Last checked at 14 Dec 2011 07:00
Embargoed: 0700hrs 14 December 2011
EXPANSYS PLC
("EXPANSYS" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2011
EXPANSYS plc, a leading global online retailer of wireless and consumer technology and provider of mobile network solutions, announces its interim results for the six months ended 31 October 2011.
Financial Highlights
- Turnover increased 42% to £46.6m (H1 2010: £32.7m). This includes six months of DSNS and PJ Media, compared to three months in H1 2010
- Adjusted profit before tax increased 13% to £1.6m (H1 2010: £1.4m)
- Profit before tax £0.8m (H1 2010: loss of £39k)
- Cash £4.0m (31 October 2010: £5.5m). Cash has reduced due to investment in growth areas of Asia and the US
Trading Highlights
- Turnover of the retail business increased 28% to £34.5m (H1 2010: £26.9m)
o Growth in turnover from websites (EXPANSYS.COM) of 64%
o Growth in the retail businesses in Asia and the US of 122% and 95% respectively compared to H1 2010
o Growth in Europe retail business of 19%
o UK retail business remains a challenge and experienced a negative performance in terms of revenue and profits in this half
- DSNS has improved core profitability through a more focused approach to suppliers and customers
- PJ Media has been successful in new business development and has a strengthened pipe-line for H2
Bob Wigley, Chairman of EXPANSYS, commented:
"We are encouraged by the improvements across the Group in the first half and are seeing the strategic benefits of the 2010 acquisitions flowing through. We are focused on building on this momentum through the second half of the year which includes the retail division's important Christmas period."
Enquiries:
EXPANSYS plc Anthony Catterson, CEO Chris Ogle, CFO
|
Via M: Communications |
Cenkos Securities Stephen Keys or Camilla Hume
| Tel: +44 (0) 20 7397 8900 skeys@cenkos.com / chume@cenkos.com |
M:Communications Nick Miles or Ben Simons | Tel +44 (0)20 7920 2340 miles@mcomgroup.com / simons@mcomgroup.com
|
Investor relations website | www.EXPANSYS.plc.uk
|
CHAIRMAN'S STATEMENT
I am pleased to announce the results for the six months ended 31 October 2011 which show good progress against a backdrop of difficult trading conditions.
Financial Review
Total turnover for the Group in the period was £46.6 million representing an increase of 42% compared to the same period last year (H1 2010: £32.7 million). Turnover for the period includes a full six months of contribution from DSNS and PJ Media, acquired in July 2010, compared to only three months of H1 2010. Turnover from the EXPANSYS.com retail business increased by 28% to £34.5 million (H1 2010: £26.9 million).
The profit before tax as adjusted for the amortisation of intangibles, share-based payment, foreign exchange and exceptional items increased by 13% to £1.6 million (2010: £1.4 million).
Profit before tax for the period was £0.8 million (2010: loss of £39k).
Cash at the end of October 2011 remained strong at £4.0 million (H1 2010: £5.5 million). Cash has reduced primarily due to the working capital requirements of Asia and the US where we are already seeing a substantial improvement in trading performance supported by our increased investment.
Markets
EXPANSYS.com
Revenues from EXPANSYS's own websites grew by 64% in the first half of the year, driven primarily by Asia and the USA, with excellent growth for the first six months of the year of 122% and 95% respectively. As anticipated Europe continues to grow in revenue (+19%) although at a slower rate. The UK market remains our most challenging, and we saw negative performance in terms of revenue and profit in the first six months of the year, primarily because of difficult market conditions and management change as we moved location.
DSNS
DSNS performed ahead of expectations and signed a number of new contracts to supply national retailers in the UK with its sim-card product range, including Sainsbury's, WHSmith and Martin McColl. This lifted the total number of retail stores stocking DSNS products in the UK to 38,000, adding significant footprint to the UK's market leading sim-card distributor.
Our agreement with T-Mobile USA represented our first major push into the US sim distribution opportunity where, unlike Europe, the pre-pay and sim-only markets are nascent. This represents a significant long-term opportunity for the Group although the US sim business has already begun to contribute to revenues and profits.
