Xps Pensions Regulatory News (XPS)

30 Jul 2007 07:01

eXpansys Plc30 July 2007 MAIDEN PRELIMINARY RESULTS eXpansys plc ("eXpansys" or the "Group"), a leading online retailer of wirelesstechnology which floated on AIM in April 2007, announces its audited preliminaryresults for the year ended 30 April 2007. Key points: * Successful flotation in April 2007 - raising £10 million before expenses * Market continues to grow strongly * Working capital constraints alleviated * EBITDA before exceptionals of £1.3 million - 18% ahead of forecast * Group well placed to continue growth both organically and through acquisition * A number of new direct manufacturer relationships secured Chairman, Barry Roberts, said: "The year under review was one in which weconsolidated our prior year acquisitions and concentrated on driving thebusiness forward. The drivers in the market remain strong for the products thatthe Group supplies and our working capital constraints have been alleviatedthrough the flotation proceeds. "The Group continues to command a leading brand and strong market positionacross a number of the major markets in Europe, Scandinavia, Asia and the USAand website traffic, which is a positive gauge of consumer interest in theGroup's product offerings, is increasing. "With all this in mind, the Board believes that the Group is now well placed forgrowth both organically and through appropriate acquisition in the coming year." For further information, please contact: eXpansys plc Tel: +44 (0) 161 232 3410Roger Butterworth, CEO roger@expansys.comInvestor relations website www.expansys.com/investor.aspx Rawlings Financial PR Limited Tel: +44 (0) 1756 770 376Catriona Valentine catriona@rawlingsfinancial.co.uk About eXpansys The Group specialises in the sale of handheld electronic devices with wirelessconnectivity and boasts a wide offering ranging from smartphones and ultramobile personal computers, to cameras and GPS equipment. Under the umbrella ofwww.expansys.com, www.nomatica.com, www.portix.com and www.mobileplanet.com,eXpansys operates some 50 websites in 12 different languages that cater to themajor economies of the world and serve both retail customers and blue-chipcorporate accounts including Microsoft, Oracle, The Metropolitan Police and DellComputer. Based in Manchester, eXpansys has grown both organically and through acquisitionand has a global infrastructure that allows it to service its internationalcustomer base through a network of warehouses in the UK, France, USA, Hong Kongand Australia. CHAIRMAN'S STATEMENT Introduction I am pleased to present my first report as Chairman of eXpansys plc and toreport another successful year for the Group, the highlight of which was ourflotation on AIM in April 2007. The float raised £10 million (before expenses of£1.4million), which has greatly helped the working capital position of theGroup. The market for mobile wireless devices continues to grow strongly as does onlineconsumer purchasing via the internet. Surfing the web on your mobile phone usedto be frustrating as users of early WAP phones will know. However, greatadvances have been made recently both in the technology and the informationsources the technology is designed to enable. It is now possible to access newsheadlines, watch video clips, use Google, check your e-mail, even monitor eBayauctions - all from your mobile phone. Social networking and the recentlylaunched mobile-friendly version of the phenomenally successful Youtube websiteare all drivers to the growing consumer demand for access devices. Add to thisthe developments in Voice over IP ("VOIP") telephony integration with mobilephones and one begins to grasp the potential of the global market for suchdevices. eXpansys is at the forefront of these technological and social developments, notas a technology innovator but as a route to market for the technology innovators- a route to market that has enabled the Group to expand rapidly around theworld. I am excited to have the opportunity to work with eXpansys, as the Groupmoves into the next key stage of its development as a quoted company. Financial Results The past year was, without doubt, a challenging one for the Group. Theconstraints on working capital impacted the ability of the business to servicecustomer demand promptly, resulting in lost revenue and margin. Following thesuccessful placing of our shares in April 2007, these working capitalconstraints have been alleviated. However, the inflow of funds came very closeto the year end and therefore had no positive impact on