Earthport Regulatory News (EPO)

13 Nov 2008 07:00



13 November 2008 

Earthport plc (the 'Company' or the 'Group')

Preliminary Results

Earthport plc, the global payments utility, is pleased to announce its preliminary results for the year ended 30 June 2008.

Financial Highlights

* Revenue increased by 79% to £1.92 million (2007: £1.07m)

* A further £600k was generated by a sale of limited North American marketing rights1

* Operating loss fell by 17% to £3.34 million (2007: £4.03m)

* Finance costs fell 13% to £0.33 million (2007: £0.38m)

* Loss per share fell 53% to 5.14p (2007: 10.98p)

* Debt was reduced to £1.10 million (2007: £2.12m)

* Cash increased to £3.66 million (2007: £0.46 million) 

Operational Highlights

* Relationship with IBM leads to strong showing at Sibos

* Relationship with Adobe creates Trade Services Lite

* Further Expansion of the international banking network

* Agreement with Standard Chartered Dubai

* Raised an additional £10.6m of new equity net of expenses

1 Our un-audited interim trading statement released on 8 October 2008 included in the revenue for the year £600k, generated by the sale of limited North American Sales and Marketing rights to our venture partner as part of the establishment of the Earthport USA venture. After consulting with our Auditors the Revenue from the sale of these rights will be applied to the balance sheet as Deferred Revenue and recognised as Revenue in later periods.

Commenting on the results Executive Chairman, Mike Harrison, said: 

"Earthport is achieving sustained growth in its activities and this is clearly demonstrated by these results.

"There has been considerable progress in advancing the Company's model of international payments and in enlarging the banking coverage. This is being aided by the global economic situation as banks and financial institutions recognise the benefits of using Earthport for activities such as payroll, remittances and potentially trade finance.

"We are confident that the Financial Year to June 2009 is our breakthrough year and we look forward to delivering value to our shareholders as well as providing an excellent service to our customers."

Earthport's Annual General Meeting will be held at 11am on Friday 12 December 2008 at the offices at 21 New Street London EC2M 4TP. The Notice of AGM and form of proxy will be posted to shareholders and will be available on the Company's website at www.earthport.com. The Annual Report and Accounts for the year ended 30 June 2008 will be distributed to shareholders on 21 November 2008.

For further information, please contact:

Earthport plc Mike Harrison, Executive Chairman James Bergman, Chief Executive Officer	+44 (0)20 7220 9700
Cenkos Securities plc Nicholas Wells / Elisabeth Bowman Andy Roberts	+44 (0)20 7397 8900
Financial Dynamics Jonathon Brill / Alex Beagley / Laura Proudlock	+44 (0)20 7831 3113

About Earthport 

Earthport (www.earthport.com) specialises in the international transactional marketplace by providing a highly secure, high volume global collection and payment capability. It has been making national and international payments and collections since 1998. 

Earthport owns, provides and hosts an international money movement platform called the Universal Payments Network. Using this platform, Earthport makes secure, low cost international bank payments and collections worldwide.

  

EXECUTIVE CHAIRMAN'S STATEMENT 

INTRODUCTION

I am delighted to report a strong set of results for the year ended 30 June 2008. Revenues have grown very strongly and we expect will continue to grow in the financial year ending 30 June 2009. The year has seen great progress from Earthport, successfully developing the Company's enormous global opportunity. Further market success and sales traction have been accompanied by good financial progress: balance sheet improvement and debt reduction.

In many ways, these results reflect the efforts that we have made since May 2005 to build a robust business tailored to the international high volume payments requirements of the world's financial institutions and corporates. Although we remain mindful of the current market conditions, the Company is on plan and our future looks bright thanks to our market positioning and the growing need for our services by our existing and targeted customers

FINANCIAL REVIEW

The year to 30 June 2008 has been one of steady progress. Revenue for the year ended 30 June 2008 has increased by 79% to £1.92m (2007: £1.07m). The Group's operating loss fell by 17% to £3.34m (2007: £4.03m). Finance costs have fallen 13% to £0.33m (2007: £0.38m). The loss per share fell 53% to 5.14p (2007: 10.98p). During the year, the Group raised £10.6m of equity, net of expenses. Debt was reduced to £1.10m (2007: £2.12m). Cash increased to £3.66 million (2007: £0.46 million).

