Espial Reports Fourth Quarter Results

Espial Reports Fourth Quarter Results


OTTAWA, Feb. 26, 2014 /CNW/ - February 26, 2014 - Espial(®) Group Inc. ("Espial" or the "Company"), (TSX: ESP), a leader in the
delivery of on-demand TV software and services, today announced its
fourth quarter and fiscal year financial results for the three and
twelve month periods ended December 31, 2013.


Espial Q4 Highlights


-- Announced a major Tier 1 North American cable operator win for
Espial's RDK and HTML5 user experience (UX) solutions.
-- Launched new on demand-services with Telenor owned Canal
Digital Kabel, Norway's largest cable operator.
-- Announced a reseller deal for the Espial TV Browser with a
leading, global Smart TV chipset manufacturer who started
shipments with 2 new major Smart TV consumer electronic brands.
-- Q4 revenue increased 44% to $3.9 million from $2.7 million last
year.
-- Q4 EBITDA increased to income of $0.6 million from a loss of
$0.9 million last year.




"We had a strong Q4 and a good finish to 2013. In 2013, we continued to
invest in innovating around our RDK software and HTML5 user experience
solutions" said Jaison Dolvane, CEO, Espial. "We announced a major
cable operator win in Q4 2013 and continued to grab the attention of
some of the world's largest cable operators with our sales and
marketing efforts. Cable operators need open, cloud-based service
platforms, using HTML5, to enable rapid service innovation and compete
effectively against new, more nimble Internet competitors. As we move
into 2014, we do so with a strong product portfolio, continued R&D
innovation and a solid sales pipeline."


Fourth Quarter Financial Summary


For the three-month period ended December 31, 2013, the Company reported
revenues of $3.9 million compared to revenues of $2.7 million for the
three months ended December 31, 2012. Earnings before interest, foreign
exchange, taxes, stock compensation, depreciation and amortization
(EBITDA) for the fourth quarter of fiscal 2013 was income of $0.6
million, compared to a loss of $0.9 million in the fourth quarter of
fiscal 2012. Net income, which includes non-cash items like
depreciation, stock compensation and amortization of intangibles, for
the quarter was $0.1 million or $0.01 per share, compared to a net loss
of $1.3 million last year, or $0.09 per share.


Q4 Financial Results


-- Fourth quarter revenues were $3,902,541 compared with revenues
of $2,716,779 in the same period a year ago. Fourth quarter
software license and royalty revenues were $2,482,863 compared
to $1,517,179 in the fourth quarter of fiscal 2012.
Professional services for the fourth quarters of 2013 and 2012
were $328,477 and $221,607 respectively. Maintenance and
support revenues for the fourth quarter were $1,091,201
compared to $977,992 last year.

-- North American revenues were $1,717,493 in the fourth quarter
of 2013 compared to $838,661 in 2012. Asia revenues were
$892,517 in the fourth quarter of 2013 compared to $563,747 in
2012. European revenues were $1,292,531 in the fourth quarter
of 2013 compared to $1,314,391 in 2012

-- Gross margin for the fourth quarter of fiscal 2013 was 81%
compared with 71% in the fourth quarter of fiscal 2012.

-- Operating expenses in the fourth quarter of fiscal 2013 were
$2,845,056 compared to $3,211,461 in the fourth quarter of
fiscal 2012.

-- Earnings before interest, foreign exchange, taxes, stock
compensation, depreciation and amortization (EBITDA) for the
fourth quarter of fiscal 2013 was income of $576,690 compared
to a loss of $910,636 in fiscal 2012.

-- Net income, which includes non-cash items like depreciation,
goodwill and intangibles, in the fourth quarter was $148,944
compared to a loss of $1,273,082 last year.



Fiscal 2013 Financial Results


-- Total revenues for the fiscal year ended December 31, 2013 were
$12,549,412 compared with revenues of $13,280,518, in the same
period a year ago. Software license and royalty revenues for
the 2013 fiscal year were $7,031,332 compared to $7,536,633 in
fiscal 2012. Professional services for the fiscal years of 2013
and 2012 were $1,315,749 and $2,201,640 respectively.
Maintenance and support revenues for the fiscal year ended
December 31, 2013 were $4,202,331 compared to $3,542,244 last
year.

