Earthport Regulatory News (EPO)

27 Mar 2008 07:01

Earthport PLC27 March 2008 27 March 2008 Earthport plc ("Earthport" or "the Company") Half Year Results for the six months ended 31 December 2007 Earthport, the global payments utility company is pleased to announce today its Half Year Results for the six months ended 31 December 2007. Financial highlights - Revenue increased 57% to £1.1m against the 2nd half of the previous year - Operating expenses fell 13% to £2.1m against the 2nd half of the previous year and are running at £1m pa less than fiscal 2007 - Operating loss fell 40% to £1.1m against the 2nd half of the previous year - Loss before tax fell 40% to £1.2m against the 2nd half of the previous year - Interest costs fell 32% to £0.17m against the 2nd half of the previous year - £4m of equity raised during the period Operational highlights - IBM Partnership announced on 22 August 2007 - Success at SIBOS in October 2007 leading to pipeline of opportunity with several banks and financial institutions - James Bergman appointed to the Board as Executive Director on 19 December 2007 Mike Harrison, Executive Chairman, Earthport, said: "These half year resultsdemonstrate a period of good progress as the strategic business model isreinforced by the direction the Company is taking. I am also gratified by thecontinued acceleration in revenue growth (1H07 £0.4m to 2H07 £0.7m to 1H08£1.1m) and the flow through of previous expense cuts of £1m annualised.Building on the significant progress made by the development team, the salesteam is now focusing on sales with major financial institutions as their utilityfor international payments. The resultant opportunities with banks also create asymbiotic relationship, as they are able to further widen the existing Earthportbanking network. "Although the time taken in the sales process is significant, the businessrewards are substantial for our clients and their customers, as well as ourshareholders. This is not just due to the fact that the revenue istransformational but also because the acceptance of Earthport by major globalinstitutions raises the Company's profile and creates further substantialopportunities. It is the Company's main strategic objective to become the globalpayments utility used by the major institutions, a goal now becoming asignificant reality." Press enquiries: Earthport plc Mike Harrison, Executive Chairman +44 (0)20 7220 9700James Bergman, Executive Director +44 (0)20 7220 9700 Dawnay, Day Corporate FinanceNick Lovering +44 (0)20 7509 4570 Dawnay, Day Corporate BrokingAdam Pollock +44 (0)20 7630 4100 Financial DynamicsJonathon Brill / Annie Evangeli +44 (0)20 7831 3113 HALF YEAR RESULTSFOR THE SIX MONTHS ENDED 31 DECEMBER 2007 Statement from the Board of Directors The results for the six months ended 31 December 2007 demonstrate furtherprogress in the Company's activities. These improvements were achieved primarilyfrom the Company's existing client base and do not reflect the sales effortwhich was accelerating during the period. The pivotal point for sales was thesuccess of the attendance at SIBOS on the IBM stand, which resulted in arealisation of Earthport's potential for being the global payments utility formajor financial institutions. As stated in the trading statement for the period, issued on 17 January 2008 "several major projects are being actively pursued each with the distinctpossibility of leading to transformational change". Results Turnover in the first half year increased 57% to £1.1m, against the second halfof the preceding financial year (£0.7m). This progress reflects increasingtransaction volumes and foreign exchange transactions from existing customers.Whilst continuing to invest in the Group's technology platform, operating lossfell 40 % to £1.1m, against the second half of last year (£2.2m) partially as aresult of lower costs following the successful RIF (Reduction in Force) fromlast year feeds through. Interest costs fell 32% to £0.17m, against the secondhalf of last year (£0.2m). Cash flow Net cash used in operating activities fell 9% to £2.4 m, against the second halfof last year (£2.8m). During the period, the Company raised £4.0m through theissue of equity. Sales and marketing Following a successful SIBOS 2007 exhibition in Boston in early October 2007,the new relationship with IBM is generating market leads. Earthport was one oftwo innovative payments companies invited on the IBM stand at SIBOS and now alsofeatures as a Business Partner in the IBM Product Guide. Earthport will also be attending SIBOS 2008 in Vienna on 15-19 September 2008and has already received expressions of interest suggesting an even moresuccessful exhibition than SIBOS 2007. Earthport is in an advanced stage of discussions with major potential