OPERATIONAL REVIEW

During the first half of FY 2008, monthly transaction volume doubled while monthly foreign exchange ("FX") revenues increased more than fivefold. During the second half of FY 2008, monthly revenues were up 175% over the same period last year, while average transaction-driven monthly revenues were up 65%.

During the second half of FY 2008, monthly transaction volume grew 65% while FX revenues increased 19% over the first half of FY 2008. By the same comparison, monthly revenues were up 20% while transaction driven monthly revenues grew 32%.

This improvement brings Earthport another step up in performance and closer to profitability. More importantly, through the company's increased focus on existing key clients and the development of additional strategic partner and customer relationships, this momentum is charted to continue.

Relationship with IBM: At Sibos 2007 in October, Earthport was one of only two technology companies invited to participate on IBM's stand. Also, as a Business Partner, Earthport featured in IBM's Product Guide for the event. Already our relationship with IBM and the exposure to IBM's sales force and the clients and prospects visiting Sibos has meant that significant and specific market opportunities are taking shape.

The Banking Sector: On 20 May 2008 Earthport announced an agreement with Standard Chartered Bank (SCB) to deliver an operational turnkey remittance solution for international transfers from Dubai for the large number of overseas workers who send money home. On 26 June 2008 the Earthport UPN was demonstrated to the global managers of SCB.

Earthport is negotiating with other banks to deliver a similar turnkey solution and to provide the Trade Services Lite (TS Lite) product which has been developed jointly with Adobe.

In addition TS Lite is being tested by a UK high street bank, which has a large client base of small-to-medium sized Corporates (SMEs) that trade internationally.

International Payments Industry: During the past 12 months, Earthport has focussed on a number of strategic service providers in the Money Transfer business and specifically on intermediaries that require a money transfer infrastructure, either for themselves or for their clients. In these applications, Earthport in effect becomes a back-end payments service utility, to which payments services can be outsourced. Furthermore, in this market we have concentrated on segments where there is proven demand for services in multiple international currencies, such as in the travel industry, entertainment business and the migrant remittance market.

Market Coverage Strategy: Approximately half of Earthport's existing client base is comprised of corporates, whose businesses involve many low-value money transfers. Hitherto this market has not been particularly well served by the traditional system. However, for these clients, service is the key to success and time is of the essence: from customer contact, through the sales and integration processes, through to revenue realisation. The ability to rapidly integrate our UPN payments system into their back-office enables them to deliver measurable improvements to the service level and price that they offer their customers, quickly and with real bottom-line benefits. 

Summary: As a result of understanding our markets more clearly and focussing more accurately, we have been able to offer a better and more responsive service to our existing client base; whilst at the same time we have been able to identify major strategic opportunities. These include banks, corporate clients and government based organisations (US, UK, EU and International) that need to undergo a transformation in their payments strategy and delivery processes.

Some of these new opportunities have arisen through our relationship with IBM, but many others have come through the increasing 'clear vote of confidence' in Earthport's capabilities, that we are receiving in both Financial Services and other strategic markets. So, FY 2008 has been very encouraging. However we feel that the next 6 to 12 months will see an even greater degree of consolidation and success and lead Earthport well into growth and profitability.

Business/Banking Operations 

During the past 12 months, the priority for Earthport has been to consolidate key strategic banking relationships within the existing network, with a view to better leveraging the partnership opportunities they present. In particular, the expansion in coverage and service via the SEB Group has enabled Earthport to grow considerably in key European markets and, with other long-standing banking partners set to adopt a similar model, we see further International expansion following on in the near future.

Thus the focus continues on growing the portfolio. Initially, growth is targeted in the lucrative AsiaPac sector, where our partnership with IBM is adding real leverage and value. Furthermore, a recent restructuring of our partnership with ANZ Australia is now affording exciting opportunities to develop key Asian markets including Indonesia, The Philippines and Thailand. In addition, the growing relationship with SCB is enlarging our coverage in the territories covered by SCB.

