TIDMPTV
RNS Number : 9235S
PeerTV PLC
30 September 2014
30 September 2014
PeerTV PLC
("PeerTV" or the "Company")
Interim Results
PeerTV plc (AIM:PTV), a provider of technology solutions for the
OTT (TV over the internet) market, and PCB (printed circuit board)
today announces its unaudited results for the six months ending 30
June 2014:
Key Developments
-- Consolidated turnover of $793,000 (H1 2013: $1,274,000) and
total comprehensive loss of $2,025,000 (H1 2013: $1,101,000).
-- Operating loss for the period was $1,530,000 compared to
$477,000 in the same period in 2013. Financial charges for the
period totalled $1,120,000 compared to $935,000 in the same period
in 2013.
Peer TV
-- R&D team continued to focus on supporting Kartina GmbH
("Kartina") the main customer. Android based set top boxes supplied
during 2013 were launched commercially by the customer in January
2014 and were sold successfully, with a reported high level of
customer satisfaction.
-- Expected reorders were delayed by Kartina's decision to
upgrade its network to the newer H265 HEV (High Efficiency Video
Coding) technology. In September 2014, the development of a H265
set top box was completed and presented to the customer resulting
in an order worth about $1.2 million conditional on satisfactory
testing in a maximum period of two months.
-- Management believe that the new H265 box provides PeerTV with a clear competitive advantage.
-- In February 2014, an order was received from PolskyTV a new
customer targeting the Polish-speaking market. Following the
necessary customisation and delays due to amendments to the
framework agreement, the initial 1,000 units were delivered in
August 2014 and are currently being launched to the Polish market
in the UK. Further orders are expected for delivery by the end of
2014 under the framework agreement.
-- Pressures on working capital have prevented PeerTV from
supporting more customers and generally limited marketing
activities. Each sales lead requires significant support from the
R&D team.
Digitek
Sales in the first six months of 2014 were at a similar level to
the same period in 2013. In the period the strategy was to:
-- Maintain and expand Digitek's traditional core business of SMT production.
-- Exploit its expertise across a wide range of product
categories to offer major customers complete products designed to
meet their specific needs and to operate as a direct supplier
rather than a subcontractor, thereby achieving higher margins.
Pressures on working capital forced Digitek to focus almost
exclusively on assembly only projects. At least one major customer
was lost as a result of the inability to supply full turnkey due to
lack of credit capacity to finance the purchase of components. A
joint venture with a main component supplier stalled as a result of
the unexpected death of the CEO and owner of the JV components
business.
In May 2014 Digitek received an order valued at $6.3 million for
the supply of Printed Circuit Boards for smart electric meters, to
an Israeli company for subsequent export. The customer has received
delivery of a first shipment of the products. However, confirmation
of the necessary approvals from the local utility, necessary to
start the mass production stage of the order, have so far not been
received and it cannot be forecast with any certainty when the mass
production will commence.
Post Period Highlights
-- As stated above, PeerTV presented the new H265 set top box to
Kartina and secured a conditional order. It also attended the IBC
2014 major trade exhibition in Amsterdam in September 2014 where
the new product was demonstrated, generating several potential
sales leads.
-- Digitek sales in the third quarter of 2014 have increased
compared to the first two quarters of 2014, However, the sales
performance has fallen short of expectations, particularly during
the months June to August 2014 as a result of various factors,
including:
a) the hostilities in Israel in July and August, which had a
significant impact on performance. Production was disrupted on
several occasions and many customers decided to delay orders
pending an end to the conflict; b) the Company continued to suffer
from a lack of working capital, making it very difficult to bid on
larger turnkey projects. c) the delay in moving to the mass
production stage of the major order.
-- Digitek has ordered a new SMT production line which is
scheduled to become operational during October 2014. It has the
potential to more than double Digitek's production capacity. Its
advanced technology will enable Digitek to support larger customers
who expect state of the art production facilities.
