Eckoh Technologies Regulatory News (ECK)

18 Jun 2007 07:01

Eckoh PLC18 June 2007 18 June 2007 Eckoh plc Preliminary results for the year ended 31 March 2007 Eckoh plc ("Eckoh" or "the Group"), the UK's largest provider of hosted speechrecognition services, reports its financial results for the year to 31 March2007. Restated Year ended Year ended 31 March 2007 31 March 2006 £'000 £'000 Turnover 103,376 127,084--------------------------------- ----------- -----------Total continuing operations 86,841 64,880Discontinued operations 16,535 62,204--------------------------------- ----------- ----------- Gross profit 14,892 24,388--------------------------------- ----------- -----------Total continuing operations 11,833 11,549Discontinued operations 3,059 12,839--------------------------------- ----------- ----------- Operating loss/(profit) (1,043) (367)--------------------------------- ----------- -----------Total continuing operations (310) (817)Discontinued operations (733) 450--------------------------------- ----------- ----------- Profit before taxation 8,418 1,036 Adjusted profit before taxation* 1,944 1,951--------------------------------- ----------- -----------Total continuing operations 1,455 (436)Discontinued operations 489 2,387--------------------------------- ----------- ----------- Profit for the year 8,366 1,166 Basic earnings per share 3.2p 0.4p Cash and short-term investments 9,601 12,737 *Profit before taxation, intangible asset amortisation and exceptional items In July 2006 the Group announced the disposal of its entire holding in SymphonyTelecom Holdings plc ("Symphony"). In this release, the discontinued operationsrefer to the contribution made by Symphony. The total continuing operationsrefer to contribution made by Speech Solutions, Client IVR and Connection Makersdivisions. Financial highlights: • Turnover from continuing operations increased by 34% to £86.8m (2006: £64.9m) • Adjusted profit before tax1 from continuing operations increased to £1.5m (2006: loss of £0.4m) • Gross margin for continuing operations amounted to 14% (2006: 18%) • Speech Solutions division revenues increased by 19% to £6.3m (2006: £5.3m) and gross margin amounted to 62% (2006: 56%) • The Client IVR division revenues increased by 50% to £71.3m (2006:£47.7m) and gross margin amounted to 5% (2006: 6%) • Cash and short term investment amounted to £9.6m (2006: £12.7m) following a cash outflow of £10.2m in relation to the share buyback and tender offer being offset by an inflow of £7.0m from the disposal of Symphony Operational highlights: Speech Solutions • Three contracts announced today: new seven-year contract with a major UK logistics group, new three-year contract with United Utilities and a three-year contract renewal with O2 • Virtually no client churn in the year and contract terms are increasing with three-year terms and longer being typical • Strong new business generation during the year, particularly in the second half, notable wins include AXA PPP healthcare, BAA, Parcelforce Worldwide, and BSkyB • Significant long-term contract renewals with ATOC, Vue, and William Hill, three of the top four Speech Solutions clients Client IVR • Eckoh continues to be one of the largest players in the UK market • Eckoh to invest in becoming a "best practice" provider of interactive services for media owners • New contracts to be negotiated to reflect the market conditions and the service that Eckoh provides Nik Philpot, Chief Executive Officer, commented today: "In 2006 we took steps to restructure and reorganise the Group so that we couldfocus more of our efforts on the high margin, high growth speech solutionsmarket. This is already paying dividends in the excellent results announcedtoday. We have secured a number of exciting new long term contracts, retainedour key existing clients and significantly improved our overall margins in thisarea. The recent issues concerning the interactive television market have had asignificant impact on response levels, which are currently much lower throughoutthe sector. Whilst these issues will inevitably reduce the revenues in ourClient IVR division, the very low margin nature of these revenues means thatthey will have a much less significant impact on gross profits. For thisactivity to remain part of our core business we intend to improve our margins bynegotiating new contracts with media clients and positioning ourselves as a bestpractice service provider. Looking ahead, Eckoh is confident of maintaining its position as the marketleader in the UK