MXCP.L Regulatory News (MXCP)

22 Nov 2007 07:01

2 ergo Group plc22 November 2007 Embargoed until 7.00 22 November 2007 2ergo Group plc ("2ergo" or "the Group") Preliminary Results for the Year Ended 31 August 2007 Restated % change 2007 2006 £000 £000 Turnover 33,309 29,515 +13Gross profit 8,614 5,927 +45Pre-tax profit 2,586 2,320 +11Adjusted pre-tax profit (1) 3,377 2,742 +23Adjusted pre-tax profit (1) before FRS 20 charge, Proteus and Broca losses 4,216 2,914 +45 Basic earnings per share 8.64p 6.81p +27Adjusted basic earnings per share (1) 11.43p 8.38p +36 (1) Stated before amortisation Highlights * Turnover up 13% to £33.3 million (2006: £29.5 million). * Increase in gross profit of 45% to £8.6 million (2006: £5.9 million) with gross margins increasing from 20% to 26%, ahead of expectations. * Underlying, like-for-like profits from continuing activities, excluding FRS 20 charge, the costs associated with Broca prior to demerger and the losses and costs following the acquisition of Proteus Inc., up 45% to £4.2 million (2006: £2.9 million). * Acquisition of Proteus with offices in Washington, D.C., New York and Buenos Aires. * Sales teams in Mexico City, Mexico; Sao Paulo, Brazil; and Bogota, Colombia. * Successful demerger of Broca. * Creation of innovative Interactive Media division. * Increasing market demand for convergent Mobile and Internet Solutions. Neale Graham, Joint Chief Executive of 2ergo, commented: "We are pleased toannounce another strong year of growth for the Group, and once again, to reportprofits ahead of market expectations. "What is particularly pleasing is that these results have been achieved despitethe additional pressures on the Board required to successfully complete severallarge projects, including the acquisition and turnaround of US-based Proteus,the demerger of Broca and the launch of 2ergo's Interactive Media Solutionsdivision. "Over the period we have witnessed the mobile sector move into an exciting newphase. We are seeing increasing demand for mobile marketing and advertisingsolutions requiring convergent mobile and internet technologies. This is helpingthe Group to expand into new areas, to introduce new products and services,which ultimately deliver additional benefits to brands and new experiences forthe end user. "Our plans to scale the business are taking shape and we are extremely pleasedwith the level of success we are achieving in North America. We now look forwardto repeating this success through ongoing investment into the South Americanregion. "As you will see from our results, 2ergo has made significant progress over theyear, our sales pipeline is building steadily, in all regions, and the Boardremains confident of future success. "Our goals are ultimately designed to deliver shareholder value and it is withthis in mind that we look forward to another strong year". For further information, please contact: 2ergo Group plc Tel: 01706 221 777Neale Graham, Joint Managing DirectorBarry Sharples, Joint Managing Director Tavistock Communications Tel: 020 7920 3150Andrew DunnLulu Bridges Numis Securities Limited Tel: 020 7776 1500David Poutney, Head of Corporate BrokingJag Mundi, Head of Corporate Finance CHAIRMAN'S STATEMENT I am pleased to report another year of continued growth in revenues and profit.Total revenue increased by 13% to £33.3 million and gross profit was £8.6million, up by 45% on the previous year. This excellent set of results has been achieved despite high levels of corporateactivity, which included the acquisition and turnaround of US-based Proteus, thedemerger of Broca and the launch of 2ergo's Interactive Media Solutionsdivision. Our innovative approach can be seen in our work with clients such as Multimap,where we have enabled them to mobilise their online service to allow mobilephone users to receive maps onto their phones, complete with directions to localrestaurants, cinemas and theatres, as well as live traffic information. At the same time, the Group has continued to develop leading edge businessapplications and advance its partnerships with mobile operators throughout theglobe, such as Vodafone and O2 in the UK, AT&T in the US, and major networks inthe South American region, including Telcel and Movistar. We have alsointroduced new services for clients to help them maximise the potential offeredby mobile advertising, together with more targeted mobile marketing solutions,for example using location-based technologies. The total number of mobile phone subscribers is predicted to reach nearly 3billion worldwide by the end of 2007 (source: Informa Telecoms & Media) and thispresents a significant opportunity for the Group. This has led to the rapidexpansion of 2ergo's presence in North and South America as we continue toleverage our now well proven geographically and technology independentMultiserve