Final Results

eg solutions plc ("eg solutions" or "the Company"; LSE-AIM: EGS), the back office optimisation software company, announces its unaudited results for the year ended 31 January 2011.

Financial Highlights:

·; Revenue up 21% to £5.1m (2010: £4.2m)

·; Profit before tax and costs relating to the XTAQ acquisition* up 400% to £0.5m (2010: £0.1m)

·; Positive cash generation - year-end cash: £0.5m (2010: £0.4m)

·; Basic Earnings Per Share 3.7p (2010: 0.7p)

·; £0.6m invested in R&D (2010: £0.6m)

* Costs relating to the XTAQ acquisition comprises £96,000 (2010: nil) consisting of £67,000 professional services costs and £29,000 management costs.

Operational Highlights:

·; Good flow of new orders from existing and new customers

·; Acquisition of XTAQ Limited fully integrated and pipeline converted, as planned, with £1.1m closed sales

·; Significant increase in South African revenues

·; Winner of Birmingham Post International trade & export award

·; ICT certification from Accredit UK, recognising high standard of software product design and development

On Current Trading and Outlook, Rodney Baker-Bates, non-executive Chairman stated:

"The momentum of last year has continued. We have a strong sales pipeline and expect to continue to win new contracts from existing and new customers, as well as benefiting during 2011/12 from contracts won last year.

"Current trading is positive, with contracted and recurring revenues accounting for 54 per cent of our expected revenues for the year (2010: 52 per cent).

"The Board plans to build on this success and we are confident that the Company will achieve further profitable growth in the coming year."

CONTACTS

About eg solutions plc

eg solutions plc is a global back office optimisation software company. Our software provides historic, real-time and predictive Operational MI. When implemented with our training programme for managers and team leaders to use this intelligence, we guarantee improvements in operational results in short timescales.

The Company, which is listed on the Alternative Investment Market ('AIM') of the London Stock Exchange, is committed to customer satisfaction and the ongoing development of its operations management solutions.

CHAIRMAN'S STATEMENT

Introduction

I am pleased to be able to report another successful year for eg. The business has built upon the solid foundations established between 2007 and 2009 to deliver strong profitable growth and further strengthened our platform for future expansion. As anticipated, the past year has seen the full potential of the back office optimisation market starting to emerge, in both the UK and overseas. At the same time financial institutions have continued to focus on minimising back office costs and improving operational control. This has translated into strong demand for eg's products and services with trading in the second half of the year continuing the momentum of the first half.

The growth in revenue achieved reflects contract wins from both new and existing customers, with a strong performance by our South African business which reported more than £1.2 million of revenues during the full year (2010: £0.35 million). The UK business benefited from significant repeat business from existing customers as well as the order pipeline of XTAQ, acquired in March 2010, converting according to plan.

We have continued to maintain tight control over costs, taking action in the second half following the acquisition of XTAQ to reduce the overall cost base. This resulted in improved margins and strong operational cashflow.

Financial results

Our financial performance demonstrates our success in creating a business platform that can consistently generate and sustain high quality revenue. Last year total revenues increased by 21 per cent to £5.1 million (2010: £4.2 million), with software licences, maintenance and software services contributing 68 per cent of revenues (2010: 70 per cent) and the balance coming from implementation and training services. Overall gross margin for the year was maintained at 63 per cent (2010: 63 per cent) although, excluding sales of third party licences by XTAQ, underlying gross margin on our core product sales improved.

Underlying profit before tax and costs relating to the XTAQ acquisition increased by 400 per cent to £0.5 million (2010: £0.1 million), demonstrating the scalability of the business, with strong revenue growth being achieved on a well managed cost base. Costs relating to the XTAQ acquisition comprises £96,000 (2010: nil) consisting of £67,000 professional services costs and £29,000 management costs.

After a tax credit of £127,000, underlying profit after taxation and costs relating to the XTAQ acquisition was up 500 per cent to £0.6 million (2010: £0.1 million).

Operating cashflow was £814,000 (2010: £728,000). The Company has a healthy balance sheet with cash and cash equivalents at 31 January 2011 of £0.5m (2010: £0.4 million).

The Board is not recommending the payment of a final dividend as we continue to re-invest profits in expanding the business.

Current trading and outlook

The momentum of last year has continued into the start of this year. We have a strong sales pipeline and expect to continue to win new contracts from new and existing customers, as well as benefiting during 2011/12 from contracts won last year.

Current trading is positive with contracted and recurring revenues accounting for 54 per cent of our forecast revenues for the year (2010: 52 per cent).

The Board plans to build on this success and we are confident of further profitable growth in the current year.

Rodney Baker-Bates

Non-executive Chairman

24 March 2011

CHIEF EXECUTIVE OFFICER'S STATEMENT

Overview

The increasing momentum in eg's financial performance over the past year reflects strong underlying demand for our products and services, together with our focus on developing and delivering back office optimisation solutions that deliver tangible cost savings for our customers. This has enabled us to grow revenues from existing users as well as expand our customer base both organically and through the acquisition of XTAQ Limited.

eg's financial performance follows management's decision three years ago to restructure the fundamentals of the business. This involved focusing on building recurring and repeatable revenues, changing the implementation model to enable clients to do more of the implementation work themselves, reducing direct and overhead costs and investing in product development. Our success in selling eg's products and services more widely and deeply to existing customers has also enabled us to deliver strong recurring and repeatable revenues and the product development undertaken has ensured that the Company's technology platform is both robust and scalable as well as compatible with the 'cloud' and other technologies used in enterprise management systems.

