TIDMIPNT
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 result
of a major slowdown in the telecom industry and the global economy, resulting
in customers taking longer to commit to prospective 3G video calling related
projects. Consequently, several significant contracts which were anticipated to
be signed during 2009 were delayed. As a result, turnover for the year ended 31
December 2009 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 enabling technology - service creating platform
for developing live interactive video calling services. These platforms enable
telecom operators and media companies to develop and deploy a wide variety of
applications and services over broadband internet and mobile networks. The
deliverable consists of 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 2009, iPoint executed its strategy in the telecoms vertical by working
closely with Ericsson and implemented signed projects and submitted proposals,
together with Ericsson's market units, to tenders issued by leading telecom
operators worldwide. Ericsson is one of the world's leading vendors to 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, the Group has delivered four projects with Ericsson
to telecom operators in Europe and Asia in which the Vitrage platform is used,
all of which were delivered in 2009. In addition, iPoint, together with
Ericsson, built a pipeline of potential tenders for projects with telecom
operators in Latin America Central and southeast Asia. The Ericsson channel
comprises approximately 20 distinct underlying projects (in various phases of
quotation/implementation) with revenues to the Group from each project in the
range of $200,000 to $2,000,000.
During the last quarter of 2009 the Group established a representative office
in China in order to expand its market to Chinese customers from the telecom
and media sectors. In addition, the Group signed a distribution agreement with
a leading Chinese distributor which is active in the banking and communications
sectors.
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 been
expanded to provide user generated content and applications for the printing
industry, 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 cooperation
with IBM, the Israeli Chief Scientist Office and IBM jointly granted iPoint the
sum of NIS 500,000 in a special `Tafnit' program to cover the research and
development costs of integrating Vitrage into IBM's Media Hub.
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 2010.
During 2009 iPoint did not succeed in enlarging its revenues from the content
aggregators vertical although the Group continues to pursue opportunities to
market its technology called `Glaze', creating an interface to existing
web-based video chat and content delivery platforms, which enables subscribers
to connect from 3G mobile to these services.
Financial review
The Company generated revenues of GBP1,275,908 ($1,990,416) for the year ended 31
December 2009 compared to GBP871,802 ($1,608,475) for the year ended 31 December
2008 and gross profit of GBP1,065,509 ($1,662,194) compared to GBP706,927
($1,304,281) in 2008. The results represent an increase of 46 per cent. in
revenue and 51 per cent. in gross profit. The delivery of several projects to
mobile operators through Ericsson's market units during the period was a key
factor in the improvement of the results.
The year ended 31 December 2009 produced a net loss of GBP547,378 compared to GBP
2,612,894 for the year ended 31 December 2008. The net loss of 2008 included GBP
1,293,900 loss from impairment of goodwill compared to GBPnil in 2009. The
reduction in net loss in the year ended 31 December 2009 compared to 2008 was
achieved principally due to the increase in revenue and a 23% reduction in
operating expenses.
Although revenues were still relatively modest, the Group has commenced certain
projects already which are due to complete in 2010 and the Directors believe
that there are good growth prospects in iPoint's key markets and that the
Group'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 GBP1,727,000 in Units comprising:
* 7,040,000 placing shares at 4 pence per Ordinary Share; and
* GBP1,408,000 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 applications
under the Open Offer and the Subscription Offer amounting to GBP1,090,412 and
extended the closing date of the Subscription Offer to 15 February 2010. On 17
February 2010, the Group announced that it had received applications under the
Open Offer and the Subscription Offer amounting to GBP1,727,000, the maximum
aggregate amount that could be raised under the Open Offer and the Subscription
Offer.
The Bonus Shares are not capable of being sold, transferred or pledged to any
third party for a period of one year from issue and for a period of a further
year in respect of 50% of these Bonus Shares.
Nisko Investments Ltd agreed not to withdraw or otherwise impair Nisko's
guarantee of iPoint Media Ltd's overdraft facility with United Mizrahi Bank Ltd
for the duration of the term of the Loan Notes issued by the Group(for a period
of 4 years from date of issue), up to NIS 1,970,000 (the "Guarantee"). The
above undertaking shall replace Nisko's existing undertaking (provided in
December 2008) not to withdraw or otherwise impair the guarantee (in an amount
of 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 deploying
its solutions with several operators through Ericsson. Several trials with
Ericsson are ongoing or have been concluded successfully. The directors believe
that several projects through Ericsson will materialise during 2010.
The Group faces a challenging year in 2010 due to the uncertainty of the
revenue streams and the significant delay in revenues that has occurred during
the first half of 2010. The ability of the Group to continue its operational
existence is subject to the fulfillment of the Group's forecasts and/or its
ability to raise funds in the short term. In addition costs could be reduced
should the forecasted revenue streams not be achieved.
Our strategic decision to open a representative office in China is important
for the Group and we're happy to have been selected by a leading Chinese
national MobileTV Operator so soon after we started activities in China and
hope that it is an indication of the large potential of the Chinese market for
our Vitrage video application platform.