Platform. Taking a macro view, our market is driven by three factors. Firstly, mobilephones are personal devices, people carry them wherever they go, and unlike thehome PC, they are seldom shared. This is helping to establish the mobile phoneas the communication channel of choice for many organisations today. Secondly, our clients and mobile phone users are increasingly demanding morelocation-based services. On many occasions we have demonstrated the power ofincluding location-awareness, notably for the services we deliver for FIAT,Multimap, Alfa Romeo and most recently Rightmove. Thirdly, we believe that the increasing convergence between the mobile andinternet worlds will create greater demands for many of our mobile internetsolutions. One example of this capability, recognised for its success, is thedevelopment of Rightmove's mobile internet site, which subsequently received anaward for innovation from Vodafone UK. This trend is being witnessed throughout the mobile and internet industries.Only recently Google announced its mission to work alongside partners to createa new 'open' and technology-independent operating system for convergent mobileand internet developments. The Board believes this type of initiative willbroaden opportunities available to the Group. The Board believes that the mobile channel in particular is growing rapidly yetit is still in its infancy. The number of people accessing data applications onmobile devices is still relatively low, but it is clear to see that the mobileis the most prolific device ever to reach the hands of the business communityand the consumer. This financial year has again been successful for the Group. We are seeingincreasing demand for convergent mobile communications solutions from blue chiporganisations and, with the adoption of 'high-end' mobile devices gatheringpace, we are now, more than ever, looking forward to delivering innovation intoa broadening market. Finally, once again, on behalf of the Board, I would like to thank our partners,suppliers and customers for their continued support, and all our staff for theirhard work and dedication to the Group over the past year. KEITH SEELEYCHAIRMAN MANAGEMENT REVIEW Financial Performance The Group has seen an increase in revenue of 13% in the year, up to £33.3million from £29.5 million in 2006. The majority of this growth resulted fromthe Group's strategy to focus on the provision of 'total solution services',particularly in the Interactive Media arena. The balance of £1.4 million camefrom Proteus, the US subsidiary acquired by the Group in September 2006. As a result of the Group's focus on these higher margin total solution servicebusiness areas, gross profit has increased from £5.9 million in 2006 to £8.6million, an increase of some 45%. Gross margins have risen ahead of expectationsfrom 20% in 2006 to 26% in 2007. This year has seen the Board undertake several large projects. As explained inthis year's Interim Report the Group has continued to invest in Proteus afterits initial acquisition. The cost to the Group of this acquisition was thepurchase price of US$1, together with the funding of losses made by Proteussince acquisition. In addition, significant time and cost has been invested bythe UK Board and senior management team in turning around the North Americanbusiness from one making substantial losses to one which, although loss makingthis year, is now making month-on-month profit. The Board now looks forward torepeating this success in South America, through further investment in theregion. In March, the Board successfully demerged the Broca (formerly 2safeguard)business from the Group. This was also a time consuming exercise, but one whichhas resulted in Broca having its own strong management team and focus, with2ergo retaining 19.9% of the shares. As an independently listed AIM company,Broca can now concentrate on the many areas where its mobile security technologycan be harnessed, whilst 2ergo has retained the rights to incorporate thetechnology in to its products and services. In addition, the core 2ergo business has undergone some significant progress,with the creation of the new Interactive Media division and the strengthening ofthe management team in certain areas. Whilst this investment, by its nature, hasan immediate impact on the cost base of the Group, there will be an initialdelay in the resulting revenues and profits. However, the Board believes thatthe advantages will be seen as early as the second half of 2008, significantlybenefiting the business in the short to medium-term. Group operating profit for the year was £2.3 million (2006: £2.2 million). Thishas been achieved after accounting for the following: * a charge of £339k (2006: £172k) in respect of the FRS 20 share option charge which has been adopted for the first time in these accounts; * a