Xps Pensions Regulatory News (XPS)

Embargoed: 0700hrs 8 August 2012

EXPANSYS plc

("EXPANSYS" or the "Group")

Final Results for the year ended 30 April 2012

EXPANSYS (AIM: XPS), a leading global online retailer of consumer wireless technology and provider of mobile network and eCommerce services and solutions, announces its final results for the year ended 30 April 2012.

Group Financial Highlights

·; Turnover increased by 33% to £108.5 million (2010: £81.8 million) - up 24% on a like for like basis.

·; Pre-tax profit increased by 27% to £4.3 million (2010: £3.4 million)*. Reported profit before tax increased to £1.9 million (2010: loss £0.7 million).

·; Cash at the year end of £5.5 million (2010: £5.1 million).

·; The Group remains debt free.

* adjusted for exceptional, foreign exchange and other non-cash items.

Anthony Catterson, CEO of EXPANSYS, commented:

"EXPANSYS has delivered another year of significant revenue growth, passing through the £100 million revenue mark whilst increasing profit to £4.3 million on an adjusted basis. This was despite a very challenging environment.

Through our mix of retail, distribution and multi-channel commerce skills, the Group is now emerging as a unique provider of end to end services for network operators and manufacturers in the telecoms and consumer electronics markets globally. We believe these full service capabilities will continue to drive attractive revenue and earnings growth in the medium to long term. We are expecting significant growth in the USA and Asia to continue, with improved retail profitability in the UK."

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About EXPANSYS

EXPANSYS PLC (AIM: XPS) is a global online consumer electronics retailer, operating directly in 51 countries through EXPANSYS.com, and over 200 countries indirectly, with a vast range of products, and a focused approach to range, service and value for its customers. EXPANSYS has recently begun to develop a strong partner eCommerce business, using its unique global footprint, infrastructure and experience by providing online services for some of the world's leading brands, across large numbers of International markets. The Group includes Data Select Network Solutions (DSNS), the UK market leading network connectivity distributor, selling products on behalf of major network operators and Mobile Virtual Network Operators (MVNOs) in the UK and the fast growth USA cellular markets. The Group also includes PJ Media, an eCommerce and web services and solutions business with expertise in the multi-channel telecommunications sector, and a number of large international blue chip clients.

Chairman's Statement

Introduction

When the current Board and management team joined EXPANSYS, the business needed attention to enable it to take advantage of the numerous opportunities it faced. This year has seen more solid progress in generating and laying the foundations for sustainable growth. Management have addressed historical issues against a backdrop of economic headwinds and some difficult industry dynamics but achieved substantial revenue and profit growth. Cash remains strong.

EXPANSYS's core internet retailing business has grown substantially. Our focus on mobile is contributing and our partnership discussions are encouraging. The economic environment and market dynamics for some of our businesses remain challenging. We have substantially addressed the lack of profitability in the UK business, laid the foundations for a better year in our Continental European business, seen a really encouraging start to our new North American SIM business and seen strong growth from the turnaround of our North American and Asian retail businesses.

Results

Total turnover for the Group was £108.5 million (2011: £81.8 million). This represents growth in turnover in the year of over 33 per cent (24 per cent on a like for like basis). The pre-tax profit for the year (adjusted for exceptional items, foreign exchange and other non-cash items) was £4.3 million compared to £3.4 million in the previous year.

The reported profit before tax was £1.9 million compared to a loss of £0.7 million in 2011.

The Group's cash balance at year end was £5.5 million (2011: £5.1 million).

Strategy

The strategy of the Group continues to evolve and in FY13 we will create a 'Network Services' division encompassing DSNS and PJ Media. This division will be able to provide valuable services to mobile networks who are under increasing pressure to minimise customer acquisition costs, reduce customer churn, and earn additional revenue from their customers. The Retail division will continue to develop its online offering for its own branded websites (EXPANSYS.COM), and websites for partners will become increasingly significant. We expect to benefit across the Group from our unique global reach.

We continue to actively assess acquisition opportunities.

People

Tim Eltze, previously the Chief Operating Officer, stepped down from the Board so that he could focus on his role of President of our US Operations and growing our business there. In April 2012 Steen Hogh, who has significant experience in the telecoms, retail and distribution sectors, was appointed Chief Operating Officer. He is not a member of the Board.

The Group now has 231 employees worldwide and I would like to thank all of our people for their contribution over the past year.

