TIDMIPNT
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 the
telecoms, media, and content aggregation verticals, in particular working
closely with Ericsson AB ("Ericsson"), a leading global vendor for the telecoms
industry.
The Group experienced slippage with new contracts throughout 2008 as a result
of the major telecoms companies, in light of the downturn in the global
economy, taking longer to commit to prospective 3G video calling related
projects. Consequently, several significant contracts which were anticipated to
be signed during 2008 were delayed. As a consequence, the turnover for the year
ended 31 December 2008 was significantly lower than expected and the loss
before taxation for the same period was significantly greater than anticipated.
IPOINT'S BUSINESS
iPoint's business is developing live interactive video calling service creation
platforms that enable telecom and media companies to deploy a wide variety of
applications and services over broadband internet and mobile networks. iPoint
has developed a `Telco grade' video application platform that incorporates a
powerful service creation environment (SCE). The SCE is based on a suite of
software building blocks and pre-configured application templates that enable
quick 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 working
closely with Ericsson and submitted proposals, together with Ericsson's market
units, to tenders issued by leading telecom operators worldwide. Ericsson is
the world's leading vendor for the telecoms industry and the directors believe
that by working closely with Ericsson, its presence can be leveraged to
generate sales of iPoint's video application platform known as Vitrage, which
complements the Video Gateway (VIG) of Ericsson. To date Ericsson has secured
two tenders issued by telecom operators in Europe in which the Vitrage platform
will be used. In addition, during 2008, iPoint, together with Ericsson, built a
pipeline of potential tenders for projects with telecom operators in the CIS,
Latin America (including Brazil) and Mexico and Southern Europe (including
Turkey). The directors expect some of these tenders to take place in 2009
although some will be delayed until 2010 because of the impact of the global
recession.
iPoint has been in discussions with IBM and the media vertical has been
expanded to provide user generated content and applications for the printing
industry, in addition to TV and mobile services already provided. iPoint's
offering will become a standard part of IBM's `Media Hub' solution in addition
to video calling applications. A Memorandum of Understanding has been signed
with IBM Media and the integrated IBM-iPoint solution was displayed at the
International Broadcasting Convention (IBC) in Amsterdam in September 2008. As
a result of the economic slowdown in the media market and the restructuring at
IBM, iPoint did not succeed in achieving a significant proportion of the
revenues expected from the media sector for the period under review. The
slowdown in advertising revenues has had a significant impact on the media
sector as a whole and budgets for new projects in particular. Consequently, the
directors believe that revenues derived from the media vertical will continue
to 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 a
technology called `Glaze', creating an interface to existing web-based video
chat and content delivery platforms, which enables subscriber connections from
3G mobile to these services. As a result, the amount of work required to
introduce a 3G mobile service for this market is reduced and the overall value
proposition is more attractive. In February 2008, the Company has signed an
Memorandum of Understanding with a Belgian platform provider in order to create
a joint offering for this market.
FINANCIAL REVIEW
The Company generated revenues of GBP871,802 ($1,608,475) for the year ended 31
December 2008 compared to GBP1,323,665 ($2,648,654) for the year ended 31
December 2007 and gross profit of GBP706,927 ($1,304,281) compared to GBP1,117,133
($2,235,383) in 2007. The results represent 32.5 per cent reduction in revenues
and 34.7 per cent reduction in gross profits.
Revenues were still relatively modest and the year ended with a loss of GBP
2,612,894 ($4,820,790) which includes an impairment of goodwill, from the
purchase of All New Video plc and the reverse takeover by iPoint USA Corp. of
the Company, of GBP1,293,900 ($2,387,246). The loss per share for the year ended
31 December 2008 is GBP0.023 ($0.0426) compared to GBP0.0064 ($0.0128) for the year
ended 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 Projects
Electronics & Communications (1990) Ltd. ("Nisko") to a maximum of NIS3.5
million. By a deed dated 25 August 2006 (as amended on 12 December 2008), Nisko
agreed that it would not withdraw or otherwise impair the guarantee before 31
December 2009.
In light of current economic conditions, the directors implemented a cost
cutting plan during 2008 and in the first quarter of 2009, which resulted in a
reduction in expenses of over 30 per cent. The cost reduction plan was based
mainly on the reduction of salaries and in the number of employees in order to
allow the Company to operate with lower costs while still supporting major
contracts.
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 project
tenders from telecom operators through Ericsson and deploying the solutions,
especially in territories which are expected to present growth of the relevant
verticals - Brazil, Russia, India and China. Ericsson's relationship with many
telecom operators has provided iPoint with access to tenders for projects
worldwide.