loss of £124k (2006: nil) due to the sales and administrative costs in relation to Broca, prior to its demerger from the 2ergo Group; and * losses amounting to £300k incurred by Proteus Inc since its acquisition, together with over £100k of costs incurred in the UK in managing and shaping the Proteus business. Excluding the above, the underlying operating profit in the year was £3.2million compared with £2.4 million in 2006, an increase of over 33%. Profit before tax was £2.6 million (2006: £2.3 million). Adjusted(pre-amortisation) profit for the year was £3.4 million, compared to £2.7million in 2006. When stated before the three items listed above, the underlyingadjusted profit was £4.2 million (2006: £2.9 million) an increase of 45%. The effective tax rate for the year is low, at 6% (2006: 21%). This is mainly aresult of the claim made for research and development tax credits (predominantlyon the Broca development) and tax relief on the exercise of employee shareoptions. Net assets on the balance sheet stood at £14.9 million (2006: £6.4 million).This figure includes £4 million in respect of the investment held in Broca plc,representing 19.9% of Broca's share capital. Cash balances at the year end were £9.3 million, an increase of £4.4 millionover 2006. Of this increase, £3.5 million came from operating activities, and afurther £5.0 million was generated by the exercise of share options and the saleof shares from treasury. Capital expenditure of £2.0 million was made, includingmonies spent on the Broca development, and £1.9 million was invested in thepurchase of Broca shares. UK Operational Performance 2ergo continues to make good progress on all fronts in line with the Board'sstrategy. During the year the Group developed and launched a number of newproducts and services. One such example is the recently launched MultiSendproduct which introduces a new level of interaction and engagement betweenorganisations and their target audience. This next generation of interactive messaging gives organisations the capabilityto fully automate many of their regular outbound communications, whether by SMS,MMS, E-mail or Voice, and to engage in one-to-one dialogue with their targetaudience, not only to encourage rapid responses, but also to conclude many formsof business transactions and payment. Companies already signed up for theMultiSend suite include the travel giant Thomas Cook, National Car Rental, andthe publishers Reed Business International. In the second half of the year the Group secured a contract to become a mobiletechnology partner for Blyk Ltd, the recently launched pan-European free mobileoperator for young people, funded by mobile advertising revenues. The Group'sMultiserve Platform is at the heart of the service offered by Blyk, providingconvergent technologies, such as SMS, MMS, Video, Voice and WAP. During the year 2ergo also joined forces with Rightmove, the UK's leadingproperty website. The Rightmove website lists around 80% of all UK propertiesfor sale, and at any one time displays a stock of over 850,000 properties to buyor rent. It receives over 16 million visits every month and has been ranked ashigh as seventh in terms of the most viewed UK websites. The Rightmove mobileservice combines 2ergo's cutting edge mobile internet development skills withlocation-based solutions. Testament to the Group's technology skills, 2ergoreceived an innovation award from Vodafone UK for the development. The Board was pleased to announce that Multimap, one of the world's leadingproviders of mapping and location-based services, became the first company todeploy its Payforit service across all UK networks - the new mobile paymentscheme introduced during the period by the UK network operators. The Group has continued to broaden and evolve the capabilities of its MultimediaSuite - the content management and provisioning technology acquired last year. This technology, now fully integrated with 2ergo's core Multiserve Platform, is helping the Group to win new business in the field of mobile marketing and advertising. With over 45.6 million UK consumers now having internet-ready mobile phones (source: National Statistics, January 2007) the Group forecasts significant take up of mobile marketing services in this area and the pipeline is very encouraging. As reported in August 2007, the Group is delighted with the traction it has gained through its Interactive Media Solutions division. The division was established to provide end to end mobile marketing solutions for any brand or traditional marketing agency to leverage the opportunities presented by mobile. The Group's services include creative concepts, portal development, mobile marketing campaigns using SMS, MMS, WAP and video, and the ever evolving world of mobile search, through relationships with major online search providers. Research