DSNS press reports

We are aware of recent reports in the mobile industry press concerning possible claw-back claims being faced by a number of UK SIM card distributors as a result of a UK mobile network provider alleging consumer misuse of SIMs last year. DSNS is among a number of distributors who have received a claw-back claim but the Company does not believe the network provider has demonstrated a valid basis for its claim and is in discussion with the network to resolve the situation as soon as possible.

Prospects

The Board has been pleased and encouraged by the growth over the past year, the overall increase in profitability and in particular by the performance of the US and Asian divisions.

The Board expects that FY13 will see continued growth in the Retail division but that for DSNS, our SIM card distribution business, FY13 will be a period of transition. Profits will remain under pressure in the UK, due to changes in the commercial model, making it more difficult to increase the overall profitability of the Group this year. Longer term we believe that the industry model will stabilise and, with further development of this business internationally together with the introduction of additional services, the longer term prospects for DSNS and the group remain encouraging.

Bob Wigley

Chairman

CEO's STATEMENT

The Group has successfully managed to grow sales and profitability strongly during FY12, despite the most challenging of trading environments. This is reflective of a clear strategic focus and an improved execution across our business units. Our strong belief in the continued growth potential of the business is only tempered by the challenging economic backdrop.

Business review - EXPANSYS.COM

We have successfully driven very good organic like for like revenue growth (+81 per cent) in our own-branded online retail business, EXPANSYS.COM, as a result of stronger focus upon cost efficient traffic generation, improved conversion rates and a better quality Customer Experience. Record trading in the key Christmas period also meant that we entered the final quarter with a far cleaner stock profile than in the same period last year, which will reduce inventory related margin pressure in FY13, when compared with FY12.

Our unique visitors to EXPANSYS.COM grew by over 28 per cent to approximately 31 million for the year, and our conversion rates for those visitors grew by 15 per cent. We added new local language sites in Egypt, Qatar and Saudi Arabia, as well as sites in Thailand, the Philippines and Malaysia. These sites will add value to the Group in the medium to long term, and they take the number of local language sites operating under the EXPANSYS brand worldwide to 51, including 37 of the top 50 online markets globally. This genuine global footprint is unique in our sector. We currently operate our four main retail regions on a hub basis, with all management and support being performed in the regional headquarters. This gives us cost advantages, as well as management synergies when operating across such a diverse footprint.

Our development of mCommerce, or 'mobile optimised' sites in the UK and France gave very encouraging early results with mobile visits up 157 per cent. We will be developing the mobile optimisation of our other core sites in due course. Mobile visitors currently represent a small proportion of traffic to EXPANSYS's own websites, although we expect that to grow in the medium term.

Overall gross margins in our own web stores reduced by 2 per cent as expected, as we established a more competitive pricing strategy in key lines. This strategy was vindicated by a growth in the gross profit of 62 per cent against the prior year. We will continue to review our pricing in core products and markets, although we do not believe pursuing a price driven strategy for retail is in the long term interests of the Group. This is because establishing volume market share through price requires significant marketing expenditure and we feel we can continue to utilise Return on Investment (ROI) based campaigns to grow retail profitability. Our research tells us that online customers look for value, range, service and relevance when considering their online purchases and we will continue to focus upon developing these areas of our business.

Diversified Sales Channels

As well as our fast growth own brand online store, we successfully sell products to consumers and businesses through the following other channels:

Partner Stores- we build and operate a number of online stores on behalf of world class brands such as HTC, Motorola and Parrot. We have identified this as a key area of strategic focus in the short to medium term as we successfully leverage our unique global footprint and eCommerce experience for the benefit of brands looking to extend their direct sales channels and relationships with customers. We believe this model has significant potential and have been pleased by our discussions to date with prospective partners. I expect our returns from this strategy to improve in FY13. Our current partner business only accounted for a small percentage of our retail revenues in FY12, but a much larger percentage of gross profits, which highlights the more attractive margins involved.

B2B - we have B2B sales teams based in our US, UK, and European locations, servicing a diverse range of businesses ranging from large enterprises (including Google, Microsoft, Cisco and Boeing) to SMEs and sole traders. While not our primary focus, we do believe a growth opportunity exists for the B2B business through our aligned products and existing infrastructure. We will also establish a new B2B presence in Asia in FY13.

Regional update - Europe (including the UK)

Our UK business suffered significantly in FY12, as we faced a multitude of challenges ranging from the well-publicised economic environment to a substantial relocation of our UK business to consolidate operations into our corporate headquarters in Marlow. This had a negative effect upon the operation, which made a loss for the year. However, trading since Christmas has been more encouraging and we expect a much improved performance in the UK business in FY13. We will continue to concentrate resources and investment into regions we believe offer a more attractive landscape and return in the short term such as the USA and Asia.