the financial year underreview. The benefits of this inflow of funds will be enjoyed in the coming year. The Group retained a loss for the year of £605,000. However, this loss wasconsiderably lower than forecast. Board Changes There were a number of changes in the composition of the Board of Directorsduring the year in order to establish a Board structure appropriate for AIMlisted company. Roger Butterworth, Steve Muttram, Frederic Pont and Cate Hulme have been joinedby Graham Dawber as Non-Executive Director and me as Chairman. Matt Kydd, who was the founder director of the Group, stepped down from theBoard in March 2007. Although Matt continues as Chief Technology Officer, Ithink it is appropriate to thank him for his contribution to the development ofthe Group to date. eXpansys People With business operations spanning multiple time zones around the world, theresults for this year and the progress we have made would not have been possiblewithout the hard work and commitment of all of our employees. I would like to record the Board's appreciation for the effort and commitmentshown by all our staff, wherever they were located, during the year. Ongoing Strategy developments The overall strategy for the Group is to continue to grow its market share ofdelivered product in the chosen technologies and markets. Creating partnershipswith manufacturers of the chosen technologies and delivering a positive customerbuying experience are both cornerstones of this strategy. Current Trading and Prospects The year under review was one in which we consolidated our prior yearacquisitions and concentrated on driving the business forward. The growth thatthe Group achieved in the year was limited by working capital constraints.However, the drivers in the market remain strong for the products that the Groupsupplies and our working capital constraints have been alleviated through theflotation proceeds. The Group continues to command a leading brand and strong market position acrossa number of the major markets in Europe, Scandinavia, Asia and the USA andwebsite traffic, which is a positive gauge of consumer interest in the Group'sproduct offerings, is increasing. With all this in mind, the Board believes that the Group is now well placed forgrowth both organically and through appropriate acquisition in the coming year. Barry RobertsNon-executive Chairman 27 July 2007 CHIEF EXECUTIVE'S OPERATING REVIEW The name 'eXpansys' is a concatenation of 'eXpanding Systems' - a reference toour mission to help our customers expand their access to computer systemswherever they may be. As I look back on the year, I see that the advances wemade, now place eXpansys in a much stronger position to help our customersexploit technological advances to improve their business efficiency, personalproductivity and entertainment offered using wirelessly connected computingdevices and content services. Direct Relationships There are considerable advantages to eXpansys in having direct relationshipswith the manufacturers of the products that we sell. The major manufacturersoften limit the number of direct relationships they will manage and promote,often choosing to deal only with a small number of partners. eXpansys,therefore, is in a strong competitive position because of the number of directrelationships it has with manufacturers. I am pleased to report that, in the months since flotation, we have addedseveral new direct manufacturer relationships and in a number of cases havestrengthened existing relationships through our improved profile as a publiccompany. Our primary direct relationship continues to be with HTC of Taiwan. Its rangeof Windows Mobile products continues to lead the market with their features,functionality and reliability, leading to strong consumer demand. Toshiba andSamsung are now also amongst our top ten direct suppliers. Both of thesemanufacturers have powerful and widely recognised consumer brands. E-Ten, a hightechnology company based in Taiwan, is developing a significant market presencethrough their Glowfiish brand, and eXpansys provides an important route tomarket for them. We have excellent relations with US companies such as Palm, OQO and Socket andwe are developing better relations with mainstream phone vendors like Nokia andT-Mobile. Our partners choose eXpansys because we offer a very efficient and effectivechannel to market for their cutting edge products. We remain aware of that andfocus on providing the best way to get high tech products into the hands ofconsumers. Service Revenue Since our