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Ultima Networks PLC (UTN)

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Wednesday 17 August, 2011

Ultima Networks PLC

Half Yearly Report

RNS Number : 4730M
Ultima Networks PLC
17 August 2011
 



Ultima Networks Plc

("Ultima" or the "Company")

 

Interim Results for the six months ended 30 June 2011

 

Ultima, the IT and Green Technology Company, is pleased to announce its unaudited interim results for the six months ended 30th June 2011.

 

Highlights for the period

·      Turnover increased by 95.7% to £1,536,000 (H1 2010: £785,000)

·      Operating profit increased by 77.3% to £195,000 (H1 2010: £110,000)

·      Debt free with cash at bank of £576,000 as at 30 June 2011 (30 June 2010: £305,000)

·      Successful launch of new range of electric bicycles

·      Development of Solar Energy for schools initiative in the UK

 

      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 installations in the United Kingdom and Solar parks in Spain and Italy.

 

Professor Humayun Mughal, Chairman and CEO, commented:

"I am pleased to report that all divisions performed well during the six months ended 30th June 2011. Ultima has achieved group operating profit of £195,000 (H1 2010 : £110,000). The continuous investment into research and new product development has seen all divisions make progress despite market conditions remaining uncertain. The IT Services division has continued the roll out of its FiLos legal software suite which has had good reviews and a positive reception from existing and new clients. The green technology products division has seen a substantial increase in demand for its range of electric bicycles bolstered by the introduction of new models. The range will be supplemented by new designs expected to be released during 2011. The Green power division has concentrated on the development of its free solar energy programme for schools in the UK with the initial installations expected to be commissioned during Q3 2011.  

 

Our main objective going forward continues to be based upon the growth of low risk recurring revenues and the expansion of the company by a mixture of organic growth, through continued investment into the development of new products and an increase in solar energy generation, complemented by a highly selective acquisitions policy.

 

I am delighted to report the progress made by all divisions and the successful introduction of a range of new products. Substantial investment has been made in creating opportunities for growth in the development of solar energy initiatives which will strengthen the group's green credentials and provide a platform for growth in recurring revenues."

 

17th August, 2011

 

 

 

 

 

 

 

 

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

 

Dan Robinson

 

 

Chairman and Chief Executive's Statement

 

Overview

 

Ultima has continued to make progress with a strong first half performance, producing a 77% increase in operating profit compared with the same period in 2010.

 

The IT Services division has accelerated the roll out of its new FiLos legal software suite which has improved the division's competitive position and contributed to the continued increase in sales and profitability despite uncertain market conditions. The division is continuing its programme of investment into product development and improvement and this is expected to continue to provide strong organic growth.

 

The Green technology products division has benefited from a substantial increase in sales into continental Europe. The sales growth, led by new products designed to meet the tastes and technical requirements of the Benelux market has resulted in substantial demand which the Board of Ultima expects to continue to grow. The U.K. market for the division's product offering continues to be impacted by the economic downturn however the Board of Ultima is confident the division is in a strong position to benefit from an increase in consumer confidence. The fluctuation in the value of sterling against the euro and US dollar has increased pressure on margins. However this has been compensated through a substantial increase in turnover resulting in a significant improvement in overall performance. Investment into new models using the company's lightweight patented battery technology continues. These new designs are being developed to take advantage of niche market opportunities which will extend the reach of the division's products.   

 

The Green power division launched the solar energy for schools initiative in January 2011 which offers schools located in the U.K. the benefit of using free electricity with Ultima receiving the government backed feed in tariff. The division is employing the experience gained during the development of its first solar park in Spain and in June 2011 Ultima was granted approved installer status under the solar photovoltaic Microgeneration Certification Scheme. The division has negotiated several agreements with the first installations expected to be completed during Q3 2011. In Italy, the division has continued discussions with ENEL Spa to agree a timetable for connection to the Italian high voltage grid. The delay in the availability of a grid connection has led the division to review the Italian solar project based upon new tariff levels which have now been set at lower levels. The Board of Ultima has however concluded that the Italian project remains viable as a result of the fall in the price of PV modules which combined with  expected falls in project costs offset the reduction in revenue which would arise from the lower tariffs. In Spain, the 100KW solar park installed in Spain is operating and is expected to start contributing revenue for Ultima in the second half of the financial year. This will contribute revenue to the division based on a fixed tariff of 32 eurocents per kilowatt hour for a period of 25 years.

