TIDMVYKE
RNS Number : 5641T
Vyke Communications PLC
30 September 2010
30 September 2010
Vyke Communications plc
("Vyke" or the "Company")
Interim Results for the six months ended 30 June 2010
Vyke Communications plc (AIM: VYKE), the leading mobile Voice over Internet
Protocol provider, is pleased to announce its Interim Results for the six months
ended 30 June 2010.
Results: six months to 30 June 2010
Ø Gross billing GBP4,929,000 for the period compared to GBP10,499,000 for H1
2009
Ø Overall gross margin on revenue increased to 16.9%; up from 13.6% in H1 2009
Ø EBITDA before exchange gains and losses: Loss GBP1,627,000 (H1 2009: Loss
GBP1,836,000)
Ø EBITDA on continuing activities: Loss GBP1,813,000 (H1 2009: Loss
GBP2,735,000)
Ø Loss on ordinary activities from continuing activities before, and after, tax:
GBP3,038,000 (H1 2009: Loss GBP3,609,000)
Ø Total comprehensive income for the period: Loss GBP2,988,000 (H1 2009: Loss
GBP3,173,000)
Post period end
Ø Major joint venture agreement with Bonjour Europe Limited
Ø Restructured Board
Ø Significant cost reductions
Chairman's statement
Sales, operations, and result for the period
Trading for the first six months of 2010 has very much followed the pattern that
was envisaged by the Board and outlined in the report and accounts for 31
December 2009.
Shareholders will recall that our results in 2009 were severely affected by the
downturn in demand for a number of our products as a result of market
convergence, competition and the global recession. This, together with
technical problems which have been now resolved, caused a significant drop in
our revenues and hence cash reserves, which we were unable to reverse without
further investment.
Given both market conditions and the situation that the Group then found itself
in, raising further investment proved extremely time consuming and difficult,
however we were pleased to report on 22 April 2010 that we had secured a further
GBP3,639,000 of equity funding for the Group. This was approved by shareholders
at the General Meeting on 10 May 2010.
The first half of 2010 continued to be severely affected by cash constraints.
We were therefore unable to develop the Vyke.com business as we would have
wished. In addition, competitive pressures in the telecoms market, particularly
in the Middle East where the bulk of our older VoIP products are sold,
contributed to continuing reduction in overall sales during the period and, for
the same reasons, we were unable address this reduction by increased marketing
or expansion into new territories.
Accordingly, gross billing for the period fell to GBP4,929,000 compared to
GBP10,499,000 for the first half of 2009. Net reported revenue under
International Reporting Standards, which excludes certain distributor
commissions, accordingly fell to GBP3,325,000 for the first half of 2010
compared to GBP7,271,000 for the first half of 2009. Whilst the decline in
overall business is reflected in the gross profit achieved, the continuing shift
of business from the older, lower margin products, into our newer offerings,
gave an overall increase in our gross profit margin based on revenue, up from
12.8% for 2009 to 16.9% for the first six months of this year.
We have continued in our efforts to cut operating costs during the period whilst
improving services to our customers. A number of overhead reductions were made
in the period, particularly in our Norwegian office and more generally across
all offices, and further significant reductions, outlined below, have been made
since June. The Board however recognises that more needs to be done to reduce
overheads to a level compatible with the business and further comment on the
action we are taking is given below.
Administration expenses, before exchange gains and losses, amortisation and
depreciation, have fallen from GBP2,825,000 in H1 2009, to GBP2,609,000 in H2
2009 and to GBP2,190,000 in H1 2010. Expenditure on development of our systems
has also reduced, from GBP829,000 in H1 2009, to GBP544,000 in H2 2009 and
GBP429,000 in H1 2010 reflecting both the need to reduce costs and the fact that
many of our products are now in a stable and well-tested form capable of meeting
the demands of a wide range of VoIP users.
Our core measure of performance, the operating result before exchange gains and
losses, depreciation and amortisation (EBITDA before exchange gains and losses),
has improved further during the period as a consequence of the above actions,
with the losses reduced from GBP1,836,000 in H1 2009 and GBP2,166,000 in H2 2009
to GBP1,627,000 in the first half of 2010.