clients,whose business would result in another step-function revenue increase; theseinclude sizable banks, some in conjunction with IBM and others without IBM.Furthermore there are a number of new corporate clients and government basedorganisations (US, UK and EU), which represent a clear vote of confidence inEarthport's model and the benefits that these companies and organisations willderive from Earthport's offering. Earthport is also a service provider to money transfer clients, concentrating onsegments in which there is a proven demand for services in multiple currenciesinternationally, particularly the migrant remittance market. Earthport focuses on intermediaries that require money transfer infrastructure,either for their clients or themselves. With such clients, Earthport is aback-end payments utility and infrastructure provider, through which paymentservices are outsourced. Earthport is now targeting strategic, business-transformational clients, oftenin conjunction with partners including major corporates and intermediaries, alsowithin the established banking system. Operations • Banking coverage In this period, we have initially sought to consolidate key strategic bankingrelationships within the existing network, with a view to better leveraging thepartnership opportunities they present. In particular, the expansion ofcoverage and service via the SEB Group has enabled Earthport to growconsiderably in key European markets, with other long-standing banking partnersset to adopt a similar model. The focus now shifts again to growing the portfolio. Initially, growth istargeted in the lucrative AsiaPac sector, where our partnership with IBM isadding real leverage and value. Furthermore, a recent partnership restructurewith ANZ Bank is now affording exciting opportunities to develop key large Asianmarkets including Indonesia, the Philippines, and Thailand. • Payment processing Significant growth in client volume is driving need for constant review of theprocesses Earthport employs to handle the bulk payment and collection demand.In working closely with the IT Development team, the Business Operations teamconsistently demonstrate greater levels of STP service, and provide real focusand performance in minimising exception ratios. • Summary The performance enhancements of late are flowing through into significantevolution within the Banking and Operations remit - this ability to build anddevelop blue-chip relationships with both the client base and banking partnersnow places tangible, sustainable growth at our fingertips. Earthport has also developed and introduced Dynamic Low Cost Routing, whichselects the lowest cost route for any UPN transaction, reducing costs. Board changes James Bergman was appointed to the Board as Executive Director on 19 December2007. Following Neil Clayton's stepping down from the Board, Colin Medway wasrequested to give guidance to the finance team. Based on advice received and toavoid any risk of conflict by combining his guidance for the financial team witha Non-Executive Director role, he is stepping down from the Board for the shortterm with effect from 27 March 2008. It is expected that he will resume hisNon-Executive role on 1 July 2008. Summary The Board expects the improvements in the Group's results to continue andaccelerate during the next period. Acceptance of the Earthport UPN as thepreferred global payments utility will increase as major institutions begin tomake use of the secure fast and cost effective solution it provides. The Company expects to announce several contract wins shortly. As well as international payments Earthport is expanding its product offeringwith global partners to develop and market innovative solutions for theFinancial Services Community. Mike Harrison Executive ChairmanCONSOLIDATED INCOME STATEMENT for the period ended 31 December 2007 Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 Dec 31 Dec 30 June 2007 2006 2007 Notes £'000 £'000 £'000REVENUE 1,067 403 1,077Operating expenses (2,131) (2,647) (5,105) ------- ------- --------OPERATING LOSS (1,064) (2,244) (4,028)Finance costs 3 (117) (202) (375) ------- ------- --------LOSS BEFORE TAXATION (1,181) (2,446) (4,403)Taxation - - - ------- ------- -------- NET LOSS FOR THE PERIOD (1,181) (2,446) (4,403) ------------ ------------ -------------Loss per share - basic 4 (2.3p) (7.5p) (10.98p) - diluted 4 (2.3p) (7.5p) (10.98p) ------------ ----------- ------------ CONSOLIDATED BALANCE SHEET at 31 December 2007 Unaudited Unaudited Audited 31 Dec 2007 31 Dec 30 June 2007 2006 Notes £'000 £'000 £'000 NON-CURRENT ASSETSProperty, plant and equipment 165 132 99Investments 5 160 160 160 ------- ------- -------- 325 292 259 ------- ------- --------CURRENT ASSETSTrade and other receivables 6 