ADT.L Regulatory News (ADT)

8 Dec 2006 07:01

AdEPT Telecom plc08 December 2006 AdEPT Telecom plc ("AdEPT" or the "Company") Interim Results for the 6 months ended 30 September 2006 AdEPT, a leading independent provider of telecommunications services forlandline calls, line rental and broadband, announces its results for the 6months ended 30 September 2006. Highlights Financial • Total revenue up 97% to £9.47 million (2005: £4.81 million) • EBITA up 58% to £1.2million (2005: £0.76 million) • Profit before tax up 52% to £0.418 million (2005: £0.275 million) • Profit after tax (adjusted for amortisation) up 71% to £0.766 million (2005: £0.448 million) • EPS (adjusted for amortisation) up 24% to 3.6p (2005: 2.9p) Operational • Continued increase in the revenue from business customers now 86% of total revenue (2005: 55%) • Expanded management and marketing team • Line rental, which is a minimum 12 month contract, now represents 21% of revenue (2005: 7%) • Acquisition of 10,000 business customers from Fizz Telecom • Fully integrated within 6 weeks • Strong pipeline of acquisitions Commenting on these results, Chairman Roger Wilson said: "AdEPT remains in a strong position to continue to consolidate the veryfragmented fixed line reseller market. We are still reporting significantincreases on the previous six months. Looking ahead, we have a strong pipelineof potential acquisitions and we believe the Company is well positioned togenerate solid shareholder returns over the medium to long term as we expandour product range to include broadband." Enquiries:+-------------------------+--------------------------------+-------------------+|Adept Telecom |Roger Wilson |Tel: 07786111535 || |Chairman | || | | || | | || | | |+-------------------------+--------------------------------+-------------------+|Cardew Group |Tim Robertson |Tel: 020 7930 0777 || |Shan Shan Willenbrock | || |David Roach | |+-------------------------+--------------------------------+-------------------+ Chairman's Statement I am pleased to announce our first set of interim results since the Company'sadmission to AIM, for the period to 30 September 2006. The first half of thecurrent financial year has seen revenues from both calls and line rental growsignificantly (up 97%) compared to the corresponding period in 2005. Our EBITAregistered a 58% increase compared to the first half of the 2005 financial year. This positive trading performance was achieved against the backdrop of anincreasingly challenging telecommunications market environment. Increasedcompetition particularly as a result of free broadband offers and packaging offixed line with mobile has led to higher levels of customer churn which has, inthe short term at least, slowed the rate at which the Company's profitability isgrowing. The Company has responded rapidly to the changes in market conditionswith a number of actions aimed at reducing the churn rate. As part of our overall retention strategy, over the last three months we havebeen successful in cross selling line rental contracts to our calls-onlycustomers as it is clear customers with line rental churn less. In addition, wehave increased the number of account managers with a view to closer managementof our higher spending customers. Lastly we are working with a major networksupplier to launch a combined voice and broadband product into the SME market. Financial review Turnover for the first six months increased by 97% to £9.47 million (2005:£4.81 million). This in turn has generated an increase in EBITA of 58% to £1.2million (2005: £0.76 million). The strength of the Company's consolidated balance sheet has increased markedlycompared to the same period last year, with net assets of £10.4 million (2005:£1.3 million), in part as a result of the net funds of approximately £7.4million raised on admission to AIM in February 2006. The Company continues togenerate positive cash, enabling the business to pay £1.5m of earn out paymentsin the period under review. Earnings per share (adjusted for amortisation) increased to 3.6p in the sixmonths to 30 September 2006 (2005: 2.9p). It is the Board's intention to paydividends in the future; however, at this stage in the Company's development theBoard intends to use surplus funds to further grow the business. As part of the process of complying with FRS 20, the Company has taken a chargeagainst profits of £39k in the first half year to cover the notional cost ofstock options and warrants awarded to executives and employees. Business review The Company was established to be a consolidator of the highly fragmented UKfixed line reseller sector, which is estimated to contain almost 1,000 smallservice providers. During the period under review, the Company acquired some10,000 small business customers from Fizz Telecom in May 2006. These customershave been fully integrated into the Company's billing and back-office systemsand the acquisition is earnings enhancing. The Company remains committed to generating shareholder returns by continuing toconsolidate the fixed line reseller sector. There remain many attractiveopportunities to improve profitability and leverage the Company's existingback-office systems, by acquiring customers and revenue with relatively smallincreases in overhead. I am also pleased to report that, since the half yearclosed, the Company