23 Sep 2008 07:00
Embargoed Release: 07:00hrs, Tuesday 23 September 2008
iPoint-media plc ("iPoint" or "the Company") Interim Results For the six month period ended 30 June 2008 iPoint (AIM: IPNT), a leading provider of live interactive video applicationsand delivery platforms for web, mobile and media, announces its interim resultsfor the six month period ended 30 June 2008 (the "period").
Chairman's Statement
During the period, the Company focused on developing projects and generatingsales of Vitrage, its leading video application platform, in particular workingclosely with Telefonaktiebolaget L M Ericsson ("Ericsson") and InternationalBusiness Machines Corporation ("IBM").
Financial highlights
The Company generated revenues of ‚£446,037 and gross profit of ‚£358,434 for theperiod, compared to revenues of ‚£561,578 and gross profit of ‚£453,982 in thesame period last year. The period shows a net loss of ‚£798,418 (compared to anet loss of ‚£574,776 in the period ended 30 June 2007), which resulted mainlyfrom increases in the Company's operating costs driven by the current sales andmarketing drive and increased expenditure on research and development. Duringthe reported period, fluctuations in the exchange rates between the New IsraeliShekel, US dollar and the British pound resulted in increased costs to theCompany.In the first half of the year, the Company experienced slippage as a result ofthe major telecommunications companies taking longer to commit funds toprospective 3G video calling related projects. Accordingly, contracts which theCompany expected to be signed in the first half of the year have not yet beensigned. Although revenues were still relatively modest in the period, theDirectors believe that there are strong growth prospects in iPoint's keymarkets and that the Company's products and capabilities are well-matched tomarket requirements.The Company has a credit facility (up to NIS 7 million) with United MizrahiBank Ltd ("the Bank"). The repayment of the Company's debt to the Bank iscurrently guaranteed by Nisko Projects Electronics & Communications (1990) Ltd.("Nisko"), the Company's largest shareholder. By a deed dated 25 August 2006,Nisko agreed that it would not withdraw or otherwise impair the guaranteebefore 31 December 2008. The Company has been notified by the directors ofNisko that they have resolved, subject to the approval of certain shareholdersand a board decision by Nisko required under Israeli law, to extend the periodof the guarantee until 31 December 2009 but to reduce the guarantee from $2million to $1 million, which would result a pro rata decrease in the bankfacility (from approximately NIS 7 million to NIS 3.5 million). The Company islooking for alternative finance possibilities which will enable it to balancethe delay in revenues in the first half of 2008 with the cash flow requirementsof the Company.iPoint's businessiPoint's business focuses on the development of live interactive video callingtechnologies, which enable companies in the telecoms and media sectors todeploy a wide variety of applications and services over broadband internet andmobile networks. iPoint has developed a `Telco grade' video applicationplatform which incorporates a powerful service creation environment ("SCE").The SCE is based on a suite of software building blocks and pre-configuredapplication templates which enable quick and easy deployment of video callingservices over IP and 3G networks.iPoint's business strategy is based on delivery to three verticals: telecom,media and content aggregation. Applications developed for these verticals useshared core technology and do not require re-engineering to address eachvertical. This development model reduces development costs and shortens time tomarket.Operational highlightsTelecomDuring the first half of 2008, iPoint worked closely with Ericsson's multimediadivision and responded, together with Ericsson Market Units, to tenders issuedby leading telecom operators worldwide. Ericsson has strategically embeddeditself among leading global telecom operators and its presence can be leveragedto generate sales of iPoint's video application platform, which iscomplementary to Ericsson's Video Gateway - a network component that performsprotocol conversion functions. The Company also co-operates with Ericsson on astrategic level; iPoint's development roadmap is addressed by feedback fromEricsson.In February 2008, the Company secured a three year contract to continue theprovision of technology and services for a major UK mobile operator's "VideoAnswer Phone" service. The packaged solution consists of specialist web-nativesoftware application necessary to provide two-way video calls between mobiledevices and IP networks as well as the hardware and software to host the`Software as a Service' (SaaS).