flotation, we have been able to expand our service offeringsconsiderably and by September 2007 we will be offering an own brand VOIPservice, optimised for mobiles, alongside our traditional service offerings fromthe legacy mobile phone carriers, as well as a hosted exchange e-mail serviceand extended warranty and insurance services for devices. Market and outlook New devices have lifted our market profile and with it our sales revenues. Sincethe year end, products in demand such as the HTC Touch, HTC S710, Toshiba G900and the OQO Model 2 have been available at eXpansys.com before anywhere else andin greater supply quantities. We look forward with considerable anticipation tothe release of the Nokia N90, the HTC Shift and the Apple i-Phone (in the UK)which should all generate considerable consumer interest. Strategy Our strategy is to continue focusing closely on the market for mobile computingdevices with wireless connectivity. We will seek to expand our product setthrough acquisition and through new relationships with manufacturers whereappropriate. Fixed costs make up a large proportion of our costs and thereforeour business model is highly scaleable as gross margins increase. Hence, wewill seek to improve profitability by increasing the scale of the business bothorganically and through acquisition. In conclusion The eXpansys business now stands on a firm financial footing and we are ready tocontinue our significant track record of growth. Our business model is provenand, while it has been widely copied, we remain the leader in our field. Roger ButterworthChief Executive Officer 27 July 2007 CHIEF FINANCIAL OFFICER'S REVIEW Rapid growth and investment in infrastructure The previous three years have seen eXpansys grow rapidly with turnoverincreasing by 137%, whilst maintaining a healthy 22% gross profit margin. At the same time, we have invested heavily in building our infrastructure. Wenow have five warehouses and 11 sales offices, all of which operate on ourproprietary software and bespoke IT systems and VOIP network. Strong demand leading to working capital constraints The growth that we enjoyed over this period was driven by strong demand for ourproducts. However, during the last six months of year ended April 2007, westruggled to meet this demand due to working capital constraints. Turnoverincreased in the first half of the year by 14% on the comparative period duringyear ended April 2006, whereas there was a 14% decrease in the six months endedApril 2007 - compared to the six months ended October 2006. At 30 April 2006, 73% of the Group's funding was provided by our suppliers. Atflotation, the business changed its primary funding source from its suppliers toits shareholders. Whilst suppliers continue to provide significant workingcapital through the provision of trade credit, the business is no longer reliantupon them to the same extent and at 30 April 2007 38% of the Group's funding wassupplier provided. We were encouraged to see an increase in gross margin from 22% in the six monthsto October 2006 to 23% in the six months to April 2007, as a result of all ourefforts to improve our relationships with manufacturers, and we believe that wecan increase this further in the coming year. Scaleable business model Our distribution costs tend to be proportional to revenue, although due to ourefforts on cost control in this area we have seen a reduction from 5.6% ofturnover during the year ended April 2006 to 5.5% during the year ended April2007. Our administration costs are fixed and represent the significant investment wehave made historically in ensuring we have infrastructure in place before it isrequired for growth, leading to a very scaleable business for future growth. Operating loss decreased from £695,000 in 2006 to £225,000 in 2007, afterdeducting exceptional expenses of £540,000 (2006: £637,000). Operating profitbefore exceptionals for the year was £315,000, an increase of £373,000 on theprevious year. Full details of exceptional expenses are included in note 3. Strong balance sheet We were admitted to AIM on 11 April 2007, raising £10 million, and as a resultwe now have a strong balance sheet which is a significant asset for us. With theflotation funds significantly improving our working capital, we believe that weare well placed to benefit from opportunities as they arise. Accounting standards The Group will be adopting International Financial Reporting Standards (IFRS)with effect from 1 May 2007 and when the 2008 results are reported the 2007results will be restated