1,232 2,523 1,084Cash and cash equivalents 1,780 8 455 ------- ------- -------- 3,012 2,531 1,539 ------- ------- -------TOTAL ASSETS 3,337 2,823 1,798 ------- ------- -------CURRENT LIABILITIESTrade and other payables 7 (2,868) (5,017) (4,119)Loans 8 (1,086) (1,377) (1,053) ------- ------- -------- (3,954) (6,394) (5,172) NET CURRENT LIABILITIES (942) (3,863) (3,633) NON-CURRENT LIABILITIESLoans 8 (914) (1,201) (1,067) ------- ------- --------NET LIABILITIES (1,531) (4,772) (4,441) --------- --------- ----------EQUITYCalled up share capital 9 29,908 27,322 28,253Share premium account 10 41,477 36,518 37,790Merger reserve 11 9,200 9,200 9,200Equity reserve 12 - 1,266 1,136Share-based payment reserve 13 1,083 678 1,083Retained earnings 14 (83,199) (79,756) (81,903) --------- --------- ----------TOTAL EQUITY (1,531) (4,772) (4,441) --------- --------- ---------- CONSOLIDATED CASH FLOW STATEMENT for the period ended 31 December 2007 Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 Dec 2007 31 Dec 2006 30 June 2007 Notes £'000 £'000 £'000 NET CASH USED IN OPERATING ACTIVITIES 15 (2,429) (1,120) (3,889)INVESTING ACTIVITIES Purchase of property, plant and equipment (115) (8) (38) ------ ------ ------NET CASH FLOWS USED IN INVESTING ACTIVITIES (115) (8) (38) FINANCING ACTIVITIESIssue of ordinary share capital (net of costs paid) 3,990 699 4,364Drawdown of term loans - 410 410Repayment of term loans (121) (38) (207)Repayment of convertible loan notes and - - (250)unsecured loan ------ ------ ------NET CASH FLOWS FROM FINANCING ACTIVITIES 3,869 1,071 4,317 ------ ------ ------ NET INCREASE / (DECREASE) IN CASH AND CASH 1,325 (57) 390EQUIVALENTSCASH AND CASH EQUIVALENTS AT THE BEGINNING OF 455 65 65THE PERIOD ------ ------ ------CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 1,780 8 455 ------ ------ ------ NOTES TO THE HALF YEAR RESULTSfor the period ended 31 December 2007 1. FUNDAMENTAL ACCOUNTING CONCEPT The financial statements have been prepared on the assumption that the Group isa going concern. When assessing the foreseeable future, the directors have forecast a period oftwelve months from the date of approval of this report. The forecast cash-flowrequirement is contingent upon the ability of the Group to generate futuresales. The uncertainty as to the timing of the future growth in sales and thepotential impact on future funding arrangements require the directors toconsider the Group's ability to continue as a going concern. Despite thisuncertainty, the directors believe that the Group has demonstrated progress inpositioning the Group as an infrastructure supplier to the global paymentsindustry. The directors therefore consider that it is appropriate to prepare theGroup's financial statements on a going concern basis, which assumes that theCompany is to continue in operational existence for the foreseeable future. The financial statements do not include any adjustment that would result shouldthe Group not generate sufficient revenues, free cash flow or raise additionalfinance through further injections of debt or equity. It is not practical toquantify the adjustments that might be required, but should any adjustments berequired they may be significant. 2. ACCOUNTING POLICIES Basis of preparation The half year financial statements have been prepared in accordance withInternational Financial Reporting Standards ("IFRSs") adopted for use in theEuropean Union and therefore comply with Article 4 of the EU IAS Regulation. The financial statements have been prepared under the historical cost conventionand the principal accounting policies as set out below. Basis of consolidation The Group half year financial statements consolidate the financial statement ofEarthport plc and all of its subsidiaries for the period ended 31 December 2007.The results of subsidiaries acquired or sold are included in the Group financialstatements from the date control passes, until control ceases. Profits andbalances arising on trading between Group companies are excluded from thefinancial statements. All companies in the Group make up their statement to thesame date. Revenue recognition Revenue on the sale of software licences and from the service agreements isrecognised upon delivery to the customer providing that there is evidence of acontract, the fee is fixed or determinable, no significant customer obligationsremain and collection of the resulting receivable is probable. In circumstanceswhere a significant vendor obligation exists (such as the installation andacceptance of the software), revenue recognition is delayed until the obligationhas been satisfied. Revenue from client transaction volume is billed monthly inarrears. Revenue from software implementation, consultancy and training isrecognised as the services are performed. Foreign currency translation Transactions in foreign currencies are recorded at the rate ruling at the dateof the transaction. Monetary assets and liabilities denominated in foreigncurrencies are retranslated at the rate of exchange ruling at the balance sheetdate and the difference is taken to income statement. 