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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Vividas | LSE:VDS | London | Ordinary Share | GB00B04NK713 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 3.25 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:9868Q
Vividas Group plc
28 March 2008
VDS
VIVIDAS GROUP PLC
("Vividas" or "the Group")
Announces
Interim Results for the six months to 31 December 2007
Vividas has developed market leading video streaming technology.
KEY POINTS
* Sales of £512,000 (2006: £588,000)
* Pre-tax loss of £1,875,000 (2006: loss of £1,413,000). Loss per share of
5.35p (2006: loss of 5.04p)
* Placing in December 2007 raised £2,275,000 net. (Proceeds received in
January 2008)
* Strategic review resulted in restructuring programme, commenced January
2008:
- focus on Live and On-demand sports and entertainment markets together
with niche broadcasters
- extend network of resellers and channel partners
- annual cost savings of £1.0m expected
* Recent contract wins with:
- Thomson Financial, Adstream, Rip Curl, SFX Sports Group, PMTV and
American TeVe
* New resellers signed in all major regions - Asia Pacific, EMEA and North
America
* Launch of new VivStreamTM Video Platform planned for April
- expected to be the most advanced video streaming platform available
- highly attractive product for video content owners, broadcasters and
resellers
* Prospects positive although continuing challenges
David Pearson, Chairman, commenting on prospects, said,
"Vividas remains focused on developing traction in the Live and On-demand sports
and entertainment markets as well as niche broadcasters, while addressing other
markets through channel partners. The cost reduction process announced in
January is now substantially completed and will deliver significant overhead
savings.
An important development for the business will be the planned launch in April of
our new VivStreamTM Video Platform. We believe this new platform will represent
the most advanced and comprehensive platform available in the market place. It
will enable content owners, broadcasters and resellers to roll out an end-to-end
Internet TV channel (for On-demand or Live events), or a portal for Pay Per
View, solutions quickly and easily.
We expect this new platform to help drive sales both for our own direct sales
teams and for our channel partners and it underpins our growth expectations for
the business over the remainder of the current financial year and beyond. Early
market acceptance of this exciting breakthrough will be a key factor in the
achievement of our sales forecasts."
For further information, please contact:
www.vividas.com.
Vividas Group plc +44 20 7189 5532
Paul Neville, Chief Executive Officer
Greg Minns, Group Finance Director
Biddicks +44 20 7448 1000
Katie Tzouliadis / Sophie Lane
HB Corporate +44 20 7510 8600
Imran Ahmad / Rory Creedon
Notes for Editors:
Quoted on AIM, Vividas Group plc (VDS.L) has developed and provides video
streaming technology and related products which enable full screen, very high
quality video to be played via networks, including the Internet or corporate
networks, without normally requiring software installation.
Vividas's proprietary technology overcomes the disadvantages of competing CD and
streaming market solutions. These competing technologies typically offer only
partial screen, or poor quality full screen, viewing and generally require the
user either to have or to install specialist player software.
For more information visit www.vividas.com
INTERIM STATEMENT
Introduction
Vividas continues to face challenges as it seeks to commercialise its products
and establish a strong presence in its chosen markets. Our technology is at the
forefront of video streaming, a market which is still in its infancy, and while
there is significant interest in our products, we are seeing a slower uptake of
video streaming technologies by companies and end users than expected, as we
announced in our trading update in January.
In order to adapt to prevailing trading conditions, we undertook a strategic
review in the first half of the financial year. As a result, we took the
decision to streamline the Group's activities in order to remove cost and to
concentrate, in the short term, on those markets where uptake is more advanced.
Our key focus is now on the Live and On-demand sports and entertainment markets
as well as on niche broadcasters, with other markets addressed via channel
partners.
At the end of December, we also raised £2.5m (gross) of new funding from
Ignition Capital LLC ("Ignition Capital") in a placing of shares. The investment
brings Ignition Capital's holding in the Group to 23.3%.
Impact of Adoption of IFRS
The unaudited interim results are the first set of financial figures the Group
has reported under International Financial Reporting Standards ("IFRS").
Comparative information has been restated in accordance with the transitional
rules governing the change from UK GAAP to IFRS and a full reconciliation of the
changes impacting the comparative figures is shown in the notes to the interim
financial statements.
The impact of adopting IFRS has meant that the consolidated pre-tax loss for the
six months to 31 December 2007 is £217,000 (6 months to 31 December 2006:
£182,000) less than it would have been if the Group were still reporting under
UK GAAP. The changes primarily relate to the non amortisation of goodwill
(IFRS3 - Business Combinations) and the capitalisation and then amortisation of
development costs for intangible assets (IAS38 - Intangible Assets), previously
expensed under UK GAAP.
Financial Review
In the six months to 31 December 2007, the Group generated sales of £512,000
(2006: £588,000). Gross margin reduced to 33.6% from 56.8% as a result of the
lower sales and increased fixed production costs, including higher number of
encoders required for trials. Operating expenses increased by 17% due to
investment in marketing and product and business development. The resulting
pre-tax loss was £1,875,000 (2006: loss of £1,413,000) and the loss per share
was 5.35p (2006: loss per share 5.04p).