Exchange losses on operating balances amounted to GBP186,000 (H1 2009 GBP
899,000) in each case with an effective hedge against the investment in
translation of foreign operations which appears separately in the income
statement as part of other comprehensive income. Amortisation and depreciation
charges rose in the period to GBP896,000 (H1 2009 GBP843,000) reflecting the
charges for internally developed products now released to the market.
Operating loss for the period, after exchange gains and losses and depreciation
and amortisation was GBP2,709,000 compared to GBP3,578,000 for the first half of
2009.
After taking into account finance expenses, which reflect the increased cost of
borrowing on the financing obtained in 2009, the loss for the period was
GBP3,038,000 (H1 2009 loss on continuing operations GBP3,609,000). No further
costs were expended on the operations discontinued during 2008 and 2009.
Balance sheet and cash flow
As noted above, the Group raised GBP3,639,000 in cash by way of an equity
funding in the period, of which GBP3,489,000 had been received by 30 June. This
funding has been principally used to continue development of products, to fund
operating losses and to pay outstanding creditors. Operations consumed
GBP2,491,000 in the period (compared to GBP2,986,000 in the first half of 2009)
of which a large element comprised payments of creditors existing at 31 December
2009. Investment in development cost GBP429,000 (H1 2009 GBP829,000). No new
loans were entered into in the period. After taking into account interest costs
and leasing payments, net cash outflow for the period before receipts from
funding amounted to GBP3,045,000 (H1 2009 GBP3,918,000).
The changes to the balance sheet principally reflect these movements. The
decrease in fixed assets arises from the capitalisation of development costs
less the amortisation for the period reflecting the process from the development
stage of the business into the operational utilisation of the assets. Trade and
other receivables have increased from 31 December 2009 as a result of the
inclusion of the outstanding equity receipts of GBP150,000 but otherwise remain
broadly in line with the current business levels. Trade and other payables have
reduced as payments to outstanding creditors at 31 December 2009 were made
whilst borrowings reflect a shift of GBP606,000 of future payments into the
current liabilities section of the balance sheet. Cash balances at the end of
period were GBP805,000.
Events after the end of the period and current trading
It became clear to the Board during the period that, owing to the losses
sustained by the Group and the difficulty in raising finance in the current
market, the Group should consider entering into a further strategic alliance to
secure its future. The Board was pleased therefore to announce on 12 July 2010
that the Group had negotiated an agreement with Bonjour Europe Limited and its
affiliates ("Bonjour"), subject to shareholder approval, to provide access to
new markets, expand the Group's sales in the US and generally accelerate the
growth and development of the Group. This agreement was confirmed by
shareholders at a General Meeting on 5 August 2010. Further details of the
terms of this agreement are available in the announcement made in July and on
the Group's website.
Mohammad Asif, who was previously Business Development Director of BLS Tel
Holdings LLC, the parent company of Bonjour, joined the Board as a nominated
director of Bonjour and has accepted the appointment as Chief Executive Officer
of the Group, and I return to my previous role as Executive Chairman.
The underlying business continues to mature albeit considerably more slowly than
we would have wished particularly as regards our entry into India and Latin
America. We ran a pilot operation in Delhi with O-Zone in July 2010 and rolled
this out to Mumbai, Pune, Bangalore and Kolkara during August. The level of
take-up has been considerably lower than we anticipated which we believe arises
from the nature of the WiFi offering. We are still confident that the Indian
market can provide good revenues, but we need to supplement the WiFi products
with call-back and call-through. Launch of the call-back service is imminent
and we are working with our partners to look at a call-through licence to
operate in India although inevitably this will take longer to bring to fruition.
Our third distribution agreement with Steen Group LLP has not proved
successful and has been terminated.
Trading in Q3 has been in line with Q1 and Q2. Downloads of our software are at
record numbers and we hope to see the benefits of this in terms of revenue
generation in Q4. Furthermore we anticipate that the joint venture with
Bonjour, which is already generating revenues for the Group, will generate
additional revenues in Q4.
Vyke's products are now available from the new Nokia Ovi application store, and
by the end of the year will also be available from Apple's application store.
Our distribution deal with Nimbuzz, the social networking provider, is building
up promisingly, albeit from a low base, and shows great potential for future
growth. However the delays which have occurred to the large scale roll-out of
our products and services have continued to put pressure on the Group's cash
resources and the next few months, whilst we restructure and redevelop our plans
with Bonjour's assistance, will be a challenge.