 

At the Company's AGM held on the 6th July 2011 the Company's shareholders passed a resolution to change the name of the company from Ultima Networks plc to Ultima plc, subject to the acceptance of the proposed change of name by the Registrar of Companies. The Registrar of Companies has however rejected the application on the basis that several other companies had a prior claim, one of which was unwilling to grant Ultima permission to change their name. Ultima will therefore continue to be known as Ultima Networks plc. At the same AGM, Matteo Turi stepped down as an Executive Director of the Company to pursue another role which conflicted with his duties at Ultima. The Board of Ultima wish to thank Matteo for his contribution to the Company in his short period of time with the Company.

 

Financial Summary

 

In the six months to 30 June 2011 the group achieved sales of £1,536,000 (H1 2010: £785,000) and an operating profit of £195,000 (H1 2010: operating profit of £110,000). A strong performance from the Green technology products division was a major contributing factor to the improvement in profitability. The Green technology products division almost doubled turnover compared with the first half of 2010 as a result of the launch of new models and a substantial increase in demand from continental Europe.

 

The IT services division made an operating profit of £141,000 (H1 2010: £137,000) on sales of £434,000 (H1 2010: £373,000). This division comprises Cognito Software, a provider of application software and services to the legal profession. 

 

The Green technology products division made an operating profit of £61,000 (H1 2010: operating loss of £13,000) on sales of £1,102,000 (H1 2010: £412,000). 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 £9,000 (H1 2010: operating loss of £14,000). This division holds the assets linked to the development of the group's solar park in Spain and the land and other assets previously acquired to enable the development of solar parks in Puglia, Italy.

 

There was an unallocated profit of £2,000 in the six months to 30th June 2011 (H1 2010: unallocated profit/ (loss) of £Nil).

 

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 2011

 

 



Unaudited

Half year

Unaudited Half Year

Audited

Full Year



2011

2010

2010



£000's

£000's

£000's

Continuing Operations










Revenue


1,536

785

1,919






Cost of Sales


879

289

761






Gross Profit


657

496

1,158






Selling and administration expenses


464

387

807






Other Operating Income


2

1

5






Operating Profit


195

110

356






Finance Cost


(5)

(1)

(3)






Profit before taxation


190

109

353











Taxation recovery


-

-

11






Exchange difference on translating foreign operations


-

-

(34)
















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


190

109

330






Basic and diluted earnings per share -pence


0.06

0.039

0.13

 

 

 

 

 

Consolidated Statement of financial position

 


30/06/2011

Unaudited

Half year

30/06/2010

Unaudited Half Year

31/12/2010

Audited

Full Year


2011

2010

2010


£000's

£000's

£000's

ASSETS








Non Current assets




Property, plant, equipment

1,226

1,227

1,223

Intangible assets - development costs

1,032

681

843

Goodwill

118

118

118

Intangible assets - other

157

167

163









Total non current assets

2,533

2,193

2,347





Current assets




Inventories

564

377

419

Trade and other receivables

1,048

573

564

Cash and other equivalents

576

305

663





Total current assets

2,188

1,255

1,646





Total assets

4,721

3,448

3,993





LIABILITIES

 

Non Current liabilities




Deferred tax

48

48

48

Total non current liabilities

48

48

48





Current Liabilities




Trade and other payables

1,015

334

543

Current tax liabilities

63

64

110

Accruals and deferred income

406

267

335





Total current liabilities

1,484

665

988





Total liabilities

1,532

713

1,036





Net assets

3,189

2,735

2,957





EQUITY




Capital and reserves attributable to equity holders of the company




Called up share capital

8,299

8,269

8,269

Share premium account

5,843

5,831

5,831

Other reserves

202

202

202

Retained earnings

(11,162)

(11,608)

(11,352)

Translations of foreign operations

7

41

7

Total equity

3,189

2,735

2,957

 

 

 

Consolidated statement of cash flows


Unaudited

Half year

Unaudited Half Year

Audited

Full Year


2011

2010

2010


£000's

£000's

£000's

Cash Flows from operating activities




Profit for the financial period

190

109

364

Taxation expense

-

-

(11)

Interest receivable

2


3

Interest payable

(5)

(1)

-

Depreciation charges

5

3

8

Amortisation of intangibles

77

21

39





Operating profit before changes in working capital

269

132

403





Decrease/(Increase) in inventories

(145)

(38)

(80)

Decrease/(Increase) in trade and other receivables

(484)

64

73

(Decrease)/increase in trade payables and other current liabilities

 

496

(449)

(109)

Cash (used in)/generated from operations

136

(291)

287





Taxation

-

-

(14)





Net cash (used in)/generated by operating activities

136

(291)

