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Expansys Regulatory News (XPS)



Regulatory News for Expansys (XPS)


Share Price: 0.6415Bid: 0.00Ask: 0.00Change: 0.00 (0.00%)No Movement on Expansys
Spread: 0.00Spread as %: 0.00%Open: 0.655High: 0.655Low: 0.655Yesterday’s Close: 0.6415





Half Yearly Report

Thu, 13th Dec 2012 07:00

RNS Number : 4197T
EXPANSYS plc
13 December 2012

?

Embargoed: 0700hrs 13 December 2012

EXPANSYS PLC

("Expansys" or the "Company" or the "Group")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2012

EXPANSYS plc (AIM: XPS), a leading global provider of end-to-end eCommerce and telecommunications services in the consumer electronics and wireless sectors, announces interim results for the six months ended 31 October 2012.

Financial Headlines

- Turnover 45.6m (H1 2011: 46.6m)

- Adjusted profit before tax 0.4m (H1 2011: 1.6m)*

- Exceptional charges of 2.3m (H1 2011: 0.1m)

- Loss before tax 2.1m (H1 2011: profit of 0.8m)

- Cash 2.3m (31 October 2011: 4.0m)

* Adjusted profit is after exceptional items, foreign exchange and other non-cash items

Trading Headlines

o DSNS has performed in line with expectations

o New international mobile network operator contracts won by PJ Media

o Growth in turnover from global websites (EXPANSYS.COM) of 21%

o Growth in turnover from the retail business in Asia of 93%

o Key major account contracts won in the retail business

o Growth in US retail business has slowed

o Significant reduction in performance from the European division. A restructuring is underway which will reduce costs significantly, although this is negatively impacting the current financial year

Bob Wigley, Chairman of EXPANSYS, commented:

The first half of the year has been more challenging than expected, chiefly as a result of a worsening performance in Europe as we restructure the business to an appropriate scale in line with the market opportunity and difficult economic climate. We continue to experience headwinds in the retail business, but believe the realignment of our cost base will have a positive impact and bring the business increased profitability in the short to medium term. Our DSNS business continues to win new customers, but the predicted network terms changes are having an effect upon profitability. We continue to make good progress within our PJ Media multi-channel solution business and have signed several key strategic contract wins that will benefit the Group moving forward.

The Group has spent a large amount of time this year restructuring underperforming areas of the business, and while not complete, we are already seeing operational improvements that are necessary to support the many strategic opportunities we have. However, due to the underperformance of the retail business chiefly in Europe, we expect full year performance to be below current market expectations.

Enquiries:

EXPANSYS plc

Anthony Catterson, CEO

Chris Ogle, CFO Via M: Communications

N+1 Singer

Jonny Franklin-Adams or Jenny Wyllie

Tel. +44 (0) 20 7496 3000

jonny.franklin-adams@n1singer.com / jenny.wyllie@n1singer.com

M:Communications

Ben Simons or Matthew Neal

Tel +44 (0)20 7920 2340/2368

simons@mcomgroup.com / neal@mcomgroup.com

Investor relations website: www.EXPANSYS.plc.uk








CHAIRMAN'S STATEMENT

Expansys announces its results for the six months ended 31 October 2012.

This period has been a difficult period for the Company and we have incurred some significant one off exceptional costs.

Financial Review

Total turnover for the Group in the period was 45.6 million representing a decrease of 2% compared to the same period last year (H1 2011: 46.6 million).

The profit before tax as adjusted for the share-based payment, foreign exchange and exceptional items was 0.4 million (2011: 1.6 million). Share based payments totalled 0.2 million and exceptional items totalled 2.3 million with more details below.

The loss before tax for the period was 2.1 million (H1 2011: profit of 1.6 million).

Cash at the end of October 2012 was 2.3 million (H1 2011: 4.0 million). Cash has reduced primarily due to the exceptional costs incurred outlined below. We have also made necessary investments in infrastructure to support the retail division at a cost of 0.4 million, as well as investing working capital in growing the DSNS business in the USA.

Exceptional Items

During this period we have taken two significant exceptional charges to the income statement.