Vyke is now providing VoIP traffic to Bonjour and, until the profits generated
from increasing VoiP business are sufficient to cover overheads, the Group will
be dependent on the Bonjour traffic to generate cash flows to support its
operation and, in the meantime, in order to meet its immediate requirements the
Group is in advanced negotiations with BLS Tel Holdings LLC in relation to the
provision of a working capital facility. In the event such a facility is put in
place the Board envisages that the Group will have sufficient working capital
for the rest of the current financial year. However, in the event that no
agreement is reached relating to a working capital facility or in the event of
unforeseen circumstances, further capital may be required in the short term.
There can be no certainty as to the terms or availability of such funding.
In addition, to reduce overheads within the Group, Bonjour has undertaken to
provide certain support services to Vyke. As part of that process, in September,
our customer service operation was moved to India where Bonjour's call centre is
based. These reductions have been made in all operational units and, in
particular, the customer service division has been moved to India from Malaysia
where the office will be closed down in Q4. In addition the number of staff at
the Norwegian office has been reduced to two and the main office itself closed
down and the US office will also be closed in Q4 in its entirety.
Further synergies with Bonjour are being planned for the coming months which
will allow for additional substantial reductions in the Group's cost base. We
also hope to be able to commence the marketing of Vyke.com and other services in
the US and Latin America with Bonjour within the next few months where we will
be able to benefit from Bonjour's pre-existing infrastructure.
We look forward to developing this relationship further over the coming months,
and, with it, providing ourselves a springboard to put the Group on a stronger
footing. At the same time, we are also considering a number of potential new
projects and discussions continue about a commercial distribution agreement with
a large UK retail distributor, which, if completed, would considerably enhance
UK sales (although at this stage there is no guarantee that this agreement will
be entered into).
A number of Board changes have been made with effect from 30 September 2010, in
line with the management's recent strategy regarding Board appointments, to add
considerable commercial experience in the telecommunications industry and to
help focus on implementing tight operational controls within the business.
Joining the Board as non-executive Directors with immediate effect are Robert
Passantino, Leonard Carone and Summeet Bhat. Following the new appointments,
Terje Ask Henriksen and Peter Holmgren will be stepping down from their
positions as non-executive Directors with immediate effect.
Tommy Jensen
Executive Chairman
29 September 2010
A copy of this statement is available on the Group's website at
www.vykecorporate.com in accordance with AIM Rule 20.
----ends----
- For further information please contact: Vyke Communications plc
+-----------------------------+-----------------------------+
| Vyke Communications | +44 20 7732 3666 |
| Tommy Jensen, Executive | |
| Chairman | |
+-----------------------------+-----------------------------+
| | |
+-----------------------------+-----------------------------+
| Allenby Capital Limited | +44 20 3328 5656 |
+-----------------------------+-----------------------------+
| Nominated Adviser | |
| Brian Stockbridge / Alex | |
| Price | |
+-----------------------------+-----------------------------+
| | |
+-----------------------------+-----------------------------+
| Daniel Stewart | +44 20 7776 6550 |
+-----------------------------+-----------------------------+
| Paul Shackleton / Martin | |
| Lampshire | |
+-----------------------------+-----------------------------+
| | |
+-----------------------------+-----------------------------+
| Threadneedle Communications | +44 20 7653 9850 |
| | |
+-----------------------------+-----------------------------+
| Graham Herring / Josh Royston |
+-----------------------------+-----------------------------+
Consolidated interim statement of comprehensive income
For the six months ended 30 June 2010
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| | | | Unaudited | | Unaudited | | Audited |
| | | | | | | | Year |
| | | | six | | six | | ended |
| | | | months | | months | | 31 |
| | | | ended 30 | | ended 30 | | December |
| | | | June | | June | | 2009 |
| | | | 2010 | | 2009 | | |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| | Notes | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| Gross billing | 1 | | 4,929 | | 10,499 | | 16,513 |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| | | | | | | | |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| Revenue | 2 | | 3,325 | | 7,271 | | 11,171 |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| Cost of operations | | | (2,762) | | (6,282) | | (9,746) |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| Gross profit | | | 563 | | 989 | | 1,425 |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| Administrative expenses excluding | | | (2,190) | | (2,825) | | (5,434) |
| exchange gains and losses, | | | | | | | |
| amortisation and depreciation | | | | | | | |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| Operating loss before exchange | 4 | | (1,627) | | (1,836) | | (4,009) |
