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Ultima Networks PLC (UTN)

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Thursday 19 August, 2010

Ultima Networks PLC

Half Yearly Report

RNS Number : 2947R
Ultima Networks PLC
19 August 2010
 



19 August 2010

 

Ultima Networks Plc

("Ultima" or the "Company")

 

Interim Results for the six months ended 30 June 2010

 

Ultima, the IT and Green Technology Company, is pleased to announce its unaudited interim results for the six months ended 30th June 2010.

 

Highlights for the period

·      Turnover of £785,000 (H1 2009: £894,000)

·      Operating profit of £110,000 (H1 2009: loss of £10,000)

·      Debt free with cash at bank of £305,000 (H1 2009: £77,000)

·      Solar Park Spain commissioned and generating electricity

·      FiLos legal software suite launched

 

      Ultima operates through three divisions: the IT Services division, the Green technology products division and the Green power division. The IT Services division develops and supplies computer based application software and services to the legal profession, the Green technology products division develops and supplies electric powered bicycles and specialist electrical goods whilst the Green power division is focused on the development of clean power generation through solar power parks in Spain and Italy.

 

Professor Humayun Mughal, Chairman and CEO, commented:

I am pleased to report that, despite the continuation of tough trading conditions during the six months ended 30 June 2010, Ultima has achieved group operating profit of £110,000 (H1 2009: loss of £10,000). All divisions have continued their commitment to research and development of new products resulting in the release by the IT Services division of the FiLos legal software suite and the completion of the design of a new generation of electric bicycles by the Green technology products division. The Board of Ultima expects that this continued investment into leading edge technology will help Ultima take advantage of changes in the economy. The IT services division has performed strongly, and the Board of Ultima expects this to continue. The Board of Ultima anticipate that the Green technology products division will benefit from new product release and improvement in consumer confidence and that the Green power division will build upon its successful commissioning of the pilot solar power park in Spain. 

 

Our main objective going forward continues to be based upon the pursuit of low risk, recurring revenues, and the expansion of the Company through a mixture of organic growth, continued investment into development of green technology complemented by a highly selective acquisitions policy.

 

I am pleased by the progress made in the introduction of new products and remain excited by the opportunities made available by the development of solar parks and the opportunity this brings to Ultima in further strengthening the group's green credentials and improving the prospects for growth in recurring revenue.

 

19 August, 2010

 

 

 

Enquiries:

 

Ultima Networks Plc

Humayun Mughal, Chairman and CEO

Anthony Klein, Finance Director

 

01279 821200

Allenby Capital Limited (nominated adviser and broker)

0203 3285656

Nick Naylor

 

Nick Athanas

 

Alex Price

 

 

Chairman and Chief Executive's Statement

 

Overview

 

Ultima continues to make progress with overall operating profit up significantly compared with the loss sustained in the first half of 2009.

 

Despite consolidation within the legal marketplace, the IT services division has continued to grow through increased sales of its range of software products and services.  The Board expects that the launch of the all new legal software suite "FiLos" will further improve competitiveness and attract interest from larger legal practices. The division is benefiting from a strong management team and is looking to continue to grow organically and through carefully targeted acquisitions.

 

The Green technology products division has experienced continued difficult market conditions with a reduction in consumer demand for luxury products.  Turnover in the division was down 23.5% compared with the first half of 2009. However, through control of overheads the division reported improvement at the operating loss level compared with the same period for 2009. The fluctuation in the value of sterling against the dollar and the relative weakness in euro/dollar exchange rates had a negative impact on sales into mainland Europe although this was partly compensated by an increase in the number of UK based dealers actively promoting the product range. Prototypes of the latest bicycle designed specifically for the BENELUX market are being tested and the Board expects these to enter full production during 4th quarter of 2010. The new design uses the Company's patented lightweight battery technology and has been developed to meet the consumer preferences of this important market sector.  

 

The period to 30 June 2010 saw the commissioning of the Company's first solar park in Spain. This relatively small scale park has enabled the Green power division to gain experience in managing the logistics and construction of solar parks which will be invaluable in the development of future schemes. This first installation will produce 100KW of electricity and generate fixed revenue on a tariff of 32 euro cents per kilowatt hour for a period of 25 years. In Italy, the division continues to negotiate with ENEL Spa to finalise details for the connection to the Italian high voltage grid. Delay in reaching agreement with ENEL Spa would prevent the construction of the parks within the acceptance date set for the current tariff.  New tariff levels are being set at a lower market price which would result in reduced revenue to the Company, however, a fall in the price of PV modules and expected lower project costs would help offset the reduction in revenue which would be caused by lower tariffs. Accordingly, the Board of Ultima believe that should it be necessary to work with the new feed in tariff the project will nevertheless remain attractive.  In addition Ultima are continuing discussions with parties who have shown interest in providing the debt funding which will be required to support the construction of the proposed three 1 MW Solar Parks planned for Puglia.