PJ Media
PJ Media, the e-Commerce and web services business, won new business with existing customers, but more importantly, reshaped its approach to new business development, which has brought a significant number of new opportunities into the deal pipeline. We believe that PJ Media can benefit carriers worldwide through its unique IP and experience in the area of e-commerce, subscriber retention and subscriber ARPU development.
Outlook
We are encouraged by the improvements across the Group in the first half and are seeing the strategic benefits of the 2010 acquisitions flowing through. We are focused on building on this momentum through the second half of the year which includes the retail division's important Christmas period.
Bob Wigley
Chairman
13 December 2011
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the 6 months ended 31 October 2011
6 months ended | 6 months ended | ||
31 October 2011 | 31 October 2010 | ||
Note | £000 | £000 | |
Revenue | 46,585 | 32,735 | |
Cost of sales | (37,096) | (25,247) | |
Gross profit | 9,489 | 7,488 | |
Distribution costs | (3,070) | (2,507) | |
Exceptional administrative items | 2 | (74) | (295) |
Amortisation of acquired intangibles | (487) | (925) | |
Share-based payments expense | (235) | (138) | |
Other administrative expenses | (4,832) | (3,650) | |
Administrative expenses | (5,628) | (5,008) | |
Operating profit / (loss) | 791 | (27) | |
Finance income | - | - | |
Finance costs | (6) | (12) | |
Profit / (Loss) before taxation | 3 | 785 | (39) |
Income tax charge | (413) | (408) | |
Profit / (Loss) for the half year | 372 | (447) | |
Attributable to owners of the parent | 367 | (449) | |
Attributable to non-controlling interests | 5 | 2 | |
Currency translation differences | (142) | (91) | |
Total comprehensive income/(expense) for the half year | 230 | (538) | |
Attributable to owners of the parent | 225 | (540) | |
Attributable to non-controlling interests | 5 | 2 | |
Earnings per share (pence) | |||
Basic earnings/(loss) per share for the half year | 4 | 0.03p | (0.06p) |
Diluted earnings/(loss) per share for the half year | 4 | 0.03p | (0.06p) |
Adjusted basic earnings per share for the half year * | 4 | 0.10p | 0.13p |
Adjusted diluted earnings per share for the half year * | 4 | 0.10p | 0.12p |
* The Directors believe that reporting adjusted measures provides a more useful comparison of business performance and reflects the way in which the business is controlled. The method of calculating adjusted earnings is detailed in note 3.
GROUP STATEMENT OF FINANCIAL POSITION
As at | As at | ||
31 October 2011 | 31 October 2010 | ||
Note | £000 | £000 | |
ASSETS | |||
Non current assets | |||
Plant and equipment | 659 | 693 | |
Intangible assets | 50,887 | 51,844 | |
Deferred income tax assets | 1,456 | 1,365 | |
53,002 | 53,902 | ||
Current assets | |||
Inventories | 4,112 | 3,159 | |
Trade and other receivables | 9,939 | 5,246 | |
Cash and short term deposits | 4,010 | 5,493 | |
18,061 | 13,898 | ||
Total assets | 71,063 | 67,800 | |
LIABILITIES | |||
Current liabilities | |||
Trade and other payables | (14,253) | (10,668) | |
Financial liabilities | (56) | (77) | |
Income tax payable | (805) | (745) | |
Government grants | (8) | (43) | |
Provisions | (55) | (51)
| |
Deferred income tax liabilities | (55) | - | |
(15,232) | (11,584) | ||
Non current liabilities | |||
Financial liabilities | (45) | (97) | |
Deferred income tax liabilities | - | (379) | |
(45) | (476) | ||
Total liabilities | (15,277) | (12,060) | |
Net assets | 55,786 | 55,740 | |
Capital and reserves | |||
Equity share capital | 2,893 | 2,890 | |
Equity share premium | 37,562 | 61,215 | |
Merger reserve | 24,417 | 750 | |
Currency translation | 828 | 998 | |
Retained earnings/(losses) | (9,959) | (10,151) | |
Equity attributable to equity holders of the parent company | 55,741 | 55,702 | |
Non-controlling interests | 45
| 38 | |
Total equity | 55,786 | 55,740 |
GROUP STATEMENT OF CHANGES IN EQUITY
For the 6 months ended 31 October 2011
