| Regulatory
Announcement |
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|
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| Company |
Ultima
Networks PLC |
 |
| TIDM |
UTN |
| Headline |
Half-yearly report |
| Released |
07:00 28-Sep-07 |
| Number |
2305 | |
Ultima Networks plc (the 'Company')
Interim Report for the Six Months ended 30 June 2007
28 September 2007
Chairman's Statement
This is the first set of results announced under IFRS with comparisons against
2006 interim results. The adoption of IFRS represents an accounting change only
and does not affect the operations or cash flows of the Group.
In the six months to 30 June 2007 the Group achieved increased sales of £678,000
(H1 2006: £654,000) and an increased pre-tax profit of £70,000 (H1 2006: profit
£3,000). All of the Group's trading subsidiaries reported operating profits.
The IT and related services division made an operating profit of £27,000 (H1
2006: profit £95,000) on sales of £287,000 (H1 2006: £345,000). This division
comprises Cognito Software and Integrated Publishing Systems. Cognito Software,
the provider of application software and services to the legal profession,
continues to be the major contributor to this division and is being supported by
the recruitment of a stronger management team.
The Green Technology Products Division contributed an operating profit of £24,000 (H1 2006:
profit £10,000) on sales of £391,000 (H1 2006: £309,000). This division solely
comprises UTN Solutions (North) and has found continuing success with its
PowaCycle branded range of electric bicycles, which are complemented by the
regular introduction of new models and are increasingly being sold through a
growing number of appointed dealers throughout the UK.
As stated above, pre-tax profit of the Group was £70,000 (H1 2006: profit
£3,000). The taxation credit of £12,000 (H1 2006: taxation charge £23,000) was
due to the release of a provision of £17,000, which was made at 31 December 2006
and is no longer required. The profit for the financial period after taxation
was £82,000 (H1 2006: loss £20,000), being a significant improvement.
The Group remains debt free and had cash at bank of £907,000 at 30 June 2007.
Any balance of cash funds not required for working capital purposes is being
placed on bank deposit to try and maximize interest receivable. Our main
objective continues to be the profitable expansion of the Group through a
mixture of organic growth and the acquisition of complementary businesses. Our
focus remains on the IT and related services division to achieve this objective.
Prof. Humayun Akhter Mughal
Chairman and Chief Executive Officer
28 September 2007
For further information, contact:
Ultima Networks PLC
Rob Piper, Finance Director Tel: 01279 821200
ARM Corporate Finance
Alan MacKenzie Tel: 020 7512 0191
Consolidated income statement
Six months ended 30 June 2007
Unaudited Unaudited Unaudited
Half Half Full
year year year
Note 2007 2006 2006
£000 £000 £000
Continuing operations
Revenue 1 678 654 1,398
Cost of sales (208) (194) (372)
______ ______ ______
Gross profit 470 460 1,026
Selling and administration (419) (474) (985)
expenses
Other operating income - 120 184
______ ______ ______
Operating profit before 1 51 105 225
exceptional items
Exceptional items (sale of - - 462
freehold property)
______ ______ ______
Operating profit 51 105 687
Finance income 19 - 11
Finance costs - (102) (150)
______ ______ ______
Profit before taxation 70 3 548
Tax income / (expense) 12 (23) (33)
______ ______ ______
Profit / (loss) for the period
attributable to equity holders of 82 (20) 515
the parent ====== ====== ======
Basic and diluted earnings /
(loss) per share derived from
total and continuing operations -
pence 0.04 (0.01) 0.25
====== ====== ======
Consolidated balance sheet
At 30 June 2007
Unaudited Unaudited Unaudited
Half year Half year Full year
2007 2006 2006
£000 £000 £000
ASSETS
Non current assets
Property, plant and equipment 123 134 127
Intangible assets - development costs 5 - 7
Deferred tax asset 4 6 4
______ ______ ______
Total non current assets 132 140 138
______ ______ ______
Current assets
Inventories 254 99 208
Trade and other receivables 139 198 234
Cash and cash equivalents 907 14 832
______ ______ ______
Total current assets 1,300 311 1,274
______ ______ ______
Total non-current assets held for - 3,730 -
sale - freehold property
______ ______ ______
Total assets 1,432 4,181 1,412
______ ______ ______
LIABILITIES
Current liabilities
Financial liabilities - 1,168 -
Trade and other payables 85 51 139
Current tax liabilities 36 35 48
Corporation tax liability 5 9 17
Accruals and deferred income 321 541 305
______ ______ ______
Total current liabilities 447 1,804 509
______ ______ ______
Non current liabilities
Financial liabilities - 2,009 -
______ ______ ______
Total liabilities 447 3,813 509
______ ______ ______
Net assets 985 368 903
