28 November 2008
Adwalker Plc
("Adwalker" or "the company")
Half-yearly results for the six months ended 31 August 2008
Chairman's Statement
I am pleased to present the interim results of the Group for the six months
ended 31 August 2008.
Financials
Revenue for the six month period was Euro451,929 (2007: Euro1,142,547). Gross profit
was Euro263,149 (2007: Euro562,201) resulting in a loss before tax of Euro825,390 (2007:
loss Euro988,917). The loss per share for the period was 0.31 cents (2007: loss
0.56 cents).
The decline in revenue and gross profit during the period was principally due
to a decline in the advertising budgets of our large corporate clients in the
USA. In light of this trend we concentrated on the Adwalker VAR (Value Added
Reseller) model which enables companies across the world to adopt the Adwalker
platform in local markets which are beyond Adwalker's key operating territories
in the USA, UK and Ireland. As a result gross profit margin in the period was
up from 49 per cent. in the corresponding period in 2007 to 58 per cent. The
Company is currently working with VAR partners in Turkey, China (Macau market),
Italy, Trinidad & Tobago, Northern Ireland, Brazil, Bermuda, Australia, New
Zealand and Holland.
Despite the decline in revenue and gross profit, the losses before tax were
reduced as a direct result of the VAR model requiring fewer personnel to
service it and greater efficiencies in our three operating territories.
Adoption of the lease/hire model through our USA office in the period and since
the period end has been disappointing. However, the Board believes the
performance of the USA operations will improve in the medium term as corporate
clients become more familiar with the model.
During the period under review the Company has been able to utilise the funds
raised in February 2008 through a placing of ordinary shares, amounting to �
240,000 (after expenses), which was announced on 27 February 2008. However, as
at 31 August 2008 the Group had a net cash deficit of Euro242,819 in the form of a
bank overdraft which is supported by Director guarantees.
The interim statements have been prepared on a going concern basis. This
assumption is dependent on the ongoing support of its Directors regarding its
financing facilities and the Group meeting its projected revenue and
expenditure targets.
Financing
As set out in the Company's trading update dated 30 September 2008, the Company
is currently operating within its existing bank facilities and in order to
continue to operate within these facilities the Company needs to grow its
revenue base significantly.
The expected near-term growth in income in the Company's core business, the
leasing of the Adwalker platform, is heavily dependent on the advertising
budgets of its global media partners. As with many companies operating in our
industry, the uncertain economic environment and the potential adverse effect
this may have on the timing and level of spending of Adwalker's customer base
makes it very difficult for the Directors to forecast the level of future
income with any degree of accuracy.
As the Directors' stated in the recent trading update, discussions have now
commenced and are ongoing with a number of parties, including the Company's
bankers, with a view to securing the necessary working capital so that the
business can continue to meet its obligations as they fall due.
In the event that there is insufficient growth in near-term income and Adwalker
is unsuccessful in securing additional bank facilities and/or raising the
necessary finance then there will be a material adverse effect on the Company's
financial position and operations.
Current trading and outlook
Discussions continue with a number of companies regarding the deployment of
Interactive Fixed Screen Networks. At this point it is difficult to predict
when any of the negotiations will come to fruition, particularly in light of
the current economic environment.
Trading conditions since the period end continue to be challenging. However,
the Board continues to believe that Adwalker's wearable media platform is still
only being utilised by `early adopting' clients and that over time the platform
will still be able to establish itself in the wider global arena. I would like
to thank our loyal shareholders for their patience during this period of
establishment.
In recent weeks the Company has focused on the provision of varied digital
technology services for its media and advertising clients. Many of these new
services have been well received in Ireland, the launch market. The Board is
encouraged by the initial reaction in Ireland and the Company hopes to be able
to generate further interest in the USA and UK markets in the first half of
2009.
I remain cautiously optimistic about the future of the Company in very
challenging economic conditions.