for hosted speech recognition solutions. We have entered 2007with a strong sales pipeline that also reflects the growing maturity andopportunity in this sector. We remain committed to extending our footprint intoother European territories and have the necessary resources to achieve this. TheSpeech Solutions business continues to be the long term focus of the Group andis where the Board believes the best value for shareholders will be realised." For further enquiries, please contact: Eckoh plcNik Philpot, Chief Executive OfficerAdam Moloney, Group Finance DirectorJim Hennigan, Executive Directorwww.eckoh.com Tel: 01442 458 300 Corfin CommunicationsHarry Chathli, Neil Thapar, Ben Hunt Tel: 020 7929 8989 Seymour PierceJonathan Wright Tel: 020 7107 8050 Introduction The past 12 months have been a period of significant change for Eckoh. Followingthe sale of its 64.64% holding in Symphony Telecom Holdings plc ("Symphony") inJuly 2006, Eckoh has consolidated its business around its two core divisions,Speech Solutions and Client IVR. The Group has made excellent progress in these core areas, resulting in a strongfinancial performance. Turnover from continuing operations has increased by 34%to £86.8m (2006: £64.9m) and profit before tax excluding intangible assetamortisation, exceptional items has improved from a loss of £0.4m to a profit of£1.5m. The sale of Symphony generated £11.0m cash proceeds before expenses of £0.8m,and a profit of £8.7m for the Group. £10.2m of cash generated was used toacquire shares in Eckoh, including a £7m tender offer to shareholders whichconcluded in February. The increase in profitability and reduction of shares incirculation has resulted in earnings per share increasing from 0.4p to 3.2p. Eckoh will continue with a strategy of concentrating on the core parts of thebusiness and the Speech Solutions division in particular. Developments in NorthAmerica where Microsoft, Google and Nuance have all made significant investmentsin speech recognition and managed service operations have confirmed the beliefof the directors that huge value exists within this market. Eckoh continues tohave substantial cash reserves and will look to expand the Speech businessthroughout Europe to further establish a clear leadership in the European SpeechRecognition market. Continuing operations 1. Eckoh The Speech Solutions and Client IVR divisions both operate under the commonEckoh brand and many employees are shared across both activities. However, thenature of the businesses, their margins and their opportunities for growth arequite different and on that basis we continue to report their resultsseparately. 1.1 Speech Solutions Eckoh is the UK's largest provider of hosted speech recognition solutions withthe broadest client portfolio and sector penetration. Our services are used by awide range of mass market organisations to serve millions of customers and ourclients include BT, National Rail Enquiries, Parcelforce Worldwide, AXA PPPhealthcare, TD Waterhouse and Scottish Power. We are extremely pleased to be announcing today three contracts. In conjunctionwith Eckoh's partner TFCC, we have signed a new three-year contract to provideadvanced power outage services to United Utilities. This is the fourthsubstantive contract for the Eckoh/TFCC partnership. Additionally, along withour partner, BT, we are delighted to have signed a new seven-year contract witha major UK logistics company, further disclosure on this agreement will be madelater in the year. Finally, our client of three years O2, has renewed itscontract for age verification services for the next three years and increasedthe scope to include self-service via the web as well as the telephone. Today's announcements are a continuation of last years' excellent progress madewithin Speech Solutions as major consumer-facing organisations adopt outsourcedand advanced technology from Eckoh to enhance their service levels withoutneeding to increase headcount or reduce cost by moving to offshore locations. The division increased its revenue by 19% to £6.3m (2006: £5.3m). Moresignificantly, the division's gross profit increased by 33% to £3.9m (2006:£2.9m) contributing to strong improvement in the gross margin from 56% to 62%.The result also reflects the impact of operational gearing, with direct costsincreasing by only 13% to £2.7m (2006: £2.4m) validating our belief in thehosted model operated by the division. As a result, the Speech Solutionsdivision more than doubled its contribution to the group overheads to £1.2m(2006: £0.5m) and