Importantly, the Directors believe that DSNS's approach enables enhanced revenue for the networks through targeted marketing campaigns. Wholesale: This sales channel provides DSNS with reach to over 5,000 retailers within the independent sector across the UK. DSNS works closely with specific wholesale partners to facilitate supply to newsagents, convenience stores, small multiple retail groups and mobile phone dealers. Vending Solutions: It is expected that DSNS's 60 per cent. owned subsidiary, M-Vend Limited, will soon have 22 machines situated in strategic locations such as railway stations and airports selling SIM cards and other mobile technology products. Whilst this is a relatively new offering from DSNS, the Directors believe that this will be an increasingly important sales channel. DSNS monitors all of its sales channels and customers enabling it to target and reward better quality customers and partners that deliver higher quality end users for the network operators. The Directors believe the "SIM only" connection to be a flexible option for customers, especially for more price sensitive customers in the current economic conditions. The Directors, therefore, expect the growth in the "SIM only" model to continue for the foreseeable future. The Directors believe DSNS to be a compelling acquisition because, as well being profitable and cash generative, DSNS has established relationships and a track record with the mobile telecommunication network operators which the Enlarged Group intends to use to provide a network connected handset. For the year ended 30 April 2010 the trade, as now operated by DSNS, reported a turnover of GBP15.4 million (2009: GBP12.5 million). The revenue generated gross profit of GBP7.3 million and profit before tax of GBP6.8 million. PJ Media PJ Media is an e-commerce and web publishing business with a number of clients in the telecoms sector. The company commenced trading in 2008 and offers a comprehensive range of web design, development and professional services to major enterprises seeking to establish or enhance their web-based outlets. As well as providing the technology to support a major mobile telecommunication network operator's online service offering in the UK, PJ Media has an overseas presence and the company has supplied internet and distribution solutions to a large global network operator's Qatar operations since early 2009. These solutions are used by the operator to support its mobile network operations in Qatar and are administered by resources in Qatar, Romania and the UK, employed by both the operator and PJ Media. PJ Media is building relationships with a range of other customers in Qatar and also intends to support network operators in other developing markets. PJ Media currently employs approximately 50 people. The Directors believe that optimising the eXpansys website and brand on a global basis will be key to the success of the Enlarged Group and that the acquisition of PJ Media will help achieve this. In addition, the acquisition of PJ Media will, the Directors believe, provide the Enlarged Group with opportunities for a combined end-to-end web services business which can be offered to OEMs and non-competing retail businesses. Whilst eXpansys currently operates the e-commerce function for an OEM, the Directors believe that there is a significant opportunity for the eXpansys platform to be used by additional OEMs. The Directors believe that in order to attract this new business, eXpansys will need to offer exceptional website optimisation to match its technology expertise and that the acquisition of PJ Media will enable the Enlarged Group to achieve this. For the year ended 30 April 2010 PJ Media reported a turnover of GBP2.9 million (2009: GBP 1.5 million). The revenue generated gross profit of GBP1.5 million and profit before tax of GBP0.7 million. Strategy for the Enlarged Group The Directors believe that the Enlarged Group will have an attractive business model, built upon a robust on-line trading platform. The Directors believe that there are a number of strategic initiatives that should be pursued and market trends that will enhance this, including: · Developing channel relationships and credibility in additional product categories such as laptops, tablet computing and other wireless technologies, which are complementary to eXpansys's existing strengths and provide a more complete connected solution for customers. · Increasing traffic to the Group's website. This will be supported through the services of PJ Media and also through the marketing skills of the Directors which will be focused on raising the profile of the eXpansys brand. · Increasing the geographic reach of the customer base. eXpansys has, over the years, developed its ability to operate a generic website which is tailored for the tastes and preferences of consumers in different jurisdictions. The Company has recently launched its dedicated site in India and the Directors intend to launch websites in additional territories as soon as practicable. · Increasing margins through additional sales of related products and services, such as accessories and insurance. A move from SIMO sales to network connected sales should also enhance margins through the connection commission received from the network operators. · Whilst the existing Group has some direct relationships with smaller OEMs, the Directors believe that the Enlarged Group has a significant opportunity to develop relationships with larger OEMs so as to sell products without the requirement to use distributors. The Directors expect benefits to include enhanced margins and, through better use of the Group's platform and technical skills, the ability to execute the exclusive launch of specific products simultaneously and, potentially, on a global scale. As the eXpansys brand continues to grow, the Directors expect this capability to be attractive to OEMs and for this to be a focus for the Group in the future. · In the longer term there are further opportunities for the Enlarged Group to develop and operate the e-commerce activities of OEMs. Through the eXpansys platform and the Group's global infrastructure the Directors believe that the Group is an attractive partner for OEMs. The existing Group currently has such relationships but the Directors believe that there is scope, through existing processes and personnel within eXpansys and PJ Media, for this to be offered to additional partners with benefits for the Enlarged Group. In addition to the strategic issues referred to above, the Directors expect that the Enlarged Group could benefit from projected changes in consumer trends with (i) there being a shift to buying consumer technology on-line, (ii) customers moving to the more flexible and value oriented, separate purchase of phone and SIM-card and (iii) the increased penetration of smartphones. This information is provided by RNS The company news service from the London Stock Exchange END ACQLELLBBDFBBBF (END) Dow Jones Newswires July 06, 2010 02:02 ET (06:02 GMT)