-- North American revenues were $4,262,957 in the 2013 fiscal year
compared to $2,833,563 in 2012. Asia revenues were $4,125,156
in the 2013 fiscal year compared to $2,524,494 in 2012.
European revenues were $4,161,299 in the 2013 fiscal year
compared to $7,922,460 in 2012.

-- Gross margin for the 2013 fiscal year was 82% compared with 78%
in fiscal 2012.

-- Operating expenses for the 2013 fiscal year were $14,668,472
compared to $12,539,180 in fiscal 2012. Included in the fiscal
2013 year operating expenses is a restructuring charge and
integrations costs related to the acquisition of ANT

-- Earnings before interest, foreign exchange, taxes, stock
compensation, depreciation and amortization (EBITDA) for the
fiscal year ended December 31, 2013 was a loss of $2,960,261
compared to a loss of $747,962 in fiscal 2012.

-- Net loss in the 2013 fiscal year was $5,529,425 compared to a
loss of $2,707,139 in 2012.


Cash, restricted cash and cash equivalents on December 31, 2013, was
$7,407,093.



A complete set of financial statements and management's discussion and
analysis for the period ended December 31, 2013, will be available at http://www.sedar.com.


Conference Call


The Company will be hosting a conference call to discuss the Q4 and
fiscal year 2013 financial results on February 27, 2014 at 10:00 a.m.
Eastern Time (ET). The phone number to join the results discussion is:



-- Toll free line (Canada/US) - +1 888-390-0605
-- Toll line (international/local) - +1 416-764-8609


The playback for the call will be available until 11:59pm EST on March
25, 2014, at the following numbers and passcode:



-- Toll line: +1 416-764-8677, Passcode: 657861
-- Toll-free line: +1-888-390-0541, Passcode: 657861



About Espial (www.espial.com)


Espial is a leading supplier of digital TV and IPTV software and
solutions to cable MSOs and telecommunications operators as well as
consumer electronics manufacturers. Espial's middleware,
video-on-demand, and browser products power a diverse range of pay-TV
and Internet TV business models. Over 35 million licenses of its
patented software are in use across the world. Espial is headquartered
in Ottawa, Canada and has offices in the United States, Europe,
and Asia. Visit www.espial.com or contact via phone at +1 613 230 4770.


Forward Looking Statement


This press release contains information that is forward looking
information with respect to Espial within the meaning of Section
138.4(9) of the Ontario Securities Act (forward looking statements) and
other applicable securities laws. In some cases, forward-looking
information can be identified by the use of terms such as "may",
"will", "should", "expect", "plan", "anticipate", "believe", "intend",
"estimate", "predict", "potential", "continue" or the negative of these
terms or other similar expressions concerning matters that are not
historical facts. In particular, statements or assumptions about, ,
economic conditions, benefits of new customer and partner
relationships, future opportunities for the company and products and
any other statements regarding Espial's objectives (and strategies to
achieve such objectives), future expectations, beliefs, goals or
prospects are or involve forward-looking information.



Forward-looking information is based on certain factors and assumptions.
While the company considers these assumptions to be reasonable based on
information currently available to it, they may prove to be incorrect.
Forward-looking information, by its nature necessarily involves known
and unknown risks and uncertainties. A number of factors could cause
actual results to differ materially from those in the forward-looking
statements or could cause our current objectives and strategies to
change, including but not limited to changing conditions and other
risks associated with the on-demand TV software industry and the market
segments in which Espial operates, competition, Espial's ability to
effectively develop its distribution channels and generate increased
demand for its products, economic conditions, technological change,
unanticipated changes in our costs, regulatory changes, litigation, the
emergence of new opportunities, many of which are beyond our control
and current expectation or knowledge.



Additional risks and uncertainties affecting Espial can be found in
Management's Discussion and Analysis of Results of Operations and
Financial Condition for the fiscal year ended December 31, 2012 and
2013 filed on SEDAR at www.sedar.com. If any of these risks or uncertainties were to materialize, or if the
factors and assumptions underlying the forward-looking information were
to prove incorrect, actual results could vary materially from those
that are expressed or implied by the forward-looking information
contained herein and our current objectives or strategies may change.
Espial assumes no obligation to update or revise any forward looking
statements, whether as a result of new information, future events or
otherwise, except as required by law. Readers are cautioned not to
place undue reliance on these forward-looking statements that speak
only as of the date hereof.