is anticipated to become the most profitable part of the groupin 2008. It is also pleasing that the division continued to experience virtually no churnin its client base, illustrating the value that the managed solutions providedto clients. During the period some of the largest clients, notably William Hill,National Rail Enquiries and Vue Cinemas, were all retained on new long termcontracts. The decision to outsource services to Eckoh tends to be part of a long termstrategy and contract terms are typically being signed on three-year terms orlonger. New contracted clients won in the period include the British AirportsAuthority (a three-year contract for flight information services), ParcelforceWorldwide (a three-year agreement for order tracking and re-delivery) and AXAPPP healthcare (a five-year contract for a sickness management solution). The Group has an exclusive alliance with BT to provide its top corporatecustomers with hosted speech recognition services and is evaluating enteringinto similar alliances with high profile technology companies to acceleratesales growth further. The first of these, which was announced earlier thismonth, is with Genesys, a world leading provider of contact centre software.Eckoh's clients will be able to take advantage of a number of technologicaladvances encapsulated in Genesys' technology, which will supplement Eckoh'shosted solutions. These include more advanced computer telephony integration(CTI) capabilities, which allows customer data and calls to be transferredbetween agents and applications and between locations without any additionaltelephony charge. In addition, IVR solutions may be built using the Voice XMLstandard. Eckoh will benefit from exposure to Genesys' extensive global clientbase of more than 4,000 companies in 80 countries. The service that Eckoh provides typically centres on speech recognition as theprimary technology. It is noticeable however, that many clients are looking fora consistent and common approach in how their customers contact them throughchannels other than the telephone, and to that end are starting to look to Eckohto provide a broader solution that may encompass internet and mobiletechnologies. Eckoh has significant technical expertise in these areas whichmeans that it can usually accommodate the client's requirements and providegreater protection in the long term as competition increases. The increasing level of interest in the Eckoh speech offering has led to astrong sales pipeline which is expected to lead to further growth in 2008 andfuture years. Our belief in the technology and the model we operate is reinforced by excitingrecent developments in the United States, a market more mature than Europe.Microsoft has acquired Tellme Networks Inc, a hosted speech solutions provider,for a reported $800m. Google, Yahoo and Nuance are also all investing heavily inspeech recognition with further consolidation anticipated in the sector. Eckoh is confident of remaining the market leader in the UK, the largest singlemarket in Europe for hosted speech services, and remains committed to extendingits footprint into other European territories for which it believes it has thenecessary resources. The Speech Solutions business continues to be the long termfocus of the group, and where the Board believes the best value for shareholderswill be realised. 1.2 Client IVR Eckoh is one of the UK's largest providers of IVR and mobile interactiveservices to media owners, delivering an end-to-end solution from design throughto development and implementation and then on to hosting and reporting. The Client IVR division has seen a 50% increase in revenue to £71.3m (2006:£47.5m), predominantly as a result of the launch of ITV Play shortly before thestart of the financial year. Gross profit increased by 13% to £3.5m (2006:£3.1m) reflecting a gross margin of 5% (2006: 6%) and the increased revenue didnot impact the direct expenses which increased marginally to £2.3m (2006:£2.4m). Contribution to central overheads from the division increased to £1.0m(2006: £0.7m). Call volumes into participation TV formats such as those shown by ITV Play weremuch higher in the first half of the year, but have subsequently declined. Inthe fourth quarter consumer confidence in TV programmes which use premium rateservices was severely dented and as a result participation was much lower. Thistrend has continued into the beginning of this year, and hence Client IVRrevenues are expected to be significantly lower than last year. The adverse publicity surrounding