-- In July 2014 the Company raised GBP210,000 before expenses
through a placing of 42,000,000 new ordinary shares of 0.5 pence
each at a price of 0.5 pence per share. In addition the Company
entered into an agreement with YA Global Master SPV Ltd to provide
an equity facility of up to GBP1.5 million under the terms of a
Standby Equity Distribution Agreement ("SEDA"). Up to now it has
not been possible to utilise the SEDA facility due to the Company's
share price.
-- In September 2014 an Extraordinary General Meeting was held
at which it was resolved that the Company reorganise its share
capital such that its existing Ordinary Shares have a lower nominal
value. This was achieved by a subdivision of each existing Ordinary
Share into one ordinary share of 0.05 pence each and one
subordinated share of 0.45 pence each.
-- Also in September 2014 the Company signed an agreement in
respect of a GBP200,000 revolving line of credit with CSS Alpha
(BVI) Ltd (the "Facility") comprising Debtor Financing and Purchase
Order Financing. Overall, the Facility will be secured by a
debenture over the assets of PeerTV plc. In addition to interest,
the Lender will receive warrants exercisable for a period of five
years from the date of each drawdown from the facility in an amount
equal to 100% of each drawdown. The Company has received an initial
GBP100,000 of the Facility, resulting in the issue of warrants to
purchase 41,200,000 Ordinary Shares with an exercise price of
0.25p.
-- The Company's subsidiary Digitek SMT Assemblies Ltd has
called an extraordinary meeting of its Loan Note holders on 21
October 2014 to approve the modification of the Loan Note
Instrument so that the interest due in respect of Q2 and Q3 2014
accrue to the principal of the Loan Notes and to obtain Loan Note
holders' permission to raise financing through the sale of purchase
orders (POs) received by Digitek with an aggregate value not
exceeding GBP100,000 to sources which could include private
investors, funds or lenders associated with the CSS Group of
Companies. Furthermore, reflecting the movement in the Company's
share price the number of warrants to acquire PeerTV plc Ordinary
Shares issued on each GBP10,000 Loan Notes has been increased to
125,000 for six month maturity and 250,000 for twelve month
maturity.
Outlook
-- The global Over the Top ("OTT") Video market, in which PeerTV
operates is growing strongly. According to a recent report by
Digital TV Research OTT video services will be available in 706.5
million TV homes worldwide by 2020, nearly double the 374.4 million
homes expected in 2014.
-- We believe that the conditional order received from our main
customer illustrates the strength of our technology and the
competitive lead that has been established. The challenge is to
exploit that lead by enabling our PeerTV products to be accessible
to new customers with much reduced customization required.
-- On the Digitek side, we are focusing on attracting accounts
from sectors such as military and medical devices which offer
higher margins but also demand higher standards. The new SMT line
is an important part of this strategy and we have indication from
some potential customers of their intention to work with Digitek
once the line is in place.
-- The Group will continue to require investment to provide the
working capital necessary to support the expansion of both business
units.