273





Cash flow from investing activities








Purchase of property, plant and equipment

(8)

(59)

(81)

Development expenditure

(260)

(232)

(412)

Other intangibles

-

-

-

Net proceeds of ordinary share issue

42

-

-





Net cash used in investing activities

(226)

(291)

(493)





Cash flows from financing activities








Interest (received)/payable

3

1

(3)





Net cash(used in)/generated by financing activities

3

1

(3)





Net decrease in cash and cash equivalents

(87)

(581)

(223)





Cash and cash equivalents at beginning of the period

663

886

886





Cash and cash equivalents at end of the period

576

305

663

 

 

 

 

 

 

 

Consolidated statement of changes in equity

 

(i)         Six months ended 30 June 2011 - unaudited

 


Called up share capital

Share Premium

Other

reserves

Retained earnings

Translation of foreign operations

Total Equity

At 1 January 2011

8,269

5,831

202

(11,352)

7

2,957

Issue Share Capital

30

12




42

Profit for the period




190


190















At 30 June 2011

8,299

5,843

202

(11,162)

7

3,189

 

 

 

(ii)        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

Loss for the period




109


109















At 30 June 2010

8,269

5,831

202

(11,607)

41

2,736

 

 

 

(iii)       Year ended 31 December 2010 - Audited

 


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

Issue of share capital

-

-

-



-

Total comprehensive income for the year

-

-

-

364

(34)

330








At 31 December  2010

8,269

5,831

202

(11,352)

7

2,957

 

 

 

 

 

 

 

1.   Segmental reporting

 

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

 

As at 30th June 2011, the Group is organised into three principal business segments:

 

·     IT and related 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 and installation of solar power)

 

The segmental results for the half year ended 30th June 2011 are as follows:

 

 


Unaudited

Half year

Unaudited Half Year

Audited

Full Year


2011

2010

2010


£000's

£000's

£000's





Revenue




United Kingdom

1,536

785

1,919

Italy


-

-

Spain


-

-

Total

1,536

785

1,919

 

Revenue




IT Services (UK)

434

373

831

Green technology and products (EU)

1,102

412

1,088

Green Power division (Italy)

-

-

-

Unallocated

-

-

-


.



Total

1,536

785

1,919





Operating profit before exceptional items




IT Services (UK)

141

137

377

Green technology and products (EU)

61

(13)

3

Green Power division (Italy)

(9)

(14)

(24)

Unallocated

2

-

-





Operating profit

195

110

356





Finance Income/(payable)

(5)

(1)

(3)





Profit before taxation and exceptional item

190

109

353

Taxation Recovered

-

-

11

Exchange difference on translating foreign operations

-

-

(34)

Profit before taxation

190

109

330



 

 

 

 


 

 

 

Unaudited

Half year

Unaudited Half Year

Audited

Full Year


2011

2010

2010


£000's

£000's

£000's

Depreciation




IT Services (UK)

1

1

2

Green technology and products (EU)

2

-

2

Green Power division (Italy)

-

-

-

Unallocated

2

2

4

Group Total

5

3

8





Amortisation




IT Services (UK)

38

5

10

Green technology and products (EU)

36

13

24

Green Power division (Italy)

2

3

5

Group Total

76

21

39





Segment Assets




IT Services (UK)

745

517

642

Green technology and products (EU)

1,698

936

1,283

Green Power division (Italy)

952

1,395

927

Unallocated

1,326

601

1,141





Group

4,721

3,449

3,993





Segmental liabilities




IT Services (UK)

(212)

(212)

(253)

Green technology and products (EU)

(662)

(92)

(288)

Green Power division (Italy)

(46)

(46)

(49)

Unallocated

(612)

(363)

(446)





Group

(1,532)

(713)

(1,036)





Net assets




IT Services (UK)

533

305

389

Green technology and products (EU)

1,036

844

995

Green Power division (Italy)

906

1,349

878

Unallocated

714

238

695





Group

3,189

2,736

2,957





Capital Expenditure








IT Services (UK)

116

106

214

Green technology and products (EU)

77

42

108

Green Power division (Italy)

28

86

87

Unallocated

48

59

60





Group

269

293

469

 

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 2010

 

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 2011 and 30 June 2010.

 

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 276,426,538 (June 2010: 276,176,538 and December 2010: 276,176,538). There are no options having a dilutive impact on earnings per share.

 

6           Other information

This interim statement was approved by the board on 16 August 2011 and has not been audited by the company's auditors Frank P Dongworth & Co. The comparatives for the full year ended 31 December 2010 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 2010 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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