Earthport has experienced a significant growth in client volume during FY 2008 and this growth continues to drive our need to constantly review the processes that we employ to handle bulk payment and collection demand. Working closely with the IT Development team, Earthport's Business Operations team has been able to consistently demonstrate greater levels of genuine Straight Through Processing (STP). This increased level of automation has provided measurable levels of performance improvements and has contributed to a further reduction in exception ratios.

 

IT Development

During the past 12 months the Development Team at Earthport has achieved a number of goals. Specifically the ideas and objectives that were set in the re-architecting program we embarked on some 24 months ago have turned into a series of delivered milestones. This in turn provided a whole new impetus to the development team's productivity.

As a result of the successes that we have achieved during the latter part of 2007 and in 2008, we have been able to add new members to our team and been able to provide a whole new set of challenges to other long-standing team members. And we believe that it is this consolidation that will yield the results that will enable Earthport to maintain and improve its technological superiority in the International Bank-2-Bank payments industry.

Platform Evolution: During the past few months, a new release of our next generation platform, EPS2, was put into production. This release focused on improved automation of back office functions and automated support for several new settlement banks.

In addition to this increase in functionality, as EPS2 has matured, particularly during the first months of 2008, a measurable improvement in system up-time has been achieved in excess of its target of 99.9% availability. Naturally these performance improvements have realised significant benefits in our Banking Operations area, both in terms of customer satisfaction and more particularly, in terms of the delivery of higher degrees of automation and continuity.

During the remainder of 2008, this evolution of system Reliability, Availability and Serviceability (RAS) will continue. However, these improvements in RAS have provided the opportunity for us to plan and now begin the deployment of significantly more powerful server configurations. To this end, during the next few months of 2008 we shall be upgrading many of our servers to further improve resilience and more importantly increased scalability.

FUTURE DEVELOPMENTS

The Company is on track to achieve its goal of becoming the utility for high volume international payments, which is utilised by banks, financial institutions and corporates. 

Fiscal Year 09 (to 30 June 2009) is already demonstrating more progress towards this goal and will see the Company firmly established in this very large global market with increased presence, clients and revenues.

Mike Harrison

Executive Chairman

  CONSOLIDATED INCOME STATEMENT

for the year ended 30 June 2008

	Notes	2008 £'000	2007 £'000
Continuing operations:			As restated
Revenue	2	1,915	1,077
Cost of sales		(390)	(340)
Gross profit		1,525	737
Administrative expenses		(4,861)	(4,765)
Operating loss		(3,336)	(4,028)
Finance costs	3	(325)	(375)
Loss before taxation	4	(3,661)	(4,403)
Taxation	5	280	-
Loss attributable to equity shareholders of the company		(3,381)	(4,403)
Loss per share - basic and fully diluted	6	(5.14p)	(10.98p)

CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE

for the year ended 30 June 2008

		2008 £'000	2007 £'000
Loss attributable to the equity shareholders of the company		(3,381)	(4,403)
Total recognised income and expense for the year, attributable to the		(3,381)	(4,403)
equity shareholders of the company

CONSOLIDATED BALANCE SHEET

at 30 June 2008

	Notes	2008 £'000	2007 £'000
Assets			As restated
Non-current assets
Property, plant and equipment	7	139	99
Investments	8	160	160
Deferred tax asset	5	280	-
		579	259
Current assets
Trade and other receivables	9	2,436	1,084
Cash at bank and in hand	10	3,655	455
		6,091	1,539
Total assets		6,670	1,798
Liabilities
Current liabilities
Trade and other payables	11	(3,254)	(4,119)
Borrowings	12	(340)	(1,053)
		(3,594)	(5,172)
Non-current liabilities
Borrowings	12	(761)	(1,067)
Total liabilities		(4,355)	(6,239)
NET ASSETS/(LIABILITIES)		2,315	(4,441)
Equity Capital and reserves
Ordinary shares	13	30,968	28,253
Share premium	14	44,732	36,801
Merger reserve	15	9,200	9,200
Equity reserve	16	-	1,136
Share-based payment reserve	17	1,354	868
Warrant reserve	18	816	1,204
Retained earnings	19	(84,755)	(81,903)
EQUITY ATTRIBUTABLE TO THE EQUITY		2,315	(4,441)
SHAREHOLDERS OF THE COMPANY

