RNS Number:0793B
Newport Networks Group PLC
30 July 2007
30 July 2007
Newport Networks Group PLC ("Company")
Interim Results for the 6 Months to 30 June 2007
Summary
* Proposed Placing with existing investors to raise #6m (gross)
* Loss after tax in the 6 months #3.96m (2006 : #6.89m)
* Product portfolio extended with smaller products
* 310 Session Border Controller launched
* Partnership agreement with UTStarcom recently announced
* Agreements now in place with four major NEVs
Commenting on the outlook Sir Terry Matthews, Chairman, said "The Directors
believe that Newport is able to achieve significant revenues and ongoing
business growth from an increased product range with more channels to market and
with good market timing for NGN technology deployment".
For further information please visit www.newport-networks.com or contact:
John Everard, Chief Executive
John Ackroyd, Finance Director
Newport Networks Group PLC
Tel: 01291 435700
Chairman's Report for Newport Networks Group PLC ("Newport" or the "Company")
The Company has announced today that it proposes to raise #6 million before
expenses by way of a Placing of New Ordinary shares at a price of 3p per share.
The net proceeds of the Placing will strengthen the Company's balance sheet,
enabling the Group to complete its current business plan and provide general
working capital for the Group. The Placing is conditional upon the Company
obtaining approval from shareholders at an Extraordinary General Meeting to be
held on 22 August 2007.
Market and Strategy
During the summer of 2006, the Company revised its market and product
development strategy in response to the delays in the implementation of Next
Generation Networks (NGNs) and corresponding delays in the market for its
carrier scale SBCs.
The product portfolio has now been extended to address the current market demand
for smaller products and the emerging demand for products that are compatible
with distributed network architectures. Such IMS (IP Multimedia Subsystem)
related products allow networks to be designed with centralised signalling
processing (using either Border Controllers or direct softswitch control) and
remote media processing using Border Gateways. The Newport SBC, Border
Controller and Border Gateway product functions can now be realised using the
larger 1460 platform or the smaller 310 platform to suit both current and future
customer requirements.
The Company also continues to develop further functions and features across the
product portfolio in response to direct customer requirements. For example, the
Company's current development of high capacity voice transcoding is particularly
important when interconnecting fixed line and mobile networks, where a
transcoding capability is required to ensure the correct inter-working of a wide
range of customer terminal devices.
From a sales strategy perspective, the Company is primarily focussing on the
AsiaPacific, European and CALA (Caribbean and Latin American) regions. With the
revised and extended product portfolio, the Company's sales teams have been
successful in developing further NEV channel partnerships that are now helping
to grow the pipeline of business prospects. The NEV channel partners represent a
very efficient route to market for the Newport products given their large sales
and support resources and existing customer base.
Financial Performance
The loss after tax for the six months to 30 June 2007 was #4.0m compared to a
loss of #6.9m in the six months to 30 June 2006. Revenue for the six months to
30 June 2007 was #76,000 compared to #758,000 in the six months to 30 June 2006.
An R&D Tax Credit claim for the year to 31 December 2006 has been agreed with HM
Revenue & Customs and a repayment of #1,377,000 was received in June 2007. At 30
June 2007, cash resources were #691,000 and as at 26 July 2007 these amounted to
approximately #350,000.
Current trading and prospects
Key ingredients relating to the Company's extended product portfolio and
channels to market are now in place to facilitate the growth of the business.
While the revenues during the period since the cost reduction programme last
year have been small, the Group's sales teams have been working steadily to
develop further key NEV channel partnerships. The Company is addressing global
opportunities and has built a sales pipeline that the Directors are confident
will lead to increasing revenues commencing in the second half of this year.
Newport recently announced a strategic partnership agreement with UTStarcom and
its associated live IP Interconnect trial with an operator in China. The Company
also announced the deployment of the 1460 SBC by Chungwa Telecom, in Taiwan,
that includes the provision of Lawful Intercept (LI) facilities for their IP
based services. LI is becoming a mandatory requirement in many countries around
the world.