has paid all earn-out liabilities due from the Talk Direct,Call Options, and Admiral acquisitions, increasing its ability to generate freecashflow. The final amounts paid under these earn-outs were lower than forecastas a result of the adverse trading conditions described above, which reflectspositively on the Company's policy of incorporating earn-out provisions whenacquiring companies. No earn-out was payable in respect of the acquisition ofTransglobal in February 2006. However, the Company also recognises that competitive pressures in the fixedline sector have increased in recent months, including the launch of "free"broadband offers from a number of leading fixed and mobile operators. This hasimpacted on residential and small business customers, and lead to an increase inchurn from those customers. The Company has responded to market conditions by expanding the management andmarketing team to lead the changes necessary to counteract the current churnrate. These actions have increased the Company's cost base but they are expected to support the long term objectives of the Company by broadening theproduct range and reducing churn. The Company continues to improve thestability of its customer base as illustrated by the increasing proportion ofline rental revenue, which is a minimum 12 month contract, now representing 21%of total revenue (2005: 7%) and the increasing proportion of business revenueto 86% of total revenue (2005: 55%). The Company remains committed to providing its customers with the highest levelof customer service quality, but recognises that it also needs to broaden itsproduct range to meet the increasing demand for "bundled" products. To this end,the Company is actively pursuing the addition of a high quality broadbandproduct to the Company's portfolio. Outlook The Company is pleased to be reporting strong increases in both sales andprofits during the first half of the financial year, while recognising theopportunities and challenges that the second half of the year will present. Wehave taken the necessary actions to manage the changes in the market environmentand we are confident that we will not see a long-term impact on the business. Overall, AdEPT is in an excellent position to continue to consolidate the veryfragmented fixed line reseller market. Our EBITA profit margins continue to besignificantly ahead of the sector at 12.7% compared to an industry average of8.8%, achieved through a number of factors including our ability to rapidlyintegrate new acquisitions into the Company's automated back office systems. Wehave in place a strong pipeline of potential acquisitions which will be earningsenhancing. I would like to offer my sincere appreciation to our customers, our staff andour business partners for their commitment and support to Adept and I lookforward to continuing to work together with them in the future. Roger Wilson 8 December 2006 Horwath Clark Whitehill Introduction We have been instructed by the company to review the financial information setout in these interim financial statements and we have read the other informationcontained in the interim report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information. Directors' Responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The continuingobligations of the AIM rules require that the accounting policies andpresentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes, andthe reasons for them, are disclosed. Review Work Performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board. A review consists principally of makingenquiries of management and applying analytical procedures to the financialinformation and underlying financial data and based thereon, assessing whetherthe accounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with AuditingStandards and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Review Conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 September 2006. HORWATH CLARK WHITEHILL LLPChartered AccountantsLonsdale House7-9 Lonsdale GardensTunbridge WellsKentTN1 1NU CONSOLIDATED PROFIT & LOSS ACCOUNTFOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 +------------------------------------------+-----+------------+------------+----------+| | | 6 months to| 6 months to| Year to|| | |30 September|30 September| 31 March|| |Note | 2006| 2005| 2006|| | | Unaudited| Audited| Audited||£000 | | | | (as|| | | | | restated)|+------------------------------------------+-----+------------+------------+----------+|TURNOVER | 3 | 9,471| 4,810| 11,521|+------------------------------------------+-----+------------+------------+----------+|Cost of sales | | (5,847)| (2,811)| (6,865)|+------------------------------------------+-----+------------+------------+----------+| | | | | |+------------------------------------------+-----+------------+------------+----------+|GROSS PROFIT | | 3,624| 1,999| 4,656|+------------------------------------------+-----+------------+------------+----------+|Administrative expenses | | (2,420)| (1,237)| (2,932)|+------------------------------------------+-----+------------+------------+----------+| | | | | |+------------------------------------------+-----+------------+------------+----------+|EARNINGS BEFORE INTEREST TAXATION AND | | | | ||AMORTISATION | | 1,204| 762| 