2. ACCOUNTING POLICIES (Continued) Share-based payments The Group offers executive and employee share schemes. For all grants of shareoptions, the fair value as at the date of the grant is calculated using anoption pricing model and the corresponding expense is recognised over thevesting period. The expense is recognised as a staff cost and the associatedcredit is made against equity and included in the share-based payment reserve.Share-based payments made in return for goods or services are expensed at thedate of grant. Taxation The charge for current taxation is based on the results for the year as adjustedfor items that are disallowed or non assessable. It is calculated using ratesthat have been enacted, or substantially enacted, by the balance sheet date. Deferred taxation is provided in full on temporary differences which result inan obligation at the balance sheet date to pay more tax, or the right to payless tax, at a future date at rates expected to apply when they crystallise,based on current tax rates and law. Deferred tax assets are recognised only tothe extent that the directors consider that it is more likely than not that theywill be recovered. Deferred tax assets and liabilities are not discounted.Deferred tax is recognised in the income statement except where it relates toitems credited or charged direct to equity, in which case the related deferredtax is also dealt with in equity. Intangible assets Research and development expenditure is only recognised as an intangible assetif each of the following conditions has been met: - It is reasonably expected that the asset is likely to generate net future economic benefits. - Development costs in relation to the asset can be reliably measured. Capitalised development expenditure is stated at cost less accumulatedamortisation and impairment losses. Amortisation is charged to the incomestatement on a straight line basis over the estimated useful life of the asset. Where no intangible asset can be recognised, development expenditure is treatedas expenditure in the period in which it is incurred. Property, plant, and equipment and depreciation Property, plant, and equipment are stated at cost less depreciation andprovision for impairment. Depreciation is provided at rates calculated to writedown assets to their estimated residual values over their expected useful lives,as follows: Leasehold improvements: long lease - straight line per annum over lease termFixtures, fittings, and equipment - 20% - 33% straight line per annumComputer equipment - 33% straight line per annumComputer software - 25% straight line per annum The carrying values of property, plant, and equipment are reviewed forimpairment annually and when events or changes in circumstances indicate thatcarrying value may be impaired. Any impairment is taken direct to the incomestatement. Available for sale investments Available for sale investments are non derivative financial assets designatedavailable for sale. These are held at fair value, with gains and losses takento equity. These gains and losses are recycled through the income statement onrealisation. If there is objective evidence that the asset is impaired, thecumulative recognised loss is removed from equity and recognised in the incomestatement. Leasing Assets held under finance leases and hire purchase contracts are capitalised andare depreciated over their expected useful lives. The interest elements of therental obligations are charged to the income statement over the period of thelease and represent a proportion of the balance of capital repaymentoutstanding. Rentals payable under operating leases are charged against incomeon a straight-line basis over the lease term. Pensions The Group offers a stakeholder pension scheme to all employees, but the Groupdoes not make any contributions to the scheme. In addition, certain employeesand directors are entitled to receive, under their contracts of employment,contributions from the Group into their individual money purchase retirementplans. Financial risk management and financial instruments Financial assets and liabilities are recognised in the Group's balance sheetwhen the Group becomes party to the contractual provisions of the instrument. The Group's principal financial instruments comprise secured and unsecuredshort-term creditors, finance leases, cash, short-term deposits and convertibleloan notes. The main purpose of these financial instruments is