  CONSOLIDATED CASH FLOW STATEMENT

for the year ended 30 June 2008

	Notes	2008 £'000	2007 £'000
NET CASH USED IN OPERATING ACTIVITIES	20	(4,851)	(3,889)
INVESTING ACTIVITIES
Purchase of property plant and equipment		(144)	(38)
NET CASH FLOWS USED IN INVESTING ACTIVITIES		(144)	(38)
FINANCING ACTIVITIES
Issue of ordinary share capital (net of costs paid)		8,466	4,364
Drawdown of term loans		-	410
Repayment of term loans		(271)	(207)
Repayment of unsecured loan		-	(250)
Net cash FLOWS from financing ACTIVITIES		8,195	4,317
NET INCREASE IN CASH AND CASH EQUIVALENTS		3,200	390
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR		455	65
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR		3,655	455

  NOTES TO THE FINANCIAL STATEMENTS

for the year ended 30 June 2008

1. The financial information set out above has been prepared in accordance with International Financial Reporting Standards (IFRS) and those parts of the Companies Act 1985 that remain applicable to companies reporting under IFRS and does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The Company's auditors have indicated that they intend to issue an unqualified auditor's report, which will not contain any statement under Section 237(2) or (3) of the Companies Act 1985, on the statutory financial statements for the year ended 30 June 2008. There have been no significant changes to the group accounting policies and the group has followed the policies as previously published.

2. REVENUE

Revenue, loss and net assets/liabilities are all attributable to one business segment operating from the United Kingdom. The segmental analysis by location of customers is as follows:

	2008 £'000	2007 £'000
UK	1,582	860
Europe	182	150
North America	151	67
	1,915	1,077

3. FINANCE COSTS	2008 £'000	2007 £'000
Interest payable on secured loans	325	375

4. LOSS BEFORE TAXATION	2008 £'000	2007 £'000 As restated
Loss before taxation is stated after charging:
Depreciation of property, plant and equipment	104	124
Development costs (included in administrative expenses in the income	607	818
statement)
Operating leases:
- Property	105	150
Fees payable to the Company's auditors:
- For the audit of the Company's annual financial statements:
- Baker Tilly UK Audit LLP	45	45
- Baker Tilly	-	7
Fees payable to associates of the Company's auditors:
- For tax compliance and advisory services-	8	20
- For other services	-	3

  

5. TAXATION	2008	2007
	£'000	£'000
Deferred tax credit	(280)	-
Factors affecting the tax credit for the year:
Loss before taxation	(3,661)	(4,403)
Loss before tax multiplied by standard rate of corporation tax in the
UK of 29.5% (2007: 30%)	(1,080)	(1,320)
Deferred tax credit	280	-
	(800)	(1,320)
Expenses not deductible for tax purposes	12	5
Timing differences not recognised for deferred tax purposes	28	41
Consolidation adjustment on inter-company provisions	-	49
Shared based payment costs not recognised for deferred tax purposes	131	114
Different tax rate applied for deferred tax purposes	15	-
Losses not recognised for deferred tax purposes	614	1,111
Recognition of tax losses carried forward	280	-
Tax credit for the year	280	-

The change in the UK standard rate of corporation tax from 30% to 28% with effect from 1 April 2008 is not expected to have a material impact on future taxation charges.

Further tax trading losses carried forward of £48m (2007: £46m) have not been recognised due to uncertainty over the timing of their reversal.

The deferred tax asset recognised in respect of trading losses is based on an assessment of trading projections for the foreseeable future.

The movement on the deferred tax asset is as follows:

			2008	2007
			£'000	£'000
At 1 July			-	-
Income statement - recognition of tax losses			280	-
At 30 June			280	-

6. LOSS PER SHARE

The loss per share is calculated by dividing the loss attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year.