| gains and losses, amortisation | | | | | | | |
| and depreciation | | | | | | | |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| Exchange gains and losses | | | (186) | | (899) | | (110) |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| Amortisation and depreciation | | | (896) | | (843) | | (1,549) |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| Total administrative expenses | | | (3,272) | | (4,567) | | (7,093) |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| | | | | | | | |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| Operating loss | 2 | | (2,709) | | (3,578) | | (5,668) |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| Finance income | | | 2 | | 31 | | 46 |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| Finance expense | | | (331) | | (62) | | (199) |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| Loss before taxation | | | (3,038) | | (3,609) | | (5,821) |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| Taxation | 5 | | - | | - | | - |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| Loss from continuing operations | | | (3,038) | | (3,609) | | (5,821) |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| Loss from discontinued operations | 3 | | - | | (407) | | (369) |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| Loss for the period | | | (3,038) | | (4,016) | | (6,190) |
| all attributable to equity | | | | | | | |
| holders of the Company | | | | | | | |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| Other Comprehensive income: | | | 50 | | 843 | | (7) |
| Exchange gains and losses on | | | | | | | |
| translation of foreign operations | | | | | | | |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
| Total comprehensive income for | | | (2,988) | | (3,173) | | (6,197) |
| the period | | | | | | | |
| all attributable to equity | | | | | | | |
| holders of the Company | | | | | | | |
+-----------------------------------+-------+----------+-----------+----------+-----------+----------+----------+
+-----------------------------------+----+----------+----------+----------+--------+----------+---------+
| Loss per share | | | | | | | |
+-----------------------------------+----+----------+----------+----------+--------+----------+---------+
| Basic and diluted | 6 | | (3.2p) | | (7.7p) | | (10.7p) |
+-----------------------------------+----+----------+----------+----------+--------+----------+---------+
+-----------------------------------+----+----------+----------+----------+--------+----------+---------+
| Loss per share from continuing | | | | | | | |
| operations | | | | | | | |
+-----------------------------------+----+----------+----------+----------+--------+----------+---------+
| Basic and diluted | 6 | | (3.2 p) | | (6.9p) | | (10.1p) |
+-----------------------------------+----+----------+----------+----------+--------+----------+---------+
Consolidated interim balance sheet
At 30 June 2010
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| | | | Unaudited | | Unaudited | | Audited |
| | | | | | | | |
| | | | 30 June | | 30 June | | 31 |
| | | | 2010 | | 2009 | | December |
| | | | | | | | 2009 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| | | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Non-current assets | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Goodwill | | | 11,907 | | 11,900 | | 11,903 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Other intangible assets | | | 5,374 | | 5,499 | | 5,755 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Property, plant and | | | 500 | | 637 | | 658 |
| equipment | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| | | | 17,781 | | 18,036 | | 18,316 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Current assets | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Inventory | | | 15 | | 148 | | 15 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Trade and other receivables | | | 978 | | 1,853 | | 742 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Cash and cash equivalent | | | 805 | | 1,426 | | 368 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Assets classified as held | | | 86 | | 160 | | 115 |
| for resale | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| | | | 1,884 | | 3,587 | | 1,240 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Total assets | | | 19,665 | | 21,623 | | 19,556 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Current liabilities | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Trade and other payables | | | 2,604 | | 2,909 | | 3,351 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Borrowings, including lease | | | 3,192 | | 2,363 | | 2,388 |
| finance | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Liabilities classified as | | | - | | 48 | | - |
| held for resale | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| | | | 5,796 | | 5,320 | | 5,739 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Non-current liabilities | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Borrowings, including lease | | | 131 | | 237 | | 737 |
