Last checked at 12 Sep 2012 07:00
Embargoed until 7am 12 September 2012
Ultima Networks Plc
("Ultima", "the Group" or "the Company")
Interim Results for the six months ended 30 June 2012
Ultima, the IT and Green Technology Company, is pleased to announce its unaudited interim results for the six months ended 30 June 2012.
Highlights for the period
·; Turnover of £1,416,000 (H1 2011: £1,536,000)
·; Operating loss of £29,000 (H1 2011: Profit £195,000)
·; Cash at bank of £258,000 as at 30 June 2012 (30 June 2011: £576,000)
·; Development of Ground Source Renewable Heat solutions
·; Pilot Hybrid Solar energy solution developed for the Mexican market to be deployed at Mexican University fourth quarter 2012 for demonstration
Ultima now operates through two divisions: the IT Services division, and the Green technology division.
The IT Services division develops and supplies computer based application software and services to the legal profession.
The Green technology division has been restructured and is responsible for the development and supply of electric powered bicycles and specialist electrical goods and provides renewable energy solutions for the development of clean power generation through solar and other renewable power sources with installations in the United Kingdom and solar parks in Spain and under development in Italy.
Professor Humayun Mughal, Chairman and CEO, commented:
"During the six months ended 30 June 2012 Ultima made a group operating loss of £29,000 (H1 2011: Profit £195,000). The continuous investment into research and new product development will position the Group to take advantage of improvements in market conditions. The IT Services division has seen some reduction in its legacy business due to the tough economic climate however the division has seen some growth in the demand for its FiLos legal software suite which is expected to continue with an increased acceptance by larger scale legal practices. The Green Technology division's sales of electronic bicycles into continental Europe slowed during the first half of 2012 which has led to a restructuring of its European distribution channel. The division's latest models have received a positive reception, which is expected to lead to improved performance when they go into volume production in the second half of 2012. The division has continued to expand the scope of its renewable energy solutions with the development of Ground Source Renewable Heat installations, the supply of turnkey solar PV solutions and extending the international scope of operations.
"Our main objective going forward continues to be based upon a growth in low risk recurring revenues, a continuous effort to control central overheads and improve operational efficiency and the expansion of the Company by a mixture of organic growth, through continued investment into the development of new products and an increase in renewable energy solutions, complemented by a highly selective acquisitions policy.
"We expect both divisions to continue to make progress with the addition of new products and investment into growth opportunities in the development of renewable energy initiatives which will strengthen the Group's green credentials and provide a platform for growth in revenues in the second half of 2012."
Enquiries:
Ultima Networks plc 01279 821200
Prof. Humayun Mughal, Chairman and Chief Executive
Zeus Capital Limited (Nominated Adviser and Broker) 0161 831 1512
Nick Cowles
Imran Ahmad
Leander (Financial PR) 07795 168157
Christian Taylor-Wilkinson
Chairman and Chief Executive's Statement
Operational Review
Ultima continued its investment into the IT Services product portfolio and the development of new products in the Green Technology division in order to generate future growth in revenues.
The IT Services division has seen an increase in the installed base of "FiLos" legal software suite which has been partially offset by a reduction in sales of its legacy products. The market for legal software remains competitive and is undergoing consolidation and restructuring. The division's programme of investment into product development and the provision of high levels of customer service is expected to provide a platform for strong organic growth.
The Green products and Renewable energy divisions have been combined to form the Green Technology division in order to increase the focus in these areas with minimal additional overheads which is expected to lead to an improvement in the overall operational efficiency of the merged division. The financial instability in the euro zone has resulted in slightly lower sales than the same period last year and a reduction in margin caused by weakness in the euro currency exchange rate has led to the division making a first half operating loss. The division will be launching new models in the second half of the current financial year which are expected to increase its contribution to the Group revenue.
The division withdrew its FREE solar energy for schools initiative following radical changes to the FIT (Feed in Tariff) but continues to hold investments of £400,000 in projects completed prior to the introduction of FIT changes which is expected to produce annual revenue in the region of £60,000 for 25 years. The division focus in the UK is now based upon EPC (Engineering, Procurement and Construction) projects and it is extending the scope of renewable energy solutions by investing into capital equipment and know-how for ground source renewable heat installations which will be eligible for government supported FIT tariffs being introduced 1 October 2012. The division is seeking the extension of its approved installer status under the microgeneration certification scheme to include ground source heat installations.
In Italy, changes in local planning regulations has led the division to review options to maximise the development of the proposed renewable energy park on the 22 hectares of land owned by the Company in the Puglia region of Italy. An outline agreement has been reached with ENEL to provide a 1MW medium voltage connection to the proposed park.