Despite economic challenges, we grew revenues overall in FY12, with very strong growth of 25 per cent in our EXPANSYS.COM European websites. I believe that our European online business offers us a strong growth opportunity in the short to medium term, although we are also conscious of the wider economic challenges in the Eurozone and will continue to focus on our cost base accordingly.

North America

We have been extremely pleased with the progress of our retail business in the USA in the last 12 months, and recorded revenue growth of 95 per cent. overall, including web growth of over 260 per cent, driven by focus upon conversion and proposition. Our more mature B2B channel grew turnover by 72 per cent. and both these channels helped the US business establish itself as a profitable entity for the Group for the first time. The Group sees significant further scope for expansion in the US web business, as well as in Canada and Mexico, where we have been investing in support teams recently. We have also opened new corporate offices in Chicago, and relocated our logistics centre in Bloomington. These new facilities will support the existing retail business, as well as the fast growing SIM-distribution business.

Asia

A similar turnaround story is evident in Asia, where we saw revenue growth of 87 per cent for the retail group, primarily driven by web growth of 244 per cent. We capitalised upon market changes in the Japanese and South Korean markets, specifically the deregulation of the SIM card market, meaning customers can now buy devices and airtime connection separately. Asia and the US are now firmly established as profitable, fast growth markets for the Group, and they have been the subject of the majority of our investment and focus in the last 12 months.

Product proposition

All retail businesses rely upon constant supply of innovative, relevant and exciting products with which they can attract customers. We operate in product segments that continue to display these characteristics and in fast growth online population and affluent territories hungry for new technology.

In the last 12 months, we have seen strong revenue growth of 39 per cent in the Smartphone category, 143 per cent in the Tablet category and 14 per cent. In the Accessory category, as we have focussed upon this core more effectively. We have seen very strong releases from Samsung and Apple, and expect that the Smartphone and Tablet categories will continue to grow strongly into FY13.

Business review - DSNS

FY13 will prove to be a pivotal year in the history of DSNS, as we look to evolve the reach of the current business model into new markets. In addition we intend to expand the business model in the UK by moving further up the value chain and offering value added services to existing network and MVNO partners.

UK DSNS Business - we continue to see the evolution of the SIM-only channel in the UK, as all the major networks move towards a 'shared revenue' model. This means that DSNS will now mostly be rewarded based upon customer spend and behaviour after connection, unlike the previous model which rewarded predominantly up front, and was based upon the activation of the SIM card itself. Although this presents a short term lowering of profitability, we believe in the medium to long term the changes will help stabilise the channel to the benefit of DSNS, the market leader.

We continue to win market share in the important retail channel, and in the last 12 months have signed agreements with a number of the largest high street retailers. These agreements now mean we have close to 40,000 exclusive points of distribution in the UK, which makes DSNS an attractive prospect for the network operators and ambitious MVNOs.

Value Added Services- we have been encouraged by the opportunities presented by aligning business development activity between the PJMedia and DSNS teams, as we present a more unified 'Network Services' approach to existing and potential customers. This has allowed us to explore opportunities outside the traditional 'SIM only' relationships, and provide a greater number of services to networks and MVNOs. We will continue to develop our 'Network Services' approach further.

DSNS International - having established our US business around 12 months ago, we have been pleased with the channel and proposition development work that has been undertaken to date. In addition to our exclusive agreement with TMobile USA, we have also signed agreements with new MVNOs. This has allowed us to develop momentum within the Pre-Paid SIM business, and we have successfully established a base of dealer customers, along with developing a brand new end-user service through our new concept PrePayPlanet (www.prepayplanet.com ). This unique concept, developed internally, has helped improve the pre-paid customer experience, as well as extend the relationship of DSNS with the end user.

In FY13 and FY14, we will look to enter further markets with the appropriate 'DSNSSIM-distribution model', using existing group infrastructure wherever possible, and we believe this offers significant scope for medium to long term growth. As proven by the success in the USA, it is likely that each market will have slightly different requirements, and this will require us to be agile and creative in our approach.

DSNS press reports

We are aware of recent reports in the mobile industry press concerning possible claw-back claims being faced by a number of UK SIM card distributors as a result of a UK mobile network provider alleging consumer misuse of SIMs last year. DSNS is among a number of distributors who have received a claim but the Company, having taken legal advice, does not believe the claim is valid and is in discussion with the network to resolve the situation as soon as possible.