 

The Board remains committed to investment in green technology and solar power as it believes that these developments are strategically important for the future development and growth of the group and represent an opportunity to grow revenues over the coming years.

 

 

Financial Summary

 

In the six months to 30 June 2010 the group achieved sales of £785,000 (H1 2009: £894,000) and an operating profit of £110,000 (H1 2009: operating loss of £10,000). A strong performance from the IT services division was the major contributing factor to the improvement in profitability. The Green technology products division experienced a 23.5% fall in turnover compared with the first half of 2009 as a result of a reduction in consumer demand for luxury products and the impact of currency fluctuations.

 

The IT services division made an operating profit of £137,000 (H1 2009: £39,000) on sales of £373,000 (H1 2009: £354,000). This division comprises Cognito Software, a provider of application software and services to the legal profession. 

 

The Green technology products division made an operating loss of £13,000 (H1 2009: operating loss of £35,000) on sales of £412,000 (H1 2009: £539,000). This division comprises UTN Solutions (North) which continues to develop its range of electric bicycles marketed under its PowaCycle and Infineum brands.

 

The Green power division made an operating loss of £14,000 (H1 2009: operating of loss £12,000). This division holds the assets linked to the development of the group's solar park in Spain and the land and other assets acquired to enable the development of solar parks in Puglia Italy.

 

There were no unallocated profit/(losses) in the six months to 30th June 2010 (H1 2009: unallocated loss of £2,000).

 

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

 

 

 

Consolidated Statement of Comprehensive Income

Six Months ended 30thJune 2010

 

 



Unaudited

Half year

Unaudited Half Year

Audited

Full Year


Note

2010

2009

2009



£000's

£000's

£000's

Continuing Operations

1









Revenue


785

894

1,867






Cost of Sales


289

380

713






Gross Profit


496

514

1,154






Selling and administration expenses


387

524

936






Other Operating Income


1

-

3






Operating Profit/(Loss)


110

(10)

221






Finance Income


(1)

-

(7)






Profit/(Loss) before taxation


109

(10)

214






Exchange difference on translating foreign operations


-

-

41






Tax Income/(expense)


-

-

-






Total comprehensive income for the period attributable to equity holders of the company


109

(10)

255






Basic and diluted earnings per share -pence


0.039

(0.005)

0.10

 

 

Consolidated Statement of financial position

 


30/06/2010

Unaudited

Half year

30/06/2009

Unaudited Half Year

31/12/2009

Audited

Full Year


2010

2009

2009


£000's

£000's

£000's

ASSETS








Non Current assets




Property, plant, equipment

1,227

816

1,171

Intangible assets -development costs

681

265

464

Goodwill

118

118

118

Intangible assets - other

167

172

172

Deferred tax asset

-

6

-





Total noncurrent assets

2,193

1,377

1,925





Current assets




Inventories

377

395

339

Trade and other receivables

573

354

637

Cash and other equivalents

305

77

886





Total current assets

1,255

826

1,862





Total assets

3,448

2,203

3,787





LIABILTIES




Deferred tax

48

48

45

Total noncurrent liabilities

48

48

45





Current Liabilities




Trade and other payables

334

401

711

Current tax liabilities

64

93

111

Accruals and deferred income

267

243

293





Total current liabilities

665

737

1,115





Total liabilities

713

785

1,160





Net assets

2,735

1,418

2,627





EQUITY




Capital and reserves attributable to equity holders of the company




Called up share capital

8,269

7,554

8,269

Share premium account

5,831

5,602

5,831

Other reserves

202

202

202

Retained earnings

(11,608)

(11,940)

(11,716)

Translations of foreign operations

41

-

41

Total equity

2,735

1,418

2,627

 

 

 

Consolidated statement of cash flows


Unaudited

Half year

Unaudited Half Year

Audited

Full Year


2010

2009

2009


£000's

£000's

£000's

Cash Flows from operating activities




Profit/(Loss) for the financial period

109

(10)

214

Taxation expense


-

-

Interest receivable

(1)

-

7

Depreciation charges

3

6

14

Amortisation of intangibles

21

15

33





Operating profit before changes in working capital

132

11

268





(Decrease)/Increase in inventories

(38)

57

113

Increase in trade and other receivables

64

50

(233)

Decrease/increase in trade payables and other current liabilities

(449)

232

624

Cash (used in)/generated from operations

(291)

350

772





Taxation

-

-

(17)





Net cash(used in)/generated by operating activities

(291)

350

755





Cash flow from investing activities








Purchase of property, plant and equipment

(59)

(202)

(518)

Development expenditure

(232)

(193)

(410)

Other intangibles


-

-

Net proceeds of ordinary share issue


-

944





Net cash (used in)/generated by investing activities

(291)

(395)