PADRAIC O'CONNOR
CHAIRMAN
27 November 2008
Enquiries:
Adwalker plc Tel: +353 (1) 866 9000
Simon Crisp
simon@adwalker.com
John East & Partners Limited Tel: 020 7628 2200
Simon Clements/David Worlidge
Consolidated Income Statement for the six months ended 31 August 2008
Notes Six months Six months Year
ended ended ended
31 August 31 August 28 February
2008 2007 2008
Unaudited Unaudited Audited
Euro Euro Euro
Revenue - continuing operations 3 451,929 1,142,547 1,770,195
Cost of sales (188,780) (580,346) (942,849)
Gross profit 263,149 562,201 827,346
Other operating income 220,363 - -
Distribution costs (14,770) (5,077) (9,565)
Administrative and other (1,277,421) (1,494,014) (3,297,837)
operating expenses
Loss from operations - (808,679) (936,890) (2,480,056)
continuing operations
Finance costs (5,342) (6,311) (1,768)
Income from investments 1,130 - 3,720
Exchange (loss)/profit (12,499) (45,716) 52,981
Loss before tax - continuing (825,390) (988,917) (2,425,123)
operations
Income tax expense - - (199)
Net loss for the period - (825,390) (988,917) (2,425,322)
continuing operations
Loss per share 4
Basic loss per share (0.31 cent) (0.56 cent) (0.92 cent)
Diluted loss per share (0.31 cent) (0.56 cent) (0.87 cent)
Consolidated Balance Sheet as at 31 August 2008
Notes 31 August 31 August 28 February
2008 2007 2008
Unaudited Unaudited Audited
Euro Euro Euro
Assets
Non-current assets
Plant and equipment 5 115,534 434,666 266,215
Intangible assets 6 128,827 282,847 205,346
244,361 717,513 471,561
Current assets
Trade and other receivables 282,435 254,844 205,297
Bank and cash balances 8,057 174,938 218,731
290,492 429,782 424,028
Total assets 534,853 1,147,295 895,589
Equity and liabilities
Capital and reserves
Share capital 5,272,676 3,712,664 5,272,676
Capital reserves 5,753,559 5,753,559 5,753,559
Other reserves 36,424 25,489 (37,550)
Share options 537,301 505,582 522,860
Accumulated losses (12,439,560) (10,177,763) (11,614,170)
Total equity (839,600) (180,469) (102,625)
Non current liabilities
Obligations under finance leases - 46,237 28,746
- due after one year
- 46,237 28,746
Current liabilities
Trade and other payables 939,555 865,900 777,561
Bank loans and 250,876 178,933 32,991
overdrafts- due within one year
Other taxation liabilities 184,022 198,176 120,398
Obligations under finance leases - 38,518 38,518
- due within one year
1,374,453 1,281,527 969,468
Total equity and liabilities 534,853 1,147,295 895,589
Consolidated Unaudited Statement of Changes in Equity for the six months ended
31 August 2008
Share Share Share Other Accumulated Total
Capital Premium Options Losses equity
Reserves
Euro Euro Euro Euro Euro Euro
Balance at 3,372,664 5,392,689 493,410 (8,519) (9,188,848) 61,396
1 March
2007
Net loss - - - - (2,425,322) (2,425,322)
for the
year
Exchange - - - (29,031) - (29,031)
rate
movement
Share - - 29,450 - - 29,450
option
charge
Shares 1,900,012 360,870 - - - 2,260,882
issued
Balance at 5,272,676 5,753,559 522,860 (37,550) (11,614,170) (102,625)
28 February
2008
Balance at 5,272,676 5,753,559 522,860 (37,550) (11,614,170) (102,625)
1 March
2008
Net loss - - - - (825,390) (825,390)
for the
period
Exchange - - - 73,974 - 73,974
rate
movement
Share - - 14,441 - - 14,441
option
charge
Balance at 5,272,676 5,753,559 537,301 36,424 (12,439,560) (839,600)
31 August
2008
Consolidated cash flow statement for the six months ended 31 August 2008
Six months Six months Year
ended ended
ended
31August 31August
28 February
2008 2007
2008
(Unaudited) (Unaudited)
(Audited)
Euro Euro Euro
Operating activities
Loss before tax (825,390) (988,917) (2,480,056)
Depreciation and amortisation 228,046 295,336 525,298
Adjustments for share options grants 14,441 12,172 29,450
Grant income (220,363) - -
Exchange differences 12,499 35,377 (52,981)
(790,767) (646,032) (1,978,289)
Tax refund - - 6,764
Decrease/(Increase) in receivables 68,774 (18,528) 22,292
Increase/(Decrease) in payables 278,599 31,952 (106,495)
Cash generated from operations (443,394) (632,608) (2,055,728)