shows that the global demand for mobile marketing and advertising is set to increase from $3bn in 2007 to $19bn in 2011 (source: ABI Research), and the Board feels it is well positioned to become a leading provider in this area. US Operational Performance During the year the Board has re-aligned the strategy of its US subsidiaryProteus, to focus on developing best of breed mobile marketing products forthree core target sectors - mobile operators, media companies and Fortune 1000enterprises. This move serves to balance the company's efforts with itstraditional mobile application development and messaging services, providingshorter sales cycles, and broader marketability for its products. As a result,Proteus is starting to generate encouraging results, with the business's salesteams in both North and South America all reporting strong new businesspipelines. In 2007 Proteus extended its partnership with News Corporation, developing anumber of innovative mobile products for a wide array of FOX brands. Theseincluded a ground-breaking mobile internet portal for over 20 of FOX's localaffiliates across the United States, a deal soon to be extended to over 100 FOXaffiliates, and an industry-leading mobile internet site for FOX News, bringingthe leading news programme to the mobile market. In addition, Proteus partnered with FOX Television, FOX Sports and AT&T to powera range of mobile services, such as American Idol, Daytona 500, and other liveNASCAR events. The Board is pleased to report that Proteus has expanded its businesspartnership with the US's largest mobile network operator - AT&T. Proteus hasdeveloped a custom application that allows AT&T's marketing department to managetheir subscriber lists and communicate effectively with customers usinginteractive SMS campaigns. Marketing staff are now using the solution to driveARPU and enhance customer experience. Proteus also worked closely with Discovery Communications Inc. to develop arange of mobile initiatives to support its live TV shows, including mobilealerts, sweepstakes, trivia, and polling applications. Finally, during the period, Proteus expanded its relationship with Disney,implementing a series of mobile storefronts to help promote new film releases.Proteus also created a first-of-its-kind mobile affinity club for Disney Studiosto reward customers with Disney products and merchandise, and communicateone-on-one via the mobile channel. South American Operational Performance The Group has continued to expand its reach in South America, establishingdirect connectivity with 10 mobile network operators across the region. This nowenables the Group to extend the reach of its clients to more than 170 millionSouth American subscribers. In 2007 Proteus helped Universal Channel make its first move into the mobilearena by designing and developing its flagship mobile internet portal, allowingit to offer consumers premium entertainment content and services for theirmobile phones throughout Mexico. Universal owns the rights to some of the bestknown media properties. The Group has also entered into a partnership with one of the largest televisionbroadcasters in the region, Azteca TV, to launch mobile content services to itsaudience. Demerger of Broca plc As part of 2ergo's strategy to focus on its core activities, during the yearBroca (formerly branded 2safeguard) was demerged from the 2ergo Group. This hasallowed the Broca directors the independence to develop the Broca business andto seek and develop opportunities that exist outside of 2ergo. The demerger, which was structured so that shareholders in 2ergo received sharesin Broca plc on a one-for-one basis, was a complex, lengthy process, whichrequired a considerable investment of time from the 2ergo senior management. Itwas effected via an internal corporate reorganisation, which saw the creation oftwo new entities, Broca Communications Limited and Broca plc. The 2safeguardintellectual property, which was in the latter stages of development by 2ergo,was sold to Broca Communications Limited in February 2007. Settlement of therelated debt was made by the Broca Group through the issue of shares in Brocaplc to 2ergo following flotation of Broca on AIM in March 2007. In addition, afurther cash investment was made by 2ergo for shares in Broca, also in March2007. As a result of these transactions, 2ergo now holds 19.9% of the share capital ofBroca plc. The demerger also resulted in the implementation of trading and serviceagreements between 2ergo and Broca. Through the trading agreement 2ergo now actsas a reseller for the Broca technologies, creating new revenue streams for theGroup. Broca's flagship service, SAMS (Secure Advanced Message Service), is a uniqueand patented technology that encrypts traditional SMS messages, allowingsensitive data and content, such as card payment