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 and
innovation, increasing its revenues and developing its relationships with
partners and customers.
E Sagi
Chairman
FURTHER 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
GBP GBP
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 SHEET
AS AT 31 DECEMBER 2008
Notes 2008 2007
GBP GBP
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
GBP GBP
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) 1,629,490
equivalents
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
GBP GBP GBP GBP GBP GBP GBP GBP
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 - - - - - 2,286,900
issued in
year for
cash
Shares 2,718 161,656 - - - - - 164,374
issued in
year for
services
Shares 27,217 - - - - 762,080 - 789,297
issued on
acquisition
Exercise of 5,572 72,418 (57,425) - - 57,425 77,990
share
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) 2,164,169
December
2007
Shares 91 9,909 - - - - - 10,000
issued in
year for
services
Shares 23 637 - - - - - 660
issued on
acquisition
of ANV
Exercise of 2,257 4,451 (72,804) - - - 72,804 6,708
share
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 International
Financial Reporting Standards, International Accounting Standards and
Interpretations (collectively IFRS) issued by the International Accounting
Standards Board (IASB) as adopted by European Union ("adopted IFRSs"), and are
in accordance with IFRS as issued by the IASB.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2007 and 2008, but is
derived from those accounts. Statutory accounts for 2007 have been delivered to
the Registrar of Companies and those for 2008 will be delivered following the
Company's Annual General Meeting. The Auditors have reported on those accounts;
their reports were unqualified and did not contain statements under the
Companies Act 1985, sections 237(2) or (3).
2. Tax on ordinary activities
2008 2007
GBP GBP
Income statement
Current tax on income for the period - -
Factors affecting the tax charge
2008 2007
GBP GBP
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 certain
that future profits will be sufficient for this asset to be realised. As at 31
December 2008 the Group has tax losses carried forward of approximately GBP
3,361,984 in iPoint-Media Ltd, GBP581,531 in All New Video UK Limited and GBP
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
GBP GBP
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
GBP GBP
Cash at bank and in hand 65,163 1,133,824
Cash at bank and in hand earns interest at floating rates based on daily bank
deposit rates. The fair value of cash and cash equivalents at 31 December 2008
was GBP65,163 (2007: GBP1,133,824).
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
GBP GBP
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
GBP GBP
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
GBP GBP
British pound 48,551 731,135
US dollar - 45,942
Euro 20,429 9,202
Israeli Shekel (3,817) 347,545
65,163 1,133,824
5. Related party transactions
During the year ended 31 December 2008 the Group paid GBP57,413 (2007: GBPnil) to
Nisko Investments, a major shareholder of the group, for management services
provided and GBP49,262 (2007: 32,954) for rent on its premises. As at 31 December
2008 the Group owed Nisko Investments GBP25,513 (2007: GBP144,893). This is
disclosed within other payables note 15.
On 17 January 2006 the Company issued 2,500,000 warrants with an exercise price
of 1 penny per Ordinary Share. 625,000 of these warrants were issued to each of
Clive Garston, director and the following past directors: Norman Fetterman,
Malcolm Coleman and Brian Leader Cramer. These warrants have been exercised
during 2007.
The Company had (until 31 December 2008) a credit facility of NIS 7 million (GBP
1,261,693) with United Mizrahi Bank Ltd ("the Bank"). The repayment of the
Company's debt to the Bank is guaranteed by Nisko investments. On December
2008, the Company announced that it had been notified by the directors of Nisko
investments that they had resolved to extend the period during which it will
not withdraw or otherwise impair the guarantee until 31 December 2009 and to
limit the guarantee up to NIS 3.5 million. Accordingly the credit facility with
the bank is now NIS 3.5 million (GBP630,846)
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 GBP5,050 (2007:GBP74,419) to
Halliwells LLP. Clive Garston is a member of Halliwells LLP. During the year
2008, the group paid fees amounting of GBP12,857 to its Israeli lawyers Gross,
Kleinhendler' Hodak, Halevy, Greenberg & Co, Simon Marks was an employee of
Gross, 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 GBP380,000.
On 5 February 2009 Nisko Investments Ltd (Nisko Investments) sold 875,000
ordinary voting shares of the Company, equivalent to 0.72% of the issued voting
share capital, and following this sale, holds 42,471,983 ordinary shares in the
Company, 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, will
be available from the Company's registered office Liberty House, New Greenham
Park, Newbury, Berkshire RG19 6HW and will be available from the Company's
website www.ipoint-media.com.
END
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