In June 2008, Cellcom Israel selected the Company's Vitrage video calling application platform to deliver new interactive 3G video calling services to its subscribers.
In addition, during 2008 iPoint entered into reseller agreements with systemsintegrators in Italy, Israel, France and Sri Lanka to resell and integrate theCompany's Vitrage 3G video calling application platform with mobile operatorsand value added service providers in the respective countries.
Media
In 2008, the Company focused on building sales into the media vertical throughindirect sales channels using significant global partners; iPoint has been indiscussions with IBM and the Company has also expanded its solutions within themedia vertical to provide user generated content and applications for theprinting industry in addition to TV and mobile. It is anticipated that iPoint'soffering will become a standard component of IBM's Media Hub solution foringesting video calling content (either live or prerecorded), and sold with theMedia Hub to IBM customers. A memorandum of understanding has been signed withIBM and the integrated IBM-iPoint solution was on display at the InternationalBroadcasting Convention ("IBC") in Amsterdam earlier this month.
Content Aggregation
The Company also continued to pursue opportunities in the content aggregationvertical, primarily in the UK and Germany. Two contracts were signed with UKaggregators in March 2008 and a contract was signed with DTMS GmbH, a leadingGerman carrier, in June 2008 with services expected to go live in the thirdquarter.In May 2008, the Company released Vitrage `GOvideoDating', a new interactivevideo dating delivery platform designed for use with 3G mobile phones.`GOvideoDating' is a hosted/managed service enabling carriers, aggregators andservice providers to deploy customised dating services rapidly on 3G mobilenetworks without capital investment.
Outlook and Strategy
As announced in August, the results for the full year to 31 December 2008 arelargely dependent on contracts that are expected to be signed in the secondhalf of the year, particularly the fourth quarter. During this second half ofthe year, 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 the second halfof 2008.
The co-operation with IBM also represents significant potential and provides access to previously unexplored verticals for new media markets such as printing and newspapers that are addressed by IBM. The IBC was an important milestone in this co-operation as leading IBM customers experienced demonstrations of the comprehensive features of the new IBM-iPoint offering.
Existing business with content aggregators is slowly gaining pace and new contracts are expected to contribute to the revenue stream in the coming months.
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 SagiChairman23 September 2008Further Enquiries:iPoint-media plc Muki Geller Tel: (0) 972 544 450 667 Simon Marks Tel: (0) 972 3 607 4444 John East & Partners Limited David Worlidge/Bidhi Bhoma Tel: 020 7628 2200Income Statement
For the six months ended 30 June 2008
Six months Six months Year ended ended ended 31 December 2007 30 June 30 June (audited) 2008 2007 (unaudited) (unaudited) ‚£ ‚£ ‚£ Revenue 446,037 561,578 1,323,665 Cost of sales (87,603) (107,596) (206,532) Gross profit 358,434 453,982 1,117,133 Research and development (363,878) (232,585) (484,715) Selling and marketing (415,945) (407,997) (617,285) Administrative expenses (349,956) (363,673) (810,116) Loss from ordinary activities before income (771,345) (550,273) (794,983)tax and finance costs Net finance costs (20,807) (24,503) 111,705 Loss before income tax (792,152) (574,776) (683,278)
Tax on loss on ordinary activities (6,266) -
-
Net loss from ordinary activities (798,418) (574,776)
(683,278)
Basic and diluted earnings per share (0.71p) (0.56p)
(0.64p)