details, to be sent securely byany mobile device via the mobile network. The Board is encouraged by the number and scale of opportunities being generatedthrough the relationship with Broca and looks forward to exploiting thesynergies and complementary revenues that the SAMS technology brings to 2ergo'sbusiness solutions portfolio. US and South American Outlook Since the acquisition in September 2006 of Proteus, which was incurringsignificant losses, 2ergo has reshaped the business. The Board believes thatProteus is now ready to enhance its position in the North and South Americanmarkets and plans to make further investment in the region. The past year was marked by several significant trends in the US mobile market -an increased media spend on mobile advertising by major national advertisers,hand-in-hand with an increase in the deployment of mobile internet sites formajor media companies. In addition, the US has experienced an increase in thenumber of premium messaging services to support live TV shows, combined withgreater demand for mobile marketing services across all target sectors. Finally,"other" uses of mobile came into the mainstream exhibiting a shift away from theentertainment and media-centric focus, such as mobile banking and the use ofmobile messaging to support accident and emergency services. These initiativesare beginning to showcase the value of the mobile channel in a broader sense. As handsets and networks in the US market continue to improve and evolve, themobile advertising landscape has grown exponentially. A major opportunity existsto engage with this audience in order to provide services, products andexpertise. Overall, the market continues to grow rapidly in terms of data usage and ARPU.Recent statistics produced by the CTIA report that US mobile data servicesrevenues for the first half of 2007 rose to $10.5 billion. This represents a 63percent increase over the first half of 2006, suggesting that the mobile phoneis becoming an increasingly important lifestyle asset for the North and SouthAmerican consumer. Proteus, both in North and South America, is well placed tobenefit from the opportunities this growth is expected to create. General Outlook The Board believes the Group is well placed to continue its strong growth in thedynamic and broadening mobile market, a view that is supported by analystpredictions which consistently point to significant increasing demand across allsectors where the Group is currently operating. In particular, the mobile marketing and advertising sector is predicted to growfrom US$3 billion in 2007 to US$19 billion by 2011 (Source: ABI Research). Thistrend is further underpinned by a study, commissioned by 2ergo in conjunctionwith O2, which clearly demonstrated the huge potential offered by mobile phonesin converting advertising into sales. The Board will continue to devoteadditional resources and investment to capitalise on this rapidly expandingopportunity.In line with the Board's growth strategy, the Group plans to launch its new Business Partner Programme later in 2008, to increase focus on driving indirectsales for productised offerings. The Board is extremely confident in its successful acquisition and organicgrowth strategy and looks forward to further developing a truly internationalcompany in what is clearly one of the fastest growing global markets. -ends- For further information, please contact: 2ergo Group plc Tel: 01706 221 777Neale Graham, Joint Managing DirectorBarry Sharples, Joint Managing Director Tavistock Communications Tel: 020 7920 3150Andrew DunnLulu Bridges Numis Securities Limited Tel: 020 7776 1500David Poutney, Head of Corporate BrokingJag Mundi, Head of Corporate Finance Notes to Editors: About 2ergo Group plc 2ergo is a leading provider of interactive and multi-channel communicationssolutions using mobile technologies, fixed-line telecommunications and theinternet. Powered by the Group's Multiserve Platform, 2ergo delivers solutionsand services to many sectors of industry, with clients that range from SMEs tomulti-national enterprises, to public sector organisations. The Group'sexpertise enables organisations to advance their use of technology, to switch onnew revenues, optimise business processes and open up new marketing channels. Headquartered in Lancashire, United Kingdom, the Group is listed on AIM, amarket of the London stock exchange (AIM: RGO). Consolidated profit and loss accountfor the year ended 31 August 2007 Restated(1) 2007 2006 Notes £000 £000-------------------------------------------------------------------------------- Turnover Continuing operations 31,939 29,515 Acquisitions 2 1,370 --------------------------------------------------------------------------------- 33,309 29,515 Cost of sales (24,695) (23,588)-------------------------------------------------------------------------------- Gross