In Spain, the 100KW solar park suffered damage due to adverse weather conditions which reduced output. Full output is expected to be restored during the second half 2012 and this will contribute revenue based on a fixed tariff of 32 eurocents per kilowatt hour for a period of 24 years.
Following serious interest from the Mexican Government the division has developed a special Hybrid PV system designed for the Mexican market to help in the resolution of some of their energy problems. A pilot scheme will be installed at a Mexican University during the last quarter 2012.
The opportunity for growth in the renewable energy market is positive and the division expects to benefit from its experience to grow within the UK and to see growth arising from developments in international markets.
Despite the uncertain economic climate the outlook for the Group remains positive and trading for the second half of the year has started well across both divisions.
The Board of Ultima expects the commitment to research, design and development will provide the platform for future growth.
Financial Summary
In the six months to 30 June 2012 the Group achieved sales of £1,416,000 (H1 2011: £1,536,000) with an operating loss of (£29,000) (H1 2011: operating profit of £195,000). Reduction in sales of electronic bicycles into mainland Europe was the major contributing factor to the reduction in profitability.
The IT Services division made a profit at the operating level of £110,000 (H1 2011: £182, 000) on sales of £393,000 (H1 2011: £434,000). This division comprises Cognito Software, a provider of application software and services to the legal profession.
The Green Technology division made an operating loss of (£44,000) (H1 2011: operating profit of £70,000) on sales of £1,023,000 (H1 2011: £1,102,000). This division now consist of the green technology products and the green energy parts of Ultima's business.
For the purpose of segmental reporting the revenue for the Green Technology division's Italian activities is reported separately.
The Group central overheads for the six months to 30 June 2012 were £95,000 (H1 2011: cost of £57,000). The increase in cost was due to an increase in the listing related cost of £14,000 and an increase in depreciation charge of £24,000.
As a result of the expected availability of brought forward losses there has been no adjustment for taxation in the period.
Prof. Humayun Akhter Mughal,
Chairman and Chief Executive Officer
12 September 2012
Consolidated Statement of Comprehensive Income
Six Months ended 30June 2012
Unaudited Half year | Unaudited Half Year | Audited Full Year | ||
2012 | 2011 | 2011 | ||
£000's | £000's | £000's | ||
Continuing Operations | ||||
Revenue | 1,416 | 1536 | 2,970 | |
Cost of Sales | 927 | 879 | 1,665 | |
Gross Profit | 489 | 657 | 1,305 | |
Selling and administration expenses | 518 | 464 | 1,224 | |
Other Operating Income | - | 2 | 405 | |
Operating Profit/(Loss) | (29) | 195 | 486 | |
Finance Cost | (5) | (5) | (3) | |
Profit/(Loss) before taxation | (34) | 190 | 483 | |
Taxation recovery | - | - | 34 | |
Exchange difference on translating foreign operations | - | - | (26) | |
Total comprehensive income/(Loss) for the period attributable to equity holders of the company | (34) | 190 | 491 | |
Basic and diluted earnings/(loss) per share -pence | (0.0001) | 0.06 | 0.19 |
Consolidated Statement of financial position
30/06/2012 Unaudited Half year | 30/06/2011 Unaudited Half Year | 31/12/2011 Audited Full Year | |||
2012 | 2011 | 2011 | |||
£000's | £000's | £000's | |||
ASSETS | |||||
Non-Current assets | |||||
Property, plant, equipment | 1,631 | 1,226 | 2,145 | ||
Intangible assets - development costs | 1,075 | 1,032 | 1,042 | ||
Goodwill | 118 | 118 | 118 | ||
Intangible assets - other | 178 | 157 | 152 | ||
Total non-current assets | 3,002 | 2,533 | 3,457 | ||
Current assets | |||||
Inventories | 420 | 564 | 500 | ||
Trade and other receivables | 1,067 | 1,048 | 611 | ||