under IFRS. The first statements to be produced underIFRS will be the interim financial statements for the half year to October 2007. We have been working with our advisors to assess the impact of IFRS on ourfinancial statements at a high level. We have not yet fully quantified theimpact but we expect the biggest area to be affected will be goodwill due to theneed to reconsider the goodwill relating to recent business acquisitions and therequirement for annual impairment reviews, rather than systematic amortisationof the goodwill balance. Cate HulmeChief Financial Officer 27 July 2007 GROUP PROFIT AND LOSS ACCOUNTFor the year ended 30 April 2007 Notes 2007 2006 £000 £000 Turnover 2 54,192 54,522 -------- --------Exceptional cost of sales 3 - (256)Other cost of sales (41,815) (42,779) -------- --------Total cost of sales (41,815) (43,035) -------- --------Gross profit 12,377 11,487 -------- --------Exceptional distribution costs 3 (223) -Other distribution costs (2,928) (2,983) -------- --------Total distribution costs (3,151) (2,983) -------- -------- Exceptional administrative expenses 3 (317) (381)Other administrative expenses (9,134) (8,818) -------- --------Total administrative expenses (9,451) (9,199) -------- -------- Operating loss (225) (695) -------- --------Exceptional operating loss 3 (540) (637)Other operating profit / (loss) 315 (58) -------- -------- Bank interest receivable 91 13Interest payable (793) (221) -------- --------Loss before taxation (927) (903)Tax on loss on ordinary activities 4 310 (136)Loss after taxation 6 (617) (1,039)Equity minority interest 6 12 52 -------- --------Loss attributable to members of theparent company (605) (987) ======== ======== Basic loss per share 7 (2.7)p (4.6)pDiluted loss per share 7 (2.7)p (4.6)p ======== ======== GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFor the year ended 30 April 2007 Notes 2007 2006 £000 £000 Loss for the financial year attributable to membersof the parent company (605) (987) -------- --------Exchange differences on retranslation of net assetsof subsidiary undertakings 6 303 (18) -------- --------Total recognised gains and losses relating to the year (302) (1,005) ======== ======== GROUP BALANCE SHEETAs at 30 April 2007 Notes 2007 2006 £000 £000Fixed assetsIntangible assets:Positive goodwill 3,510 3,677Trade marks 171 176 -------- -------- 3,681 3,853Tangible assets 2,213 2,114 -------- -------- 5,894 5,967 -------- --------Current assetsStocks 5,736 6,674Debtors 5,266 3,820Cash at bank and in hand 739 896 -------- -------- 11,741 11,390Creditors: amounts falling due within one year (7,784) (14,263) -------- --------Net current assets / (liabilities) 3,957 (2,873) -------- --------Total assets less current liabilities 9,851 3,094 -------- --------Creditors: amounts falling due after more than oneyear (396) (1,926) -------- --------Provisions for liabilities (39) (27) -------- -------- 9,416 1,141 -------- --------Equity minority interests - 5 -------- -------- 9,416 1,146 ======== ======== Capital reservesShare capital 5,6 101 53Share premium 6 8,664 145Merger reserve 6 750 750Profit and loss account 6 (99) 198 -------- --------Equity shareholders' funds 6 9,416 1,146 ======== ======== GROUP STATEMENT OF CASH FLOWSFor the year ended 30 April 2007 Notes 2007 2006 £000 £000 Net cash (outflow)/inflow from operating activities 8 (3,928) 1,449 -------- --------Returns on investments and servicing of financeNet interest paid (702) (208) -------- --------TaxationCorporation tax paid (50) (133) -------- --------Capital expenditure and financial investmentPayments to acquire intangible fixed assets (36) (234)Payments to acquire tangible fixed assets (755) (957) -------- -------- (791) (1,191) -------- --------AcquisitionsRefund of consideration - Mobile Planet - 379Purchase of subsidiary undertaking - Portix USA Inc - (5)Purchase of minority interest (30) (45) -------- -------- (30) 329 -------- --------Net cash (outflow)/inflow before financing (5,501) 246 -------- --------FinancingIssue of share capital 10,015 -Share issue costs (1,443) -New long term borrowings 235 -Repayment of long term borrowings (2,289) (229)Repayments of capital element of finance leases (135) (164) -------- -------- 6,383 (393) -------- --------Increase / (decrease) in cash 8 882 (147) ======== ======== RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBTfor the year ended 30 April 2007 Notes 2007 2006 £000 £000 Increase / (decrease) in cash 8 882 (147)Repayment of capital element of finance leases 8 135 164New long term