Business Review - PJMedia

We made strategic investments in the business development team at PJMedia in the second half of FY12, which are expected to benefit the Group in FY13 and beyond. We announced a major new contract with Vodafone Turkey and are expecting to announce other new contracts in due course. We continue to develop our support of Vodafone Qatar, with new functionality contracts, and have used our presence in the region to win a Mobile App development contract with the Qatari government.

PJMedia is firmly focussed upon the resale of existing IP, software and solutions to new partners. We have been pleased by our business development activities in the second half of FY12. We strongly believe there is a compelling need for agile, efficient and relevant software and services for network operators and MVNOs in mature and developing telecom markets worldwide. We have a clear business development plan and are now actively talking to potential customers about a broad range of end-to-end solutions (modules include customer acquisition and billing and care), as opposed to the vertical solutions we previously offered. This will be done in conjunction with DSNS, where appropriate, as part of our 'Network Services' vision.

We are increasingly confident of extending our services into other mobile operators in due course.

Our People

Once again we have invested in the development of the management team and have recruited appropriate skills to match the opportunities we face, most notably in the USA and Asian retail businesses, the USA SIM-business and the partner business unit within Retail. At the end of the reporting period, we recruited Steen Hogh as our new Chief Operating Officer. Steen brings tremendous experience in the network operator and distribution segments with him.

Our achievements throughout the year would not have been possible without the tremendous efforts and adaptability of my colleagues across the globe and once again I would like to place on record my gratitude for their endeavours. We remain committed to attracting and retaining high quality talent, capable of supporting our ambitions.

Group Outlook

We have delivered another year of solid growth in terms of revenue (+33per cent) and passed through the £100 million revenue milestone along the way. Profit has now increased to £4.3 million on an adjusted basis, despite the challenging economic outlook we face in many of our chosen markets.

We expect the retail business to be driven by growth in our own EXPANSYS.COM websites and the partner business with scope for further growth based upon better KPI execution, which still requires improvement to be considered benchmark for the sector. We are expecting significant growth in the USA and Asia, with an improved profitability in the UK and continued revenue growth in Europe.

DSNS and PJMedia will work together to develop the 'Network Services' aspect of our business, which we believe offers significant growth opportunities. The DSNS business will continue to develop the contribution from international markets, as well as value added services, and the Board believes both offer significant scope for growth. PJMedia will continue the successful development of its new business pipeline and we expect to announce further contract wins going forward.

The Group itself is now emerging as a provider of end to end services for network operators and manufacturers in the telecoms and consumer electronics markets, through our unique mix of retail, distribution and software development skills. We are uniquely positioned to offer agile, efficient and relevant solutions to our partners and customers and continue to believe we can offer attractive growth in revenues and earnings.

Anthony Catterson

CEO

EXPANSYS plc

Financial Review for the year ended 30 April 2012

Results Overview

The Group has seen strong growth in turnover on a like-for-like basis and in its underlying profit. Importantly the company made a net reported profit before tax in the year of £1.9 million compared to a loss of £0.7 million in the previous year.

Turnover for the year ended 30 April 2012 (FY12) was £108.5 million (2011: £81.8 million.) This represents an increase of 33 per cent. Turnover for FY12 included a full 12 months of turnover from Data Select Network Solutions Limited and PJ Media Limited, compared to nine months in FY11. Without the contributions from these companies, turnover showed a like-for like increase of 24 per cent from £66.7 million to £82.7 million.

The underlying profit before tax for the Group was £4.3 million (2011: £3.4 million). A reconciliation of the reported profit for the year of £1.9 million (2011: loss £0.7 million) is set out below. The reconciling items are, in the opinion of the Board, not indicative of the Group's underlying trading.

The amortisation of acquired intangible assets relates to the acquisition of DSNS in July 2010 for the value of the SIM cards that had been distributed to the market at the point of the transaction and on which future revenues would be earned. These intangible assets have now been fully amortised so there will be no further cost in FY13.

Revenue

Overall revenue for the retail division increased by over 22 per cent compared to the previous year, with significant growth coming from our US and Asian operations. Revenue from Europe (including the UK) now accounts for a smaller proportion of the total at 62 per cent compared to 75 per cent in FY11. Turnover for Europe was flat year on year. Revenue from the Asian operation increased by 87 per cent to £14.1 million (2011: £7.5 million) and revenue from the retail division of the US increased by 83 per cent to £16.9 million (£9.3 million).

On a proforma basis revenue from DSNS in the UK increased by 41 per cent to £23.1 million (2011: £16.4 million). Following the change of terms that we announced in June 2012, it is expected that turnover will reduce back to around previous levels. The DSNS model was rolled out to the US during the year and achieved turnover of £1.5 million; this is expected to grow rapidly over the next few years, whilst we expect growth in the UK to be limited.