Cash and other equivalents | 258 | 576 | 388 | ||
Total current assets | 1,745 | 2,188 | 1,499 | ||
Total assets | 4,747 | 4,721 | 4,956 | ||
LIABILITIES
Non-Current liabilities | |||||
Deferred tax | 53 | 48 | 53 | ||
Total noncurrent liabilities | 53 | 48 | 53 | ||
Current Liabilities | |||||
Trade and other payables | 874 | 1,015 | 998 | ||
Current tax liabilities | 15 | 63 | 37 | ||
Accruals and deferred income | 349 | 406 | 378 | ||
Total current liabilities | 1,238 | 1,484 | 1,413 | ||
Total liabilities | 1,291 | 1,532 | 1,466 | ||
Net assets | 3,456 | 3189 | 3,490 | ||
EQUITY | |||||
Capital and reserves attributable to equity holders of the company | |||||
Called up share capital | 8,299 | 8,299 | 8,299 | ||
Share premium account | 5,843 | 5,843 | 5,843 | ||
Other reserves | 202 | 202 | 202 | ||
Retained earnings | (10,869) | (11,162) | (10,835) | ||
Translations of foreign operations | (19) | 7 | (19) | ||
Total equity | 3,456 | 3,189 | 3,490 | ||
Consolidated statement of cash flows
Unaudited Half year | Unaudited Half Year | Audited Full Year | |
2012 | 2011 | 2011 | |
£000's | £000's | £000's | |
Cash Flows from operating activities | |||
Profit/(Loss) for the financial period | (34) | 190 | 517 |
Taxation expense | - | - | (34) |
Interest receivable | - | 2 | 3 |
Interest payable | (5) | (5) | - |
Comprehensive Income | (26) | ||
Depreciation charges | 20 | 5 | 34 |
Amortisation of intangibles | 69 | 77 | 166 |
Operating profit before changes in working capital | 50 | 269 | 660 |
Decrease/(Increase) in inventories | 80 | (145) | (81) |
Decrease/(Increase) in trade and other receivables | (456) | (484) | (47) |
(Decrease)/increase in trade payables and other current liabilities
| (175) | 496 | 425 |
Cash (used in)/generated from operations | (501) | 136 | 957 |
Taxation | - | - | 39 |
Net cash (used in)/generated by operating activities | (501) | 136 | 996 |
Cash flow from investing activities | |||
Purchase of property, plant and equipment | (22) | (8) | (956) |
Development expenditure | (102) | (260) | (354) |
Other intangibles | (30) | - | - |
Net proceeds of ordinary share issue | - | 42 | 42 |
Disposal of Property, plant and equipment | 520 | - | - |
Net cash used in investing activities | 366 | (226) | (1,268) |
Cash flows from financing activities | |||
Interest (received)/payable | 5 | 3 | (3) |
Net cash(used in)/generated by financing activities | 5 | 3 | (3) |
Net decrease in cash and cash equivalents | (130) | (87) | (275) |
Cash and cash equivalents at beginning of the period | 388 | 663 | 663 |
Cash and cash equivalents at end of the period | 258 | 576 | 388 |
Consolidated statement of changes in equity
(i) Six months ended 30 June 2012 - unaudited
Called up share capital | Share Premium | Other reserves | Retained earnings | Translation of foreign operations | Total Equity | |
At 1 January 2012 | 8,299 | 5,843 | 202 | (10,835) | (19) | 3,490 |
Loss for the period | (34) | (34) | ||||
At 30 June 2012 | 8,299 | 5,843 | 202 | (10,869) | (19) | 3,456 |
(ii) Six months ended 30 June 2011 - unaudited
Called up share capital | Share Premium | Other reserves | Retained earnings | Translation of foreign operations | Total Equity | |
At 1 January 2011 | 8,269 | 5,831 | 202 | (11,352) | 7 | 2,957 |
Issue Share Capital | 30 | 12 | 42 | |||
Profit for the period | 190 | 190 | ||||
At 30 June 2011 | 8,299 | 5,843 | 202 | (11,162) | 7 | 3189 |
(iii) Year ended 31 December 2011 - Audited
Called up share capital | Share Premium | Other reserves | Retained earnings | Translation of foreign operations | Total Equity | |
At 1 January 2011 | 8,269 | 5,831 | 202 | (11,352) | 7 | 2,957 |
Issue of share capital | 30 | 12 | - | 42 | ||
Total comprehensive income for the year | - | - | - | 517 | (26) | 491 |
At 31 December 2011 | 8,299 | 5,843 | 202 | (10,835) | (19) | 3,490 |
1. Segmental reporting
The Group operates in the United Kingdom, Italy and Spain.