During the first half, expenditure on development costs capitalised increased to
£263,000 (2006: £181,000) largely due to investment in new staff in the
development department.
Net cash outflow for the period was £1,759,000 which represented the net of
operating loss before amortisation and a cash outflow from capital expenditure
and development costs. At 31 December 2007, net cash was £118,000 (2006:
£3,370,000). However, this figure excludes the net proceeds from the placing in
December of £2,275,000 and a tax refund of £173,000 relating to research and
development expenditure in Australia. The net refinancing proceeds have been
included in the balance sheet at 31 December 2007 as the new ordinary shares
relating to the placing were admitted to trading on AIM on 31 December 2007 and
give a total equity of £3,519,000 (2006: £4,210,000).
Following the restructuring programme we commenced in early 2008, operating
costs have now been significantly reduced and by the year end, we expect to
realise annualised savings of £1,000,000, with an associated one-off cost of
approximately £300,000.
Placing
Vividas raised new finance, in December 2007, via a placing of 7,142,857 new
ordinary shares at a subscription price of 35 pence per new ordinary share to
raise £2,500,000 gross and net proceeds of £2,275,000. The shares were placed
with Ignition Capital UK Limited, a wholly owned subsidiary of Ignition Capital,
the Delaware based company whose managing member is Mr Aubrey Chernick. Ignition
Capital was an existing investor in Vividas and the additional shares were
admitted to trading on 31 December 2007.
Operational Review
Streaming
The Asia Pacific region saw encouraging results, with sales increasing by 24% in
the first half to £286,000 (2006: £231,000). This was due to our expansion into
Asia from our Australian base, primarily through our relationship with reseller,
Magneato, based in the Philippines. Additional resellers have been signed in
Japan, Singapore and Taiwan and we are moving the region to a purely indirect
sales model. The Group also signed contracts in Australia with Adstream, the
global technology solutions company to the media industry, and with Thomson
Financial, the leading global provider of information-based solutions, for
corporate communications. The Thomson Financial partnership is working well and
we hope to extend the relationship into other regions, in particular, Japan and
China, over the next twelve months. In March 2008, the Group signed an agreement
with the surf company, Rip Curl Pty. Ltd to stream the high profile Rip Curl Pro
surfing event in Australia. The deal is part of an evaluation licence agreement
with Rip Curl and should translate into a guaranteed annual revenue contract.
In EMEA region, sales reduced by 19% to £163,000 (2006: £202,000) as we shifted
our focus to Pay Per View and broadcasters, away from VivStream Campaign and
Corporate products. We have now moved to a solely indirect sales model through
the region and signed new resellers in Saudi Arabia, Pakistan, India and UAE. We
expect to sign further resellers over the remainder of the year. We secured new
work with Ogilvy, the international advertising and media agency, and secured
increased commitments from Thomson UK (part of TUI) and Granada International,
the UK's largest commercial TV producer. Certain resellers and customer
contracts signed last year did not perform to expectation largely owning to a
lack of marketing by the customer and ownership rights over content. Moviepol, a
Pay Per View movie site, will be relaunched in April 2008, and should contribute
to revenues this year.
In North America, sales reduced by 59% to £63,000 (2006: £155,000). This was a
very disappointing result and reflected the still early stage development of the
Pay Per View and Live markets, the delays in launching our video platform, ready
for our Evotum brand, and Sony Pictures' content issues. Our agreement with Fox
Soccer ("Fox") illustrated some of the difficulties of the marketplace. While
Fox successfully launched its Pay Per View site before Christmas, uptake by
viewers has been slower than expected. Work with Fox continues and Fox is
relaunching its site with additional content and promoting it across its
network. We have also signed contracts with new broadcasters, including niche
Columbian broadcaster, American TeVe, based in Miami, which is streaming Live TV
to the Columbian community eight hours a day. We are also making progress in the
Mixed Martial Arts sector with one contract signed, and advanced discussions are
underway with several other companies in this popular sports sector. We have
signed new reseller agreements with SFX Sports Group, the leading US sports and
marketing agency, and with PMTV, the mobile video production company, to steam
live events for corporations. In January, we also successfully streamed a live
concert of Finger Eleven, the Canadian rock band, for NBC direct from Times
Square in New York.
Discs
The disc business is non-core and delivered maintained sales of £60,000 (2006:
£60,000). The existing business will be passed to a reseller to manage, with
Vividas receiving a royalty.
The Board
There have been a number of Board changes. Following Angelo Cortese's
resignation as a director from JHG Financial Models SLU (a major shareholder in
Vividas, with a stake of 21.1%), on 28 November, Mr Cortese also resigned as
Non-Executive Director from the Vividas Board. On 4 December, Non-Executive
Director, Neil Crabb resigned for personal reasons. In addition, Vernon Sankey
is stepping down from his role as a Non-Executive Director, effective from 31
March 2008, being the end of his three year contract, due to heavy demands on his
time. The Board would like to thank both Neil and Vernon for their commitment to
Vividas over the past three years and for their personal efforts on behalf of
the Group during that time. The Board intends to strengthen the Board going
forward as appropriate.