====== ====== ======
EQUITY
Capital and reserves attributable
to equity holders of the parent
Called up share capital 7,554 7,554 7,554
Share premium account 5,602 5,602 5,602
Revaluation reserve - 2,071 -
Other reserves 1,334 1,334 1,334
Retained earnings (13,505) (16,193) (13,587)
_______ _______ _______
Total equity 985 368 903
======= ======= =======
Consolidated cash flow statement
Six months ended 30 June 2007
Unaudited Unaudited Unaudited
Half year Half year Full year
2007 2006 2006
£000 £000 £000
Cash flows from operating activities
Operating profit for the financial 51 105 225
period
Depreciation and amortisation 8 60 99
charges
(Increase) / decrease in (46) 15 (94)
inventories
Decrease / (increase) in trade and 95 14 (22)
other receivables
Decrease in trade and other (50) (11) (49)
payables and accruals ______ ______ ______
Cash generated from operations 58 183 159
Taxation - - -
______ ______ ______
Net cash generated from operating 58 183 159
activities ______ ______ ______
Investing activities
Interest received 19 - 11
Purchase of property, plant and (2) (17) (17)
equipment
Purchase of intangible development - - (10)
costs
Proceeds from sale of non-current - - 4,163
assets held for sale ______ ______ ______
Net cash flow from Investing 17 (17) 4,147
activities ______ ______ ______
Financing activities
Interest paid - (81) (226)
Repayment of borrowings - (176) (3,068)
______ ______ ______
Net cash flow from financing - (257) (3,294)
activities ______ ______ ______
Net movement in cash and cash 75 (91) 1,012
equivalents
Cash and cash equivalents at the 832 4 4
beginning of the period
Bank overdrafts at the beginning - (184) (184)
of the period * ______ ______ ______
832 (180) (180)
Cash and cash equivalents at the 907 14 832
end of the period
Bank overdrafts at the end of the - (285) -
period * ______ ______ ______
907 (271) 832
====== ====== ======
* Bank overdrafts are included
within financial liabilities under
current liabilities in the
consolidated balance sheet above.
Reconciliation of net movement in
cash and cash equivalents to
movements in net funds
Net movement in cash and cash 75 (91) 1,012
equivalents
Net movement in debt - 176 3,068
______ ______ ______
Movement in net funds or debt from 75 85 4,080
cash flows ______ ______ ______
Movement in net funds or debt in 75 85 4,080
the period
Net funds / (debt) at the start of 832 (3,248) (3,248)
the period ______ ______ ______
Net funds / (debt) at the end of 907 (3,163) 832
the period ====== ====== ======
Consolidated statement of changes in equity
(i) Six months ended 30 June 2007 - Unaudited
Called up Share Revaluation Other Retained Total
Share capital Premium reserve reserve Earnings equity
£000 £000 £000 £000 £000 £000
At 1 January 2007 7,554 5,602 - 1,334 (13,587) 903
Profit for the period - - - - 82 82
______ ______ ______ ______ ______ ______
At 30 June 2007 7,554 5,602 - 1,334 (13,505) 985
====== ====== ====== ====== ====== ======
(ii) Six months ended 30 June 2006 - Unaudited
Called up Share Revaluation Other Retained Total
Share capital Premium reserve reserve Earnings equity
£000 £000 £000 £000 £000 £000
At 1 January 2006 7,554 5,602 2,071 1,334 (16,173) 388
Loss for the period - - - - (20) (20)
______ ______ ______ ______ ______ ______
At 30 June 2006 7,554 5,602 2,071 1,334 (16,193) 368
====== ====== ====== ====== ====== ======
(iii) Year ended 31 December 2006 - Unaudited
Called up Share Revaluation Other Retained Total
Share capital premium reserve reserve Earnings equity
£000 £000 £000 £000 £000 £000
At 1 January 2006 7,554 5,602 2,071 1,334 (16,173) 388
Profit for the period - - - - 515 515
Sale of freehold property - - (2,071) - 2,071 -
______ ______ ______ ______ ______ ______
At 31 December 2006 7,554 5,602 - 1,334 (13,587) 903
====== ====== ====== ====== ====== ======
Notes
1. Segmental reporting
Unaudited Unaudited Unaudited
Half year Half year Full year
2007 2006 2006
£000 £000 £000
Revenue
United Kingdom 678 654 1,398
______ ______ ______
Total 678 654 1,398
====== ====== ======
Revenue
IT and related services 287 345 778
Other products 391 309 620
______ ______ ______
Total 678 654 1,398
====== ====== ======
Operating profit before exceptional items
IT and related services 27 95 126
Other products 24 10 99
______ ______ ______
Total 51 105 225
====== ====== ======
2. Accounting policies
The Group has previously prepared Group financial statements in accordance with UK Generally Accepted Accounting
Practice ('UK GAAP'). From 1 January 2007 the Group is required to prepare its consolidated financial statements under
International Accounting Standards and International Financial Reporting Standards (collectively 'IFRS') as adopted by
the European Union ('EU'). The Group's date of transition to IFRS is 1 January 2006, being the start of the previous
period that has been presented as comparative information.
