how low can eng go, page-7

Fair play phishpheet,

seems you called the tivo correctly. Engin will relinquish distribution exclusivity in an amended deal to reduce costs. Does not look good to me. Full report below.

Performance Update
Half Year ended 31 December 2007
Sydney, 24 January 2008:
Chairman Appointment
Engin today announces that Mr Ian Smith has assumed the role of Chairman of the
Board.
Mr Smith, who joined the company in September 2007, brings a wealth of experience
in the media and communications industry to the role, with over twenty years in the
advertising business. Smith’s previous roles include CEO of Yahoo!7, CEO of the
Communications Group Ltd, President International for Bates Worldwide and a board
Director of Cordiant Communications PLC.
Performance Update
Engin Limited announces its unaudited draft financial statements for the half-year
ended 31 December 2007 showing a net loss before and after tax of $6.7 million.
As noted in the Chairman’s Statement in the 2007 annual report, during the second
half of the 2007 financial year, the company commenced the implementation of a
world-class customer relationship and billing system. This went live in the final quarter
of last calendar year. Through this period the company’s high customer growth
aspirations were unfortunately not met, despite achieving growth in subscriptions of
11.4% to 85,000.
A strategic review of the business was undertaken in October and November 2007 to
reduce the ongoing working capital requirements of the business, and bring forward
cash flow breakeven. A revised strategy was determined and implemented which,
to date, is succeeding with remuneration, marketing and services related costs
having been significantly reduced and are now more closely aligned with cash flow
being generated from operating activities.
ADSL2+
A further outcome of the strategic review was to temporarily put on hold the
company’s ADSL2+ project until such time that the strategy to provide a nearer -term
path to profitability for the company’s core telephony business was successfully
executed. With this strategy being successfully executed it is intended that the
ADSL2+ project will recommence later this financial year. The intention remains for
Engin to be able to offer a combined broadband access and telephony solution.
TiVo
Engin intends to market TiVo to its customer base as well as work with Seven and its
related bodies corporate to build the retail channel relationships. To reduce funding
demands, Engin has decided to relinquish its exclusivity of distribution status and in
doing so, significantly reduced the performance related risk and demands on
working capital carried by Engin under the TiVo distribution contract. Agreement has
been reached with HTS (a Seven Group Company and holder of the TiVo rights) to
vary the agreement to achieve this outcome.
The company is also in discussion with Unwired in regard to examining prospective
operational synergies between the two companies’ complementary product and
service offerings.
Engin is now better positioned to focus on its core telephony business, while still
retaining the option to distribute TiVo as part of a Broadband triple play. This position
materially decreases its working capital demands and will accelerate its path to
profitability.
Sale of the Unwired Shareholding
As previously noted, the company sold its shareholding in Unwired into the bid by
Seven Network Limited’s wholly owned subsidiary, Network Investment Holdings Pty
Limited. A profit of $3.7 million ($3.1 million net of interest related costs) was realised
on this investment. Engin has repaid the funds raised to make the initial investment,
along with interest owing, to Seven. Engin remains well positioned to capitalise on
Unwired’s roll out of WiMax in due course.
Fund raising
As previously foreshadowed, Engin will seek new equity to complete the funding of its
business, including consolidation of its broadband telephony business. Details of this
will be made available in early February.