the interactive television market and thepotential increase in risk has led Eckoh to review its involvement in thesector. Eckoh has worked closely with regulators ICSTIS and Ofcom, assistedDeloittes in a review of all ITV programming and appointed KPMG to perform anindependent review of all of its premium rate services in the media sector. As aresult, we firmly believe that none of our competitors in the sector have thelevel of compliance expertise or the experience and scale of resource that Eckohnow possesses. For Eckoh to continue to remain involved, it is imperative that either a higherproportion of the revenue is retained or fee based contracts are implemented tosupport the "best practice" service that Eckoh is now obliged to provide. Hence,it is the Company's intention to re-negotiate its contracts, and to that end ithas already started discussions with its largest clients. The technical and operational expertise that Eckoh now has in this sector isun-paralleled on a global basis. Whilst the UK market is relatively mature,around the world there are many emerging markets which are looking to capitaliseon the opportunities that interactivity can provide. Eckoh is not only able toassist in setting up these services but is also able to advise on ways ofoperating them that can reduce the associated risks. Over recent months, Eckoh has had many discussions with broadcasters andproduction companies from outside the UK regarding similar participation TVformats. It is possible that international opportunities may provide a positivecounter balance to any reduction in the UK market, however, the focus onmaximising the Speech Solutions opportunity must remain the primary focus formanagement. Regulatory Review of the Interactive Television Market The last six months have seen a number of high profile investigations andregulatory reviews commence into the use of premium rate calls and text messagesin the interactive television sector. This began late last year with a Select Committee of MP's reviewing the quiz TVmarket and intensified in February 2007, when a number of major television showsbecame the subject of media scrutiny following disclosure of the way in which anumber of operations were managed exposing flaws in certain procedures. As a result of the media coverage both ICSTIS, the regulatory body that governsthe premium rate sector, and Ofcom, the independent regulator and competitionauthority for the UK communications industries, have instigated wide-rangingreviews into the way these services are operated and it is anticipated that theywill recommend changes to the codes of conduct. ICSTIS is continuing its investigation into the "You Say, We Pay" competition onChannel 4's "Richard & Judy Show" and Eckoh is cooperating fully with theinvestigation. The conclusion of this investigation is expected in early July2007. There are no other ongoing ICSTIS investigations involving formal breaches ofthe ICSTIS Code which involve Eckoh. In September 2007 the new Gambling Act 2005 will come into full effect and it islikely to result in further changes to the way that premium charged competitionsare operated. The new Act requires that competitions must either have asignificant degree of skill, a genuine free entry route or be provided by alicensed lottery provider. It is as yet unclear which of these three optionswill be generally adopted by the industry which currently generates significantrevenues from these services. These significant changes in the market have prompted Eckoh to invest inbecoming a "best practice" provider of IVR services for media owners. Eckoh hasalready appointed KPMG to conduct a comprehensive review of all of its mediaservices to ensure that these are not only operating in a fully compliant mannerbut that these services could be used as a benchmark for future regulation. As aresult, Eckoh's intention is to improve on the very low margin that it currentlyobtains from this activity by renegotiating its contracts and thereby providinga superior level of service to media owners who want to ensure that theirinteractive services operate without the risk of non-compliance with current andfuture regulations. 