1,724|+------------------------------------------+-----+------------+------------+----------+|Amortisation | | (665)| (338)| (944)|+------------------------------------------+-----+------------+------------+----------+| | | | | |+------------------------------------------+-----+------------+------------+----------+|OPERATING PROFIT | | 539| 424| 780|+------------------------------------------+-----+------------+------------+----------+|Interest receivable | | 6| 2| 4|+------------------------------------------+-----+------------+------------+----------+|Interest payable | | (127)| (151)| (334)|+------------------------------------------+-----+------------+------------+----------+| | | | | |+------------------------------------------+-----+------------+------------+----------+|PROFIT ON ORDINARY ACTIVITIES BEFORE | | | | ||TAXATION | | 418| 275| 450|+------------------------------------------+-----+------------+------------+----------+|Tax on profit on ordinary activities | | (317)| (165)| (285)|+------------------------------------------+-----+------------+------------+----------+| | | | | |+------------------------------------------+-----+------------+------------+----------+|PROFIT ON ORDINARY ACTIVITIES AFTER | | | | ||TAXATION | | 101| 110| 165|+------------------------------------------+-----+------------+------------+----------+|Dividends | | -| -| (116)|+------------------------------------------+-----+------------+------------+----------+| | | | | |+------------------------------------------+-----+------------+------------+----------+|RETAINED PROFIT FOR THE PERIOD | | 101| 110| 49|+------------------------------------------+-----+------------+------------+----------+| | | | | |+------------------------------------------+-----+------------+------------+----------+|EARNINGS PER SHARE | | | | |+------------------------------------------+-----+------------+------------+----------+|Basic earnings per share | 2 | 0.5 pence| 0.7 pence| 1.0 pence|+------------------------------------------+-----+------------+------------+----------+|Diluted earnings per share | 2 | 0.4 pence| 0.7 pence| 0.9 pence|+------------------------------------------+-----+------------+------------+----------+| | | | | |+------------------------------------------+-----+------------+------------+----------+ CONSOLIDATED BALANCE SHEETAS AT 30 SEPTEMBER 2006 +----------------------------------------+-----+------------+------------+----------+| | | 6 months to| 6 months to| Year to|| | |30 September|30 September| 31 March|| |Note | 2006| 2005| 2006|| | | Unaudited| Audited| Audited|| | | | | (As||£000 | | | | restated)|+----------------------------------------+-----+------------+------------+----------+|FIXED ASSETS | | | | |+----------------------------------------+-----+------------+------------+----------+|Intangible fixed assets | | 14,004| 6,916| 11,174|+----------------------------------------+-----+------------+------------+----------+|Tangible fixed assets | | 321| 151| 223|+----------------------------------------+-----+------------+------------+----------+|Total fixed assets | | 14,325| 7,067| 11,397|+----------------------------------------+-----+------------+------------+----------+| | | | | |+----------------------------------------+-----+------------+------------+----------+|CURRENT ASSETS | | | | |+----------------------------------------+-----+------------+------------+----------+|Debtors | | 3,422| 1,896| 3,337|+----------------------------------------+-----+------------+------------+----------+|Cash at bank and in hand | | 946| 50| 580|+----------------------------------------+-----+------------+------------+----------+|Total current assets | | 4,368| 1,946| 3,917|+----------------------------------------+-----+------------+------------+----------+| | | | | |+----------------------------------------+-----+------------+------------+----------+|CREDITORS: amounts falling due within | | | | ||one year | | (4,691)| (5,861)| (5,043)| +----------------------------------------+-----+------------+------------+----------+|NET CURRENT LIABILITIES | | (323)| (3,915)| (1,126)|+----------------------------------------+-----+------------+------------+----------+| | | | | |+----------------------------------------+-----+------------+------------+----------+|TOTAL ASSETS LESS CURRENT LIABILITIES | | 14,002| 3,152| 10,271|+----------------------------------------+-----+------------+------------+----------+|CREDITORS: amounts falling due after | | | | ||more than one year | | (3,600)| (1,870)| -| +----------------------------------------+-----+------------+------------+----------+|NET ASSETS | | 10,402| 1,282| 10,271|+----------------------------------------+-----+------------+------------+----------+| | | | | |+----------------------------------------+-----+------------+------------+----------+|CAPITAL AND RESERVES | | | | |+----------------------------------------+-----+------------+------------+----------+|Called up share capital | | 2,107| 64| 2,107|+----------------------------------------+-----+------------+------------+----------+|Share premium account | 4 | 7,967| 988| 7,976|+----------------------------------------+-----+------------+------------+----------+|Share option reserve | 4 | 58| -| 19|+----------------------------------------+-----+------------+------------+----------+|Profit and loss account | 4 | 270| 230| 