profit 8,614 5,927 Operating expenses (6,300) (3,699)-------------------------------------------------------------------------------- Operating profit/(loss) Continuing operations 2,614 2,228 Acquisitions 2 (300) --------------------------------------------------------------------------------- 2,314 2,228 Interest receivable 272 92-------------------------------------------------------------------------------- Profit on ordinary activities before taxation 2,586 2,320 Tax on profit on ordinary activities (143) (483)-------------------------------------------------------------------------------- Retained profit for the period 2,443 1,837-------------------------------------------------------------------------------- Earnings per ordinary share: Basic 4 8.64 p 6.81 p Diluted 4 8.32 p 6.62 p (1) 2006 results have been restated to reflect the adoption of FRS 20 Share-based Payments - see note 3 Consolidated balance sheetat 31 August 2007 Restated 2007 2006 £000 £000-------------------------------------------------------------------------------- Fixed assets Intangible assets 2,674 3,413Tangible assets 255 234Investments 4,004 -Negative goodwill (3) --------------------------------------------------------------------------------- 6,930 3,647--------------------------------------------------------------------------------Current assets Stock 49 51Debtors 5,947 4,923Cash at bank and in hand 9,251 4,857-------------------------------------------------------------------------------- 15,247 9,831 Creditors: amounts falling due within one year (7,209) (6,986)--------------------------------------------------------------------------------Net current assets 8,038 2,845-------------------------------------------------------------------------------- Total assets less current liabilities 14,968 6,492 Provisions for liabilities and charges (78) (92)--------------------------------------------------------------------------------Net assets 14,890 6,400-------------------------------------------------------------------------------- Capital and reserves Called up share capital 301 299Share premium account 7,141 4,147Merger reserve 1,512 1,512Other reserve (413) (536)Share option reserve 605 278Profit and loss account 5,744 700--------------------------------------------------------------------------------Shareholders' funds 14,890 6,400-------------------------------------------------------------------------------- Consolidated cash flow statementfor the year ended 31 August 2007 2007 2006 £000 £000-------------------------------------------------------------------------------- Net cash inflow from operating activities 3,475 4,152-------------------------------------------------------------------------------- Return on investments and servicing of finance Interest received 272 92 Taxation (293) (639)-------------------------------------------------------------------------------- Capital expenditure and financial investment Payments to acquire tangible fixed assets (129) (89)Payments to acquire intangible fixed assets (1,856) (1,407)Investment in ordinary shares of Broca plc (2,004) --------------------------------------------------------------------------------- (3,989) (1,496)--------------------------------------------------------------------------------Net cash (outflow)/inflow before financing and acquisitions (535) 2,109-------------------------------------------------------------------------------- Financing Proceeds from share issue (net of issue costs) 347 1,429Proceeds from exercise of options over shares held in EBT 123 121Proceeds from sale of shares from treasury (net of disposal costs) 4,575 756Purchase of own shares held in treasury - (710)Capital element of finance lease payments - (18)-------------------------------------------------------------------------------- 5,045 1,578--------------------------------------------------------------------------------Acquisitions Purchase of subsidiary undertaking (128) -Cash acquired with subsidiary 12 --------------------------------------------------------------------------------- (116) ---------------------------------------------------------------------------------Increase in cash in the year 4,394 3,687-------------------------------------------------------------------------------- 2ergo Group plcNotes to the preliminary results for the year ended 31 August 2007 1. Basis of Preparation The financial information set out herein does not constitute statutory accountsas defined in Section 240 of the Companies Act 1985. The financial informationfor the year ended 31 August 2007 has been extracted from the statutory accountsof 2ergo Group plc for that year which, if adopted by the members at the AnnualGeneral Meeting, will be filed with the Registrar of Companies. The results forthe year ended 31 August 2006 are derived from the statutory accounts for thatyear which have been filed with the Registrar of Companies. The auditors havereported on those accounts; their reports were unqualified and did not contain astatement under section 237 (2) or (3) of the Companies Act 1985. 