	2008	2007
	£'000	£'000
Loss attributable to equity holders of the company	(3,381)	(4,403)
	2008	2007
	Number	Number
Weighted average number of ordinary shares in issue (thousands)	65,804	40,088
	2008	2007
Basic and fully diluted loss per share (pence)	(5.14p)	(10.98p)

The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purposes of calculating the diluted loss per share are identical to those used for basic loss per ordinary share. This is because the exercise of share options and other benefits would have the effect of reducing loss per share and is therefore not dilutive under the terms of IAS33.

  

7. PROPERTY, PLANT AND EQUIPMENT Group and Company
	Computer	Fixtures	Short
	equipment	fittings and	leasehold
	and software	equipment	improvement	Total
	£'000	£'000	£'000	£'000
Cost
At 1 July 2006	6,265	389	147	6,801
Additions	35	4	-	39
At 1 July 2007	6,300	393	147	6,840
Additions	83	2	59	144
At 30 June 2008	6,383	395	206	6,984
Depreciation
At 1 July 2006	6,124	381	112	6,617
Charge for the year	86	3	35	124
At 1 July 2007	6,210	384	147	6,741
Charge for the year	83	2	19	104
At 30 June 2008	6,293	386	166	6,845
Net book value
At 30 June 2008	90	9	40	139
At 30 June 2007	90	9	-	99
At 30 June 2006	141	8	35	184

Depreciation for all years is included in administrative expenses in the income statement.

  

8. INVESTMENTS  Group and Company			2008 £'000	2007 £'000
Available-for-sale investment			160	160

The Company holds 0.5% of Altair Financial Services International plc, an unquoted company specialising in the area of prepaid debit cards. The investment is held at cost, which, in the opinion of the directors, approximates fair value. There were no movements on the investment from 1 July 2006 to 30 June 2008.

Company			£'000
Investment in subsidiaries
Cost at 30 June 2006, 30 June 2007 and 30 June 2008			11,073
Provision for impairment at 30 June 2006, 30 June 2007 and 30 June 2008			(11,072)
Net book value at 30 June 2006, 30 June 2007			1
and 30 June 2008

The Company's subsidiaries are:	Country of  incorporation	Nature of  business	Holding
EnsurePay Limited	England and Wales	On line services	100%
Earthport Enterprises Limited	England and Wales	Dormant	100%
Earthport Newco Limited	England and Wales	Dormant	100%
Travelpay Limited	England and Wales	Dormant	100%
Mobilepay Limited	England and Wales	Dormant	100%
Earthport Solutions Limited	England and Wales	Dormant	100%
Earthport Asiapac Limited	England and Wales	Dormant	100%
Zabadoo.com Limited	England and Wales	Dormant	100%
Epal Limited	England and Wales	Dormant	100%
Earthport USA Limited	England and Wales	Dormant	100%

  9. TRADE AND OTHER RECEIVABLES

		Group		Company
	2008	2007	2008	2007
	£'000	£'000	£'000	£'000
Trade receivables	1,059	191	910	93
Other receivables	1,240	752	1,239	752
Amount due from subsidiary undertakings	-	-	53	54
Prepayments	137	141	137	141
	2,436	1,084	2,339	1,040

Trade receivables amounted to £1,059,000 (2007: £191,000), net of a provision of £65,000 (2007: £142,000) for impairment. Movement on the group provisions for impairment were as follows:

			2008	2007
			£'000	£'000
At 1 July			142	69
Provisions for receivables impairment			65	73
Receivables written off during the year			(142)	-
At 30 June			65	142

The average credit period taken on sales of services is 154 days (2007: 66 days). No interest is charged on overdue balances. The directors consider that the carrying amount of trade receivables approximates their fair value.

Included in other receivables is an amount in respect of unpaid share capital amounting to £625,000 due from Rob Cunningham (former company director). (2007: £625,000) - see note 17.

The principal reason for the increase in other receivables was in regard to foreign exchange revenues amounting to £483,000 at 30 June 2008 (2007: £Nil).