Outlook
Vividas remains focused on developing traction in the Live and On-demand sports
and entertainment markets as well as niche broadcasters, while addressing other
markets through channel partners. The cost reduction programme, announced in
January, is now substantially completed and will deliver significant overhead
savings.
An important development for the business will be the planned launch in April of
our new VivStreamTM Video Platform. We believe this new platform will represent
the most advanced and comprehensive platform available in the market place. It
will enable content owners, broadcasters and resellers to roll out an end-to-end
Internet TV channel (for On-demand or Live events), or a portal for Pay Per View
solutions, quickly and easily. The solution also encompasses full website
development and deployment, payment interfaces, a comprehensive content
management system, digital rights management protection and detailed reporting
on users and revenues.
We expect this new platform to help drive sales both for our own direct sales
teams and for our channel partners and it underpins our growth expectations for
the business over the remainder of the current financial year and beyond. Early
market acceptance of this exciting breakthrough will be a key factor in the
achievement of our sales forecasts.
CONSOLIDATED
INCOME STATEMENT
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2007 2006 2007
Unaudited Unaudited Unaudited
Notes £'000 £'000 £'000
Revenue 2 512 588 1,221
Cost of sales (340) (254) (528)
Gross profit 172 334 693
Selling & marketing costs (698) (578) (1,180)
Administration expenses (1,375) (1,194) (2,409)
Operating loss before share of operating
loss of associate (1,901) (1,438) (2,896)
Share of operating loss of associate 9 - - (110)
Operating loss (1,901) (1,438) (3,006)
Interest receivable 26 25 90
Loss before taxation (1,875) (1,413) (2,916)
Income tax income 3 129 136 103
Loss after taxation 2 (1,746) (1,277) (2,813)
Basic and diluted loss per ordinary share 4
- pence (5.35) (5.04) (9.81)
CONSOLIDATED
BALANCE SHEET
31 31 December 30 June
December
2007 2006 2007
Notes Unaudited Unaudited Unaudited
£'000 £'000 £'000
Assets
Non-current assets
Goodwill 5 980 980 980
Development costs 5 767 508 620
Other intangible assets 5 120 73 107
Property, plant and 6
equipment 78 87 70
1,945 1,648 1,777
Current assets
Trade and other receivables 7 3,060 378 437
Cash and cash equivalents 118 3,370 1,877
3,178 3,748 2,314
Total assets 5,123 5,396 4,091
Liabilities
Non-current liabilities
Hire purchase - 9 -
Deferred tax 230 152 186
230 161 186
Current liabilities
Trade and other payables 1,374 1,025 1,074
1,374 1,025 1,074
Total liabilities 1,604 1,186 1,260
Capital and reserves
Share capital 7 396 319 323
Share premium 12,344 9,881 10,008
Merger reserve 921 921 921
Share based payments reserve 76 278 77
Translation reserve (40) (6) (12)
Retained earnings (10,178) (7,183) (8,486)
Total equity 3,519 4,210 2,831
Total equities and liabilities 5,123 5,396 4,091
CONSOLIDATED
CASH FLOW STATEMENT
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2007 2006 2007
Notes Unaudited Unaudited Unaudited
£'000 £'000 £'000
Operating activities
Result for the period before tax (1,875) (1,413) (2,916)
Depreciation 39 41 86
Amortisation 134 80 181
Employee based payments 53 57 89
Interest received (26) (25) (90)
Australian R&D tax concession received 3 173 170 170
Foreign Exchange movement (51) (5) (10)
(Increase)/decrease in receivables (109) 36 (23)
Increase/(decrease) in trade payables and
other liabilities 173 (64) (21)
Net cash outflow from operating activities (1,489) (1,123) (2,534)
Investing activities
Additions to property, plant and equipment (58) (35) (63)
Additions to development costs (263) (181) (382)
Additions to other intangibles (10) (11) (60)
Interest received 26 25 90
Net cash outflow from investing activities (305) (202) (415)
Financing activities
Proceeds from share issues 7 35 3,494 3,625
Net cash inflow from financing activities 35 3,494 3,625
Cash and cash equivalents at the beginning
of the period 1,877 1,201 1,201
Net (decrease)/increase in cash and cash
equivalents (1,759) 2,169 676
Cash and cash equivalents at end of the period 118 3,370 1,877
CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY
Share
based
Share Share Merger payments Translation Retained Total
capital premium reserve reserve reserve earnings equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 July 2006 229 6,477 921 378 - (6,063) 1,942
Result for the period - - - - - (1,277) (1,277)
Shares issued 90 3,404 - - - - 3,494
Employee share based
payments - - - 57 - - 57
Employee share based
payments - adjustment for
lapsed/exercised options - - - (157) - 157 -
Currency translation
differences - - - - (6) - (6)
Balance at 31 December 2006 319 9,881 921 278 (6) (7,183) 4,210
Balance at 1 July 2006 229 6,477 921 378 - (6,063) 1,942
Result for the year - - - - - (2,813) (2,813)
Shares issued 94 3,531 - - - - 3,625
Employee share based
payments - - - 89 - - 89
Employee share based
payments - adjustment for
lapsed/exercised options - - - (390) - 390 -
Currency translation
differences - - - - (12) - (12)
Balance at 30 June 2007 323 10,008 921 77 (12) (8,486) 2,831
Balance at 1 July 2007 323 10,008 921 77 (12) (8,486) 2,831
Result for the period - - - - - (1,746) (1,746)
Shares issued 73 2,336 - - - - 2,409
Employee Share based - - - 53 - - 53
payments
Employee Share based
payments - adjustment for
lapsed/exercised options - - - (54) - 54 -
Currency translation
differences - - - - (28) - (28)
Balance at 31 December 2007 396 12,344 921 76 (40) (10,178) 3,519
NOTES TO THE INTERIM STATEMENT
1 PRINCIPAL ACCOUNTING POLICIES
1.1 Statement of compliance
The consolidated interim financial statements have been prepared in accordance
with IAS 34 "Interim Financial Reporting". These are the Group's first IFRS
consolidated interim financial statements for part of the period covered by the
first IFRS annual financial statements and IFRS 1 - First-time adoption of
International Reporting Standards has been applied.