to finance theGroup's operations, including any acquisitions. The Group has various otherfinancial instruments, such as trade receivables and trade payables arising fromits operations. It is the Groups' policy that no trading in financial instruments shall beundertaken. The Group borrows at both fixed and floating rates of interest.The Group's policy in relation to the finance is to ensure that sufficientliquid funds are maintained for operations. Trade receivables are measured at initial recognition at fair value andsubsequently at amortised cost using the effective interest rate method, ifmaterial. Appropriate allowances for estimated irrecoverable amounts arerecognised in profit or loss when there is evidence that the asset is impaired. Cash and cash equivalents comprise cash in hand, demand deposits and othershort-term highly liquid investments that are readily converted into a knownamount of cash and are subject to insignificant changes in value. Trade payables are initially measured at fair value and subsequently atamortised cost using the effective interest rate method, if material. Compound financial instruments: Convertible loan notes are treated as debt wherethe conversion terms of the notes state that the conversion is at the choice ofthe noteholder. Certain notes convert at the maturity date into ordinary sharesof 10p each at the option of the Company and are treated as compound financialinstruments. In such cases the discounted value of the interest is treated asdebt, with the balance of the principal taken to equity and accounted for inother reserves. Upon conversion, the appropriate transfer is made from reservesto ordinary share capital. Equity instruments issued by the Group are recognised at proceeds received netof direct issue costs. 3. FINANCE COSTS 6 months 6 months 12 months ended ended ended 31 Dec 31 Dec 30 June 2007 2007 2006 £'000 £'000 £'000Interest payable on secured, 102 200 366unsecured and convertible loansLoan arrangement fees and other finance costs 15 2 9 ------- ------- ------- 117 202 375 -------------- -------------- ---------- 4. LOSS PER SHARE The calculation of the basic and diluted loss per share is based on thefollowing data 31 Dec 31 Dec 30 June 2007 2007 2006Weighted average number of shares Weighted average number of shares inissue for basic and diluted loss per share 52,292,831 32,776,353 40,087,785 Loss attributable to shareholders (£'000) 1,181 2,446 4,403 Basic and fully diluted loss per share 2.3p 7.5p 10.98p(pence) The loss attributable to ordinary shareholders and weighted average number ofordinary shares for the purposes of calculating the diluted loss per share areidentical to those used for basic loss per ordinary share. This is because theexercise of share options and other share benefits would have the effect ofreducing loss per share and is therefore not dilutive under the terms of IAS33. 5. INVESTMENTS 31 Dec 31 Dec 30 June 2007 2006 2007 £'000 £'000 £'000Available for sale investment 160 160 160 ---------- ---------- ---------- The company holds 0.5% of Altair Financial Services International plc, anunquoted company specialising in the area of prepaid debit cards. The investmentis held at cost, which, in the opinion of the directors, approximates fairvalue. 6. TRADE AND OTHER RECEIVABLES 31 Dec 31 Dec 30 June 2007 2006 2007 £'000 £'000 £'000Trade receivables 367 227 191Other receivables 703 2,192 752Prepayments and accrued income 162 104 141 ------- ------- ------- 1,232 2,523 1,084 ---------- ----------- --------- Included in other receivables at 31 December 2007, 31 December 2006 and 30 June2007 is an amount in respect of unpaid share capital amounting to £625,000. 7. TRADE AND OTHER PAYABLES 31 Dec 31 Dec 30 June 2007 2006 2007 £'000 £'000 £'000Trade creditors 499 807 653Other creditors 702 1,247 1,097Other taxation and social security 1,333 2,187 1,742Accruals and deferred income 334 776 627 ------- ------- ------- 2,868 5,017 4,119 ---------- ------------ --------- 8. LOANS 31 Dec 31 Dec 30 June 2007 2006 2007 £'000 £'000 £'000Amounts falling due within one yearSecured loans 318 340 286Unsecured loans - 270 -Convertible loan notes 768 767 767 ------- ------- ------- 1,086 1,377 1,053 ------- ------- ------- The convertible loan notes in issue are subject to the following terms: Series Principal Conversion terms No. Maturity Date Value Value £'000 Of 10p shares per £1 loan 31 Dec 31 Dec note 2007 2006 & 30 Jun 2007 £'000 £'000No. 1 2004 600 2.857 30 June 2008 600 600No. 1 2006 168 2.857 30 June 2008 168 167 ------- ------- ------- 768 768 767 ------- ---------- ----------- The 2004 and 2006 series notes have a coupon of 10% payable in arrears in cashor shares at the option of the Company. The 2004 and 2006 series notes areconvertible into shares at the option of the note holder and have been treatedas debt under IAS 32 Financial instruments: disclosure and presentation. 