In the Annual report for FY 12 we reported that DSNS was among a number of distributors that had received a clawback claim from a UK mobile network operator. We have been in continuous discussions with the operator and continue to believe that there is no valid legal basis for the claim. However, we have decided to make a provision due to the protracted on-going negotiations.

The second charge relates to our substantial restructuring of the European division. In the Annual Report for FY 12 we said that while the Eurozone offers strong growth opportunities we are also aware of the challenges and the need to focus on the cost base. From November 1st we have outsourced the European warehouse and distribution facility, as well as the multi-lingual customer services function. This is expected to produce savings of up to 1 million per annum, as well as delivering a necessary improvement to our customer experience in the medium term, but we expect to incur one-off reorganisation costs of circa 0.9 million that have been treated as an exceptional cost.

Markets

EXPANSYS.com

Revenues from EXPANSYS.com websites grew by 21% in the first half of the year. We continue to see good growth in our website revenue in Asia and the USA, and during this period the growth was 84% and 54% respectively when compared to the first six months of last year. Overall the growth in the wider retail business, which includes all sales channels was 1% to 34.7 million (H1 2011: 34.5m). Growth would have been more robust, but was held back as a result of the decline in revenues from our European business.

We have also been encouraged by the signing of a major partner contract in Asia, and continue to believe this offers a strategic opportunity for the Group going forward.

DSNS

DSNS UK has performed in line with our expectations, and as previously communicated, profits have been impacted by the change in terms from networks and therefore the profit is reduced when compared to the previous first half. We continue to believe that despite the short term impact of the term changes, the medium to long term prospects for the market remain good.

We are taking appropriate steps to roll out the DSNS model to other suitable markets.

PJ Media

During the period PJ Media announced two new contracts with network operators; one to build and support a new webstore for a major mobile network operator in Asia and the other to provide a top up service for a major network operator in the UK. The two contracts demonstrate PJ Media's ability to provide a broad range of services to a number of different network operators, and the team continue to explore the large number of opportunities available globally.

Current trading and outlook

The first half of the year has been more challenging than expected. There have been some very encouraging developments in our Asian business, with new strategic contract wins that will improve results in the medium term. Profits for the Group are traditionally weighted to the second half of the year and therefore we expect an improvement in performance in the second half. However, the Board now believes that the profit for the current year will be lower than current market estimates.

The Board are confident that the intended future size and shape of the Group will allow us to maximise the numerous strategic opportunities available. We are actively looking at supporting our strategy through a new sales structure and evolved distribution solution for the Group, which we believe will give us a more robust business model moving forward.

Bob Wigley

Chairman

13 December 2011



GROUP STATEMENT OF COMPREHENSIVE INCOME

For the 6 months ended 31 October 2012



6 months ended

6 months ended



31 October 2012

31 October 2011


Note

000

000





Revenue


45,643

46,585





Cost of sales


(36,375)

(37,096)





Gross profit


9,268

9,489





Distribution costs


(1,910)

(1,677)





Exceptional administrative items

2

(2,313)

(74)

Amortisation of acquired intangibles


(6)

(487)

Share-based payments expense


(172)

(235)

Foreign exchange


(22)

25

Other administrative expenses


(6,987)

(6,250)





Administrative expenses


(9,500)

(7,021)





Operating (loss) / profit


(2,142)

791





Finance costs


(5)

(6)





(Loss) / profit before taxation

3

(2,147)

785





Income tax credit / (charge)


547

(413)





(Loss) / profit for the half year


(1,600)

372





Attributable to owners of the parent


(1,628)

367

Attributable to non-controlling interests


28

5





Currency translation differences


(56)

(142)





Total comprehensive (expense) / income for the half year


(1,656)

230





Attributable to owners of the parent


(1,684)

225

Attributable to non-controlling interests


28

5





Earnings per share (pence)




Basic (loss) / earnings per share for the half year

4

(0.14p)

0.03p

Diluted (loss) / earnings per share for the half year

4

(0.14p)

0.03p





Adjusted basic earnings per share for the half year *

4

0.08p

0.10p

Adjusted diluted earnings per share for the half year *

4

0.08p

0.10p

* The Directors believe that reporting adjusted measures provides a more useful comparison of business performance and reflects the way in which the business is controlled. The method of calculating adjusted earnings is detailed in note 3.