The Group will prepare its first full set of IFRS financial statements for the
year ended 30 June 2008. The date of transition to IFRS for the Group was 1 July
2006. A summary of the accounting policies applied in the preparation of the
financial statements is given below. These policies have been consistently
applied to all the periods presented, unless otherwise stated. The impact of the
transition from UK GAAP to IFRS is explained in note 8 to the interim statement.
The accounting policies are based on the recognition and measurement principles
of IFRS in issue as adopted by the European Union (EU) and effective as at 30
June 2008, or expected to be adopted and effective as at 30 June 2008, the first
reporting date at which the Group is required to use IFRS accounting standards
adopted by the EU.
1.2 Basis of preparation
The financial statements have been prepared under the historical cost
convention.
The Group's financial statements will be prepared in accordance with IFRS 1 -
First-time Adoption of International Financial Reporting Standards. This interim
report is prepared in accordance with IAS 34 "Interim Financial Reporting" and
IFRS 1 as it applies to interim statements. IFRS 1 requires full retrospective
application of all applicable accounting standards, but exemptions are permitted
in specific areas and the Group has elected to make use of the following
exemptions;
Business combinations
The Group has elected not to apply IFRS 3 - Business Combinations,
retrospectively to past business combinations prior to the date of transition.
Share-based payment transactions
The Group has applied IFRS 2 - Share Based Payments retrospectively to equity
instruments granted after 7 November 2002 and vesting on or after 1 January
2006.
1.3 Basis of consolidation
The Group financial statements consolidate those of the Company and of its
subsidiary undertakings drawn up to 31 December 2007. Subsidiaries are entities
over which the Group has power to control the financial and operating policies
so as to obtain benefits from its activities. The Group obtains and exercises
control through voting rights.
Acquisitions that occurred prior to the transition date have not been
retrospectively restated to conform with IFRS 3 - Business Combinations.
Acquisitions of subsidiaries are dealt with by the purchase method. The purchase
method involves the recognition at fair value of all identifiable assets and
liabilities, including contingent liabilities of the subsidiary, at the
acquisition date, regardless of whether or not they were recorded in the
financial statements of the subsidiary prior to acquisition. On initial
recognition, the assets and liabilities of the subsidiary are included in the
consolidated balance sheet at their fair values, which are also used as the
bases for subsequent measurement in accordance with the Group accounting
policies. Goodwill is stated after separating out identifiable intangible
assets. Goodwill represents the excess of acquisition cost over the fair value
of the Group's share of the identifiable net assets of the acquired subsidiary
at the date of acquisition.
The Company is entitled to the merger relief offered by section 131 of the
Companies Act 1985 in respect of the premium of the shares issued over the
nominal value of the equity shares issued in connection with the acquisition of
Vividas Pty Limited on 18 July 2003.
1.4 Going Concern
The Directors consider that in preparing the financial statements they have
taken into account all information that could reasonably be expected to be
available. On 27 December 2007 the Group raised £2,500,000 via the placing of
7,142,857 shares (as stated in note 7). On 25 January 2008 the Group announced
that it would be initiating a cost reduction program to reduce annual fixed
costs within the business by £1,000,000. This program is now substantially
complete. In addition the Group will be launching its new VivStreamTM Video
Platform, a product which the Directors expect will help drive sales growth via
the business' own sales teams and channel partners. On this basis, they consider
that it is appropriate to prepare the financial statements on the going concern
basis.
1.5 Revenue
Revenue is the amount receivable for goods and services provided in the year,
net of Value Added Tax and trade discounts.
The accounting recognition in relation to the most significant revenue streams
is as follows:
Licence Fees - spread evenly over the period of the contract
Playout Revenues - recognised on delivery
Professional services - upon delivery to the customer
Professional services are short term in nature and typically take less than one
month to deliver.
1.6 Intangible assets
Goodwill
All business combinations that occurred prior to the date of transition have
been accounted for using the acquisition method of accounting. The goodwill
arising, representing the excess of the fair value of the consideration over the
fair value of the separate net assets acquired, has been capitalised. The value
of goodwill in the financial statements is the previous UK GAAP amount at the
date of transition and is stated at cost less any accumulated impairment losses.