borrowings 8 (235) -Repayment of long term borrowings 8 2,289 229 -------- --------Change in net debt resulting from cash flows 8 3,071 246New finance leases 8 (168) (144) -------- --------Movement in net debt 2,903 102Net debt at the beginning of the year 8 (2,906) (3,008) -------- --------Net debt at the end of the year 8 (3) (2,906) ======== ======== NOTES 1. Basis of preparation The preliminary results of eXpansys plc are prepared under the historical costconvention, and in accordance with United Kingdom Generally Accepted AccountingPractice (UK GAAP). In preparing the preliminary results for the current year, the Group has adoptedFinancial Reporting Standard 20 'Share-based payments' (FRS 20). The adoption ofFRS 20 has resulted in a change in accounting policy for share-based paymenttransactions. FRS 20 requires the fair value of options and share awards whichultimately vest to be charged to the profit and loss account over the vestingperiod or performance period. For equity-settled transactions the fair value isdetermined at the date of the grant using an appropriate pricing model. As therewas no share based payment plan in place during the 2006 financial year, theadoption of the standard has not resulted in the re-statement of the comparativefigures. With the exception of the adoption of FRS 20 the preliminary announcement hasbeen prepared on the same basis as set out in the previous year's annualaccounts. This preliminary statement was approved by the directors on 27 July 2007. The financial information set out above does not constitute the Group'sstatutory financial statements for the year ended 30 April 2007 but is derivedfrom those financial statements. The comparative figures are those of thefinancial statements for the year ended 30 April 2006. The report of theauditors was unqualified and did not contain a statement under s.237 (2) or (3)Companies Act 1985. The statutory financial statements for the year ended 30April 2007 will be delivered to the Registrar of Companies following theCompany's Annual General Meeting. The financial information contained in this Preliminary Statement does notconstitute statutory accounts as defined by Section 240 of the Companies Act. 2. Segmental analysis The primary segment reporting format is determined to be geographical segmentsby origin as the Group's risks and rates of return are affected predominantly bydifferences in geographic location. 2007 2006Turnover £000 £000 United Kingdom and rest of the world 24,379 24,315European Union 12,100 9,489United States and Canada 13,899 17,428Far East 3,814 3,290 -------- -------- 54,192 54,522 ======== ======== 2007 2006Loss before taxation £000 £000 United Kingdom and rest of the world 546 (271)European Union 500 307United States and Canada (469) 68Far East (240) (150) -------- --------Total 337 (46)Common costs (562) (649) -------- --------Group operating loss (225) (695)Net interest payable (702) (208) -------- --------Loss before taxation (927) (903) ======== ======== 2. Segmental analysis continued 2007 2006 Net assets £000 £000United Kingdom and rest of the world 2,632 1,704European Union 296 81United States and Canada (2,836) (1,811)Far East (626) (319) -------- --------Total (534) (345)Unallocated 9,950 1,486 -------- --------Minority interest 9,416 1,141 - 5 -------- --------Net assets 9,416 1,146 ======== ======== 3. Exceptional costs 2007 2006 £000 £000 One off stock write offs, deemed exceptional by virtue oftheir size - 256Non recoverable distribution expenses 223 -Legal costs for renegotiation of participation in supplierdistribution network - 105Directors bonuses relating to acquisition and integration ofMobile Planet Inc - 177Costs relating to closure of sales office in Mobile Planet Inc - 79Costs relating to redundancies in Portix Group Limited - 20Costs relating to renegotiation of covenants 31 -Costs in relation to redundancies in eXpansys Nomatica SAS 286 - -------- --------Total exceptional costs 540 637 ======== ======== 4. Tax (a) Analysis of (credit)/charge in the year 2007 2006 £000 £000 UK corporation tax on profits for the year 35 26Foreign tax 12 106Adjustments in respect of previous periods (3) (23) -------- --------Total current tax 44 109Deferred tax (354) 27 -------- --------Tax (credit) / charge (310) 136 ======== ======== (b) Factors affecting the tax charge for the year The tax charge is different from the standard rate of corporation tax in the UKof 30% (2006: 30%). The differences are reconciled below: 2007 2006 £000 £000 Loss before taxation (927) (903) ======== ========Loss before taxation multiplied by 30% (2006: 30%) (278) (271)Effect of:Disallowed expenses and non taxable income 54 186Capital allowances in excess of depreciation (26) (52)Other short term timing differences 5 (19)Adjustments in respect of prior periods (3) (23)Utilisation of tax losses of prior periods (149) (8)Tax losses not relievable against current tax 487 258Tax rate difference 4 38Other (50) - -------- --------Current tax charge for the year (note 4(a)) 44 109 -------- -------- 5. Share capital 2007 2006 £000 £000Authorised:10,000,000 Ordinary shares of 1p each - 10080,000,000 Ordinary shares of 0.25p each 200 - -------- -------- 200 100 ======== ======== 2007 2006 £000 £000Allotted and called up:5,316,545 fully paid Ordinary shares of 1p each - 5340,353,907 fully paid Ordinary shares of 0.25p each 101 - -------- -------- 101 53 ======== ======== On 13 December 2006, 398,740 1p ordinary shares were issued in a share for shareexchange for the whole of the minority interest share capital in Portix GroupLimited (and indirectly in Portix USA Inc). Merger relief was taken andtherefore no share premium was recognised. On 7 February 2007, 53,165 1p ordinary shares were issued in a share for shareexchange for the whole of the minority interest share capital in eXpansys DELimited (and indirectly in eXpansys GmbH). Merger relief was taken and thereforeno share premium was recognised. On 7 February 2007, 9,682 1p ordinary shares were issued for cash at a premiumof £9,000. On 6 March 2007, the Group adopted the eXpansys plc Enterprise ManagementIncentives and Unapproved Share Scheme and the following equity settled shareoptions were granted: Number of Exercise price shares under (pence) option Cate Hulme (director) 425,320 10.25Three employees 595,320 29.00Thirteen employees 260,000 46.40Consultant 40,000 29.00 ========== ========== The share options were conditional upon the company's shares being floated onAIM by 31 May 2007 and are exercisable, at the discretion of the option holder,for up to two years from issue date. The options vested on 11 April 2007, when the company floated on AIM. The weighted average exercise price is 26.39pence (2006: nil) for the 1,320,640shares (2006: nil) under option at 30 April 2007. The fair value of equity settled share options granted is estimated as at thedate of the grant using the Black-Scholes-Merton model, taking into account theterms and conditions upon which the options were granted. The following tablelists the inputs to the model for the year ended 30 April 2007. 2007 Dividend yield (%) 0Expected share price volatility (%) 13.2Risk free interest rate (%) 5.2Expected life of option (years) 2 ======= The expected volatility reflects the assumption that the AIM index is indicativeof future trends, which may also not necessarily be the actual outcome. The expense to the profit and loss account during the year ended 30 April 2007was £5,000 (2006: £nil). There were no cash settled share options and no share options were exercisedduring the year. On 12 March 2007 the 100,000 1p ordinary shares currently in issue weresubdivided into 0.25p shares and the authorised share capital was increased to£200,000. On 11 April 2007 17,241,379 0.25p ordinary shares were issued at 58p each,resulting in a premium of £8,519,000 net of share issue costs. On 4 April 2007 a warrant to subscribe to 403,539 0.25p ordinary shares at 58peach was issued to Cenkos Securities plc, the company's Nominated Advisor andBroker. The transaction has been measured at the fair value of the equityinstruments (as set out above) as there was no additional service performed inexchange for these options. The fair value of this award was not material. 6. Reconciliation of shareholders' funds and movements on reserves Profit Total Share Share Merger and loss shareholders capital premium reserve account funds £000 £000 £000 £000 £000 At 1 May 2005 10 145 - 1,246 1,401Issue of shares - - 750 - 750Reserves transfer for bonus issue 43 - - (43) -Loss for the year - - - (1,039) (1,039)Minority interest - - - 52 52Exchange differences on retranslation of net assets of subsidiary undertakings - - - (18) (18) ------- ------- ------- ------- --------At 30 April 2006 53 145 750 198 1,146Issue of shares 48 8,519 - - 8,567Share based payment - - - 5 5Loss for the year - - - (617) (617)Minority interest - - - 12 12Exchange differences on retranslation of net assets of subsidiary undertakings - - - 303 303 ------- ------- ------- ------- --------At 30 April 2007 101 8,664 750 (99) 9,416 ======= ======= ======= ======= ======== As a result of the acquisition of eXpansys Nomatica SAS in a share for shareexchange, merger relief was taken and no share premium was recognised, ratherthe premium arising was credited to merger reserve. 