The income statement has been prepared on the basis that all operations arecontinuing operations.Balance SheetAs at 30 June 2008 As at As at As at 31 December 30 June 30 June 2007 2008 2007 (audited) (unaudited) (unaudited) ‚£ ‚£ ‚£ Assets Non-current Assets Intangible assets 1,451,771 1,391,678 1,451,771 Property, plant & equipment 92,534 188,255 138,203 Non-current receivables - 5,975 1,848 1,544,305 1,585,908 1,591,822 Current assets Trade receivables 164,075 429,681 258,714 Other receivables 14,554 57,133 45,083 Cash & cash equivalents 388,121 1,065,070 1,133,824 566,750 1,551,884 1,437,621 Total assets 2,111,055 3,137,792 3,029,443 Equity and liabilities
Share capital and reserves
Issued capital 530,445 519,559 528,418 Share premium account 3,040,629 2,098,424 3,039,066 Other reserves 331,568 417,823 395,564 Reverse acquisition reserves 1,098,894 1,098,894 1,098,894 Merger reserve 854,146 851,331 854,146 Retained earnings (4,405,627) (3,584,962) (3,671,205) Translation reserve (62,510) 87,353 (80,714) Total equity 1,387,545 1,488,422 2,164,169 Non-current liabilities 66,010 56,107 43,757 Current liabilities Trade & other payables 560,102 578,137 535,243 Related party - 106,376 144,893 Deferred income 85,914 57,671 112,682 Short term borrowing - 805,450 - Finance lease obligations 11,484 45,629 28,699 Total current liabilities 657,500 1,593,263 821,517 Total liabilities 723,510 1,649,370 865,274 Total equity and liabilities 2,111,055 3,137,792
3,029,443
Cash Flow Statement
For the six months ended 30 June 2008
Six months Six months Year ended ended ended 31 December 30 June 30 June 2007 2008 2007 (audited) (unaudited) (unaudited) ‚£ ‚£ ‚£
Cash flows from operating activities
Cash receipts from customers 565,654 580,393 1,579,087 Cash paid to suppliers and employees (1,307,210) (1,186,698) (1,983,773) (741,556) (606,305) (404,686) Cash absorbed by operations Interest paid (2,922) (20,634) (30,954) Interest received 13,829 14,540 49,713
Net cash outflow from operating activities (730,649) (612,399) (385,927)
Cash flow from investing activities
Acquisition of subsidiary - (92,040) (47,228) Purchase of equipment (4,260) (30,205) (7,059)
Proceeds from sale of equipment 2,380 -
-
Exchange differences on fixed assets (17,201) -
-depreciation/cost Net cash outflow used in investing (19,081) (122,245) (54,287)activities
Cash flows from financing activities
Proceeds from issue of shares - 1,576,773 2,286,900 Less: costs of issue (3,285) (110,886) (199,376) Exercise of share option 6,323 - 77,990 Payment of finance lease (17,215) (16,658) (33,588) Net cash flows used in financing activities (14,177) 1,449,229 2,131,926 Exchange differences 18,204 30,722 (62,222)
Net increase in cash and cash equivalents (745,703) 745,307 1,629,490
Cash and cash equivalents brought forward 1,133,824 (485,687) (495,666)
Cash and cash equivalents carried forward 388,121 259,620 1,133,824 Represented by: Positive cash balance 388,121 1,065,070 1,133,824 Short term borrowing - (805,450) - 388,121 259,620 1,133,824
Unaudited Group Statement of Changes in Equity
For the six months ended 30 June 2008
Share Share Share-based Translation Reverse
Merger Retained Total
capital premium payments reserve acquisition reserve earnings reserve ‚£ ‚£ ‚£ ‚£ ‚£ ‚£ ‚£ ‚£ At 1 January 475,586 718,369 452,989 27,444 1,098,894 108,490 (3,045.352) (163,580)2007 Shares issued 10,450 1,368,950 - - - - - 1,379,400for cash Shares issued 2,462 141,853 - - - - - 144,315for services Shares issues on 27,177 - - - - 759,265 - 786,442acquisition Exercise of 3,884 52,204 (35,166) - - - 35,166 56,088share options Costs of share - (182,952) - - - (16,424) - (199,376)issue Exchange - - - 59,909 - - - 59,909adjustments Loss for the - - - - - - (574,776) (574,776)period
At 30 June 2007 519,559 2,098,424 417,823 87,353 1,098,894 851,331 (3,584,962) 1,488,422
At 1 January 528,418 3,039,066 395,564 (80,714) 1,098,894 854,146 (3,671,205) 2,164,1692008 Shares issued on 19 533 - - - - - 552acquisition of NAV Exercise of 2,008 4,315 (63,996) - - - 63,996 6,323share options Costs of share - (3,285) - - - - - (3,285)issue Exchange - - - 18,204 - - - 18,204adjustments Loss for the - - - - - - (798,418) (798,418)period
