on revenue recognition and cash flow. This new business model has already been adopted by some of the Company's customers, including IBM and Orange owing to the benefits it offers them. The model enables these customers to focus on their core business rather than the integration and implementation of new technological solutions. It also eliminates the need for these customers to undertake the large capital expenditure that would otherwise have been required.
Financial highlights
In the six month period ended 30 June 2007, the financial statements show a revenue of $1,106,566 and gross profit of $894,552 compared to a revenue figure of $1,655,965 and gross profit of $1,290,129 in the year ended 31 December 2006. The period ended 30 June 2007 shows a net loss of $1,132,571 (compared to a net loss of $949,262 in the year ended 31 December 2006) which resulted mainly from increases in the Company's operating costs driven by the current sales and marketing drive and increased expenditure on research and development. No comparative numbers have been included in the interim results for the comparative period last year as they are not considered to be representative and their inclusion would be misleading.
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 Projects Electronics & Communications (1990) Ltd. ("Nisko"). By a deed dated 25 August 2006, Nisko agreed that it would not withdraw or otherwise impair the guarantee before 31 December 2007. The Company has been notified by the directors of Nisko that they have resolved, subject to the approval of certain shareholders of Nisko required under Israeli law, to extend the period during which it will not withdraw or otherwise impair the guarantee until 31 December 2008.
Operational highlights during the period
Material achievements for the Company in the six month period ended 30 June 2007 were:
* the introduction of the `GOliveTV' platform, which enables media and broadcast companies to implement new types of moderated participation TV shows for internet, mobile and TV formats with user generated content in the form of text, images and live & recorded video. The `GOliveTV' platform's unique capabilities provide iPoint with additional penetration into the media and broadcast market alongside the Company's existing Vitrage platform, which provides video calling applications and services to mobile telecommunications operators. * In Q2 2007, iPoint received new `GOliveTV' purchase orders including orders from a division of the BBC and an order from Singapore-based broadcaster, Media Corp. These companies have both adopted the new leased license and managed service business model. * The Company signed teaming agreements with tier one partners, including IBM and Orange. * The Company raised ‚£1.4 million by placing 4,180,000 new ordinary shares at 33p per share.
Outlook and Strategy
In the second half of 2007, iPoint will be focusing on establishing itself within the broadcast and media sector. The directors believe that the participants in this market are eager to capitalise on the growing popularity of user generated content and offer new TV show formats, where viewers will be able to enter live TV sessions or record their own unique content via a unified web/mobile interface. The directors hope that the strategic teaming agreement signed between iPoint and IBM in February 2007 will lead to a number of significant projects later this year. Since 30 June 2007, the Company has been developing other leads for new projects which the directors hope will lead to further growth in the Company's performance for the second half of 2007.
I should like to thank all of our team for their commitment, professionalism and creativity, which has placed iPoint as one of the frontier technology pioneers in the broadcast and media sector.
iPoint remains utterly committed to its core values: total quality and innovation, increasing its revenues and developing its relationships with the telecom and media broadcast market all over the world.
E SagiChairman26 September 2007Further Enquiries:iPoint-media plc Muki Geller Tel: (0) 972 544 450 667 Clive Garston Tel: (0) 20 7330 6800 John East & Partners Limited David Worlidge/Bidhi Bhoma Tel: 020 7628 2200Income StatementFor the six months ended 30 June 2007 Six months Year ended ended 31 December 2006 30 June (audited) 2007 (unaudited) $ $ Revenue 1,106,566 1,655,965 Cost of sales (212,014) (365,836) Gross profit 894,552 1,290,129 Research and development (458,298) (647,786) Selling and marketing (803,940) (677,210) Administrative expenses (716,603) (806,333) Loss from ordinary activities before income tax and (1,084,289) (841,200)finance costs Net finance costs (48,282) (108,062) Loss before income tax (1,132,571) (949,262)
Tax on loss on ordinary activities - - Net loss from ordinary activities (1,132,571) (949,262)
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Statement of Recognised Income and Expense
Six months Year ended 31 ended December 2006 (audited) 30 June 2007 (unaudited) $ $ Loss for the year (1,132,571) (949,262)
Exchange differences on translation 84,080 (124,756) Total recognised income and expense for the year (1,048,491) (1,074,018)