Goodwill is allocated to cash generating units and is no longer amortised but
tested for impairment annually or more frequently if events or changes in
circumstances indicate that it might be impaired.
Other intangible assets
Research and development
Expenditure on the research phase of a development project is recognised as an
expense in the period in which it is incurred.
Development costs incurred on specific projects are capitalised when all the
following conditions are satisfied:
- completion of the intangible asset is technically feasible so that it will be
available for use or sale
- the Group intends to complete the intangible asset and use or sell it
- the Group has the ability to use or sell the intangible asset
- the intangible asset will generate probable future economic benefits. Among
other things, this requires that there is a market for the output from the
intangible asset or for the intangible asset itself, or, if it is to be used
internally, the asset will be used in generating such benefits
- there are adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset; and
- the expenditure attributable to the intangible asset during its development
can be measured reliably.
Development costs not meeting the criteria for capitalisation are expensed as
incurred.
The cost of an internally generated intangible asset comprises all directly
attributable costs necessary to create, produce, and prepare the asset to be
capable of operating in the manner intended by management. Directly attributable
costs include employee costs incurred on software development.
The costs of internally generated software developments are recognised as
intangible assets and are subsequently measured in the same way as externally
acquired licences. However, until completion of the development project, the
assets are subject to impairment testing only.
Amortisation commences upon completion of the asset, and is shown within
Administration expenses.
Careful judgement by the Directors is applied when deciding whether the
recognition requirements for development costs have been met. This is necessary
as the economic success of any product development is uncertain and may be
subject to future technical problems at the time of recognition. Judgements are
based on the information available at each balance sheet date. In addition, all
internal activities related to the research and development of new software
products are continuously monitored by the Directors.
Development costs capitalised are amortised over 5 years.
Patents, design fees and licences
Patents, design fees and licences are included at cost less estimated residual
amount and are amortised on a straight line basis over their useful economic
lives which is five years. The amortisation charge is shown within
Administration expenses.
1.7 Property, plant and equipment
All fixed assets are initially recorded at cost.
Depreciation is charged over the estimated useful lives on the costs of the
assets less their residual value. The useful lives of each category of asset are
estimated to be as follows:
Computer equipment - 2 years
Plant and equipment - 4 years
Fixtures & fittings - 10 years
Residual values are re-assessed annually.
1.8 Impairment
The Group's goodwill and other intangible assets are tested for impairment
annually or more frequently, if events or changes in circumstances indicate that
it might be impaired. An impairment loss is recognised for the amount by which
the asset's carrying amount exceeds its recoverable amount. The recoverable
amount is based on internal discounted cash flow evaluation. If at the Balance
Sheet date there is any indication that an impairment loss is recognised in
prior periods for an asset other than goodwill that no longer exists, the
recoverable amount is reassessed and the asset is reflected at the recoverable
amount.
1.9 Leased assets
In accordance with IAS 17, the economic ownership of a leased asset is
transferred to the lessee if the lessee bears substantially all the risks and
rewards related to the ownership of the leased asset. The related asset is
recognised at the time of inception of the lease at the fair value of the leased
asset or, if lower, the present value of the minimum lease payments plus
incidental payments, if any, to be borne by the lessee. A corresponding amount
is recognised as a finance leasing liability.
The interest element of leasing payments represents a constant proportion of the
capital balance outstanding and is charged to the income statement over the
period of the lease.
All other leases are regarded as operating leases and the payments made under
them are charged to the income statement on a straight line basis over the lease
term. Lease incentives are spread over the term of the lease.
1.10 Accounting for income taxes
Deferred tax is recognised on all temporary differences. This involves
comparison of the carrying amount of assets and liabilities in the consolidated
financial statements with their respective tax bases. Deferred tax liabilities
are provided for in full. Deferred tax assets and liabilities are calculated
without discounting, at tax rates that are expected to apply to the period when
the asset is realised or the liability is settled, based on tax rates (tax laws)
that have been enacted or substantially enacted by the balance sheet date. All
changes in deferred tax assets or liabilities are recognised as a component of
tax expense in the income statement.
Tax losses available to be carried forward as well as other income tax credits
to the Group are assessed for recognition as deferred tax assets. Deferred tax
assets are only recognised to the extent that it is probable that future taxable
profits will be available against which the asset can be recognised and are
reduced to the extent that it is no longer probable that the related tax benefit
will be realised.
1.11 Post retirement benefits
The Group contributes to personal pension plans for the employees. The amounts
charged to the income statement represent contributions payable in respect of
the accounting period.
1.12 Foreign currencies
Assets and liabilities denominated in foregin currencies and those of foreign
subsidiaries are translated into sterling at the rates ruling at the end of the
financial period.
Profits and losses on exchange arising from the retranslation of the opening
balances of overseas subsidiary undertakings at the beginning of the period, or
the date of acquisition, where later, are taken directly to reserves. The
results of the overseas subsidiary undertakings are translated into Sterling at
average rates for the period.
