Ultima Networks PLC

23 May 2011

ANNOUNCEMENT OF AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010

ULTIMA NETWORKS PLC

("Ultima" or the "Company")

23 May 2011

The Directors are pleased to announce the audited results of the company and its subsidiaries (the "Group" or the "Ultima Group") for the year ended 31 December 2010.

The Ultima Group's operations consist of three divisions: IT Services, Green technology products and Green power. These divisions are involved respectively in the sale of software to the legal profession, the development and sale of specialist electrical goods and the development of  clean power generation through solar installations in Spain, Italy and the United Kingdom.

Operational highlights of 2010:

·      Successful launch of Infineum Continental Electric Bicycle

·      Grant of Patent protecting core technology used in the Infineum Electric Bicycles

·      Connection of 100KW Solar Park to Spanish National Grid

·      Award of development grant by Valencia Energy Agency towards deployment of 10KW solar installation based on concentrated solar cell technology.  

·      Launch of Free Solar Energy for Schools initiative

·      Launch of  "Cognito FiLOS" legal software suite

Financial highlights:

·      Group revenue up 2.8% - 2010: £1,919,000 (2009: £1,867,000)

·      Group administration expenses down 13.8%  - 2010: £807,000 (2009: £936,000)

·      Operating profit up 61.1% - 2010: £356,000 (2009: £221,000)

·      Profit on ordinary activities before taxation for the year up 65.0% - 2010: £353,000 (2009: £214,000)

·      Earnings per share of 0.13p (2009: 0.10p)

·      Consolidated statement of financial position,  net assets up 12.6% to £2,957,000 (31 December 2009: £2,627,000)

Chairman's statement

Introduction

I am pleased to report that despite difficult trading conditions, the Group made progress and increased pre-tax  profit by 65%. During the year, all divisions announced the launch of new products which have contributed to the improvement in profitability. Product development is an essential element of the Group strategy of continuous investment in research and the development and deployment of new products and services. The Group's green power division commenced operation of its first solar park in Spain and has been awarded a grant by the Valencia Energy Agency to develop and deploy a small scale solar installation based on concentrated PV technology. IT Services has seen growth in net revenues and has launched its FiLos legal software suite which is expected to accelerate growth during 2011. The Green technology products division released several new models to supplement its Infineum electric bicycle range, and although market conditions continue to impact demand for consumer products, has seen an increase in turnover and profitability and expects strong growth during 2011. The last financial year saw an overall increase in sales and operating profit across the Group.

IT services division

The IT services division made an operating profit of £377,000 (2009:£237,000) on sales of £831,000 (2009:£816,000). This division provides computer application software and related support and other services to small and medium size legal practices in England and Wales. The division operates from two locations (Midlands and South West England) under the name "Cognito Software Limited". The divisions' management team has focused on the maintenance of high quality customer support and extending the depth of its client base during a year which has seen major restructuring within the legal profession. After 3 years of development the division added to its range of copyrighted products with the launch of the FiLos legal software suite. This is a major investment for Cognito and is expected to accelerate growth in its client base by attracting interest from larger legal practices. The division is continuing its investment in FiLos to further develop the scope and range of the software and appeal to larger firms.

The outlook for the division is for continued improvement in overall performance and profitability based on continued product development and a focus on ensuring the deployment of new products to a wider customer base.

The legal software market has seen substantial consolidation through 2010 which is expected to continue during 2011 as the changes in legal aid support take effect. The division is actively reviewing opportunities to grow through carefully targeted acquisitions and continues to review a number of potential targets.

Green technology products division

The green technology products division made an operating profit of £3,000 (2009:£11,000) on sales of £1,088,000 (£2009:£1,023,000). The division has had continuous success with sales of Powacycle, its budget range of branded electric bicycles, and sales of its premium "Infineum" range of electric bicycles.  Trading conditions within the UK remain depressed as the demand for luxury products continues to be undermined by the general economic conditions however the division has seen growth of sales into continental Europe and a substantial increase in its order book. Sales growth is expected to continue during 2011 supported by the launch of new models based upon the divisions patented technology. The new models will widen market coverage and are expected to increase market share and lead to improvement in the division's profitability.