| finance | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| | | | 131 | | 237 | | 737 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Total liabilities | | | 5,927 | | 5,557 | | 6,476 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Equity | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Share capital | | | 8,735 | | 7,516 | | 7,516 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Share premium account | | | 30,442 | | 28,239 | | 28,239 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Translation reserve | | | (1,725) | | (925) | | (1,775) |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Retained earnings | | | (23,714) | | (18,764) | | (20,900) |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Total equity | | | 13,738 | | 16,066 | | 13,080 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Total equity and liabilities | | | 19,665 | | 21,623 | | 19,556 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
Tommy Jensen
Chairman
29 September 2010
Consolidated interim statement of changes in shareholders' equity
+--------------------------+---------+----------+---------+----------+-------------+----------+----------+----------+---------+
| | Share | | Share | | Translation | | Retained | | Total |
| | | | | | | | | | |
| | capital | | premium | | reserve | | earnings | | |
| | | | | | | | | | |
+--------------------------+---------+----------+---------+----------+-------------+----------+----------+----------+---------+
| | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | | | |
+--------------------------+---------+----------+---------+----------+-------------+----------+----------+----------+---------+
| As at 1 January 2009 | 7,388 | | 25,217 | | (1,768) | | (14,783) | | 16,054 |
+--------------------------+---------+----------+---------+----------+-------------+----------+----------+----------+---------+
| Shares issued in the | 128 | | 3,022 | | - | | - | | 3,150 |
| period | | | | | | | | | |
+--------------------------+---------+----------+---------+----------+-------------+----------+----------+----------+---------+
| Share based payments | - | | - | | - | | 35 | | 35 |
+--------------------------+---------+----------+---------+----------+-------------+----------+----------+----------+---------+
| Total comprehensive | - | | - | | 843 | | (4,016) | | (3,173) |
| income for the period | | | | | | | | | |
+--------------------------+---------+----------+---------+----------+-------------+----------+----------+----------+---------+
| As at 30 June 2009 | 7,516 | | 28,239 | | (925) | | (18,764) | | 16,066 |
+--------------------------+---------+----------+---------+----------+-------------+----------+----------+----------+---------+
| Equity element of | | | | | | | 23 | | 23 |
| convertible loan | | | | | | | | | |
+--------------------------+---------+----------+---------+----------+-------------+----------+----------+----------+---------+
| Share based payments | - | | - | | - | | 15 | | 15 |
+--------------------------+---------+----------+---------+----------+-------------+----------+----------+----------+---------+
| Total comprehensive | - | | - | | (850) | | (2,174) | | (3,024) |
| income for the period | | | | | | | | | |
+--------------------------+---------+----------+---------+----------+-------------+----------+----------+----------+---------+
| As at 31 December 2009 | 7,516 | | 28,239 | | (1,775) | | (20,900) | | 13,080 |
+--------------------------+---------+----------+---------+----------+-------------+----------+----------+----------+---------+
| Shares issued in the | 1,219 | | 3,047 | | - | | - | | 4,266 |
| period | | | | | | | | | |
+--------------------------+---------+----------+---------+----------+-------------+----------+----------+----------+---------+
| Costs relating to share | - | | (844) | | - | | 217 | | (627) |
| issue | | | | | | | | | |
+--------------------------+---------+----------+---------+----------+-------------+----------+----------+----------+---------+
| Revenue related share | - | | - | | - | | 7 | | 7 |
| based payments | | | | | | | | | |
+--------------------------+---------+----------+---------+----------+-------------+----------+----------+----------+---------+
| Total comprehensive | - | | - | | 50 | | (3,038) | | (2,988) |
| income for the period | | | | | | | | | |
+--------------------------+---------+----------+---------+----------+-------------+----------+----------+----------+---------+
| As at 30 June 2010 | 8,735 | | 30,442 | | (1,725) | | (23,714) | | 13,738 |
+--------------------------+---------+----------+---------+----------+-------------+----------+----------+----------+---------+
Consolidated interim cash flow statement
For the six months ended 30 June 2010
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| | | | Unaudited | | Unaudited | | Audited |
| | | | | | | | |
| | | | six | | six | | Year |
| | | | months | | months | | ended |
| | | | ended | | ended | | 31 |
| | | | 30 June | | 30 June | | December |
| | | | 2010 | | 2009 | | 2009 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| | | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Net cash flow before tax | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Loss from operations | | | (3,038) | | (4,016) | | (6,190) |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Adjustments for: | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Investment income | | | (2) | | (31) | | (46) |
| recognised in loss for the | | | | | | | |
| period | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Finance costs recognised in | | | 331 | | 62 | | 199 |
| loss for the period | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Loss on sale of property, | | | - | | - | | 7 |
| plant and equipment | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Loss on disposal of | | | - | | - | | 43 |
| businesses | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Depreciation and | | | 896 | | 843 | | 1,549 |