Attributable to: Equity interests (1,048,491) (1,074,018)Balance SheetAs at 31 June 2007 As at As at 31 December 30 June 2006 2007 $ $ Assets Non-current Assets Intangible assets 2,786,205 865,341 Property, plant & equipment 376,895 75,930 Non-current receivables 11,962 12,030 3,175,062 953,301 Current assets Trade and other receivables 974,626 840,004 Cash & cash equivalents 2,132,321 51,056 3,106,947 891,060 Total assets 6,282,009 1,844,361 Equity and liabilities Share capital and reserves Issued capital 977,327 889,976 Share premium account 4,505,484 1,364,006 Other reserves 795,207 846,867 Reverse acquisition reserves 2,134,419 200,050 Merger reserve 1,420,074 2,134,419 Retained earnings (6,863,677) (5,731,114) Translation reserve 11,057 (73,023) Total equity 2,979,891 (368,819) Non-current liabilities 112,328 78,955 Current liabilities Trade & other payables 1,248,809 630,092 Related party 212,970 166,537 Deferred income 115,461 314,170 Short-term borrowings 1,612,550 1,023,426 Total current liabilities 3,189,790 2,134,225 Total liabilities 3,302,118 2,213,180 Total equity and liabilities 6,282,009 1,844,361Cash Flow StatementFor the six months ended 30 June 2007 Six months Year ended ended 31 December 30 June 2006 2007 (audited) (unaudited) $ $
Cash flows from operating activities Cash receipts from customers 1,143,639 1,250,431 Cash paid to suppliers and employees (2,371,160) (1,986,081)
Cash absorbed by operations (1,227,521) (735,650) Interest paid (40,659) (96,626) Interest received 28,651 1,844
Net cash outflow from operating activities (1,239,529) (830,432) Cash flow from investing activities
Acquisition of subsidiary (181,361) - Purchase of equipment (59,517) (54,782)
Net cash outflow used in investing activities (240,878) (54,782) Cash flows from financing activities
Proceeds from issue of shares 3,106,964 1,900,115 Less: costs of issue (218,497) (709,869)
Net cash flows used in financing activities 2,888,468 1,190,246 Exchange differences 84,080 (124,756) Net increase in cash and cash equivalents 1,492,141 180,276 Cash and cash equivalents brought forward (972,370) (1,152,646) Cash and cash equivalents carried forward 519,771 (972,370)
Represented by: Positive cash balances 2,132,321 51,056 Short term borrowings (1,612,550) (1,023,426) 519,771 (972,370)
Notes to the Interim Financial Statements for the six months ended 30 June 2007
1. Basis of preparation
The group accounting policies are set out in the annual report and financial statements for 2006.
The interim financial statements do not comprise statutory accounts for the purpose of s240 of the Companies Act 1985. The figures for the year ended 31 December 2006 have been extracted from the statutory accounts filed with the registrar of companies on which the auditors gave an unqualified report.
2. Comparative figures
The comparative figures for the corresponding period in the preceding financial year have not been included in this half-yearly report, as required by the AIM Rules, as they are not representative and their inclusion would be misleading.
3. Contingent liabilities
An amendment to the Stamp Duty on Documents Law 1961 in Israel came into effect on 1 June 2003. This law determined that a document (or part thereof) that is signed in Israel or relates to an asset or obligation in Israel would be subject to a tax rate between 0.4 per cent. and 1 per cent. of the value of the subject of such a document. As at 31 December 2006 and 30 June 2007 the Directors estimate the Group's maximum liability to this stamp duty is in the region of $7,000.
The stamp duty law was cancelled as of 1 December 2005.
No provision is included in the Group's accounts regarding this potential liability as it was not deemed material and the Directors do not believe any liability will be collected.
The Directors have received notice of a claim against the Company from an individual claiming he is entitled to receive 784,827 Ordinary Shares in the Company (or monetary payment of equal value) following work done for iPoint-media Limited in relation to its acquisition by the Company. The Directors consider there to be no basis for this claim and no provision has been recognised in the financial statements related to this.
4. Goodwill
No impairment review has been carried out on the Company's goodwill as at 30 June 2007.
In accordance with IFRS 3 an impairment review is to be carried out annually, with the first impairment review to be at the Company's year end, 31 December 2007. As no review has been carried out, it is possible that the goodwill figure could be impaired as at 30 June 2007.
5. TaxCorporation tax: As at As at 30 June 2007 31 December 2006 Income statement
Current tax on income for the period - - - - Factors affecting the tax charge Loss on ordinary activities before taxation (1,132,571) (949,262) Loss on ordinary activities before taxation (328,446) (303,764)multiplied by standard rate of Israeli Corporation Tax of 29% (2006: 32%) for the year Effects of: Expenditure not allowable for tax purpose 36,000 72,073 Unrelieved tax losses and other deductions arising in 292,446 231,691the period - -6. 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. Options over 280,909 shares 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 period was:
Six months Year ended ended 30 June 31 December 2007 2006 Basic 102,524,871 81,991,356
Dilutive Ordinary Shares from share options/ 5,406,008 2,652,987warrants Total diluted 107,930,879 84,644,343 Loss attributable to equity share holders of the (1,132,571) (949,262)parent Basic earnings per share (0.011) (0.012) Diluted earnings per share (0.010) (0.011)7. Dividends
No dividends have been declared for the six months ended 30 June 2007.
8. Copies of the half-yearly report
Copies of the half-yearly report will be sent to shareholders shortly and will be available from the Company's registered office and from John East & Partners Limited at 10 Finsbury Square, London EC2A 1AD. This announcement will also be available on the Company's website www.ipoint-media.com.
IPOINT MEDIA PLC