Revenue from the e-commerce division, PJ Media increased by 15 per cent to £2.7 million (2011: £2.4 million) on a proforma basis with some important international wins in the year.

Operating Profit

The retail division made an operating loss of £1.2 million (2011: loss of £1.7 million). However, this includes exceptional items, foreign exchange losses and intercompany recharges. The adjusted loss for the retail division excluding these items was £0.1 million (2011: profit of £0.4 million).

The European division of the retail business was impacted by a poor performance in the UK, which during FY12 continued to be affected by the relocation of the business from Manchester to Marlow. Overall the European division made an adjusted loss of £0.7million (2011: profit 0.4 million). On the other hand the US and Asia had their best performances to date; the US made an adjusted profit of £0.2 million (FY11: loss of £0.2 million and Asia made an underlying profit of £0.4 million (FY11: £0.2 million).

The adjusted profit contribution from DSNS in the UK was £5.9 million compared to a proforma profit in FY11 of £4.8 million and the US division made a small but profitable contribution of about £50k. PJ Media Limited made an adjusted profit of £0.6 million (FY11: £0.6 million).

Central costs for FY 12 were £2.1 million (FY11: 2.2 million).

Taxation

The tax charge for the year has been impacted by a write-off of a deferred tax asset in EXPANSYS UK limited of £1.1 million. This entity is forecast to make a small contribution to profit in the year to 30 April 2013 but it will take some time to use all of the tax losses that are available and it has therefore been decided to no longer recognise this tax asset.

The tax charge for the year was £1.5 million in total (2011:£0.3 million). This comprised a current charge of £0.5 million (2011: £0.7 million) and a deferred tax charge of £0.9 million (2011: credit of £0.4million). The Group has tax losses that are available for use against future profits of £0.7 million in the USA, £3.9 million in the UK and £1.7 million in Asia.

Results

The reported result for the year is a profit of £0.4 million (2011: Loss £1.1 million). The basic (and diluted) earnings per share for the year was 0.04 pence (2011:loss of 0.11 pence). The adjusted earnings per share was 0.25 pence (2011:0.32 pence).

Balance Sheet

The Intangible assets on the balance sheet have reduced from £51.1 million at the end of April 2011 to £50.7 million. This is mainly because of the amortisation of the intangible assets acquired with DSNS; this is now fully amortised. Intangible assets now mainly comprise goodwill £50.1 million (2011: £50.1 million) and website development costs £0.5 million (2011: £0.3 million).

The goodwill has been tested for impairment at the year end and the Board have concluded that the present value of future cash flows exceeds the carrying value of the goodwill and other attributable assets and no impairment has been made.

Stock at the year-end was £4.7 million (2011: £4.4 million). The retail stock at the year end was £4.4 million which represents 20 days' sales (2011: 24 days'). The Company fully provides for stock when it ages to 180 days and additional specific provisions are made for other slow-moving items. Our overall stock profile is healthier than the previous year ensuring that margins will not be impacted in FY13.

Trade receivables at the year-end were £5.2 million (2011: £3.1 million), before provisions.

Cash Flow

Net cash generated from operating activities was £1.3 million (2011:£0.5 million). The net increase in cash in the year was £0.4 million taking the cash balance at the year end to £5.5 million (2011 :£5.1 million).

The Group has no debt.

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 April 2012

GROUP STATEMENT OF FINANCIAL POSITION

At 30 April 2012

GROUP STATEMENT OF CHANGES IN EQUITY

At 30 April 2012

*Exchange differences relate to the retranslation of net assets of subsidiary undertakings.GROUP CASH FLOW STATEMENT

For the year ended 30 April 2012

NOTES

1. Basis of preparation

The financial information within this report has been prepared in accordance with International Financial Reporting Standards (IFRSs) and International Finance Reporting Interpretation Committee (IFRIC) interpretations as adopted by the European Union as they apply to the financial statements of the Group for the year ended 30 April 2012 and applied in accordance with Companies Act 2006.

The Group financial statements are presented in Sterling (being the Group's functional and presention currency) and all values are rounded to the nearest thousand pounds (£000) except where indicated otherwise.

The principal accounting policies adopted by the Group are set out in note 2.