16





Cash flows from financing activities








Interest received

1

-

(7)





Net cash(used in)/ generated by financing activities

1

-

(7)





Net (decrease)/increase in cash and cash equivalents

(581)

(45)

764





Cash and cash equivalents at beginning of the period

886

122

122





Cash and cash equivalents at end of the period

305

77

886

 

 

 

Consolidated statement of changes in equity

 

(i)         Six months ended 30 June 2010 - unaudited

 


Called up share capital

Share Premium

Other

reserves

Retained earnings

Translation of foreign operations

Total Equity

At 1 January 2010

8,269

5,831

202

(11,716)

41

2,627

Profit for the period




109

















At 30 June 2010

8,269

5,831

202

(11,607)

41

2,736

 

 

 

(ii)        Six months ended 30June 2009 -unaudited

 


Called up share capital

Share Premium

Other

reserves

Retained earnings

Translation of foreign operations

Total Equity

At 1 January 2009

7,554

5,602

202

(11,930)

-

1,428

Loss for the period




(10)


(10)















At 30 June 2009

7,554

5,602

202

(11,940)

-

1,418

 

 

 

(iii)       Year ended 31 December 2009 - Audited

 


Called up share capital

Share Premium

Other

reserves

Retained earnings

Translation of foreign operations

Total Equity

At 1 January 2009

7,554

5,602

202

(11,930)

-

1,428

Issue of share capital

715

229

-



944

Total comprehensive income for the year

-

-

-

214

41

255








At 31 December  2010

8,269

5,831

202

(11,716)

41

2,627

 

 

 

1.   Segmental reporting

 

The Group operates in the United Kingdom, Italy and Spain.

 

As at 30th June 2010, the Group is organised into three principal business segments:

 

·     IT Services (comprising legal and publishing application software)

·     Green technology products division (comprising electric bicycles, energy saving lamps, and educational electronic kits)

·     Green Power Division (development of Solar Parks)

 

The segmental results for the half year ended 30th June 2010 are as follows:

 

 


Unaudited

Half year

Unaudited Half Year

Audited

Full Year


2010

2009

2009


£000's

£000's

£000's





Revenue




United Kingdom

785

893

1,867

Italy


1

-

Spain


-

-

Total

785

894

1,867

 

Revenue




IT Services (UK)

373

354

816

Green technology and products (EU)

412

539

1,023

Green Power division (Italy)

-

1

-

Unallocated

-

-

28


.



Total

785

894

1,867





Operating profit/(loss) before exceptional items




IT Services (UK)

137

39

237

Green technology and products (EU)

(13)

(35)

11

Green Power division (Italy)

(14)

(12)

(27)

Unallocated

-

(2)

-





Operating profit/(loss)

110

(10)

221





Finance Income/(payable)

(1)

-

(7)





Profit/(loss) before taxation and exceptional item

109

(10)

214

Exchange difference on translating foreign operations

-

-

41

Profit/(loss) before taxation

109

(10)

255

 

 




 

 

 

Unaudited

Half year

Unaudited Half Year

Audited

Full Year


2010

2009

2009


£000's

£000's

£000's

Depreciation




IT Services (UK)

1

2

6

Green technology and products (EU)

-

2

4

Green Power division (Italy)

-

-

-

Unallocated

2

2

4

Group Total

3

6

14





Amortisation




IT Services (UK)

5

10

12

Green technology and products (EU)

13

3

16

Green Power division (Italy)

3

2

5

Group Total

21

15

33





Segment Assets




IT Services (UK)

517

552

563

Green technology and products (EU)

936

579

726

Green Power division (Italy)

1,395

544

1,251

Unallocated

601

428

1,247





Group

3,449

2,203

3,787





Segmental liabilities




IT Services (UK)

(212)

(370)

(240)

Green technology and products (EU)

(92)

(48)

(308)

Green Power division (Italy)

(46)

(16)

(15)

Unallocated

(363)

(351)

(597)





Group

(713)

(785)

(1,160)





Net assets




IT Services (UK)

305

182

323

Green technology and products (EU)

844

531

418

Green Power division (Italy)

1349

628

1,236

Unallocated

238

77

650





Group

2,736

1,418

2,627





Capital Expenditure








IT Services (UK)

106

56

218

Green technology and products (EU)

42

28

60

Green Power division (Italy)

86

109

292

Unallocated

59

-

403





Group

293

193

973

 

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 2009

 

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 2010 and 30 June 2009.

 

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 on ordinary activities after taxation and the weighted average number of shares in issue for the period of 276,176,538 (June 2009: 204,747,964 and December 2009: 207,724,155). There are no options having a dilutive impact on earnings per share.

 

6           Other information

This interim statement was approved by the board on 18 August 2010 and has not been audited by the company's auditors Frank P Dongworth & Co. The comparatives for the full year ended 31 December 2009 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 2009 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.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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