| amortisation | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Share based payments | | | 7 | | 35 | | 50 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Net (increase)/decrease in | | | (685) | | 121 | | 480 |
| working capital | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Net cash outflow from operations | | | (2,491) | | (2,986) | | (3,908) |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Cash flows from investing | | | | | | | |
| activities | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Purchase of intangible assets | | | (429) | | (829) | | (1,373) |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Purchase of property, plant and | | | - | | (29) | | (44) |
| equipment | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Disposal of property, plant and | | | - | | 34 | | 6 |
| equipment | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Disposal of businesses | | | - | | - | | 37 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Net cash used in investing | | | (429) | | (824) | | (1,374) |
| activities | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Cash flows from financing | | | | | | | |
| activities | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Interest received | | | 2 | | 31 | | 46 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Interest paid | | | (47) | | (17) | | (59) |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Capital element of finance lease | | | (80) | | (122) | | (194) |
| repayments | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| New loans | | | - | | - | | 500 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Issue costs of long term loans | | | - | | - | | (13) |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Proceeds from equity issues | | | 3,489 | | 3,060 | | 3,060 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Issue costs of new equity | | | - | | (90) | | (90) |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Net cash from financing | | | 3,364 | | 2,862 | | 3,250 |
| activities | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Decrease in cash and cash | | | 444 | | (948) | | (2,032) |
| equivalents | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Cash and cash equivalents at the | | | 368 | | 2,408 | | 2,408 |
| beginning of the period | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Effect of changes in exchange | | | (7) | | (34) | | (8) |
| rates on cash | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Cash and cash equivalents at the | | | 805 | | 1,426 | | 368 |
| end of the period | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
Notes to the unaudited interim financial information
1. Basis of preparation and accounting policies
Basis of preparation
The interim financial information is unaudited. The interim financial
information was approved by the Board of Directors on 29 September 2010.
The information for the year ended 31 December 2009 is extracted from the
statutory financial statements for that year which have been reported on by the
Group's auditors and filed with the Registrar of Companies. The auditor's report
on the 2009 statutory accounts is unqualified but includes a reference to
matters on which the auditor drew attention by way of emphasis relating to
Group's reliance on new sales initiatives to provide sufficient liquidity to
enable the Group to meet its liabilities as they fell due and thereby continue
as a going concern.
The financial information in this interim report does not comprise statutory
accounts for the purpose of section 435 of the Companies Act 2006.
Accounting convention
These interim statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) except that International Accounting
Standard IAS 34 "Interim Financial Reporting", which is not mandatory for AIM
companies, has not been adopted in the preparation of this statement. However,
whilst the information in these statements has been prepared in accordance with
recognition and measurement criteria of IFRSs, the statements do not in
themselves give sufficient information to comply with IFRSs.
Accounting policies adopted are consistent with those applied at 31 December
2009 and expected to be adopted at 31 December 2010.
Gross billing and revenue
Gross billing represents the revenue before deducting commissions and bonuses
payable to distributors. In respect of certain sales of pre-paid cards, the
distributor is remunerated by way of commissions and bonuses, payable in terms
of additional cards, and this commission or bonus is deductible from the amount
invoiced. Under IAS 18, which requires revenue to be measured at the fair value
of consideration received or receivable, only the net sum after deducting these
payments is regarded as revenue.
The gross billing figure is shown by way of note to aid comparison with other
entities which remunerate distributors in other ways and account gross for
revenue.
Revenue is measured at the fair value of the consideration received or
receivable. Revenue represents invoiced services and goods, in each case net of
irrecoverable sales tax and trade discount. Services are recorded as they are
delivered. Revenue from goods sold is recorded at the time of delivery.
Going concern
The interim statements are on a going concern basis which assumes adequate
financial resources for the business to continue for the forthcoming twelve
months and which may require the Group to seek further equity or loan capital.