The outlook of the media vertical looks promising with the new product of the
GOlivestudio that was initially developed for the Chinese market and now might
approach the media market in Europe. With the collaboration with IBM, the Group
expects 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, professionalism
and creativity, which has placed iPoint as a frontier technology pioneer 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
partners and customers.
E Sagi
Chairman
Further 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 GBP GBP
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 Sheet
As at 31 December 2009
2009 2008
GBP GBP
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 GBP GBP
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
GBP GBP GBP GBP GBP GBP GBP GBP
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 Board
on 11 May 2010, does not comprise statutory accounts for the purpose of Section
435 of the Companies Act 2006 for the years ended 31 December 2008 or 2009. It
has been extracted from the Company's consolidated accounts for the period to
31 December 2009.
The statutory accounts for the year ended 31 December 2008 have been delivered
to the Registrar of Companies and included an audit report which was
unqualified and did not contain statements under s237(2) or (3) of the
Companies Act 1985. The statutory accounts for the year ended 31 December 2009
will 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 International
Financial Reporting standards and IFRIC interpretations issued and effective or
issued and early adopted as at the time of preparing these statements (March
2010) and with those parts of the Companies Act 2006 applicable to companies
reporting under IFRS. The financial statements have been prepared under the
historical cost convention and a summary of the more important accounting
policies is set out below.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the reported amounts of revenues and expenses during the reporting period.
Although these estimates are based on management's best knowledge of the
amount, event or actions, actual results ultimately may differ from those
estimates.
The Group elected to disclose its cash flows from operating activities using
the direct method that requires the disclosure of gross cash receipts and gross
cash payments to be disclosed. Additionally, IAS 7 encourages the use of the
direct method for the reporting of operating cash flows.
This year the Group adopted IFRS 8 "Operating Segments", which replaces IAS 14
segment Reporting. The standard is applied retrospectively. The accounting
policy for identifying segments is now based on internal management reporting
information 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 operating
segments. This change has resulted in the UK and Israel being identified as
separate 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 GBP547,000 during the year ended 31 December
2009 and the results of the first six months of 2010 are well below expectation
and will not be profitable. The unused cash proceeds of the Group as at 30
April 2010 totalled approximately GBP663,000 (which include a short-term
borrowings, guaranteed for the next four years by Nisko Investments Ltd , up to
the amount of NIS 1,970,000 ).
The Group faces a challenging year in 2010 due to the uncertainty of the
revenue streams and the significant delay in revenues that has occurred during
the first half of 2010. The aforementioned factors indicate the existence of a
material uncertainty which may cast significant doubt about the Group's ability
to continue as a going concern. The ability of the Group to continue its
operational 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 be
reduced should the forecasted revenue streams not be achieved. The directors,
after reviewing the forecasted revenues and having considered the Group's
ability to raise funds in the short term and taking into account the
possibility of reducing costs, adopt the going concern basis in preparing the
accounts.
Notes
1. 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
GBP GBP
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 the
parent company iPoint Media plc was GBP223,895 (2008: GBP10,005,579). As permitted
by section 406 Companies Act 2006, no separate income statement is presented in
respect of the company.
2. Cash and cash equivalents 2009 2008
GBP GBP
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% For
the purpose of the cash flow statement, cash and cash equivalents comprise the
following at 31 December 2009.
2009 2008
GBP GBP
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 GBP322,359), 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
GBP GBP
A - or equivalent 545,424 65,163
========= =========
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 2009
was GBP545,424 (2008: GBP65,163).
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
GBP GBP
British pound 477,649 48,551
US dollar 45,376 -
Euro 15,742 20,429
Israeli Shekel 6,657 (3,817)
545,424 65,163
Company
Cash at bank and in hand 441,678 285
3. Post balance sheet events
On 17 February 2010, the Company announced that it has received applications
under the Open Offer and the Subscription Offer amounting to GBP1,727,000, the
maximum aggregate amount that could be raised under the Open Offer and the
Subscription Offer. The Group raised GBP1,090,000 of the GBP1,727,000 before 31
December 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 an
exercise 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 the
consolidated profit figures for the group set out in the optimistic forecasts
as presented to and approved by the board of directors of the Company in
respect of such financial year (the "Optimistic Forecast"), as reflected in its
audited financial statements for such financial year, the exercise price for
each option that vests in such financial year shall be equal to the nominal
value of the Ordinary Shares.
In any financial year in which the Company achieves 75 percent or more of the
Optimistic Forecast, as reflected in its audited financial statements for such
financial year, the exercise price for each option that vests in such financial
year shall be as follows:
in 2010 - GBP0.03;
in 2011 - the average mid-market closing price of the Ordinary Shares during
January 2011, but in any event not less than GBP0.03;
in 2012 - the average mid-market closing price of the Ordinary Shares during
January 2012, but in any event not less than GBP0.03.
In any financial year in which the Company achieves less than 75 percent of the
Optimistic Forecast, as reflected in its audited financial statements for such
financial year, then the options that vest in such financial year shall lapse.
3
10
END
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