 

10. CASH AND CASH EQUIVALENTS

		Group		Company
	2008	2007	2008	2007
	£'000	£'000	£'000	£'000
Cash at bank and in hand	3,655	455	3,654	442

Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less. The carrying amount of these assets approximates their fair value.

  11. TRADE AND OTHER PAYABLES

		Group		Company
	2008	2007	2008	2007
	£'000	£'000	£'000	£'000
Trade payables	496	653	315	472
Other payables	1,063	1,097	913	937
Amount due to subsidiary undertakings	-	-	751	751
Other taxation and social security	836	1,742	836	1,753
Accruals and deferred income	859	627	859	627
	3,254	4,119	3,674	4,540

Trade payables and accruals principally comprise amounts outstanding in respect of operating costs. The average credit period taken for trade purchases is 38 days (2007: 53 days). The directors consider that the carrying amounts for trade and other payables approximate their fair value.

12. BORROWINGS
Current liabilities			2008 £'000	2007 £'000
Secured loans			340	286
Convertible loan notes			-	767
			340	1,053

Non-current liabilities			2008 £'000	2007 £'000
Secured loans			761	1,067

General Capital Venture Finance Limited and Michael Gerson Finance Plc has provided the loan facilities. The facility is repayable over 5 years at a fixed interest rate of 15%, secured by means of an all-monies mortgage debenture over the Company's assets. 

On 26 June 2008, convertible loan notes amounting to £767,000 all with a maturity date of 30 June 2008 and interest rate of 15% were converted into 2,189,614 ordinary shares of 10p each at the option of the note holder.

  

13. SHARE CAPITAL	2008 £'000	2007 £'000
Authorised
At 1 July (69,412,642 ordinary shares of 10p each)	6,941	6,941
Increase in the ordinary share capital in the year	10,000	-
At 30 June (169,412,642 ordinary shares of 10p each)	16,941	6,941
Deferred shares of 7.5p each: 307,449,810 (2007: 307,449,810)	23,059	23,059
At 30 June	40,000	30,000
Issued
At 1 July (51,945,677 ordinary shares of 10p each)	5,194	3,210
Shares issued in the year	2,715	1,984
At 30 June (79,088,009 ordinary shares of 10p each)	7,909	5,194
Deferred shares of 7.5p each: 307,449,792 (2007: 307,449,792)	23,059	23,059
At 30 June	30,968	28,253

The deferred shares carry no rights to receive any dividend or other distribution. The holders of the deferred shares have no rights to receive notice, attend, speak or vote at any general meeting of the Company. On a return of capital on liquidation or otherwise, the holders of the deferred shares are entitled to receive the nominal amount paid up on the deferred shares after the repayment of £10,000,000 per ordinary share. 

During the year to 30 June 2008 a total of 27,142,332 ordinary shares of 10p each were allotted, of which 21,450,626 were allotted for cash consideration of £8,465,966, a further 5,691,706 were allotted upon conversion of £2,179,612 of convertible loan notes and loan notes interest.

The following share issues were completed during the year:

2008		No of	Average
		Shares	premium	Total
		Issued	in	premium
			pence	£
September 2007		9,677,419	21.00	2,032,258
October 2007		3,332,968	30.57	1,018,820
November 2007		3,487,160	21.19	738,784
December 2007		48,532	25.00	12,133
February 2008		90,651	25.00	22,663
March 2008		213,000	25.00	53,250
April 2008		6,200,792	53.23	3,300,513
May 2008		1,460,572	25.00	365,143
June 2008		2,631,238	24.69	649,711

  

2007		No of	Average
		Shares	premium	Total
		Issued	in	premium
			pence	£
July 2006		598,086	31.80	190,191
October 2006		761,190	11.00	83,731
November 2006		476,190	11.00	52,381
December 2006		8,695,651	13.00	1,130,435
March 2007		4,641,955	13.00	603,454
April 2007		208,333	14.00	29,167
May 2007		4,464,287	18.00	803,572

Transaction costs amounting to £262,000 (2007: £264,000) in regard to issue of shares were deducted from equity and charged against share premium. 

At 30 June 2008, there remained £625,000 (2007: £625,000) due in respect of unpaid share capital. This is included in other receivables (note 13).