Green power division

The 100KW solar park installed in Spain is operating and generating revenue based on the fixed revenue of 32 euro cents for a period of 25 years. The completion of the project has led to the award of a grant by the Valencia Energy Agency towards the design and deployment of a small scale solar installation using the latest solar PV technology.  The division announced a United Kingdom based initiative aimed at supplying mid range solar energy projects to schools and the Ministry of Defence. Pilot marketing has resulted in a large number of enquiries which the division is following up. The schemes are based upon the supply of PV solutions without capital cost to the participating organisation, with the division receiving revenue through the receipt of the government backed feed-in tariff scheme introduced into the United Kingdom in April 2010.

The division continues to negotiate with ENEL Spa to finalise a timescale for connecting the proposed Italian solar parks to the Italian high voltage grid. Work has been completed on the construction of a security fence to protect the 22 hectares of land acquired by the company in the Puglia region of Southern Italy. The demand for solar parks based upon concentrated PV is increasing in Italy with the division well placed to demonstrate its ability to deploy this technology.

Group Results

In the year ended 31st December 2010, the group achieved sales of £1,919, 000 (2009:£1,867,000) with operating profit of £356,000 (2009:£221,000).

The pre-tax profit of the group was £353,000 (2009:£214,000). The taxation expense was (£11,000) (2009:£Nil) and therefore the profit for the financial year was £364,000 (2009:£214,000).

The Group had cash at the bank of £663,000 (2009:£886,000). Any balance of cash funds not required for working capital purposes is being placed on short term bank deposit to try and maximise interest receivable. Cash was utilised in the year in the development of solar parks in Spain and the additional cost incurred in the development of solar parks in Italy and the United Kingdom. Cash was also used to fund continued development of software by the IT products division and the design of electric bicycles by the Green products division.

Outlook

Despite the tough economic conditions the outlook for the Group is positive based on a very strong  growth in the  order book and growing revenue. The group philosophy continues to be based on the pursuit of low risk recurring revenues and continued development of environmentally friendly products. We maintain the view that the professional services sector offer opportunities for growth through selective acquisition.

Our investment in new technology for all operating divisions has improved the group's competitive position and is expected to lead to a continued growth in sales.

We will be releasing further news on product launches and developments in the Green Power division in the coming months. 

Enquiries:

Ultima Networks plc

Prof. Humayun Mughal                                                                                                                 +44(0)1279 821200

Chairman and Chief Executive Officer

Allenby Capital Limited (nominated adviser and broker)

Nick Naylor/Nick Athanas/Dan Robinson                                                                                  +44(0)203 328 5656            

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2010

			2010 £000		2009 £000
Revenue			1,919		1,867
Cost of sales			(761)		(713)
Gross profit			1,158		1,154
Administration expenses			(807)		(936)
Other operating income			5		3
Operating profit			356		221
Finance income			(3)		(7)
Profit before taxation			353		214
Taxation recovery			11		-
Profit for the year			364		214
Other comprehensive income: Exchange difference on translating foreign operations			(34)		41
Total comprehensive income for the year attributable to equity holders of the parent			330		255
Basic and diluted earnings per share - pence			0.13		0.10

All amounts relate to continuing activities

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2010

			2010 £000		2009 £000
ASSETS
Non current assets
Property, plant and equipment			1,223		1,171
Intangible assets - development costs			843		464
Goodwill			118		118
Intangible assets - other			163		172
Deferred tax assets			-		-
Total non current assets			2,347		1,925
Current assets
Inventories			419		339
Trade and other receivables			564		637
Cash and cash equivalents			663		886
Total current assets			1,646		1,862
Total assets			3,993		3,787
LIABILITIES
Non current Liabilities
Deferred tax			48		45
Total non current liabilities			48		45
Current liabilities
Trade and other payables			543		711
Current tax liabilities			110		111
Accruals and deferred income			335		293
Total current liabilities			988		1,115
Total liabilities			1,036		1,160
Net assets			2,957		2,627