Further enquiries:
PeerTV Plc
Ossie Weitzman, Chief Financial Officer
Tel: +972 974 07315 Ext.0
Daniel Stewart & Company (Nomad and Broker)
Emma Earl / David Coffman
Tel: +44 (0)20 7776 6550
CONDENSED GROUP INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2014
Six months Six months Year to
to to
30 June 30 June 31 December
2014 2013 2013
Note $'000 $'000 $'000
TURNOVER 3 793 1,274 3,010
Cost of sales (1,285) (1,496) (3,737)
--------------- --------------- ----------------
GROSS PROFIT / (LOSS) (492) (222) (727)
Research and development (375) - (274)
Sales and marketing (69) (42) (109)
General and administrative (539) (377) (898)
Other expenditure (55) 164 217
Exceptional item - - -
- impairment of intangibles
--------------- --------------- ----------------
OPERATING LOSS (1,530) (477) (1,791)
Finance costs (1,120) (935) (2,262)
Other expense (157) (30)
--------------- --------------- ----------------
LOSS BEFORE TAXATION (2,650) (1,569) (4,083)
Taxation - - -
Minority interest 625 468 1,035
--------------- --------------- ----------------
TOTAL COMPREHENSIVE
LOSS (2,025) (1,101) (3,048)
======= ======== ========
Loss per share
4 $(0.01) $(0.02) $(0.04)
Basic ======== ======== ========
Diluted $(0.01) $(0.01) $(0.03)
======== ======== ========
CONDENSED GROUP BALANCE SHEET
FOR THE SIX MONTHS ENDED 30 JUNE 2014
As at As at As at
30 June 30 June 31 December
2014 2013 2013
$'000 $'000 $'000
Unaudited Unaudited Audited
ASSETS
Non-current assets
Intangible assets 2,978 3,265 3,200
Property, plant and equipment 1,194 1,374 1,307
------------- ------------- ------------
4,172 4,639 4,507
Current assets
Inventories 116 357 170
Trade and other receivables 410 426 919
Cash and cash equivalents 103 118 230
------------- ------------- ------------
629 901 1,319
------------- ------------- ------------
Total assets 4,801 5,540 5,826
====== ====== ======
LIABILITIES
Non-current liabilities
Other payables 78 104 77
Loans and loan notes 545 2,180 610
------------- ------------- ------------
623 2,284 687
Current liabilities
Bank overdraft 1,080 626 979
Trade and other payables 3,417 3,550 3,912
Bank and other borrowing 6,297 4,330 6,418
Provisions 83 192 169
------------- ------------- ------------
10,877 8,698 11,478
------------- ------------- ------------
Total liabilities 11,500 10,982 12,165
------------- ------------- ------------
Net liabilities (6,699) (5,442) (6,339)
======= ======= ======
EQUITY
Called up share capital 2,116 533 838
Share premium account 24,356 22,173 23,759
Share options, warrants
and deferred shares 2,625 2,101 2,112
Minority interest (3,191) (1,999) (2,566)
Foreign exchange rate
reserves (395) (12) (297)
Other reserves - on consolidation
under
predecessor accounting (1,817) (1,817) (1,817)
Other reserves - equity
component of
Preference shares 490 490 490
Other reserves- equity - -
component of loan notes
Retained earnings (30,883) (26,911) (28,858)
------------- ------------- ------------
Total equity (6,699) (5,442) (6,339)
======= ======= ======
CONDENSED GROUP CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2014
Six months Six months Year to
to to 31
30 June 30 June December
2014 2013 2013
$'000 $'000 $'000
Unaudited Unaudited Audited
Cash flows from operating
activities
Loss before taxation (2,650) (1,569) (4,083)
Adjustments for:
Finance expense 1,038 935 293
Foreign exchange loss (14) - (238)
Depreciation and amortisation 473 91 686
Movement in provisions, trades
and other receivables 509 69 (424)
Movement in inventories 54 130 317
Movement in trade and other
payables (580) 328 (10)
Share options changes - - -
Impairment of intangible - - -
------------ ------------ --------------
Net cash outflow from operating
activities (1,170) (16) (3,459)
Cash flow from investing
activities
Purchase of fixed assets - - (16)
Intangible assets additions (124) (151) (360)
Withdrawal/ (investment)
in restricted bank deposit - - 3
------------ ------------ --------------
Net cash outflow from investing
activities (124) (151) (373)
Cash flows from financing
activities
Proceeds from borrowings 337 871 2,041
Repayment of borrowings (223) (1,393) (1,819)
Proceeds from loan notes - - -
Issue of shares 952 116 2,796
------------ ------------ --------------
Cash (outflow) / inflow from
financing activities 1,066 (406) 3,018
Net cash (outflow) / inflow
from all activities (228) (573) (814)
Cash and cash equivalents
at beginning of period (749) 65 65
------------ ------------ --------------
Cash and cash equivalents
at end of period (977) (508) (749)
====== ====== ======
Cash and cash equivalents
are made up as follows:
Cash at bank and hand 103 118 230
Bank overdraft (1,080) (626) (979)
------------ ------------ --------------
(977) (508) (749)
====== ====== ======
NOTES TO THE REPORT AND CONDENSED GROUP FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2014
1. BASIS OF PREPARATION
The condensed group financial statements have been prepared
using accounting policies consistent with International Financial
Reporting Standards (IFRS) as endorsed for use by Companies listed
on an EU regulated market and in accordance with IAS34 - "Interim
Financial Reporting". The same accounting policies, presentation
and methods of computation have been followed in the preparation of
these results as were applied in the Group's latest annual audited
financial statements. It is not expected that there will be any
changes or additions to these in the 2013 annual financial
statements.