Transactions in foreign currencies are translated at the rate of exchange ruling
at the date of transaction. All profits and losses on exchange are credited or
charged to operating profit.
1.13 Share based payments
With effect from 1 July 2006, the Group adopted FRS 20 which deals with share
based payments. Share option awards are made by Vividas Group plc to Group
employees and are satisfied by Vividas Group plc issuing shares to the employees
on exercise of the options. An expense in relation to such grants is recognised
in the income statement with the corresponding credit to equity. The equity
share based payment is measured at the fair value at the grant date using the
Black Scholes method of valuation. If vesting periods or other vesting
conditions apply, the expense is allocated over the vesting period, based on the
best available estimate of the number of share options expected to vest.
1.14 Financial instruments
Financial assets and liabilities are recognised on the Group's balance sheet
when the Group becomes a party to the contractual terms of the instrument.
Trade receivables
Trade receivables do not carry any interest and are stated at their nominal
amounts as reduced to equal the estimated present value of the future cash
flows. Provision against trade receivables is made when there is objective
evidence that the Group will not be able to collect all amounts due to it in
accordance with the original terms of those receivables. The amount of the
write-down is determined as the difference between the asset's carrying amount
and the present value of estimated future cash flows.
Trade payables
Trade payables are not interest bearing and are stated at their nominal value.
Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received,
net of direct costs.
1.15 Cash and cash equivalents
Cash and cash equivalents comprise cash balances and high interest deposits with
instant access.
1.16 Accounting estimates and judgements
Accounting estimates and assumptions are used in preparing the financial
statements. Although these estimates are based on management's best knowledge of
current events and actions, actual results may ultimately differ from those
estimates.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The estimates
and assumptions that have a significant risk of causing a material adjustment to
the carrying amount of assets and liabilities within the next financial year are
discussed below:
Impairment of goodwill, development costs and other intangibles
The Group test annually the carrying value of goodwill, development costs and
other intangibles for any possible impairment in accordance with the accounting
policies statement in note 1.6 The achievement of the growth and profitability
by the individual cash generating units is critical in supporting the carrying
value of goodwill, development costs and intangibles.
Capitalisation of development costs
The identification of costs incurred in developing the Group's technology and
products is continually reviewed. The decision to capitalise development costs
so identified is made in accordance with the policy as stated in note 1.6 and
involves judgement as to the future market for the Group's technology and
products.
2 SEGMENTAL REPORTING
Segment information is presented in the consolidated financial statements in
respect of the Group's business segments, which are the primary basis of segment
reporting. The business segment reporting format reflects the Group's management
and internal reporting structure.
Primary business segments
The Group is arranged into three external revenue generating business units -
North America, Asia Pacific and EMEA. These are supported by two further service
units - R&D and Group. These units form the basis for the Group's reporting of
primary segment information.
Segment results
Segment results include all items directly attributable to a segment as well as
those that can be allocated on a reasonable basis.
6 months ended 31 December 2007
North Asia
America Pacific EMEA Total
£'000 £'000 £'000 £'000
Revenue - external sales 63 286 163 512
Segment result - loss 436 166 304 906
R&D expenses 263
Group expenses 732
Operating loss 1,901
Interest receivable (26)
Loss before taxation 1,875
Income tax income (129)
Loss after taxation 1,746
6 months ended 31 December 2006
North Asia
America Pacific EMEA Total
£'000 £'000 £'000 £'000
Revenue - external 155 231 202 588
sales
Segment result - loss 180 122 308 610
R&D expenses 166
Group expenses 662
Operating loss 1,438
Interest receivable (25)
Loss before taxation 1,413
Income tax income (136)
Loss after taxation 1,277
Year ended 30 June 2007
North Asia
America Pacific EMEA Total
£'000 £'000 £'000 £'000
Revenue - external sales 253 495 473 1,221
Segment result - loss 398 379 560 1,337
R&D expenses 212
Group expenses 1,347
Operating loss before share of associate's operating
loss 2,896
Share of loss of associate 110
Operating loss 3,006
Interest receivable (90)
Loss before taxation 2,916
Income tax income (103)
Loss after taxation 2,813
3 INCOME TAX INCOME
The amount shown under Income tax comprises the following:
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2007 2006 2007
£'000 £'000 £'000
Deferred tax on development costs
capitalised (44) (34) (67)
Australian R&D tax concession
received 173 170 170
Income tax income 129 136 103
The Group's Research and Development resource is located in Australia where the
local tax regime provides for tax concessions which can be claimed as cash
refunds. As a consequence of making such a claim tax losses carried forward are
reduced. Further explanation is given in note 8 (d).
4 LOSS PER SHARE
The calculation of the basic loss per share is based on the earnings
attributable to ordinary shareholders divided by the weighted average number of
shares in issue during the period.
The calculation of diluted loss per share is based on the basic loss per share
due to the Group being loss making. The weighted average number of shares for
diluted loss per share is the same for basic loss per share as any adjustment in
relation to options and warrants that have been granted would be anti-dilutive.