Including the UTStarcom agreement, the Company now has four signed agreements
with major NEVs. Newport is in advanced negotiations regarding an agreement with
one of the world's largest NEVs that is also a market leader in IMS solutions.
This relates to Newport's development of Border Gateway products for integration
by the NEV into its overall IMS product portfolio. Given the profile of the NEV
in the IMS market, the Directors believe that the Border Gateway business
associated with this opportunity is likely to provide Newport with a substantial
base level of revenues in 2008 and enhance revenues significantly during 2009
and beyond as IMS based NGNs are implemented. The Directors expect this
agreement to be signed by the end of September 2007, however, there can be no
certainty that negotiations will reach a satisfactory outcome in this time frame
or at all.
The Directors believe that the Placing proceeds, in combination with the lower
cost base, current inventories and extended product portfolio will allow the
Company to capitalise on the above opportunities. Also, the strengthening of the
balance sheet will enhance Newport's credibility with current and potential
channel partners and customers.
Outlook.
In summary, the Directors believe that, subject to the Placing, Newport is well
placed to achieve significant sales of its carrier-scale products as tier-1
operators move to deployment of NGN infrastructures. The 1460 has a high
performance signalling and media processing capability, which is required for
efficient IP multimedia networking. This, added to the recent introduction of
the 310, a small SBC (using the same technology as the 1460), allows the
distributed architecture properties of the product line to be much more
effective in NGN infrastructures. With many major NEVs offering the products,
the Company is now better positioned to address the business opportunities
worldwide.
The Directors believe that Newport is able to achieve significant revenues and
ongoing business growth from an increased product range with more channels to
market and with good market timing for NGN technology deployment.
Sir Terence Matthews
Chairman.
GROUP PROFIT AND LOSS ACCOUNT
6 months to 6 months to Year to
30 June 30 June 31 December
2007 2006 2006
Unaudited Unaudited Audited
#000 #000 #000
Turnover 76 758 1,061
Cost of sales (28) (297) (439)
Gross Profit 49 461 622
Administrative expenses (4,544) (8,131) (16,062)
Operating loss (4,495) (7,670) (15,440)
Interest receivable 47 232 399
Loss on ordinary activities before (4,448) (7,438) (15.041)
taxation
Tax on loss on ordinary activities 487 553 1,344
Loss for the period (3,961) (6,885) (13,697)
Loss per share
- Basic and diluted (2.38p) (4.52p) (8.6p)
GROUP STATEMENT OF TOTAL
RECOGNISED GAINS AND LOSSES
6 months to 6 months to Year to
30 June 30 June 31 December
2007 2006 2006
Unaudited Unaudited Audited
#000 #000 #000
Loss for the period (3,961) (6,885) (13,697)
Translation difference in respect of net 22 (23) (56)
investment
in overseas subsidiary undertakings
Prior year adjustment in respect of - - (554)
adoption of FRS 20 'Share-based payment'
Total recognized losses in the period (3,939) (6,908) (14,307)
GROUP BALANCE SHEET
30 June 30 June 31 December
2007 2006 2006
Unaudited Unaudited Audited
#000 #000 #000
Fixed assets
Tangible assets 2,115 2,595 2,516
Current assets
Stock 2,284 3,248 1,880
Debtors 1,715 2,558 2,986
Cash at bank and in hand 691 10,501 3,697
4,690 16,307 8,563
Creditors: amounts falling due within one (1,050) (2,430) (1,415)
year
Net current assets 3,640 13,877 7,148
Net assets 5,755 16,472 9,664
Capital and reserves
Called up share capital 8,329 8,329 8,329
Share premium account 36,390 36,390 36,390
Merger reserve 8,088 8,088 8,088
Other reserve 899 278 869
Profit and loss account (47,951) (36,613) (44,012)
Total shareholders' funds - equity 5,755 16,472 9,664
interests
GROUP CASH FLOW STATEMENT
6 months to 6 months to Year to