At 30 June 2008 530,445 3,040,629 331,568 (62,510) 1,098,894 854,146 (4,405,627) 1,387,545
Notes to the Interim Financial Statements for the six months ended 30 June 2008
1. Basis of preparation
The interim financial statements include the financial position of the Companyand its subsidiaries iPoint USA Corporation, iPoint-media Limited, All NewVideo Plc (in liquidation since 21 December 2007) and All New Video (UK)Limited (together "the Group") as at 30 June 2008 and the results of itsoperations for the six months then ended. They have been prepared on accountingbases and policies that are consistent with those used in the preparation ofthe financial statements for the year ended 31 December 2007.
The interim financial statements have not been audited.
The interim financial statements do not comprise statutory accounts for the purpose of Section 240 of the Companies Act 1985. The figures for the year ended 31 December 2007 have been extracted from the statutory accounts filed with the Registrar of Companies on which the auditors gave an unqualified report.
2. Contingent liabilities
An amendment to the Stamp Duty on Documents Law 1961 in Israel came into effecton 1 June 2003. This law determined that a document (or part thereof) that issigned in Israel or relates to an asset or obligation in Israel would besubject to a tax rate between 0.4 per cent. and 1 per cent. of the value of thesubject of such a document. As at 31 December 2007 and 30 June 2008 theDirectors estimate the Group's maximum liability to this stamp duty is in theregion 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.
The group has also received notice of a claim from an ex-employee of a formersubsidiary of All New Video (UK) Limited, for unpaid salary and unfairdismissal. Based on advice from the lawyers dealing with this case, a provisionhas been made in the accounts in respect of this claim.
3. Goodwill
No impairment review has been carried out on the Company's goodwill as at 30June 2008. In accordance with IAS36 an impairment review is to be carried outannually. As no review has been carried out, it is possible that the goodwillfigure could be impaired as at 30 June 2008.4. TaxCorporation tax: Six months Six months Year ended ended ended 31 December 30 June 30 June 2007 2008 2007 (audited) (unaudited) (unaudited) Income statement
Current tax on income for the period 6,266 -
-
Factors affecting the tax charge Loss on ordinary activities before (798,418) (574,766) (683,278)taxation
Aggregate of loss on ordinary activities (215,573) (166,682) (201,310) before taxation multiplied by dometic tax
rates Effects of:
Expenditure not allowable for tax purpose 30,598 18,269 61,196
Unrelieved tax losses and other 184,975 148,413
140,114
deductions arising in the period
- - -5. Loss per share
The basic loss per share is calculated by dividing the loss attributable toequity shareholders by the weighted average number of shares in issue. Incalculating the diluted loss per share, share options outstanding have beentaken into account where the impact of these is diluted. Options were excludedfrom the calculation of the total diluted number of shares, as the impact ofthese is anti-dilutive.
The weighted average number of shares in the period was:
Six months Six months Year ended ended 30 ended 30 June June 31 December 2007 2008 2007 (audited) (unaudited) (unaudited) Total 113,220,439 102,524,871 106,565,539 Loss attributable to equity (798,418) (574,776) (683,278)shareholders of the parent Basic and diluted earnings per share (0.007) (0.0056) (0.0064) 6. Dividends
No dividends have been declared for the six months ended 30 June 2008.
7. Copies of the Interim Results
Copies of the Interim Results are available on the Company's website www.ipoint-media.com.
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