Notes to the unaudited interim financial information continued
2. Segmental information
The Group's revenue and loss for the period from its continuing operations arose
from the following business segments:
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| | | | Unaudited | | Unaudited | | Audited |
| | | | | | | | |
| | | | six | | six | | Year |
| | | | months | | months | | ended |
| | | | ended | | ended | | 31 |
| | | | 30 June | | 30 June | | December |
| | | | 2010 | | 2009 | | 2009 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| | | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Revenue | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Vyke enhanced products | | | 2,878 | | 6,971 | | 10,371 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Vyke wholesale | | | 447 | | 300 | | 800 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Group revenue | | | 3,325 | | 7,271 | | 11,171 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Operating loss | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Vyke enhanced products | | | 72 | | 121 | | (120) |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Vyke wholesale | | | (61) | | 15 | | (181) |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| | | | 11 | | 136 | | (301) |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Unallocated expenses | | | (2,534) | | (2,815) | | (5,257) |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Exchange gains and losses | | | (186) | | (899) | | (110) |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Operating loss | | | (2,709) | | (3,578) | | (5,668) |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
Direct expenses, principally staff salaries for sales staff, commissions,
marketing costs and bad debts, are allocated against individual segments.
Unallocated expenses include technical and customer support infrastructure costs
and administration staff which are common to all segments. Depreciation and
amortisation are included within unallocated expenses. Inter-segment trading is
excluded from revenue.
The Group's revenue from continuing operations derived from the following
regions:
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| | | | Unaudited | | Unaudited | | Audited |
| | | | | | | | |
| | | | six | | six | | Year |
| | | | months | | months | | ended |
| | | | ended | | ended | | 31 |
| | | | 30 June | | 30 June | | December |
| | | | 2010 | | 2009 | | 2009 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| | | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Revenue | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Europe, Africa and the Middle | | | 3,074 | | 6,496 | | 9,749 |
| East | | | | | | | |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Americas | | | 209 | | 377 | | 710 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Asia | | | 42 | | 398 | | 712 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
| Group revenue | | | 3,325 | | 7,271 | | 11,171 |
+-----------------------------------+----+----------+-----------+----------+-----------+----------+----------+
Notes to the unaudited interim financial information continued
3. Discontinued activities
Profits and losses attributable to the discontinued operations were as follows:
+-----------------------------------+----+----------+----------+-----------+----------+-----------+----------+----------+
| | | Unaudited | | Unaudited | | Audited |
| | | | | | | |
| | | six | | six | | Year |
| | | months | | months | | ended |
| | | ended | | ended | | 31 |
| | | 30 June | | 30 June | | December |
| | | 2010 | | 2009 | | 2009 |
+---------------------------------------------------+----------+-----------+----------+-----------+----------+----------+
| | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | |
+---------------------------------------------------+----------+-----------+----------+-----------+----------+----------+
| Gross billing | | | - | | 6,084 | | 9,020 |
+-----------------------------------+----+----------+----------------------+----------+-----------+----------+----------+
| | | | | | | | |
+-----------------------------------+----+----------+----------------------+----------+-----------+----------+----------+
| Revenue | | | - | | - | | - |
+-----------------------------------+----+----------+----------------------+----------+-----------+----------+----------+
| Cost of operations | | | - | | - | | - |
+-----------------------------------+----+----------+----------------------+----------+-----------+----------+----------+
| Gross profit | | | - | | - | | - |
+-----------------------------------+----+----------+----------------------+----------+-----------+----------+----------+
| Administrative expenses excluding | | | - | | (407) | | (326) |
| depreciation and | | | | | | | |
| amortisation | | | | | | | |
+-----------------------------------+----+----------+----------------------+----------+-----------+----------+----------+
| EBITDA and operating loss | | | - | | (407) | | (326) |
+-----------------------------------+----+----------+----------------------+----------+-----------+----------+----------+