The financial information set out in this announcement does not constitute the Group's statutory financial statements for the year ended 30 April 2012 or 2011 but is derived from those financial statements. The comparative figures are derived from the financial statements for the year ended 30 April 2011. The auditors have reported on the Group's statutory financial statements and the report was unqualified and did not contain a statement under section 498 (2) or 498 (3) Companies Act 2006. The statutory financial statements for the year ended 30 April 2012 have not yet been delivered to the Registrar of Companies and will be delivered following the Company's Annual General Meeting.

The financial information contained in this statement does not constitute statutory accounts as defined by Section 240 of the Companies Act.

2. Accounting policies

The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. The nature of estimation means that actual outcomes could differ from those estimates. Estimates and assumptions used in the preparation of the financial statements are continually reviewed and revised as necessary. Whilst every effort is made to ensure that such estimates and assumptions are reasonable, by their nature they are uncertain and, as such, changes in estimates and assumptions may have a material impact in the financial statements.

The key sources of estimation uncertainty that have significant risk of causing material adjustment to carrying amounts of assets and liabilities within the next financial year are the measurement of:

·; indefinite life intangible assets

·; inventory provisions; and

·; trade receivable provisions; and

·; taxation.

The measurement of intangible assets on a business combination involves estimation of future cash flows and the selection of a suitable discount rate. The Group determines whether indefinite life intangible assets are impaired on an annual basis and this requires an estimation of the value in use of the cash generating units to which the intangible assets are allocated. This involves estimation of future cash flows and choosing a suitable discount rate. Any estimates of future economic benefits made in relation to these assets may differ from the benefits that ultimately arise and materially affect the recoverable value of the asset.

Calculation of inventory provisions requires judgements to be made which include forecast consumer demand and inventory loss trends.

Provisions for irrecoverable receivables are based on extensive historical evidence and the best available information in relation to specific issues, but are nevertheless inherently uncertain.

The complex nature of tax legislation across the tax jurisdictions in which the Group operates necessitates the use of estimates and assumptions, where the outcome may differ from that assumed. The extent to which tax losses can be utilised depends on the extent to which taxable profits are generated in the relevant jurisdictions in the foreseeable future, and on the tax legislation then in force and, as such, the value of associated deferred tax assets is uncertain.

3. Segment information

The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors, since they are responsible for making strategic decisions.

Operating segments are reported in a manner consistent with the internal reporting provided to the Board which is split in accordance with statutory trading entities in the group, in addition to the parent company.

·; EXPANSYS plc, parent company, incorporated in the United Kingdom

·; EXPANSYS UK Limited, incorporated in the United Kingdom

·; EXPANSYS Nomatica SAS, incorporated in France

·; EXPANSYS Inc (formerly Mobile Planet Inc), incorporated in United States of America

·; EXPANSYS Hong Kong Limited, incorporated in Hong Kong, and its subsidiaries RCK Communications Limited, incorporated in Hong Kong , and EXPANSYS Shenzhen Trading Company, incorporated in China

·; Data Select Network Solutions Limited, incorporated in the United Kingdom

·; PJ Media Limited, incorporated in the United Kingdom

Transfer prices between business segments are set on an arm's length basis in a manner similar to transactions between third parties. Segment revenue, segment expense and segment result includes transfers between business segments. Those transfers are eliminated on consolidation.

No one customer accounts for more than 10% of Group revenue.

The following tables present revenue and (loss) / profit and certain asset and liability information regarding the Group's business segments for the years ended 30 April 2012 and 2011.

4. Exceptional items

All of the exceptional items in the table above, are deemed allowable for corporation tax purposes.

5. Taxation

6. Earnings per ordinary share

Basic earnings per share amounts are calculated by dividing loss for the year attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share for the year amounts are calculated by dividing the loss attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

The following reflects the income and share data used in the basic and diluted earnings per share computations:

The amounts for earnings per share from continuing operations after exceptional items are as follows:

Underlying earnings per share

The Group presents as exceptional items, foreign exchange and other non-cash items on the face of the Statement of Comprehensive Income, those material items of income and expense which, because of the nature and expected infrequency of the events giving rise to them, merit separate presentation to allow shareholders to understand better the elements of financial performance in the year, so as to facilitate comparison with prior periods and to facilitate better assessment of trends in financial performance.

To this end, basic and diluted earnings per share is also presented on this basis and using the weighted average number of ordinary shares for both basic and diluted amounts as per the table above.

the parent is derived as follows:

The amounts for underlying earnings per share before exceptional and other non-cash items are as follows:

7. Impairment review of goodwill

As required by IAS 36 Impairment of Assets, goodwill is subject to annual impairment reviews. These reviews are carried out using the following criteria.