Basic earnings per Diluted earnings
share per share
6 months to 31 December 2007
Earnings £'000 (1,746) (1,746)
Weighted average number of shares in issue 32,629,480 32,629,480
Loss per share amount pence (5.35) (5.35)
6 months to 31 December 2006
Earnings £'000 (1,277) (1,277)
Weighted average number of shares in issue 25,328,178 25,328,178
Loss per share amount pence (5.04) (5.04)
12 months to 30 June 2007
Earnings £'000 (2,813) (2,813)
Weighted average number of shares in issue 28,660,919 28,660,919
Loss per share amount pence (9.81) (9.81)
5 INTANGIBLE FIXED ASSETS
Other
Development intangible
Goodwill costs assets Total
£'000 £'000 £'000 £'000
Cost
At 1 July 2006 980 514 110 1,604
Additions - 181 11 192
At 31 December 2006 980 695 121 1,796
Amortisation
At 1 July 2006 - 117 38 155
Provided for in the period - 70 10 80
At 31 December 2006 - 187 48 235
Net Book amount
At 31 December 2006 980 508 73 1,561
Cost
At 1 July 2006 980 514 110 1,604
Exchange differences - - (3) (3)
Additions - 382 60 442
At 30 June 2007 980 896 167 2,043
Amortisation
At 1 July 2006 - 117 38 155
Provided for in the year - 159 22 181
At 30 June 2007 - 276 60 336
Net Book amount
At 30 June 2007 980 620 107 1,707
Cost
At 1 July 2007 980 896 167 2,043
Exchange Differences - - 21 21
Additions - 263 10 273
At 31 December 2007 980 1,159 198 2,337
Amortisation
At 1 July 2007 - 276 60 336
Provided for in the period - 116 18 134
At 31 December 2007 - 392 78 470
Net Book amount
At 31 December 2007 980 767 120 1,867
6 PROPERTY, PLANT AND EQUIPMENT
During the six months to 31 December 2007, the Group acquired property, plant and
equipment with a total cost of £57,000. This represented computer equipment and
encoders for internal use. Depreciation of £39,000 has been charged for the
period.
7 EQUITY
During the six months ended 31 December 2007 the Group made two issues of
ordinary shares. On 6 July 2007 150,000 options were exercised for a total of
£33,500. On 27 December 2007 7,142,857 shares were allotted for a total of
£2,500,000. The cash for these shares was received on 4 January 2008 and thus
the proceeds are shown as a current receivable in the Consolidated Balance
Sheet.
8 TRANSITION TO IFRS
As stated in note 1 these are the Group's first IFRS interim financial
statements for part of the period covered by the first IFRS annual consolidated
financial statements, prepared in accordance with IFRS. The accounting policies
have been consistently applied to all the periods presented.
IFRS 1 requires full retrospective application of all applicable accounting
standards, but exemptions are permitted in specific areas. The Group has elected
to avail itself of the exemptions pertaining to Business Combinations and Share
Based Payments.
An explanation of how the transition from UK GAAP to IFRS has affected the
Group's financial position, financial performance and cash flows is set out in
the following notes:
RECONCILIATION OF EQUITY FOR THE 6 MONTHS ENDED 31 DECEMBER 2007
1 July 2006 31 December 2006 30 June 2007
£'000s £'000s £'000s
Effect of Effect of Effect of
Previous transition Previous transition Previous transition
UK GAAP to IFRS IFRS UK GAAP to IFRS IFRS UK GAAP to IFRS IFRS
Notes
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Assets
Non-current assets
Goodwill (a) 980 - 980 910 70 980 840 140 980
Development
costs (b) - 397 397 - 508 508 - 620 620
Other
intangible
assets 72 - 72 73 - 73 107 - 107
Property,
plant and
equipment 94 - 94 87 - 87 70 - 70
1,146 397 1,543 1,070 578 1,648 1,017 760 1,777
Current
assets
Trade and
other
receivables 414 - 414 378 - 378 437 - 437
Cash and
cash
equivalents 1,201 - 1,201 3,370 - 3,370 1,877 - 1,877
1,615 - 1,615 3,748 - 3,748 2,314 - 2,314
Total assets 2,761 397 3,158 4,818 578 5,396 3,331 760 4,091
Liabilities
Non-current liabilities
Hire
purchase 10 - 10 9 - 9 - - -
Deferred tax (c) - 119 119 - 152 152 - 186 186
10 119 129 9 152 161 - 186 186
Current
liabilities
Trade and
other
payables 1,087 - 1,087 1,025 - 1,025 1,074 - 1,074
1,087 - 1,087 1,025 - 1,025 1,074 - 1,074
Total
liabilities 1,097 119 1,216 1,034 152 1,186 1,074 186 1,260
Capital and
reserves
Share capital 229 - 229 319 - 319 323 - 323
Share premium 6,477 - 6,477 9,881 - 9,881 10,008 - 10,008
Merger reserve 921 - 921 921 - 921 921 - 921
Share based
payments
reserve 378 - 378 278 - 278 77 - 77
Translation
reserve - - - - (6) (6) - (12) (12)
Retained
earnings (e) (6,341) 278 (6,063) (7,615) 432 (7,183) (9,072) 586 (8,486)
Total equity 1,664 278 1,942 3,784 426 4,210 2,257 574 2,831
Total
equities and
liabilities 2,761 397 3,158 4,818 578 5,396 3,331 760 4,091
RECONCILIATION OF INCOME STATEMENT
31 December 2006 30 June 2007
£'000s £'000s
Effect of Effect of
Previous transition Previous transition
Notes UK GAAP to IFRS IFRS UK GAAP to IFRS IFRS
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 588 - 588 1,221 - 1,221
Cost of sales (254) - (254) (528) - (528)
Gross profit 334 - 334 693 - 693
Other operating (d)