Net investment expense/(income) 4,212 6,311 (1,952)
Net cash used by operating activities (439,182) (626,297) (2,057,680)
Investing activities
Interest received 1,130 - 3,720
Interest paid (5,342) (6,311) (1,768)
Purchase of intangible assets (4,021) (22,665) (22,001)
Purchase of property, plant and (759) (41,938) (25,244)
equipment
Net cash used in investing activities (8,992) (70,914) (45,293)
Net cash outflow before financing (448,174) (697,211) (2,102,973)
Financing activities
Issue of shares - 700,871 2,260,882
Grants received 74,451 - -
Capital repayment of finance leases (67,264) (19,254) (36,749)
Net cash inflow from financing 7,187 681,618 2,224,133
(Decrease)/Increase in cash and cash (440,987) (15,593) 121,160
equivalents in period
Cash and cash equivalents at start of 185,740 11,599 11,599
the period
Effects of exchange rate changes 12,428 - 52,981
Cash and cash equivalents at end of the (242,819) 3,994 185,740
period
Notes to the unaudited interim consolidated financial statements for the six
months ended 31 August 2008
1. General
Adwalker plc is a public limited company incorporated in Ireland. The Company
has subsidiaries located in the United Kingdom, United States and Hong Kong.
The Company and subsidiaries are principally involved in offering clients
digital media solutions on the Adwalker mobile platform.
These financial statements are presented in Euro as that is the currency in
which the majority of the Group's transactions are presently denominated.
2. Basis of Preparation of the interim financial statements
The interim financial statements have been prepared on a basis which is
consistent with the accounting policies adopted for the period to 31 August
2008.
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the interim report in accordance with the AIM
Rules of the London Stock Exchange which require that the accounting policies
and presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes,
and the reasons for them, are disclosed.
The interim accounts which are abridged and unaudited, do not include all the
information required for full annual financial statements. The financial
information contained in the interim statements does not constitute statutory
accounts as defined within the meaning of the Companies Act 1963 to 2006.
Comparative figures for the year to 28 February 2008 have been extracted from
the latest financial statements on which the report of the independent auditors
was unqualified.
The interim financial statements have been prepared in accordance with the
International Financial Reporting Standards.
The Company is currently operating within its existing bank facilities and in
order to continue to operate within these facilities the Company needs to grow
its revenue base significantly. However, the level of income generated in
September was significantly lower than management expectations. The expected
near-term growth in income in the Company's core business, the leasing of the
Adwalker platform, is heavily dependent on the advertising budgets of its
global media partners.
The uncertain economic environment and the potential adverse effect this may
have on the timing and level of spending of Adwalker's customer base makes it
very difficult for the Directors to forecast the level of future income with
any degree of accuracy.
While the Directors remain optimistic that the effect of these factors will be
limited in the medium term and the shortfall in income experienced since 31
August 2008 may be recovered in future months, the Directors intend to commence
discussions with a number of parties with a view to securing the necessary
working capital so that the business can continue to meet its obligations as
they fall due.
In the event that there is insufficient growth in near-term income and Adwalker
is unsuccessful in securing additional bank facilities and/or raising the
necessary finance then there will be a material adverse effect on the Company's
financial position and operations.