2. Connection Makers Connection Makers provides dating and chat services which are accessed over thephone, via mobile and through the internet. These services are advertised ordistributed directly in newspapers, magazines or on television, and are providedto clients on a revenue share basis. The last 12 months has seen a decline in the business as the average sellingprice of services has reduced significantly through aggressive competition andthe lack of availability of suitable television and press advertising that isnecessary to drive critical mass. In addition, there have been a number ofregulatory changes, particularly in the mobile market, which has impacted theeffectiveness of the advertising. As a result, revenues for the period were down to £9.3m (2006: £12.1m). Grossmargin was stable at 48% (2006: 46%), resulting in gross profit of £4.5m (2006:£5.5m). Direct expenses within the division increased slightly to £3.1m (2006:£3.0m), leading to a contribution to central overheads of £1.3m (2006: £2.5m). The signs of recovery which were seen at the beginning of the second half wereunfortunately impacted by the media coverage in the last quarter reducingconsumer confidence in premium rate services in general and their propensity touse them. The impact has not however been as significant as the participation TVmarket and volumes are returning to more normal levels. As previously stated, Connection Makers operates as a stand-alone entity with anexperienced management team. The Board continues to review all options for thisbusiness. 3. Discontinued Operations Eckoh's results include those for the discontinued Symphony operation for theperiod prior to its disposal on 18 July 2006. During that period, Symphonyreported an operating loss of £0.7m (2006: profit of £0.5m). Included within theoperating loss are exceptional costs comprising expenditure incurred by Eckoh inrelation to the restructuring and simplification of the Eckoh business followingthe disposal of Symphony Telecom Holdings plc to Redstone plc, and by Symphonyin relation to the disposal. Continuing operations will benefit from therestructuring with an annual cost saving of around £0.5m going forward. 4. Outlook The Group made a solid start to the new year and trading in the first quarterhas been in line with management expectations. In the first quarter of the year the Client IVR division has continued to beaffected by lower consumer demand for premium rate interactive services acrossthe media sector. Whilst this will impact the division's revenues, the impact onoverall profitability is likely to be much less significant due to the currentlow margin business model. Management are intending to improve the low marginthrough negotiation of new contracts and by positioning the business as a bestpractice provider in the media sector. The Speech Solutions division has excellent revenue visibility and with a strongsales pipeline, Eckoh is confident of maintaining its position as the marketleader in the UK for hosted speech recognition solutions. The Group remainscommitted to extending its footprint into other European territories and has thenecessary resources to achieve this. The Speech Solutions division continues tobe the long term focus of the Group and is where the Board believes the bestvalue for shareholders will be realised. Despite the challenging conditions in Client IVR, the Group as a whole remainswell positioned, with a strong balance sheet, to benefit from long term growthin the Speech Solutions business. As a result the Board remains confident ofdelivering shareholder value in both the current financial year and beyond. Consolidated profit and loss accountfor the year ended 31 March 2007 Restated Year ended Year ended 31 Mar 2007 31 Mar 2006 audited audited Note £'000 £'000 Turnover 103,376 127,084------------------------------------- -------- --------Total continuing operations 86,841 64,880Discontinued operations 16,535 62,204------------------------------------- -------- --------Cost of sales (88,484) (102,696) -------- --------Gross profit 14,892 24,388------------------------------------- -------- --------Net operating expenses before intangible assetamortisation and restructuring costs (13,753) (22,232)Amortisation of intangible assets (755) (2,165)Exceptional items relating to continuing operations (646) -Exceptional items relating to discontinued operations (781) (358) ------------------------------------- -------- --------Net operating expenses (15,935) (24,755) -------- --------------------------------------------- -------- --------Operating profit/(loss) before intangible assetamortisation and exceptional items 1,139 2,156------------------------------------- -------- --------Total continuing operations 574 (613)Discontinued operations 565 2,769------------------------------------- -------- --------Operating (loss)/profit (1,043) (367)------------------------------------- -------- --------Total