169|+----------------------------------------+-----+------------+------------+----------+|SHAREHOLDERS' FUNDS | | 10,402| 1,282| 10,271|+----------------------------------------+-----+------------+------------+----------+| | | | | |+----------------------------------------+-----+------------+------------+----------+| | | | | |+----------------------------------------+-----+------------+------------+----------+ CONSOLIDATED CASH FLOW STATEMENTFOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 +-----------------------------------------+-----+------------+------------+------------+| | | 6 months to| 6 months to| Year to|| | |30 September|30 September| 31 March||£000 |Note | 2006| 2005| 2006|| | | | | || | | Unaudited| Audited| Audited|+-----------------------------------------+-----+------------+------------+------------+|Net cash flow from operating activities | 5 | 2,003| 327| 1,253|+-----------------------------------------+-----+------------+------------+------------+|Returns on investments and servicing of | | | | ||finance | | (121)| (149)| (507)|+-----------------------------------------+-----+------------+------------+------------+|Taxation | | -| 5| (159)|+-----------------------------------------+-----+------------+------------+------------+|Capital expenditure and financial | | | | ||investment | | (3,674)| (1,757)| (6,656)|+-----------------------------------------+-----+------------+------------+------------+|Equity dividends paid | | -| -| (116)|+-----------------------------------------+-----+------------+------------+------------+|CASH OUTFLOW BEFORE FINANCING | | (1,792)| (1,574)| (6,185)|+-----------------------------------------+-----+------------+------------+------------+| | | | | |+-----------------------------------------+-----+------------+------------+------------+|Financing | | 2,156| 1,445| 7,106|+-----------------------------------------+-----+------------+------------+------------+|INCREASE IN CASH IN THE PERIOD | | 364| (129)| 921|+-----------------------------------------+-----+------------+------------+------------+ RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS/DEBTFOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 +-----------------------------------------+-----+------------+------------+------------+| | | 6 months to| 6 months to| Year to|| | |30 September|30 September| 31 March||£000 |Note | 2006| 2005| 2006|| | | Unaudited| Audited| Audited|+-----------------------------------------+-----+------------+------------+------------+|Increase/(decrease) in cash in the period| | 364| (129)| 921|+-----------------------------------------+-----+------------+------------+------------+|Cash (inflow)/outflow from (increase)/ | | | | ||decrease in debt and lease financing | | (3,600)| (1,445)| 54| +-----------------------------------------+-----+------------+------------+------------+|Deferred consideration outflow | | 1,510| 223| 1,293|+-----------------------------------------+-----+------------+------------+------------+|CHANGE IN NET DEBT RESULTING FROM CASH | | | | ||FLOWS | | (1,726)| (1,351)| 2,268| +-----------------------------------------+-----+------------+------------+------------+|Deferred consideration | | (76)| (1,170)| (2,347)|+-----------------------------------------+-----+------------+------------+------------+|Preference share conversion to equity | | | | ||shares | | -| -| 1,871|+-----------------------------------------+-----+------------+------------+------------+|MOVEMENT IN NET DEBT IN THE PERIOD | | (1,802)| (2,521)| 1,792|+-----------------------------------------+-----+------------+------------+------------+| | | | | |+-----------------------------------------+-----+------------+------------+------------+|Net debt at beginning of period | | (930)| (2,720)| (2,722)|+-----------------------------------------+-----+------------+------------+------------+|NET DEBT AT END OF PERIOD | | (2,732)| (5,241)| (930)|+-----------------------------------------+-----+------------+------------+------------+| | | | | |+-----------------------------------------+-----+------------+------------+------------+| | | | | |+-----------------------------------------+-----+------------+------------+------------+ NOTES TO THE INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 1. ACCOUNTING POLICIES 1.1 Basis of preparation The results for the six months ended 30 September 2006, which are unaudited, have been prepared under the historical cost convention and in accordance with applicable accounting standards. The financial information set out in this document does not comprise of the statutory financial statements of the company within the meaning of Section 240(5) of the Companies Act 1985. 1.2 Turnover Turnover comprises of both invoiced and un-invoiced amounts for services supplied by the Company during the period, exclusive of Value Added Tax and trade discounts. 1.3 Investments Investments in subsidiaries are valued at cost less provision for impairment. 1.4 Intangible fixed assets and amortisation Goodwill is stated at cost, less amortisation and any provision for impairment. The cost of goodwill is the difference between amounts paid on the acquisition of a business and the fair value of the identifiable assets and liabilities. It is amortised to the profit and loss account over its estimated economic life. The average estimated useful economic life has been estimated at 9 years. Included within intangible fixed assets is a licence which is being amortised over its life of 10 years. 