| Loss on sale of businesses | | | - | | - | | (43) |
+-----------------------------------+----+----------+----------------------+----------+-----------+----------+----------+
| Loss before taxation | | | - | | (407) | | (369) |
+-----------------------------------+----+----------+----------------------+----------+-----------+----------+----------+
| Taxation | | | - | | - | | - |
+-----------------------------------+----+----------+----------------------+----------+-----------+----------+----------+
| Loss from discontinued operations | | | - | | (407) | | (369) |
+-----------------------------------+----+----------+----------+-----------+----------+-----------+----------+----------+
4. EBITDA
+----------------------------------------+----------+-----------+----------+------------+----------+----------+
| | | Unaudited | | Unaudited | | Audited |
| | | | | six months | | |
| | | six | | ended | | Year |
| | | months | | 30 June | | ended |
| | | ended | | 2009 | | 31 |
| | | 30 June | | | | December |
| | | 2010 | | | | 2009 |
+----------------------------------------+----------+-----------+----------+------------+----------+----------+
| | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | |
+----------------------------------------+----------+-----------+----------+------------+----------+----------+
| Operating loss before exchange gains | | (1,627) | | (1,836) | | (4,009) |
| and losses, amortisation and | | | | | | |
| depreciation | | | | | | |
+----------------------------------------+----------+-----------+----------+------------+----------+----------+
| Less loss on disposal of fixed assets | | - | | - | | 7 |
+----------------------------------------+----------+-----------+----------+------------+----------+----------+
| EBITDA before exchange gains and | | (1,627) | | (1,836) | | (4,002) |
| losses | | | | | | |
+----------------------------------------+----------+-----------+----------+------------+----------+----------+
| Exchange gains and losses | | (186) | | (899) | | (110) |
+----------------------------------------+----------+-----------+----------+------------+----------+----------+
| EBITDA | | (1,813) | | (2,735) | | (4,112) |
+----------------------------------------+----------+-----------+----------+------------+----------+----------+
Notes to the unaudited interim financial information continued
5. Taxation
No tax charge arises in the period. In view of the uncertainty as to the timing
of future profits, no deferred tax credit has been provided in respect of the
losses in the period or past periods.
6. Earnings/loss per share
Loss per share has been calculated as follows
+----------------------------------------+----------+-------------+----------+-------------+----------+-------------+
| | | Unaudited | | Unaudited | | Audited |
| | | | | | | |
| | | six | | six | | Year |
| | | months | | months | | ended |
| | | ended | | ended | | 31 |
| | | 30 June | | 30 June | | December |
| | | 2010 | | 2009 | | 2009 |
+----------------------------------------+----------+-------------+----------+-------------+----------+-------------+
| Weighted average number of shares in | | 94,721,480 | | 51,966,154 | | 57,834,382 |
| issue used in the calculation of basic | | | | | | |
| and diluted earnings per share | | | | | | |
+----------------------------------------+----------+-------------+----------+-------------+----------+-------------+
| Loss for the period attributable to | | (3,038) | | (4,016) | | (6,190) |
| equity holders of the Company | | | | | | |
| (GBP'000) | | | | | | |
+----------------------------------------+----------+-------------+----------+-------------+----------+-------------+
| Loss for the period on continuing | | (3,038) | | (3,609) | | (5,821) |
| operations attributable to equity | | | | | | |
| holders of the Company (GBP'000) | | | | | | |
+----------------------------------------+----------+-------------+----------+-------------+----------+-------------+
No share options, warrants or convertible loans outstanding during the
period were dilutive and all such potential ordinary shares are therefore
excluded from the weighted average number of ordinary shares for the purposes of
calculating diluted earnings per share.
Company Information
Directors
T B Jensen, Executive Chairman
M Asif, Chief Executive Officer
M G Bacchus, Finance Director
J P Rasmussen, Non-executive
T Ask-Henriksen, Non-executive
P Holmgren, Non-executive
Company Secretary
M G Bacchus
Registered Office
1 Harbour Exchange Square
London
E14 9GE
Registered Number
05159777
Nominated adviser and joint brokers
Allenby Capital Limited
Claridge House
32 Davies Street
London
W1K 4ND
Joint brokers
Daniel Stewart & Company PLC
Becket House
36 Old Jewry
London
EC2R 8DD
Registrars
Capita Registrars
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
West Yorkshire
HD8 0LA
Public Relations
Threadneedle Communications Limited
7 Ludgate Broadway
London
EC4V 6D
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR ZMGZLGLVGGZZ
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