GROUP STATEMENT OF FINANCIAL POSITION



As at

As at

As at



31 October 2012

30 April 2012

31 October 2011



000

000

000

ASSETS





Non current assets





Plant and equipment


714

457

659

Intangible assets


50,762

50,680

50,887

Deferred income tax assets


339

340

1,456








51,815

51,477

53,002

Current assets





Inventories


3,393

4,738

4,112

Trade and other receivables


11,200

8,670

9,939

Cash and short term deposits


2,270

5,485

4,010








16,863

18,893

18,061






Total assets


68,678

70,370

71,063






LIABILITIES





Current liabilities





Trade and other payables


(11,721)

(12,420)

(14,253)

Financial liabilities


(30)

(45)

(56)

Income tax payable


(168)

(730)

(805)

Government grants


(50)

(62)

(8)

Provisions


(2,279)

(1,199)

(55)

Deferred income tax liabilities


-

-

(55)








(14,248)

(14,456)

(15,232)

Non current liabilities





Financial liabilities


-

(11)

(45)

Deferred income tax liabilities


(8)

(8)

-








(8)

(19)

(45)






Total liabilities


(14,256)

(14,475)

(15,277)






Net assets


54,422

55,895

55,786






Capital and reserves





Equity share capital


2,896

2,893

2,893

Equity share premium


37,582

37,574

37,562

Merger reserve


24,417

24,417

24,417

Currency translation


518

574

828

Retained (losses) / earnings


(11,081)

(9,625)

(9,959)






Equity attributable to equity holders of the parent company


54,332

55,833

55,741

Non-controlling interests


90

62

45






Total equity


54,422

55,895

55,786



GROUP STATEMENT OF CHANGES IN EQUITY

For the 6 months ended 31 October 2012


Equity

share

capital

000

Equity

share

premium

000

Merger

reserve

000

Currency

translation

reserve

000

Retained

earnings

000

Non-controlling interests

000

Total

equity

000

At 1 May 2011

2,890

37,552

24,417

970

(10,561)

40

55,308

Profit for the period

-

-

-

-

367

5

372

Exchange differences*

-

-

-

(142)

-

-

(142)

Total comprehensive income for the period

-

-

-

(142)

367

5

230

Equity share issue

3

-

-

-

-

-

3

Share based payment

-

10

-

-

235

-

245

Total contributions by and distribution to owners of the Company

3

10

-

-

235

-

248









At 31 October 2011

2,893

37,562

24,417

828

(9,959)

45

55,786

*Exchange differences relate to the retranslation of net assets of subsidiary undertakings.



GROUP CASH FLOW STATEMENT

For the 6 months ended 31 October 2012



6 months ended

6 months ended



31 October 2012

31 October 2011


Note

000

000

Cash flows from operating activities




(Loss) / profit before income tax


(2,147)

785

Depreciation


121

138

Amortisation


214

604

Equity-settled share-based payment expense


182

245

Foreign exchange


22

(25)

Net finance costs


(3)

6

Decrease / (increase) in inventories


1,342

309

(Increase) / decrease in trade and other receivables


(2,541)

(3,864)

Increase / (decrease) in trade and other payables


(541)

1,318

Increase in / (release of) provisions


991


Cash used in operations


(2,360)

(484)

Interest received / paid


3

(6)

Income tax paid


(82)

(49)

Net cash used in operating activities


(2,439)

(539)





Purchase of property, plant and equipment


(402)

(117)

Purchase of intangible assets


(318)

(360)

Net cash used in investing activities


(720)

(477)





Capital repayment of borrowings


(23)

(27)

Capital repayment of finance leases and hire purchase contracts


(4)

(11)

Net cash used in financing activities


(27)

(38)





Decrease in cash and cash equivalents


(3,186)

(1,054)





Cash and cash equivalents as at 1 May


5,485

5,060

Effects of exchange rate changes


(29)

4

Cash and cash equivalents as at 31 October


2,270

4,010



NOTES

1. Basis of preparation and accounting policies

The financial information comprises the unaudited results for the six months ended 31 October 2012 and 31 October 2011.

The condensed consolidated financial statements for the six months ended 31 October 2012 should be read in conjunction with the annual financial statements for the year ended 30 April 2012 which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The Auditors' Report on those statements was unqualified and did not contain any statements under section 498 of the Companies Act 2006.