Goodwill acquired through business combinations has been allocated for impairment testing purposes to five cash generating units, which are also reportable segments, as follows:

§ EXPANSYS UK Limited;

§ EXPANSYS Inc;

§ EXPANSYS Nomatica SAS;

§ Data Select Network Solutions Limited; and

§ PJ Media Limited

These represent the lowest level within the Group at which goodwill is monitored for internal management purposes.

The recoverable amount of each CGU is determined based on calculating its value in use, using cash flow projections based on financial budgets approved by the board for the financial period to 30 April 2013. Growth rates that are consider appropriate for each regions have been assumed for the following two years and in the years beyond this a growth rate of 2% has been assumed.

The post tax discount rate applied to cash flow projections is 9.05% (2011: 8.87%) and is deemed as the Group's weighted average cost of capital.

Cash flows in outlying years are extrapolated using a 2% growth rate (2011: 2%).

The tax rate appropriate for the different regions has been used as follows: UK - 24%; France - 33%; US - 34%; Asia - 17%.

Carrying amount of goodwill allocated to CGUs

Key assumptions used in value in use calculations

The calculation of value in use is most sensitive to the following assumptions:

§ Gross margin in the retail business; the average rate is 16%.

§ Distribution costs; in the budget a rate of between 3.9% and 4.7% has been used.

§ Discount rates; as above 9.05% has been assumed in these calculations.

§ Growth rate used to extrapolate cash flows beyond the first three years; as noted above a rate of 2% has been assumed.

Gross margins and distribution and administration expenses are based on the rates used in the budget for FY 2012. These are increased to reflect anticipated efficiency improvements due to shortening of the supply chain and in line with expected growth netted against anticipated efficiency improvements respectively.

Discount rates reflect management's estimate of return on capital employed required in each business. This is the benchmark used by management to assess operating performance and to evaluate future capital investment proposals.

Sensitivity to changes in assumptions

A sensitivity analysis has been performed on the base case assumptions used for assessing the goodwill. In particular a higher discount rate of 10% was used to sensitise the results.

With regards to the assessment of value in use of the cash-generating units, the Directors believe that key assumptions are reasonable and do not expect these to be incorrect to the extent that it would cause the carrying value of the unit to exceed its recoverable amount.

8. Issued share capital

B Collie (non-executive Director) has been awarded 1,008,881 shares, as satisfaction of 50% of his salary pursuant to the terms of his service contract. £2,522 has been credited to equity share capital and £17,489 credited to equity share premium.

9. Share based payments

Share options

.

There were no cash settled share options and no share options were exercised during either year.

The share options issued will all expire seven years from the date of vesting.

The fair value of equity settled share options granted is estimated as at the date of the grant using the Black-Scholes-Merton model, taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model:

The expected volatility reflects the assumption that the AIM index is indicative of future trends, which may also not necessarily be the actual outcome.

The expense to the statement of comprehensive income during the year ended 30 April 2012 was £523,000 (2011: £342,000).

The weighted average exercise price is 4.26 pence (2011: 5.88 pence) for the 97,964,318 shares (2011: 71,819,196) under option at 30 April 2012.

The weighted average exercise price of shares granted during the year ended 30 April 2012 was 1.3125 pence for the 30,645,122 options granted in the year. The weighted average exercise price of shares granted during the year ended 30 April 2011 was 5.6 pence for the 67,319,196 options granted in that year.

During the year, Tim Eltze, President of Expansys Inc. acquired a 10% restricted holding in Expansys Inc, at a price determined by the Board. There are vesting conditions that attach to these shares such that if PBT performance conditions are not achieved the shares can be repurchased by the Company at the price paid. Tim Eltze can sell the shares for cash or shares in Expansys plc (determined by the Board) at a value determined by the earnings of Expansys Inc over the vesting period and the p/e ratio of Expansys plc. The fair value recognised for the purposes of IFRS2 was therefore determined with reference to the market price of Expansys plc shares, with the number of shares expected to vest determined by estimates of earnings for Expansys plc and Expansys Inc and by expected performance against the PBT targets. The shares can be sold in three annual tranches starting in April 2014.

Share-based payment of Non-Executive Director

Brian Collie (Non-Executive Director) is awarded 50% of his salary in shares pursuant to the terms of his service contract. This is done in two instalments during the course of the year. The total number of shares awarded to Brian Collie in the year to 30 April 2012 was 1,008,881.