income 170 (170) - 173 (173) -
Selling & Marketing costs (578) - (578) (1,180) - (1,180)
Administration (a),
expense (b) (1,376) 182 (1,194) (2,775) 366 (2,409)
Operating loss before share
of operating loss of
associate (1,450) 12 (1,438) (3,089) 193 (2,896)
Share of operating loss of
associate - - - (110) - (110)
Operating Loss (1,450) 12 (1,438) (3,199) 193 (3,006)
Interest receivable 25 - 25 90 - 90
Loss before taxation (1,425) 12 (1,413) (3,109) 193 (2,916)
Income tax income (c), (d) - 136 136 - 103 103
Loss after taxation (1,425) 148 (1,277) (3,109) 296 (2,813)
Notes
a) Under UK GAAP, Goodwill arising on business combinations was amortised on a
straight line basis over its estimated economic life which was ten years. Under
IFRS, Goodwill is tested for impairment annually or more frequently if events or
changes in circumstances indicate that it might be impaired and not amortised.
The Group has elected not to apply IFRS 3 retrospectively to business
combinations prior to IFRS adoption. The effect of the above adjustment is to
add back the amortisation charge to administrative expenses by £70,000 for the
six months to 31 December 2006, and by £140,000 for the year ended 30 June 2007.
As a result the carrying value of Goodwill is increased by £70,000 at 31
December 2006 and by £140,000 at 30 June 2007.
b) Under UK GAAP, expenditure incurred on Research and Development was expensed
in the income statement in the period in which it was incurred. Under IFRS,
Development costs are capitalised if all the conditions for doing so, as stated
in note 1.6, are met. The resultant intangible asset thus created is then
amortised over 5 years and tested for impairment at least annually. The effect
of the above adjustment is to remove development expenditure from administration
expenses of £182,000 for the six months ended 31 December 2006 and £382,000 for
the year ended 30 June 2007. In addition, development expenditure, to the extent
that it can be identified, incurred prior to the date of transition has also
been capitalised and amortised resulting in the creation of an intangible asset
at 1 July 2006 (the date of transition) of £397,000. Amortisation on these
amounts has been charged to administration expenses totalling £70,000 in the six
months to 31 December 2006 and £159,000 in the year ended 30 June 2007. As a
result of the above, adjustments intangible assets with a net book value of
£397,000 at 1 July 2006 (the date of transition), £508,000 at 31 December 2006
and £620,000 at 30 June 2007 have been created.
c) The above adjustments in relation to development expenditure gave rise to
deferred tax charges of £34,000 for the six months to 31 December 2006 and
£67,000 for the year ended 30 June 2007. The resultant deferred tax adjustment
relating to the pre transition development costs capitalised is £119,000. As a
result deferred tax liabilities have been recognised within non current liabilities
of £119,000 at 1 July 2006 (the date of transition), £152,000 at 31 December 2006
and £186,000 at 30 June 2007.
d) As part of the IFRS conversion process, the disclosure of amounts received in
relation to R&D tax concessions in Australia was reconsidered. As a result, the
amounts received have been reclassified and disclosed as part of the Income tax
expense for each period, hence creating Income tax income. Previously these
amounts were disclosed under "Other operating income". For both the 6 months
ended 31 December 2006 and year ended 30 June 2007, £170,000 has been
reclassified.
e) The sum total of all of the above adjustments has been to reduce accumulated
losses by £278,000 at 1 July 2006 (the date of transition), £426,000 at 31
December 2006 and £574,000 at 30 June 2007.
9 ASSOCIATE COMPANY
The Group holds 330 shares, representing 33% of the issued share capital, in
Dargo Limited, a company registered in Eire. This company did not undertake any
activity during the six months to 31 December 2007 and consequently did not
incur any costs. In the year ended 30 June 2007 the Group's share of the loss of
Dargo Limited was £110,000.
10 PREPARATION OF INTERIM STATEMENTS
The interim statement is unaudited but has been reviewed by the auditors. The
financial information does not constitute statutory accounts within the meaning
of section 240 of the Companies Act. Statutory accounts for Vividas Group plc
for the year ended 30 June 2007 prepared under UK GAAP, on which the auditors
gave an unqualified report and which did not contain statements under section
237(2) and 237(3) of the Companies Act 1985, have been delivered to the
Registrar of Companies.
11 APPROVAL OF INTERIM STATEMENT
The interim statement was approved by the Board of Directors on 28 March 2008.
Copies of this statement will be available to members of the public, free of
charge, from the Company at 25 Floral Street, London WC2E 9DS.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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