The financial information presented in this document has been prepared on the basis of the IFRS in issue that are either
endorsed by the EU and effective at 31 December 2007 or are expected to be endorsed at 31 December 2007. Based on these
adopted and unadopted IFRS, the directors have made assumptions about the accounting policies expected to be applied
when the first annual IFRS statements are prepared for the year ended 31 December 2007. In addition, the adopted IFRS
that will be effective in the annual financial statements for the year ending 31 December 2007 are still subject to
change and to additional interpretations and therefore cannot be determined with certainty. Accordingly, the accounting
policies for that annual period will be determined finally only when the annual financial statements for the Group are
prepared for the year ending 31 December 2007.
3. The effects of the transition to IFRS
In implementing the transition to IFRS, the Group has followed the requirements of IFRS 1 'First Time Adoption of
International Financial Reporting Standards', which in general requires IFRS accounting policies to be applied fully
retrospectively in deriving the opening balance sheet at the date of transition. IFRS 1 contains certain mandatory
exceptions and some optional exemptions to this principle of retrospective application. Where the Group has taken
advantage of the exemptions they are noted below.
It should be noted that reconciliations to previously presented financial statements are not required as there are no
adjustments necessary to any of the figures in this interim statement arising from the adoption of IFRS.
Goodwill and Business Combinations (IFRS 3)
The Group has elected to take the exemption not to apply IFRS 3 retrospectively to business combinations occurring prior
to the date of transition to IFRS. Under IFRS 3 any goodwill arising on such acquisitions is not amortised, but is
subject to impairment reviews. However, as the Group had no goodwill recognised under UK GAAP at 1 January 2006 there
are no adjustments necessary.
Intangible Assets - capitalisation of development costs (IAS 38)
Under UK GAAP all development expenditure was capitalised and amortised over a period of three years in equal
instalments since most of the benefit of the expenditure was expected to fall into this period. There is no change to
this existing policy under IAS 38 required and therefore there are no adjustments necessary.
Income Taxes (IAS 12)
IAS 12 looks at 'temporary differences' between tax and book values for deferred tax whereas UK GAAP assesses
'permanent' and 'timing differences' reversing in future periods. However, as there is no impact arising from this on
either the profit and loss or balance sheet there are no adjustments necessary.
Interim Financial Statements (IAS 34)
As permitted, 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.
4. Taxation
The interim tax credit reflects an estimate of the likely effective tax rate for the period applied to the interim
profit before tax.
5. Dividends
The company has not proposed or declared an interim dividend.
6. Earnings per share
Basic earnings per share has been calculated based on the profit on ordinary activities after taxation and the weighted
average number of shares in issue for the period of 204,747,964 (June 2006: 204,747,964 and December 2006: 204,747,964).
Diluted basic earnings per share has been calculated based on the profit on ordinary activities after taxation and the
weighted average number of shares in issue and dilutative shares for the period of 204,747,964 (June 2006: 204,747,964
and December 2006: 204,747,964).
7. Other information
This interim statement was approved by the board on 25 September 2007 and has not been audited by the company's auditors
Grant Thornton UK LLP. The comparatives for the full year ended 31 December 2006 are not the Company's full statutory
accounts for that year. A copy of the statutory accounts for that year, which were prepared under UK GAAP, 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 237(2)-(3) of the Companies Act 1985.
A copy of this interim statement is available at the Company's registered office at Ultima Networks plc, Akhter House,
Perry Road, Harlow, CM18 7PN or on the company's website, http://www.ultimanetworks.co.uk/