Non-IFRS Financial Measures


Earnings before interest, foreign exchange, taxes, stock compensation,
depreciation and amortization (EBITDA) is a non-IFRS financial measure
that does not have any prescribed meaning by IFRS and is therefore
unlikely to be comparable to similar measures presented by other
issuers. Management believes that this non-IFRS financial measure, when
taken together with the corresponding consolidated IFRS measures,
increases the transparency of the Company's current results and enables
investors to more fully understand trends in its current and future
performance. A reconciliation of net loss to earnings before interest,
foreign exchange, taxes, stock compensation, dividends on redeemable
preferred shares, depreciation and amortization is as follows:






December December
31, December 31, 31, December 31,
2013 2012 2013 2012

(3 months) (3 months) (12 months) (12 months)

(unaudited) (unaudited) (unaudited) (unaudited)



Net loss and
Comprehensive ($
loss $ 148,943 ($1,273,082) 5,529,421 ($2,707,139)

Add

Stock 141,488
compensation 36,751 37,732 143,969

Depreciation 212,158 207,919
of property
and
equipment 59,569 60,743

Amortization of
intangibles 161,460 288,196 1,101,885 1,146,573

406,723 (886,411) (4,071,413) (1,211,159)

Less (add)

Net interest
income (expense) (147,836) (125,068) (547,024) (469,481)

Foreign exchange
gain (loss) 33,241 149,293 (277,641) 6,284

Income tax (55,371) - (286,483) -

Earnings before
interest,
foreign
exchange, taxes,
stock
compensation,
depreciation and ($
amortization $ 576,689 ($910,636) 2,960,261) ($747,962)






Q4 Consolidated Statements of Income (Loss)




Three months ended Three months ended
December 31, 2013 December 31, 2012

(Unaudited) (Unaudited)

Revenue

Software $ 2,482,863 $ 1,517,179

Professional services 328,477 221,607

Support and maintenance 1,091,201 977,992

Total Revenue 3,902,541 2,716,779

Cost of revenue 738,575 802,624

Gross margin 3,163,966 1,914,155

Expenses

Sales and marketing 710,362 978,995

General and administrative 394,635 360,878

Research and development 1,578,599 1,583,393

Business restructuring charges - -

Amortization of Intangible
assets 161,460 288,196

2,845,056 3,211,462

Loss before other expense 318,910 (1,297,307)

Interest income 3,360 14,328

Foreign exchange gain 33,241 149,293

Interest expense (151,196) (139,396)

Income (loss) before tax 204,315 (1,273,082)

Taxes (55,371) -

Net income (loss) $ 148,944 $ (1,273,082)






Consolidated Balance Sheets



December 31, December 31,
2013 2012
(unaudited) (unaudited)



CURRENT ASSETS

Cash and cash equivalents $ 7,407,093 $ 3,055,644

Restricted cash - 8,164,551

Accounts receivable 2,057,222 1,758,089

Investment tax credits receivable 312,027 300,000

Prepaid expenses and other assets 502,990 212,722

10,279,332 13,491,006



Equipment 539,348 609,088

Intangible assets 2,099,398 1,032,409

Goodwill 3,340,808 3,340,808

$ 16,258,886 $ 18,473,311



CURRENT LIABILITIES

Operating line $ - $ 3,010,192

Accounts payable and accrued
liabilities 1,872,505 1,869,932

Provisions 281,813 -

Deferred revenue 4,052,700 1,327,484

Term Debt 2,442,056 -

8,649,074 6,207,608

Term debt - 3,256,604

Provisions 363,132 -

Total Liabilities 9,012,206 9,464,212



COMMITMENTS

SHAREHOLDERS' EQUITY

Share capital 77,781,292 74,861,877

Warrants 1,436,004 732,382

Share based payments reserve 12,125,080 11,981,111

Deficit (84,095,696) (78,566,271)

7,246,680 9,009,099

$ 16,258,886 $ 18,473,311





SOURCE ESPIAL GROUP

ESPIAL GROUP

CONTACT: For inquiries from the financial press or analysts, contact: Carl Smith
Chief Financial Officer
Espial Group Inc.
Email: csmith@espial.com
Phone: +1 613-230-4770 Kirk Edwardson
Director, Marketing
Espial Group Inc.
Email: kedwardson@espial.com
Phone: +1-613-230-4770 x1145



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