31 Dec 31 Dec 30 June 2007 2006 2007 £'000 £'000 £'000Amounts falling due after more than one yearSecured loans 914 1,201 1,067 ---------- ------------ --------- General Capital Venture Finance Limited and Michael Gerson Finance plc haveprovided the loan facilities. The facility is repayable over 5 years at an IRRof 15% and is secured by means of an all monies mortgage debenture. 9. SHARE CAPITAL Authorised 31 Dec 31 Dec 30 June 2007 2006 2007Number of ordinary shares 69,412,642 69,412,642 69,412,642Nominal value of each ordinary share 10p 10p 10p Number of 7.5p deferred shares in issue 307,449,810 307,449,810 307,449,810 £'000 £'000 £'000IssuedOrdinary share capital 6,849 4,263 5,194Deferred share capital 23,059 23,059 23,059 ------- ------- ------- 29,908 27,322 28,253 ---------- ----------- ---------- During the period ended 31 December 2007 a total of 16,546,079 ordinary sharesof 10p each were allotted, of which 13,213,111 were allotted for cashconsideration of £3,989,561, a further 3,332,968 were allotted in uponconversion of £1,352,116 of convertible loan stock and loan stock interest. As at 31 December 2007, the maximum number of shares, which could be issued uponthe conversion of convertible loan notes, investor warrants and employee shareoptions is as follows: Last date when Exercise price Number of share options exercisable outstanding at 31 December 2007Convertible Loan Notes 30 June 2008 35p 2,194,176Investor Warrants 31 March 2008 35p 446,429Investor Warrants 30 June 2008 31.5p 1,729,036Investor Warrants 31 October 2008 35p 3,089,026Investor Warrants 31 December 2008 35p 2,020,201Investor Warrants 31 December 2009 23p 2,075,000Employee Options 31 October 2014 29p - 42p 7,632,000 ------- 19,185,868 -------------- 10. SHARE PREMIUM ACCOUNT 31 Dec 2007 31 Dec 2006 30 June 2007 £'000 £'000 £'000At 1 July 37,790 35,161 35,161Premium on shares issued 3,802 1,357 2,893Expenses of issue (115) - (264) ------- ------- -------At 31 December 41,477 36,518 37,790 ------- ------- ------- 11. MERGER RESERVE 31 Dec 31 Dec 30 June 2007 2006 2007 £'000 £'000 £'000At 1 July, 31 December 2007 and 31December 2006 9,200 9,200 9,200 ------- ------- ------- This reserve represents the premium attributable to shares issued inconsideration of the costs of acquisition of subsidiaries in prior years asrequired by s131 of the Companies Act 1985. 12. EQUITY RESERVE 31 Dec 31 Dec 30 June 2007 2006 2007 £'000 £'000 £'000At 1 July 1,136 1,364 1,364Convertible loan notes (1,136) (228) (228) ------- ------- -------At 31 December - 1,136 1,136 ------- ------- ------- 13. SHARE-BASED PAYMENT RESERVE 6 months 6 months 12 months ended ended ended 31 Dec 31 Dec 30 June 2007 2006 2007 £'000 £'000 £'000At 1 July 1,083 678 678Equity settled share-based payments - employees - 320 380Equity settled share-based payments - other - - 25 ------- ------- -------At 31 December 1,083 998 1,083 ------- ------- ------- 14. RETAINED EARNINGS 6 months 6 months 12 months ended ended ended 31 Dec 31 Dec 30 June 2007 2006 2007 £'000 £'000 £'000At 1 July (81,903) (77,478) (77,478) Loss for the period attributable to equity (1,181) (2,446) (4,403)holders of the CompanyConversion of loan notes (115) (22) (22) ------- ------- -------At 31 December (83,199) (79,946) (81,903) ------- ------- ------- 15. RECONCILIATION OF LOSS TO NET CASH OUTFLOW FROM OPERATING activities 6 months 6 months 12 months ended ended ended 31 Dec 31 Dec 30 June 2007 2006 2007 £'000 £'000 £'000Operating loss (1,064) (2,244) (4,403)Depreciation of property, plant and equipment 49 60 124Share-based payment expense - 320 380Finance costs - - 375 ------- ------- -------Operating cash flows before movements in working capital (1,015) (1,864) (3,524)(Increase) / decrease in receivables (149) 217 44(Decrease) / increase in payables (1,146) 613 (83) ------- ------- -------Cash used by operations (2,310) (1,034) (3,563)Interest paid (119) (86) (326) ------- ------- -------Net cash used in operating activities (2,429) (1,120) (3,889) ----------- ---------- ----------- 16. PUBLICATION OF NON-STATUTORY FINANCIAL STATEMENTS The results for the six months ended 31 December 2007 and 2006 are unaudited andun-reviewed by the auditors. The results for the year ended 30 June 2007 do notconstitute statutory financial statements as defined in section 240 of theCompanies Act 1985, but have been derived from the full audited financialstatements for the year ended 30 June 2007. The report of the auditors on thefinancial statements for the year ended 30 June 2007 was qualified. This information is provided by RNS The company news service from the London Stock Exchange