This statement does not comprise statutory accounts as defined
in Section 434 of the Companies Act 2006 and the results for the
six months ended 30 June 2014 and for the six months ended 30 June
2013 are unaudited.
The financial information for the year ended 31 December 2013 is
an extract from the latest group accounts. Statutory financial
statements for the year ended 31 December 2013, prepared in
accordance with IFRS, on which the auditors gave an unmodified
opinion but did include reference to matters to which the auditors
drew attention by way of emphasis without modifying their
report.
The condensed group financial statements are presented in US
Dollars and all values are rounded to the nearest thousand dollars
($'000) except when otherwise indicated.
During the six month period ended 30 June 2014 the group
incurred a loss of $2,025,000 and had net liabilities of $6,699,000
as at that date.
Subject to the group's ability to raise required funds, the
directors consider that it is appropriate to prepare the financial
statements on the going concern basis. If additional financing by
whatever means is not secured in the next twelve statutory months,
then it is unlikely that the group be able to continue in its
present form.
2. RAISING OF CAPITAL
During the period the company issued shares as follows:
In January 2014 the company issued a private placement
memorandum pursuant to which gross investment of GBP300,500 was
received. 30,050,000 Ordinary Shares were issued at a price of 1p
per share together with an equal number of warrants exercisable at
1.5 p each.
In April 2014 the company issued a private placement memorandum
pursuant to which it received by 30 June 2014 gross investment of
GBP266,300 was received. 26,630,000 Ordinary Shares were issued at
a price of 1p per share together with an equal number of warrants
exercisable at 1.5 p each.
In June 2014 under terms agreed with the holders of the PeerTV
plc 8% Loan Notes in December 2013, Loan Notes to the value of
GBP450,280 were converted to equity at a price of 1.047 p per
Ordinary Share being at an agreed discount to the average price at
which the company raised the same amount from investors during the
quarter ended 31 March 2014.
In addition to the above, during the six months ended 30 June
2014 the Company issued a total of 53,575,093 Ordinary Shares at an
average price of 1.2 p each in lieu of interest and loan
repayments, exercise of options and settlements with certain
creditors.
During the period the company's subsidiary Digitek SMT
Assemblies Limited raised GBP130,000 in secured loan notes and made
payments totalling GBP107,700 to loan note holders requesting
redemption.
3. BUSINESS SEGMENT ANALYSIS
Class of business
The turnover, loss on ordinary activities before taxation and
net liabilities of the group are attributable to two classes of
business.
PeerTV Ltd is engaged in developing and providing hardware and
software to enable the delivery of live broadcasts and video on
demand over the internet to the television. The company develops,
manufactures and supplies end-to-end technology systems for a new
breed of TV operator that seeks to deliver rich, personalized and
highly cost-effective internet TV services.