7. Earnings per share Basic earning per share amounts are calculated by dividing net profit/(loss) forthe year attributable to ordinary share holders of the parent by the weightedaverage number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing the net profit /(loss) attributable to ordinary share holders of the parent by the weightedaverage number of ordinary shares outstanding during the year plus the weightedaverage number of ordinary shares that would be issued on the conversion of allthe dilutive potential ordinary shares into ordinary shares. The following reflects the income and share data used in the basic and dilutedearnings per share computations: 2007 2006 £000 £000 Net loss attributable to equity holders of the parent (605) (987) ====== ====== Restated 2007 2006 thousands thousands Basic weighted average number of shares 22,646 21,266Dilutive potential ordinary shares:Employee and consultant options 52 -Warrants over options 16 - ------- -------Diluted weighted average number of shares 22,714 21,266 ======= ======= Basic loss per share (2.7)p (4.6)p ======= ======= Diluted loss per share (2.7)p (4.6)p ======= ======= The basic weighted average number of shares for year ended April 2006 has beenrestated during 2007 to reflect the subdivision of each 1p ordinary shares intofour 0.25p ordinary shares on 12 March 2007. There have been no other transactions involving ordinary shares or potentialordinary shares between the reporting date and the date of completion of thesefinancial statements. Earnings per share from operations before exceptional items The group presents as exceptional items on the face of the profit and lossaccount, those material items of income and expense which, because of the natureand expected infrequency of the events giving rise to them, merit separatepresentation to allow shareholders to understand better element of financialperformance for the period, so as to facilitate comparison with prior periodsand to assess better trends in financial performance. To this end, basic earnings per share is also presented on this basis and usingthe weighted average number of ordinary shares as per the table above. Netprofit before exceptional items before exceptional items and attributable toequity holders of the parent is derived follows: 2007 2006 £000 £000 Net loss attributable to equity holders of the parent (605) (987)Exceptional items after tax attributable to equity holdersof the parent 540 637 ------ ------- Net loss before exceptional items attributable to equityholders (65) (350)of the parent ------ -------Basic loss per share before exceptional items (0.3)p (1.6)p ====== =======Diluted loss per share before exceptional items (0.3)p (1.6)p 8. Note to the group statement of cash flows (a) Reconciliation of operating loss to net cash (outflow) / inflow fromoperating activities 2007 2006 £000 £000 Operating loss (225) (695)Depreciation 786 641Amortisation 249 167Loss on sale of fixed assets 18 -Issue of share options 5 -Currency movements 21 -Change in debtors (1,080) (2,110)Change in creditors (4,640) 5,734Change in stocks 938 (2,288) ------ -------Net cash (outflow)/inflow from operating activities (3,928) 1,449 ====== ======= (b) Analysis of net debt At New At 1 April Cash finance 30 April 2006 flow lease 2007 £000 £000 £000 £000 Cash at bank and in hand 896 (157) - 739Bank overdrafts (1,039) 1,039 - - ------ ------- ------- ------- (143) 882 - 739Finance leases (459) 135 (168) (492)Bank loans (2,304) 2,054 - (250) ------ ------- ------- ------- (2,906) 3,071 (168) (3) ====== ======= ======= ======= (c) Cash flows relating to operating exceptional items Net cash (outflow) / inflow from operating activities includes the followingexceptional cash flows: 2007 2006 £000 £000Legal costs for negotiation of participation in supplierdistribution network - 105Directors' bonuses relating to acquisition and integration ofMobile Planet Inc - 177Costs relating to closure of sales office in Mobile Planet Inc - 79Costs relating to redundancies in Portix Group Limited - 20Costs relating to renegotiation of covenants 31 -Costs relating to redundancies in eXpansys Nomatica SARL 286 - ------- -------- 317 381 ======= ======== This information is provided by RNS The company news service from the London Stock Exchange