2. Acquisitions Acquisitions relate to the purchase of Proteus Inc. by the Group during theperiod. 3. FRS 20 - Share Based Payments During the year, the company adopted FRS 20 'Share-based Payment'. The adoptionof this standard constitutes a change in accounting policy. Therefore the impacthas been reflected as a prior year adjustment in accordance with FRS 3. The standard requires that where shares or rights to shares are granted to thirdparties, including employees, a charge should be recognised in the profit andloss account based on the fair value of the shares at the date the grant ofshares or right to shares is made. The effect of the adoption of FRS 20 'Share-based Payment' is as follows: 2006 2006 2006 As previously Impact of reported FRS 20 As restated £000 £000 £000 Gross profit 5,927 - 5,927 Operating charges (3,527) (172) (3,699) ---------- ---------- ----------Operating profit 2,400 (172) 2,228 Interest receivable and similar income 92 - 92 ---------- ---------- ----------Profit on ordinary activities before tax 2,492 (172) 2,320 Taxation (535) 52 (483) ---------- ---------- ----------Retained profit for the year 1,957 (120) 1,837 ========== ========== ========== Deferred tax (175) 83 (92) ========== ========== ==========Reserves: Share option reserve - 278 278Profit and loss account 895 (195) 700 ========== ========== ========== 4. Earnings per share The calculation of basic earnings per share is based on profit attributable toordinary shareholders divided by the weighted average number of ordinary sharesin issue during the year. The calculation of diluted earnings per share is basedon the basic earnings per share adjusted to allow for the assumed conversion ofall dilutive options. Restated 2007 2006 Earnings Weighted Earnings Weighted per Earnings Average per Earnings Average share £000 No of share £000 No of shares shares Basic earnings per share 8.64p 2,443 28,286,294 6.81p 1,837 26,965,089 Dilutive effect of share options 1,090,755 775,959 ---------- ----------Diluted earnings per share 8.32p 2,443 29,377,049 6.62p 1,837 27,741,048 ========== ========== An adjusted earnings per share (before the amortisation of intangible fixedassets) has been presented in addition to the earnings per share as defined inFRS 22, since, in the opinion of the directors, this provides a more meaningfulindicator for investors. It can be reconciled from the basic earnings per shareas follows: Restated 2007 2006 Earnings Weighted Earnings Weighted per Earnings Average per Earnings Average share £000 No of share £000 No of shares shares Basic earnings per share 8.64p 2,443 28,286,294 6.81p 1,837 26,965,089Amortisation charge 791 - 422 - ----- ---------- ----- ----------Adjusted basic earnings per share 11.43p 3,234 28,286,294 8.38p 2,259 26,965,089 Dilutive effect of share options 1,090,755 775,959 ---------- ----------Adjusted diluted earnings per share 11.01p 3,234 29,377,049 8.14p 2,259 27,741,048 ========== ========== 5. Reconciliation of operating profit to net cash flow from operating activities Restated 2007 2006 £000 £000 Operating profit 2,314 2,228Depreciation 112 69Amortisation of intangible assets 791 422Decrease in stock 2 3Increase in debtors (782) (71)Increase in creditors 699 1,329FRS 20 charge 339 172 ----- -----Net cash flow from operating activities 3,475 4,152 ===== ===== 6. Reconciliation of net cash flow to movement in net funds 2007 2006 £000 £000 Increase in cash in the year 4,394 3,687Cash inflow from change in debt - 18 ------ ------Movement in net funds in the year 4,394 3,705Net funds at beginning of year 4,857 1,152 ------ ------Net funds at end of year 9,251 4,857 ====== ====== 7. Reconciliation of net funds to the amounts shown in the balance sheet At 1 At 31 September Cash August 2006 flow 2007 £000 £000 £000 Cash at bank and in hand 4,857 4,394 9,251 ----- ----- -----Total 4,857 4,394 9,251 ===== ===== ===== 8. Reconciliation of movements in shareholders' funds Restated 2007 2006 £000 £000 Profit for the financial year 2,443 1,837Sale of shares from treasury (net of disposal costs) 4,575 756Issue of share capital (net of issue costs) 347 1,429Exercise of options over shares held in EBT 123 121Purchase of own shares held in treasury - (1,970)FRS 20 share option charge 339 172Contribution arising on demerger of Broca 663 - ------- -------Net addition to shareholders' funds 8,490 2,345Opening shareholders' funds 6,400 4,055 ------- -------Closing shareholders' funds 14,890 6,400 ======= ======== This information is provided by RNS The company news service from the London Stock Exchange