continuing operations (310) (817)Discontinued operations (733) 450------------------------------------- -------- -------- Profit on disposal of subsidiary operations 8,656 1,388Profit on disposal of fixed asset investment - 300Costs of group restructuring - (80)Net interest receivable/(payable) and othersimilar items 805 (205) -------- --------Profit on ordinary activities before taxation 8,418 1,036Taxation (80) (166) -------- --------Profit on ordinary activities after taxation 8,338 870Minority interests 28 296 -------- --------Profit for the period 8,366 1,166 -------- -------- Basic earnings per 0.25p share 2 3.2p 0.4pDiluted earnings per 0.25p share 2 3.1p 0.4p Statement of total recognised gains and lossesfor the year ended 31 March 2007 Restated Year ended Year ended 31 Mar 2007 31 Mar 2006 audited audited £'000 £'000-------------------------------------Profit for the period 8,366 1,166-------------------------------------Exchange adjustments offset in reserves (63) (34)------------------------------------- -------- --------Total recognised gains for the year 8,303 1,132------------------------------------- --------Prior year adjustment: FRS 20 share option charge (109)------------------------------------- --------Total gains recognised since last annual report 8,194------------------------------------- -------- Consolidated balance sheetas at 31 March 2007 31 March 31 March 2007 2006 audited audited Note £'000 £'000 Fixed assetsIntangible fixed assets 190 8,604Tangible fixed assets 1,148 1,498Investments 288 288 -------- -------- 1,626 10,390 Current assetsStock 17 479Debtors: amounts falling due within one year 8,644 22,537Debtors: amounts falling due after more than oneyear 3,273 -Short-term investments 2,000 3,000Cash at bank and in hand 7,601 9,737 -------- -------- 21,535 35,753 Creditors: amounts falling due within one year (13,946) (32,277) -------- --------Net current assets 7,589 3,476 Total assets less current liabilities 9,215 13,866 Creditors: amounts falling due after more thanone year - (1,493) Provisions for liabilities and charges (516) (172) -------- --------Net assets 8,699 12,201 -------- -------- Capital and reserves 3Called up share capital 491 681Capital redemption reserve 198 -Share premium account 477 227Profit and loss account 7,533 9,366 -------- --------Total shareholders' funds 4 8,699 10,274 Minority interests - 1,927 -------- --------Capital employed 8,699 12,201 -------- -------- Consolidated cash flow statementfor the year ended 31 March 2007 Year ended Year ended 31 March 2007 31 March 2006 audited audited Note £'000 £'000 Net cash inflow from operating activities 6 1,083 3,232 Return on investments and servicing offinanceInterest received 803 286Interest paid (83) (335)Loan issue costs - (298) -------- -------- 720 (347) -------- -------- Taxation (162) (362) Capital expenditure and financial investmentPurchase of tangible fixed assets (990) (1,023)Expenditure on intangible fixed assets (286) (186)Proceeds on disposal of tangible fixedasset - 12Disposal of trade investment - 300 -------- -------- (1,276) (897) -------- -------- Acquisitions and disposalsPurchase of subsidiary undertakings - (9,722)Net cash acquired with subsidiaryundertakings - 796Contingent consideration paid in respect ofa prior year acquisition - (50)Costs of group restructuring - (80)Net cash disposed with subsidiaryundertakings (3,165) (107)Additional proceeds from disposal ofoperations in a prior year - 108Proceeds on disposal of subsidiaryundertaking 10,188 3,400 -------- -------- 7,023 (5,655) -------- -------- Cash inflow/(outflow) before use of liquidresources and financing 7,388 (4,029) Management of liquid resourcesDecrease in short-term investments 1,000 4,000 FinancingIssue of shares 258 82Share buyback and tender offer (10,247) -Loan raised - 6,000Loan repaid (400) (2,560)Capital element of finance lease rentalpayments (14) (9) -------- -------- (10,403) 3,513 -------- -------- -------- --------(Decrease)/increase in cash in the period (2,015) 3,484 -------- -------- Notes to the full-year results 1. Basis of preparation The preliminary results for the year ended 31 March 2007 have been preparedusing accounting policies consistent with those set out in the Company'sconsolidated 2006 statutory accounts with the exception of FRS 20 which has beenadopted in the current year. These statements do not constitute statutoryaccounts within the meaning of section 240 of the Companies Act 1985. Thestatements have been extracted from