The interim statements have been prepared on a going concern basis. This
assumption is dependent on the Group meeting its projected revenue and
expenditure targets. The Group incurred losses of Euro825,390 for the six month
period ended 31 August 2008. The Group had a net cash deficit of Euro242,819 as at
31 August 2008.
The Directors are confident that the group is taking the necessary steps to
grow the business to achieve profitability in the short to medium term. Should
projected profit levels not materialise the Directors will take whatever steps
necessary to ensure the group has sufficient working capital for its needs.
The Directors have reviewed the forecasted profit and loss account and cash
flows of the Group for a period of one year from the date of approval of these
interim financial statements. They are satisfied that in view of the Group's
bank facilities and the expected trading and cash flow performance, the Group
has the necessary resources to continue trading for the foreseeable future.
Inherently, there can be no certainty in any of these respects. Accordingly,
they believe that it is appropriate for the financial statements to be prepared
on the going concern basis.
If the Group was unable to continue in operational existence for the
foreseeable future, adjustments would have to be made to adjust the balance
sheet values of assets to their recoverable amounts, to provide for further
liabilities that might arise and to reclassify fixed assets and long term
liabilities as current assets and liabilities.
3. Revenue
An analysis of the Group's revenue is as follows:
Six months Six months Year ended 28
February 2008
ended 31 ended 31
August 2008 August 2007
Unaudited Unaudited Audited
Euro Euro Euro
Media Services 451,929 1,142,547 1,770,195
Revenue is derived from the following geographic regions
Ireland 109,952 78,972 191,322
United Kingdom 185,342 53,970 144,869
United States of America 156,635 1,009,605 1,434,004
451,929 1,142,547 1,770,195
4. Loss per share
Basic loss per share is based on a loss of Euro825,390, (six months ended 31
August 2007: Euro988,917) (year ended 28 February 2008: Euro2,425,322) and a weighted
average number of shares in issue of 263,633,702 (six months ended 31 August
2007: 177,880,340) (year ended 28 February 2008: 263,633,702).
In 2008 the diluted loss per share has been calculated on the same basis as
basic loss per share because the effect of the potential ordinary shares (share
options) reduces the net loss per share and is therefore anti-dilutive.
5. Plant and equipment
Adwalker Fixtures & Computer Leasehold Total
Packs Fittings Equipment Improvements
Euro Euro Euro Euro Euro
Cost or valuation
At 1 March 2008 1,334,619 131,256 200,556 89,174 1,755,605
Exchange 650 (7,588) 4,135 (1,131) (3,934)
differences
Additions - - 759 - 759
At 31 August 2008 1,335,269 123,668 205,450 88,043 1,752,430
Accumulated depreciation and impairment
At 1 March 2008 1,203,153 64,911 176,080 45,246 1,489,390
Exchange 5,067 1,849 (10,223) (760) (4,067)
differences
Charge for the 113,084 11,221 18,296 8,972 151,573
period
At 31 August 2008 1,321,304 77,981 184,153 53,458 1,636,896
Carrying amount
At 28 February 131,466 66,345 24,476 43,928 266,215
2008- Audited
At 31 August 2008 - 13,965 45,687 21,297 34,585 115,534
Unaudited
6. Intangible assets
Patents and ACOMS System Goodwill Total
Trademark
Euro Euro Euro Euro
Cost
At 1 March 2008 114,137 527,643 1,959,567 2,601,347
Additions 4,021 - - 4,021
At 31 August 2008 118,158 527,643 1,959,567 2,605,368
Accumulated amortisation
At 1 March 2008 62,185 374,249 1,959,567 2,396,001
Charge for the period 13,082 67,458 - 80,540
At 31 August 2008 75,267 441,707 1,959,567 2,476,541
Carrying amount
At 28 February 2008 - 51,952 153,394 - 205,346
Audited
At 31 August 2008 - 42,891 85,936 - 128,827
Unaudited
The impairment of goodwill arose on Adwalker (IP) Limited. The company ceased
trading on acquisition and the Directors wrote down the goodwill relating to
this subsidiary by Euro1,959,567 in the period ended 28 February 2005.
7. Copies of interim report
Copies of the interim report are available for download from the company's
website www.adwalker.com.
END
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