1.5 Tangible fixed assets and depreciation Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost of fixed assets, less their estimated residual value, over their expected useful lives on the following bases: Short term leasehold - 5 years straight line improvements Fixtures and fittings - 3 years straight line Office equipment - 3 years straight line Computer software - 3 years straight line 1.6 Operating leases Rentals under operating leases, where substantially all of the benefits and risks of ownership remain with the lessor, are charged to the profit and loss account on a straight line basis, even if payments are not made on such a basis. 1.7 Taxation UK corporation tax is provided for amounts expected to be paid (or received) using tax rates and laws that have been enacted or substantially enacted at the balance sheet date. Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date, where transactions or events have occured at that date that will result in an obligation to pay more tax in future or a right to pay less tax in future, except for gains on disposal of fixed assets which will be rolled over into replacement assets. Timing differences are differences between the Company's taxable profits and its results stated in the financial statements that arise from the inclusion of gains and losses in tax recognised in the financial statements. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse based upon tax rates and laws that have been enacted or substantially enacted at the balance sheet date. Deferred tax is measured on a non-discounted basis. Deferred tax assets are recognised to the extent that it is more likely than not that they will be recovered. 1.8 Pensions The Company contributes to personal pension plans. The amount charged to the profit and loss account in respect of pension costs is the contribution payable in the year. 1.9 Capital instruments The costs incurred directly in connection with the issue of debt instruments are charged to the profit and loss account on a straight line basis over the life of the debt instrument. 1.10 Share Based Payments The Company has adopted FRS 20, Share Based Payments with effect from 1 April 2006. The Company has granted share options to employees and warrants to its advisors and therefore accounts for these options and warrants as "Equity-Settled Share Based Payments". The Company calculates the value of these options and warrants by reference to the fair value of the equity instruments granted, which is determined using the Black Scholes-Merton ("BSM") pricing model. The value derived from the BSM pricing model is charged to the profit and loss account evenly over the vesting period of the options i.e. the period over which the options are "earned". The above represents a change in the Company's accounting policy and therefore a prior year adjustment has been made in accordance with FRS 3, Reporting Financial Performance. 2. EARNINGS PER SHARE Earnings per share is calculated by dividing the earnings attributable toordinary shareholders by the weighted average number of shares in issue duringthe period. The weighted average number of shares in issue during the six monthsto 30 September 2006 was 21,067,443 (six months to 30 September 2005 was15,210,300; year to 31 March 2006 was 15,916,367). The diluted earnings per share is calculated on the assumption all options areexercised. This would give rise to a total weighted average number of ordinaryshares in issue for the period of 23,037,309 (six months to 30 September 200516,247,296; year to 31 March 2006 17,686,094) +----------------------+----------+---------+---------+-----------+----------+----------+| | | | | | | |+----------------------+----------+---------+---------+-----------+----------+----------+| | 6 months to | 6 months to | Year to || | 30 September 06 | 30 September 05 | 31 March 06 || | Unaudited | Audited |Audited (as restated)|+----------------------+----------+---------+---------+-----------+----------+----------+| | Earnings|Pence per| Earnings| Pence per| Earnings| Pence per|| | £000| share| £000| share| £000| share|+----------------------+----------+---------+---------+-----------+----------+----------+|Basic EPS | | | | | | |+----------------------+----------+---------+---------+-----------+----------+----------+| | | | | | | |+----------------------+----------+---------+---------+-----------+----------+----------+|Earnings attributable | | | | | | ||to ordinary | | | | | | ||shareholders | 101| 0.5| 110| 0.7| 165| 1.0|+----------------------+----------+---------+---------+-----------+----------+----------+|Amortisation | 665| 3.1| 338| 2.2| 944| 6.0|+----------------------+----------+---------+---------+-----------+----------+----------+|Adjusted earnings | 766| 3.6| 448| 2.9| 1,109| 7.0|+----------------------+----------+---------+---------+-----------+----------+----------+| | | | | | | |+----------------------+----------+---------+---------+-----------+----------+----------+|Diluted EPS | | | | | | |+----------------------+----------+---------+---------+-----------+----------+----------+| | | | | | | |+----------------------+----------+---------+---------+-----------+----------+----------+|Earnings