the audited consolidated financialstatements of the Group for the year ended 31 March 2007 which have not yet beenfiled with the Registrar of Companies. The auditors' reports on those accountswere unqualified and did not contain any statement under section 237 of theCompanies Act 1985. Changes in accounting policy The Company has adopted FRS 20, Share-based payments for the year ended 31 March2007. As a result of this, a change is made to the profit and loss account toreflect the calculated fair value of employee share options. The charge iscalculated at the date of grant of the options and is charged over the vestingperiod. As a result of the adoption of FRS 20 in the current year thecomparatives have been restated. The results for the year ended 31 March 2007 were approved by the Board on 15June 2007 and will be posted on the Company's web site, www.eckoh.com, on 18June 2007. 2. Earnings per ordinary share of 0.25p each Basic earnings per share Basic earnings per ordinary share is calculated on thebasis of the weighted average number of ordinary shares of 263,382,969 (2006:271,957,745) in issue during the year and the profit for the year, afterminority interests, of £8.366m (2006: £1.166m). Diluted earnings per share In calculating diluted earnings per share, theweighted average number of ordinary shares in issue is adjusted to include thedilutive effect of potential ordinary shares. The potential ordinary sharesrepresent share options granted to employees where the exercise price is lessthan the market price of ordinary shares as at 31 March 2007. 2007 2006 Restated Restated Restated Earnings Weighted earnings weighted earnings attributable average attributable average per to ordinary number of Earnings to ordinary number of share shareholders shares per share shareholders shares (number in (number in £'000 thousands) (pence) £'000 thousands) (pence)-------------- -------- -------- -------- ------------ ---------- ------- Basic earningsper share 8,366 263,383 3.2p 1,166 271,958 0.4pDilutiveeffect ofshare options - 5,152 - - 2,465 ------------------ -------- -------- -------- -------- -------- -------Dilutedearnings pershare 8,366 268,535 3.1p 1,166 274,423 0.4p----------------- ------- ------- -------- -------- -------- ------- 3. Share capital and reserves Ordinary Capital Share Profit share redemption premium and loss capital reserve account account £'000 £'000 £'000 £'000 At 1 April 2006 681 - 227 9,366 Profit for the period - - - 8,366Share option charge - - - 111 Exchange adjustments offset in reserves - - - (63)Shares issued in respectof share options exercised 8 - 250 -Share buyback and tender offer (198) 198 - - ------- ------- ------ -------At 31 March 2007 491 198 477 7,533 ------- ------- ------- ------- 4. Reconciliation of movement in shareholders' funds Restated Year ended 31 Year ended 31 March 2007 March 2006 £'000 £'000 Opening shareholders' funds 10,274 8,951Profit for the period (see note 5) 8,366 1,166Share option charge 111 109Employee share options exercised 258 82Exchange adjustments offset in (63) (34)reservesShare buyback and tender offer (10,247) - ------- -------Closing shareholders' funds 8,699 10,274 ------- ------- 5. Impact of FRS 20, Share-based payment Restated Year ended 31 March 2006 £'000 Profit for the period as reported in 2006 annual report 1,275 Share option charge relating to the implementation of FRS 20 (109) -------Profit for the period (see note 4) 1,166 ------- 6. Net cash (outflow)/inflow from operating activities Restated Year ended Year ended 31 March 2007 31 March 2006 £'000 £'000 Operating loss (1,043) (367)Depreciation of tangible fixed assets 819 1,028Amortisation of intangible fixed assets 755 2,165Share option charge 111 109(Increase)/decrease in stock (21) 110Decrease/(increase) in debtors 3,949 (8,654)(Decrease)/increase increditors/provisions (3,487) 8,841 ------- ------- 1,083 3,232 ------- ------- 7. Adjusted profit before taxation Restated Year ended Year ended 31 March 2007 31 March 2006 £'000 £'000 Profit before taxation 8,418 1,036Adjust for:Profit on disposal of subsidiary operations (8,656) (1,388) Profit on disposal of fixed asset investment - (300)Costs of group restructuring - 80Amortisation of intangible fixed assets 755 2,165Exceptional items relating to continuingoperations 646 -Exceptional items relating todiscontinued operations 781 358 ------- -------Adjusted profit before taxation 1,944 1,951 ------- ------- This information is provided by RNS The company news service from the London Stock Exchange