As at 30 June 2012, the Group is organised into two principal business segments:
·; IT and related services (comprising legal and publishing application software)
·; Green Technology division (comprising electric bicycles, energy saving lamps and educational electronic kits and development and installation of renewable energy solutions)
The segmental results for the half year ended 30 June 2012 are as follows:
Unaudited Half year | Unaudited Half Year | Audited Full Year | |
2011 | 2011 | 2011 | |
£000's | £000's | £000's | |
Revenue | |||
United Kingdom | 1,416 | 1,536 | 2,970 |
Italy | - | - | |
Spain | - | - | |
Total | 1,416 | 1,536 | 2,970
|
Revenue | |||
IT Services (UK) | 393 | 434 | 915 |
Green technology (EU) | 1,023 | 1,102 | 2,055 |
Green technology division (Italy) | - | - | - |
Unallocated | - | - | - |
. | |||
Total | 1,416 | 1,536 | 2,970 |
Operating profit before exceptional items | |||
IT Services (UK) | 110 | 182 | 14 |
Green technology division (EU) | (37) | 79 | 498 |
Green technology division (Italy) | (7) | (9) | (26) |
Unallocated | (95) | (57) | - |
Profit before Finance Charges | (29) | 195 | 486 |
Finance Income/(payable) | (5) | (5) | (3) |
Operating profit | (34) | 190 | 483 |
Taxation Recovered | - | - | 34 |
Exchange difference on translating foreign operations | - | - | (26) |
Profit before taxation | (34) | 190 | 491 |
| |||
| Unaudited Half year | Unaudited Half Year | Audited Full Year |
2012 | 2011 | 2011 | |
£000's | £000's | £000's | |
Depreciation | |||
IT Services (UK) | 1 | 1 | 2 |
Green technology division (EU) | 2 | 2 | 4 |
Green technology division (Italy) | - | - | - |
Unallocated | 17 | 2 | 28 |
Group Total | 20 | 5 | 34 |
Amortisation | |||
IT Services (UK) | 30 | 38 | 83 |
Green technology division (EU) | 37 | 36 | 77 |
Green technology division (Italy) | 2 | 2 | 4 |
Unallocated | 2 | ||
Group Total | 69 | 76 | 166 |
Segment Assets | |||
IT Services (UK) | 862 | 745 | 1024 |
Green technology division (EU) | 1,233 | 1,698 | 1,016 |
Green technology division (Italy) | 873 | 952 | 957 |
Unallocated | 1,779 | 1,326 | 1,959 |
Group | 4,747 | 4,721 | 4,956 |
Segmental liabilities | |||
IT Services (UK) | (183) | (212) | (168) |
Green technology division (EU) | (548) | (662) | (512) |
Green technology division (Italy) | (52) | (46) | (47) |
Unallocated | (508) | (612) | (739) |
Group | (1,291) | (1,532) | (1,466) |
Net assets | |||
IT Services (UK) | 678 | 533 | 856 |
Green technology division (EU) | 685 | 1,036 | 504 |
Green technology division (Italy) | 821 | 906 | 910 |
Unallocated | 1,272 | 714 | 1,220 |
Group | 3,456 | 3,189 | 3,490 |
Capital Expenditure | |||
IT Services (UK) | 77 | 116 | 200 |
Green technology division (EU) | 27 | 77 | 108 |
Green technology division (Italy) | - | 28 | 95 |
Unallocated | 50 | 48 | 968 |
Group | 154 | 269 | 1,371 |
2 Basis of preparation
The consolidated interim financial statements have been prepared in accordance with the AIM Rules for Companies and prepared on a basis consistent with International Financial Reporting Standards ("IFRS") as adopted by the EU and the accounting policies set out in the Group's financial statements for the year ended 31 December 2011.
The interim financial statements do not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006.
The consolidated interim financial statements are unaudited and include all adjustments which management considers necessary for a fair presentation of the Group's financial position, operating results and cash flows for the 6 month periods ended 30 June 2012 and 30 June 2011.
The Group has chosen not to adopt IAS 34 'Interim Financial Statements' in preparing these interim financial statements and therefore the interim financial information is not in full compliance with IFRS disclosure.
The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
These interim financial statements have been prepared under the historical cost convention.
3 Taxation
Due to expected availability of brought forward losses, no provision has been made for application of tax for the period under review.
4 Dividends
The Company has not proposed or declared an interim dividend.
5 Earnings per share
Basic earnings per share has been calculated based on the profit/ (loss) on ordinary activities after taxation and the weighted average number of shares in issue for the period of 279,176,538 (June 2011: 276,426,538 and December 2011: 277,803,935). There are no options having a dilutive impact on earnings per share.
6 Other information
This interim statement was approved by the board on 11 September 2012 and has not been audited by the Company's auditors Hills Jarrett. The comparatives for the full year ended 31 December 2011 are not the Company's full statutory accounts for that year. A copy of the statutory accounts for that year, which were prepared under IFRS, has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
No adjustments have been made for any changes in estimates made at the time of approval of the 2011 accounts.
A copy of this interim statement will be available shortly at the Company's registered office at Ultima Networks plc, Akhter House, Perry Road, Harlow, CM18 7PN and on the company's website, www.ultima-networks.co.uk.