Equity share capital £000
| Equity share premium £000 |
Merger reserve £000 | Currency translation reserve £000 |
Retained earnings £000 | Non-controlling interests £000 |
Total equity £000 | |
At 1 May 2011 | 2,890 | 37,552 | 24,417 | 970 | (10,561) | 40 | 55,308 |
Equity share issue | 3 | - | - | - | - | - | 3 |
Cost associated with equity share issue | - | - | - | - | - | - | - |
Share-based payment | - | 10 | - | - | 235 | - | 245 |
Profit for the period | - | - | - | - | 367 | 5 | 372 |
Exchange differences* | - | - | - | (142) | - | - | (142) |
At 31 October 2011 | 2,893 | 37,562 | 24,417 | 828 | (9,959) | 45 | 55,786 |
Equity share capital £000
| Equity share premium £000 |
Merger reserve £000 | Currency translation reserve £000 |
Retained earnings £000 | Non-controlling interests £000 |
Total equity £000 | |
At 1 May 2010 | 445 | 10,641 | 750 | 1,089 | (9,840) | - | 3,085 |
Equity share issue | 2,445 | 52,327 | - | - | - | - | 54,772 |
Cost associated with equity share issue | - | (1,753) | - | - | - | - | (1,753) |
Share based payment | - | - | - | - | 138 | - | 138 |
Acquisitions | - | - | - | - | - | 36 | 36 |
Loss for the period | - | - | - | - | (449) | 2 | (447) |
Exchange differences* | - | - | - | (91) | - | - | (91) |
At 31 October 2010 | 2,890 | 61,215 | 750 | 998 | (10,151) | 38 | 55,740 |
*Exchange differences relate to the retranslation of net assets of subsidiary undertakings.
GROUP CASH FLOW STATEMENT
For the 6 months ended 31 October 2011
6 months ended | 6 months ended | ||
31 October 2011 | 31 October 2010 2009 | ||
Note | £000 | £000 | |
Operating activities | |||
Profit / (loss) for the half year | 372 | (447) | |
Income tax expense | 413 | 408 | |
Net interest charge | 6 | 12 | |
Equity-settled share-based payment expense | 245 | 138 | |
Foreign exchange | (25) | 62 | |
Depreciation | 138 | 154 | |
Amortisation of intangible assets | 604 | 1,191 | |
Cash flow from operating activities before changes in working capital | 1,753 | 1,518 | |
Decrease / (increase) in inventories | 309 | (971) | |
(Increase) / decrease in trade and other receivables | (3,864) | 1,099 | |
Increase / (decrease) in trade and other payables | 1,318 | (750) | |
Cash (used in)/ generated from operations | (484) | 896 | |
Interest paid | (6) | (12) | |
Income tax paid | (49) | (302) | |
Net cash flow (used in)/ generated from operating activities | (539) | 582 | |
Purchase of property, plant and equipment | (117) | (18) | |
Purchase of intangible assets | (360) | (231) | |
Purchase of subsidiaries | - | (13,443) | |
Cash acquired with subsidiaries | - | 417 | |
Cash flow used in investing activities | (477) | (13,275) | |
Issue of ordinary share capital | - | 30,000 | |
Fees associated with share issue | - | (1,753) | |
Capital repayment of borrowings | (27) | (10,985) | |
Capital repayment of finance leases and hire purchase contracts | (11) | (17) | |
Net cash (paid) / received from financing activities | (38) | 17,245 | |
(Decrease) / Increase in cash and cash equivalents | (1,054) | 4,552 | |
Cash and cash equivalents as at 1 May | 5,060 | 924 | |
Effects of exchange rate changes | 4 | 17 | |
Cash and cash equivalents as at 31 October | 4,010 | 5,493 |
NOTES
1. Basis of preparation and accounting policies
The financial information comprises the unaudited results for the six months ended 31 October 2011 and 31 October 2010.
The condensed consolidated financial statements for the six months ended 31 October 2011 should be read in conjunction with the annual financial statements for the year ended 30 April 2011 which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The Auditors' Report on those statements was unqualified and did not contain any statements under section 498 of the Companies Act 2006.
The Group's principal accounting policies used in preparing this information are as stated in the financial statements for the year ended 30 April 2011, which have been filed with the Registrar of Companies, and are available on our website www.EXPANSYS.com .