10. Related party transactions

Data Select Limited

The Group has a close relationship with Data Select Limited ("Data Select") which is ultimately controlled by Peter Jones CBE. Peter Jones CBE and Stephen Vincent are also directors of Data Select. EXPANSYS UK Limited has a trade credit facility with Data Select of £2.5 million. The facility is secured by a fixed and floating charge and is guaranteed by EXPANSYS plc. In the year ended 30 April 2012 purchases by EXPANSYS UK Limited from Data Select amounted to £2.8 million (2011: £4.6million) and sales to Data Select amounted to £0.5 million (2011: £1.3 million). At 30 April 2012 EXPANSYS UK Limited had a receivable balance with Data Select of £294,000 (2011: £145,000) and a payable balance of £634,000 (2011: £1,056,000).

In the year to 30 April 2012 purchases by EXPANSYS Inc from Data Select totalled £2.7million (2011: £nil) and sales to Data Select totalled £98,000 (2011: £nil). At 30 April 2012 EXPANSYS Inc had a payable balance with Data Select of £481,000 (2011: £nil) and a receivables balance of £nil (2011: £nil).

EXPANSYS Nomatica SAS made sales to Data Select in the year totalling £1,700 (2011: £80,000) and no purchases (2011: £93,000). At 30 April 2012 there was a receivable balance with the company of £nil (2011: £nil) and a payable balance of £nil (2011: £nil).

DSNS has a trading relationship with Data Select. In the year ended April 2012 sales to Data Select by DSNS have totalled £2.2 million (2011: £3.9 million) and purchases by DSNS have totalled £2.8 million (2011: £1.5 million). DSNS pays rent to Data Select under a licence and in the year ended 30 April 2012 this has amounted to £144,000 (2011: £90,000) included in the total purchases figure above. Also included in the above sales and purchases figures is the amount of £2.3 million which represents pass-through revenue from which DSNS derives no profit. At 30 April 2012 DSNS had a receivable balance with Data Select of £1,200 (2011: £3,000) and a payable balance of £450,000 (2011: £97,000).

PJ Media made sales to Data Select in the year of £432,000 (2011: £821,000). PJ Media pays rent to Data Select under a licence and in the year ended April 2012 this has amounted to £72,000 (2011: £60,000). Other purchases by PJ Media from Data Select have totalled £159,000 (2011: £167,000). At 30 April 2012 PJ Media had a payable balance with Data Select of £28,000 (2011: £19,000) and a £nil receivable balance (2011:nil).

Other related party transactions for PJ Media Limited

PJ Media Limited undertakes various web design and e-commerce related activities for companies in which Peter Jones CBE and Stephen Vincent have interests as follows:

Wines For Business Limited

Wines For Business Limited is a company in which Peter Jones CBE and Stephen Vincent are directors and have a non-controlling interest in its shares. In the year ended 30 April 2012 sales to Wines for Business Limited from PJ Media Limited totalled £2,300 (2011: £66,000). At 30 April 2012 there was a receivables balance with the company of £300 (2011: £nil).

Peter Jones TV Limited

Peter Jones TV Limited is a company of which Peter Jones CBE and Stephen Vincent are directors and which is controlled by Peter Jones CBE through its parent company. Stephen Vincent has an interest in shares in its parent company. In the year to 30 April 2012 sales to Peter Jones TV Limited have totalled £8,500 (2011: £7,000) and purchases totalled £2,000 (2011: £nil). At 30 April 2012 both the receivable and payable balances were £nil (2011: £nil).

Peter Jones Foundation

Peter Jones Foundation is a company of which Peter Jones CBE, Bob Wigley, and Stephen Vincent are directors. In the year to 30 April 2012 sales to Peter Jones Foundation by PJ Media totalled £39,000 (2011: £nil). At 30 April 2012 there was a receivables balance of £4,000 (2011: £nil). EXPANSYS PLC committed a donation to PJ Foundation of £2,000 (2011: £nil). At 30 April 2012 there was a payables balance with the company of £2,000 (2011: £nil).

Phones International Group Limited

Phones International Group Limited is a company of which Peter Jones CBE and Stephen Vincent are directors. In the year to 30 April 2012, PJ Media made sales to the company of £25,000 (2011: £nil). At 30 April 2012 there was a receivables balance of £25,000 (2011: £nil).

Transactions with key management personnel

The Directors and the business unit heads of the UK, Europe, US and Hong Kong are deemed to be key management personnel.

Key management personnel compensation is disclosed below:

During the period, loans were made to Tim Eltze to facilitate his move to the United States. The total amount of the loan was £23,000 and the amount outstanding at 30 April 2012 was £8,900. Tim Eltze was a director of Expansys PLC until January 2012 and is president of the Group's US operation Expansys Inc.