30 June 30 June 31 December
2007 2006 2006
Unaudited Unaudited Audited
#000 #000 #000
Net cash outflow from operating (4,310) (7,164) (13,718)
activities
Returns on investments
and servicing of finance
Interest received 47 232 399
Taxation
UK corporation tax repaid 1,377 1,117 1,119
Capital Expenditure
Purchase of tangible fixed assets (120) (955) (1,403)
Proceeds of sale of fixed assets - - 30
Net cash outflow before financing (3,006) (6,770) (13,573)
Financing
Issue of ordinary share capital - 14,672 14,671
(Decrease) / Increase in cash (3,006) 7,902 1,098
Reconciliation of operating loss
to net cash outflow from
operating activities
Operating loss (4,495) (7,670) (15,440)
Depreciation of tangible fixed assets 521 553 1,050
Decrease / (Increase) in debtors 381 (202) 159
(Decrease) / Increase in creditors (365) 137 (877)
(Increase) / Decrease in stock (404) (38) 1,330
Share based payment 30 79 116
Other non cash items 22 (23) (56)
Net cash outflow from operating (4,310) (7,164) (13,718)
activities
NOTES TO THE INTERIM STATEMENT
1. Basis of preparation
The interim financial statements have been prepared on the basis of the
accounting policies set out in the 2006 statutory financial statements of
Newport Networks Group PLC. The directors consider that following the proposed
share placing announced on 30 July 2007 the group will have adequate resources
to continue in existence for the foreseeable future and therefore it is
appropriate to prepare the interim report on a going concern basis.
The interim report was approved by the Board of directors on 27 July 2007.
2. Loss per ordinary share
The basic loss per share (LPS) of (2.38p) is based on the loss for the period of
#3,961,000 and the weighted average number of ordinary shares in issue of
166,582,833.
The 30 June 2006 comparative loss per share (LPS) of (4.52p) is based on the
loss for the period of #6,885,000 and the weighted average number of ordinary
shares in issue of 152,310,273.
The 31 December 2006 comparative loss per share (LPS) of (8.6p) is based on the
loss for the year of #13,697,000 and the weighted average number of ordinary
shares in issue of 159,505,207.
Diluted LPS has not been disclosed, due to employee share options being
anti-dilutive. In these circumstances diluted LPS is the same as the basic LPS.
3. Debtors
30 June 30 June 31 December
2007 2006 2006
#000 #000 #000
Trade debtors 998 1,406 1,290
VAT recoverable 18 75 62
Other debtors 37 203 16
R&D tax credit receivable 450 551 1,340
Prepayments and accrued income 212 323 278
1,715 2,558 2,986
4. Creditors: amounts falling due within one year
30 June 30 June 31 December
2007 2006 2006
#000 #000 #000
Trade creditors 305 565 497
Other taxes and social security costs 167 267 144
Accruals 578 1,459 764
Deferred revenue - 139 10
1,050 2,430 1,415
5. Group reconciliation of movements in shareholders' funds
Share Share Other Profit &
capital premium reserve loss
account
#000 #000 #000 #000
At 1 January 2007 8,329 36,390 869 (44,012)
Loss for the period - - - (3,961)
Exchange differences on - - - 22
foreign net investments
Share based payment charge - - 30 -
At 30 June 2007 8,329 36,390 899 (47,951)
There has been no movement in the Merger Reserve during the six month period
ended 30 June 2006.
6. Publication of non-statutory accounts
The financial information contained in this interim statement does not amount to
statutory financial statements within the meaning of section 240 Companies Act
1985 and has not been reported on by the auditors or delivered to the Registrar
of Companies. The figures for the year to 31 December 2006 have been extracted
from the full statutory financial statements for that year which have been filed
with the Registrar of Companies. The auditors' report on those financial
statements was unqualified and did not contain a statement under Section 237(2)
or (3) of the Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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