2. Exceptional items
6 months ended | 6 months ended | |
31 October 2011 | 31 October 2010 | |
£000 | £000 | |
Administrative expenses | ||
Costs associated with acquisitions | 385 | |
Other, including movement in restructuring provisions | 74 | (90) |
Total exceptional costs | 74 | 295 |
3. Adjusted measures
The Directors believe that reporting adjusted measures provides a more useful comparison of business performance and reflects the way in which the business is controlled.
The tables below illustrate how the key adjusted measures are calculated.
6 months ended | 6 months ended | |
31 October 2011 | 31 October 2010 | |
£000 | £000 | |
Profit (loss) before tax for the half year (as reported) | 785 | (39) |
Add back: | ||
Amortisation of acquired intangibles | 487 | 925 |
Exceptional items | 74 | 295 |
Foreign exchange | (25) | 62 |
Share-based payments expense | 235 | 138 |
Adjusted profit before tax for the half year | 1,556 | 1,381 |
6 months ended | 6 months ended | ||
31 October 2011 | 31 October 2010 | ||
£000 | £000 | ||
Profit (loss) for the half year attributable to equity holders of the parent company (as reported) | 367 | (449) | |
Add back: | |||
Amortisation of acquired intangibles | 487 | 925 | |
| Exceptional items | 74 | 295 |
| Foreign exchange | (25) | 62 |
| Share-based payments expense | 235 | 138 |
| |||
| Adjusted profit for the half year attributable to equity holders of the parent company | 1,138 | 971 |
Calculations for adjusted earnings per share use adjusted profit for the half year attributable to equity holders of the parent company (shown above) and are detailed in note 4.
4. Earnings per ordinary share
Basic earning per share amounts are calculated by dividing earnings/(loss) for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.
Diluted earnings per share for the year amounts are calculated by dividing the loss attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period 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:
6 months ended | 6 months ended | |
31 October 2011 | 31 October 2010 | |
£000 | £000 | |
Profit (loss) for the period | 372 | (447) |
Less earnings attributable to non-controlling interests | (5) | (2) |
Profit (loss) attributable to equity holders of the parent | 367 | (449) |
6 months ended | 6 months ended | |
31 October 2011 | 31 October 2010 | |
'000 | '000 | |
Basic weighted average number of shares | 1,156,722 | 737,073 |
Dilutive potential ordinary shares: | ||
Employee and consultant options | 11,082 | 41,805 |
Diluted weighted average number of shares | 1,167,804 | 778,878 |
Where ordinary shares are issued at a discount to the market price, the weighted average number of shares should reflect that the discount is effectively a bonus given to shareholders for no consideration. The weighted average number of shares in the current year and prior year reflect this.
The amounts for earnings per share are as follows:
6 months ended | 6 months ended | |
31 October 2011 | 31 October 2010 | |
Basic earnings (loss) per share | 0.03p | (0.06)p |
Diluted earnings (loss) per share | 0.03p | (0.06)p |
Adjusted earnings per ordinary share
The Directors believe that reporting adjusted measures provides a more useful comparison of business performance and reflects the way in which the business is controlled.
To this end, basic and diluted earnings per share are also presented on this basis below.
Adjusted profit for the half year attributable to equity holders of the parent is calculated in note 3 above, and is as follows:
6 months ended | 6 months ended | |
31 October 2011 | 31 October 2010 | |
£000 | £000 | |
Adjusted profit attributable to equity holders of the parent | 1,138 | 971 |
The amounts for adjusted earnings per share using this adjusted profit for the half year attributable to equity holders of the parent are as follows:
6 months ended | 6 months ended | |
31 October 2011 | 31 October 2010 | |
Adjusted basic earnings per share | 0.10p | 0.13p |
Adjusted diluted earnings per share | 0.10p | 0.12p |
5. Approval by the Board of Directors and Audit Committee
The interim statement was approved by the Board of Directors and the Audit Committee on 13 December 2011 and is neither audited nor reviewed by the Group's auditors.
The Directors of EXPANSYS plc are listed in the EXPANSYS plc Annual Report for 30 April 2011. A list of current directors is maintained on the EXPANSYS plc website www.EXPANSYS.com .