Further warrants have been granted under the terms of the Company's fund-raising activities with exercise prices and dates shown in the table below. 

		No. of Options		Extended		No. of Options
Last date when	Exercise	outstanding at	Granted	/( lapsed)	Exercised	outstanding at
exercisable	price	1 July 2007	No.	No.	No.	30 June 2007
31 October 2007	0.32	2,187,716	-	(1,152,519)	(1,035,197)	-
31 December 2007	0.32	1,729,036	-	(1,729,036)	-	-
31 March 2008	0.35	446,428	-	(20,000)	(426,428)	-
31 July 2008	0.35	-	-	1,729,036	-	1,729,036
31 October 2008	0.35	-	-	3,071,427	(2,000,000)	1,071,427
31 December 2008	0.35	1,836,239	215,217	-	(563,094)	1,488,362
31 December 2008	0.23	2,075,000	-	-	-	2,075,000
11 June 2017	0.29	-	250,000	-	-	250,000
27 March 2018	0.65	-	650,000	-	-	650,000
		8,274,419	1,115,217	1,898,908	(4,024,719)	7,263,825

The fully diluted share capital at 30 June 2008 may be analysed as follows: 

	No. of Ordinary 10p shares
	2008	2007
Shares in issue at 30 June	79,088,009	51,945,677
Employee share options (see note 30)	16,039,080	7,156,808
Other options	7,263,825	8,274,419
Convertible loan notes	-	5,180,048
Fully diluted number of shares	102,390,914	72,556,952

 

14. SHARE PREMIUM ACCOUNT

Group and Company 

	2008 £'000	2007 £'000
		As restated
At 1 July	36,801	35,161
Premium on shares issued	8,193	1,904
Expenses of share issues	(262)	(264)
At 30 June	44,732	36,801

15. MERGER RESERVE Group and Company	2008 £'000	2007 £'000
At 1 July and 30 June	9,200	9,200

The merger reserve represents the premium attributable to shares issued in consideration of the costs of acquisition of subsidiaries in prior years as required by s131 of the Companies Act 1985.

16. EQUITY RESERVE Group and Company	2008 £'000	2007 £'000
At 1 July	1,136	1,364
Conversion of loan notes	(1,136)	(228)
At 30 June	-	1,136

The equity reserve represents the equity component of convertible loan notes.

17. SHARE-BASED PAYMENT RESERVE Group and Company	2008 £'000	2007 £'000
		As restated
At 1 July	868	488
Equity settled share-based payments - employees	539	380
Options exercised during the year	(53)	-
At 30 June	1,354	868

The share-based payment reserve represents the cumulative charge to date in respect of unexercised share options at the balance sheet date. 

  

18. WARRANT RESERVE Group and Company	2008 £'000	2007 £'000
		As restated
At 1 July	1,204	190
Equity settled share-based payments - warrants	88	1,014
Warrants exercised during the year	(476)	-
At 30 June	816	1,204

The warrant reserve (share warrants granted under the terms of the Company's funding activities in relation to new debt, broking fee and follow on funding strategies) represents the cumulative charge to date in respect of unexercised share warrants at the balance sheet.

19. RETAINED EARNINGS Group	2008 £'000	2007 £'000
At 1 July	(81,903)	(77,478)
Loss for the year attributable to equity shareholders of the Company	(3,381)	(4,403)
Options exercised during the year	53	-
Warrants exercised during the year	476	-
Conversion of loan notes	-	(22)
At 30 June	(84,755)	(81,903)

20. RECONCILIATION LOSS BEFORE TAX TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES Group	2008 £'000	2007 £'000
Loss before tax	(3,661)	(4,403)
Depreciation of property, plant and equipment	105	124
Share-based payment expense	627	380
Finance costs	324	375
Operating cash out flow before movements in working capital	(2,605)	(3,524)
(Increase)/decrease in receivables	(1,352)	44
Decrease in payables	(743)	(83)
Cash used by operations	(4,700)	(3,563)
Interest paid	(151)	(326)
Net cash used in operating activities	(4,851)	(3,889)

  

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