attributable | | | | | | ||to ordinary | | | | | | ||shareholders | 101| 0.4| 110| 0.7| 165| 0.9|+----------------------+----------+---------+---------+-----------+----------+----------+|Amortisation | 665| 2.9| 338| 2.0| 944| 5.3|+----------------------+----------+---------+---------+-----------+----------+----------+|Adjusted earnings | 766| 3.3| 448| 2.7| 1,109| 6.2|+----------------------+----------+---------+---------+-----------+----------+----------+ 3. ACQUISITIONS During the year AdEPT acquired 10,000 business customers of Fizz TelecomLimited, effective from 1st June 2006. The fair value table in respect ofacquisitions can be summarised as follows: +---------------------------------------+--------------+--------------+--------------+| | 6 months to| 6 months to| Year to|| | 30 September| 30 September| 31 March|| | 2006| 2005| 2006||£000 | Unaudited| Audited| Audited|+---------------------------------------+--------------+--------------+--------------+|Cash | 1,500| 1,338| 4,927|+---------------------------------------+--------------+--------------+--------------+|Deferred consideration | 1,576| 1,331| 2,253|+---------------------------------------+--------------+--------------+--------------+|Acquisition costs | 219| -| 222|+---------------------------------------+--------------+--------------+--------------+|Goodwill | 3,295| 2,669| 7,402|+---------------------------------------+--------------+--------------+--------------+ Following acquisitions the customers are fully integrated into a single billingand customer service platform. Whilst turnover can be separately identified byacquisition, costs cannot. Calls are routed across various network operators andthe overhead base serves all customers. The analysis of turnover by existing andacquired businesses is as follows: +---------------------------------------+--------------+--------------+--------------+| | 6 months to| 6 months to| Year to|| | 30 September| 30 September| 31 March|| | 2006| 2005| 2006||Turnover £000 | Unaudited| Audited| Audited| +---------------------------------------+--------------+--------------+--------------+|Existing businesses at the start of the| | | ||period | 7,923| 4,213| 8,477| +---------------------------------------+--------------+--------------+--------------+|Businesses acquired during the period | 1,548| 597| 3,044|+---------------------------------------+--------------+--------------+--------------+|Total turnover | 9,471| 4,810| 11,521|+---------------------------------------+--------------+--------------+--------------+ 4. RESERVES +-----------------------------------------+-------------+--------------+--------------+| |Share premium| Share option| Profit and||£000 | account| reserve| loss account|+-----------------------------------------+-------------+--------------+--------------+|At 1 April 2006 | 7,976| -| 188|+-----------------------------------------+-------------+--------------+--------------+|Prior year adjustment | -| 19| (19)|+-----------------------------------------+-------------+--------------+--------------+|At 1 April 2006 (P & L as restated) | 7,976| 19| 169|+-----------------------------------------+-------------+--------------+--------------+| | | | |+-----------------------------------------+-------------+--------------+--------------+|Profit retained for the period | -| -| 101|+-----------------------------------------+-------------+--------------+--------------+|Additional expenses in connection with | | | ||previous share issue | (9)| -| -| +-----------------------------------------+-------------+--------------+--------------+|Shares to be issued | -| 39| -|+-----------------------------------------+-------------+--------------+--------------+|At 30 September 2006 | 7,967| 58| 270|+-----------------------------------------+-------------+--------------+--------------+ 5. NET CASH FLOW FROM OPERATING ACTIVITIES +-----------------------------------------+-------------+--------------+--------------+| | 6 months to| 6 months to| Year to|| | 30 September| 30 September| 31 March|| | 2006| 2005| 2006|| | Unaudited| Audited| Audited||£000 | | | (as restated)|+-----------------------------------------+-------------+--------------+--------------+|Operating profit | 539| 424| 780|+-----------------------------------------+-------------+--------------+--------------+|Amortisation of intangible fixed assets | 665| 338| 944|+-----------------------------------------+-------------+--------------+--------------+|Depreciation of tangible fixed assets | 81| 49| 121|+-----------------------------------------+-------------+--------------+--------------+|Decrease/(increase) in debtors | (91)| (454)| (1,707)|+-----------------------------------------+-------------+--------------+--------------+|(Decrease)/increase in creditors | 770| (30)| 1,095|+-----------------------------------------+-------------+--------------+--------------+|Cost of share options charged to profit | | | ||and loss | 39| -| 20| +-----------------------------------------+-------------+--------------+--------------+|Net cash inflow from operations | 2,003| 327| 1,253|+-----------------------------------------+-------------+--------------+--------------+ This information is provided by RNS The company news service from the London Stock Exchange