The Group's principal accounting policies used in preparing this information are as stated in the financial statements for the year ended 30 April 2012, which have been filed with the Registrar of Companies, and are available on our website www.EXPANSYS.com .

2. Exceptional items


6 months ended

6 months ended


31 October 2012

31 October 2011


000

000

Administrative expenses



Provision for disputes with customers/trading partners

1,300

-

Costs in relation to office relocation and redundancies

893

74

Aborted acquisition costs

87

-

Other

33

-




Total exceptional costs

2,313

74

3. Adjusted measures

The Directors believe that reporting adjusted measures provides a more useful comparison of business performance and reflects the way in which the business is controlled.

The tables below illustrate how the key adjusted measures are calculated.


6 months ended

6 months ended


31 October 2012

31 October 2011


000

000




(Loss) / profit before tax for the half year (as reported)

(2,147)

785

Add back:



Amortisation of acquired intangibles

6

487

Exceptional items

2,313

74

Foreign exchange

22

(25)

Share-based payments expense

172

235




Adjusted profit before tax for the half year

366

1,556


6 months ended

6 months ended


31 October 2012

31 October 2011


000

000




(Loss) / profit for the half year attributable to equity holders of the parent company (as reported)

(1,628)

367

Add back:



Amortisation of acquired intangibles

6

487

Exceptional items

2,313

74

Foreign exchange

22

(25)

Share-based payments expense

172

235




Adjusted profit for the half year attributable to equity holders of the parent company

885

1,138

Calculations for adjusted earnings per share use adjusted profit for the half year attributable to equity holders of the parent company (shown above) and are detailed in note 4.

4. Earnings per ordinary share

Basic earnings per share amounts are calculated by dividing earnings/(loss) for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share for the year amounts are calculated by dividing the loss attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

The following reflects the income and share data used in the basic and diluted earnings per share computations:


6 months ended

6 months ended


31 October 2012

31 October 2011


000

000

(Loss) / profit for the period

(1,600)

372

Less earnings attributable to non-controlling interests

(28)

(5)




(Loss) / profit attributable to equity holders of the parent

(1,628)

367


6 months ended

6 months ended


31 October 2012

31 October 2011


'000

'000




Basic weighted average number of shares

1,157,707

1,156,722

Dilutive potential ordinary shares:



Employee and consultant options

4,396

11,082




Diluted weighted average number of shares

1,162,103

1,167,804

Where ordinary shares are issued at a discount to the market price, the weighted average number of shares should reflect that the discount is effectively a bonus given to shareholders for no consideration. The weighted average number of shares in the current year and prior year reflect this.

The amounts for earnings per share are as follows:


6 months ended

6 months ended


31 October 2012

31 October 2011




Basic (loss) / earnings per share

(0.14p)

0.03p




Diluted (loss) / profit per share

(0.14p)

0.03p

Adjusted earnings per ordinary share

The Directors believe that reporting adjusted measures provides a more useful comparison of business performance and reflects the way in which the business is controlled.

To this end, basic and diluted earnings per share are also presented on this basis below.



Adjusted profit for the half year attributable to equity holders of the parent is calculated in note 3 above, and is as follows:


6 months ended

6 months ended


31 October 2012

31 October 2011


000

000







Adjusted profit attributable to equity holders of the parent

885

1,138

The amounts for adjusted earnings per share using this adjusted profit for the half year attributable to equity holders of the parent are as follows:


6 months ended

6 months ended


31 October 2012

31 October 2011




Adjusted basic earnings per share

0.08p

0.10p




Adjusted diluted earnings per share

0.08p

0.10p

5. Approval by the Board of Directors and Audit Committee

The interim statement was approved by the Board of Directors and the Audit Committee on 12 December 2012 and is neither audited nor reviewed by the Group's auditors.

The Directors of EXPANSYS plc are listed in the EXPANSYS plc Annual Report for 30 April 2012. A list of current directors is maintained on the EXPANSYS plc website www.EXPANSYS.com .


This information is provided by RNS
The company news service from the London Stock Exchange
END
IR TTBTTMBJBTLT


Related Shares: eXpansys (XPS).




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