Through its wholly owned subsidiary SM Digitek (1993) Ltd,
Digitek Holdings Ltd's principal activities are the assembly of
electronic products and components and the associated sourcing and
logistics for companies principally engaged in the hi-tech and
telecommunications industries in Israel. It uses electronic and
computerized equipment, which operates robotically and is geared to
the accurate assembly of the electronic components on the circuit
board in the least possible time.
Geographical areas Turnover by location of
customer
----------------------------------------
Six months Six months Year to
to to
30 June 30 June 31 December
2014 2013 2013
% % %
Unaudited Unaudited Audited
Europe 7 51 22
Israel 93 49 78
Canada - - -
Other - - -
----------- ----------- ----------
100 100 100
===== ===== =====
4. LOSS PER SHARE
Basic loss per share is calculated by reference to the loss on
ordinary activities after taxation of $2,025,000
(30 June 2013- loss of $1,101,000 and 31 December 2013 - loss of
$3,048,000) and on the weighted average of 166,851,497 (30 June
2013 - 59,683,350 and 31 December 2013 - 79,081,357) shares in
issue. The calculation of diluted earnings per share is based on
the loss on ordinary activities after taxation and the diluted
weighted average of 183,075,160 (30 June 2013 - 73,558,939 and 31
December 2013 - 94,164,029) shares calculated as follows:
Number of shares
30 June 30 June 31 December
2014 2013 2013
Number Number Number
Basic weighted average
number of shares 166,851,497 59,683,350 79,081,357
Dilutive potential
ordinary
shares: Share options 16,223,663 13,875,589 15,082,663
------------------------- -------------------------- --------------------------
Diluted weighted average
number of shares 183,075,160 73,558,939 94,164,029
============ ============ ============
5. POST BALANCE SHEET EVENTS
In July 2014 the Company raised GBP210,000 before expenses
through a placing of 42,000,000 new ordinary shares of 0.5 pence
each at a price of 0.5 pence per share. In addition the Company
announced that it had entered into an agreement with YA Global
Master SPV Ltd ("YA"), an investment fund managed by Yorkville
Advisors Global under which YA will provide an equity facility of
up to GBP1.5 million under the terms of a Standby Equity
Distribution Agreement ("SEDA"). 6,400,000 Ordinary Shares were
issued at a price of 0.625p to satisfy various costs which became
due on signing the agreement.
In August 2014 the company issued 5,000,000 new ordinary shares
of 0.5p each in lieu of part repayment of a loan due by the
company's subsidiary SM Digitek (1993) Limited at a price of 0.5p
per share and a further 10,000,000 Ordinary Shares at a price of
0.5p each in part repayment of loans due by the company's
subsidiary PeerTV Limited. It also issued 6,950,000 new Ordinary
Shares at a price of 0.5p in lieu of part repayment of certain fees
and expenses.
In September 2014 an Extraordinary General Meeting was held at
which it was agreed that the Company reorganise its share capital
such that its existing Ordinary Shares have a lower nominal value.
This was achieved by a subdivision of each existing Ordinary Share
into one ordinary share of 0.05 pence each and one subordinated
share of 0.45 pence each. This action had become necessary since
the price at which the Company's ordinary shares traded on AIM had
recently fallen below the nominal value of such ordinary shares,
preventing the issue of any further shares.
Also in September 2014 it was announced that the company had
signed an agreement in respect of a GBP200,000 revolving line of
credit with CSS Alpha (BVI) Ltd comprising Debtor Financing and
Purchase Order Financing. Overall, the Facility will be secured by
a debenture over the assets of PeerTV plc. In addition to interest,
the Lender will receive warrants exercisable for a period of five
years from the date of each drawdown from the facility in an amount
equal to 100% of each drawdown. The exercise price of the warrants
shall be equal to the average of the mid-market price of the shares
of the Company for the five days preceding the date of each
drawdown. On signing the agreement the Company received an initial
GBP100,000 of the Facility, resulting in the issue of warrants to
purchase 41,200,000 Ordinary Shares with an exercise price of
0.25p.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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