The Nuqleus product set, acquired with XTAQ, provides real-time data capture capability that reduces manual data entry routines. For our customers this provides an alternative integration mechanism with incumbent IT platforms without diverting their IT resources from other priorities. We are also addressing the growing demand from organisations seeking to combine the provision of real-time and historic management information from the back office with more advanced forecasting and planning capabilities usually found in the front office. This is achieved using our own products as well as by exporting data into the solutions either of other vendors or developed by our customers.

Internationally, the growth and profitability achieved in South Africa was encouraging and validates the Company's decision to invest in that market. Following this success, and with opportunities identified with a number of customers and other business partners, we are planning to expand selectively into other new territories.

During the year, we have continued to maintain tight cost control and achieved annual savings of approximately £165,000 following the acquisition of XTAQ Limited.

Business development and operations

Market development

The growth potential of the back office optimisation market is increasingly being recognised. DMG Consulting estimated in its 2010 Workforce Management Market Report, that the back office market has the potential to become at least three to seven times the size of the contact centre segment of the workforce management market. Other analysts have also forecast that demand for new types of software that continuously monitor and analyse people and process could have a value of approximately $3.5 billion over the new few years.

For eg this will mean new sales opportunities as workforce management vendors increase their marketing of 'back office' solutions. We are well placed to capitalise on the significant growth in market demand we expect over the next few years. The range of eg's products and services addresses each of the key aspects of back office optimisation requirements, including resource forecasting and planning, end-to-end as well as intra-day and intra-process work allocation and tracking, and operational management and reporting, all in real- time.

Growing industry recognition of eg as the provider of the most comprehensive back office optimisation software functionality will be a significant factor in our future success and it is encouraging, as we move forward, that we have strong endorsement of our products through our growing customer base.

Customer base growth

During the past year the total number of eg customers increased from 29 to 42. The expansion of our customer base reflects the growing recognition of eg'sleading position in the back office optimisation market, our strong long-term customer relationships, the measurable value added by our products and services and the benefits of the Company's technology and product development programme.

New projects undertaken during the year included implementations of Nuqleus in the UK for Aviva, Bradford & Bingley and Citibank, with a further contract signed at the end of the year with Produban UK, part of the Santander group. Other projects included the roll-out of eg work manager® for Vital, a Norwegian life and pensions insurance company, and services relating to the implementation of licences bought by Nationwide and a major UK life and pensions company in 2009/10. Wins in South Africa included implementations for one of South Africa's largest healthcare Administrator in the open and closed medical scheme markets,Silica (an outsourcing company) and a pilot implementation for Alexander Forbes (provider of financial and risk services).

During 2010 eg's Professional Services team undertook over 20 fee earning projects for existing customers looking to leverage their investments in our products. Significantly a number of these projects involved customers migrating their systems onto new virtualised server platforms and we believe such projects will be a trend through 2011. Custom reporting projects were also significant as customers looked to publish increasingly sophisticated operational management information across their enterprises. Significant projects included;

·; A First Contact Resolution Reporting project for a major outsourcer

·; A Virtual Server Migration project for a major building society

·; Development of a real-time Customer Experience Management enquiry tool for the call centre of a major outsource provider

·; A Field Sales New Business reporting project for a major UK insurer, and

·; A major platform migration project for a customer centralising and virtualising their eg servers.

Underpinning our growth is a high level of repeat business, with approximately 60 per cent of revenues last year coming from existing customers who provide strong endorsement of eg's products and services. Customer service remains a key priority for eg and in a recent survey, 100 per cent of eg's customers said that they would recommend the Company to others, the majority because of the results achieved. Also in the bi-annual customer satisfaction survey of our Helpdesk and Software Support service, covering 41,000 software users, the Company scored an average of 8.4 out of 10 for the quality of service provided.

Technology and product development

During the year the Company continued to enhance and develop both its technology platform and its products to improve performance, add functionality and enable delivery across any enterprise system.

Key product developments included:

·; Completion of eg work manager® v6.0, a 'thin client' web browser version of eg's core eg work manager® product, built using the latest Microsoft Silverlight and Windows Communication Foundation technologies. This latest product has been designed to enable customers to deploy and extend the use of eg work manager® more easily, providing a lower total cost of ownership for deployments 'on premise' or 'on the cloud'. The product has been designed to work with the existing eg work manager® database, enabling both new and existing customers to use the new version without the need for existing product upgrades;

·; Enhancement to the eg integration framework™, an open, standards based Software Development Kit (SDK) designed to simplify and shorten integration project timescales;

·; Enhancement to Nuqleus to enable integration with Verint® Impact 360® Recording™ system for call centres and for compatibility with zero footprint Citrix environments;

·; Further releases of eg operational intelligence® and eg operational intelligence® data views;

·; The release of a new product, eg operational intelligence® data views for BusinessObjects enabling customers with SAP BusinessObjects business intelligence platforms to interrogate eg's operational data via a BusinessObjects universe; and

·; Certification of eg work manager® and eg operational intelligence® for Microsoft Server 2008 and SQL Server 2008 platforms.

 Acquisition

The integration of the operations and products of XTAQ, acquired in March 2010, was completed as planned along with approximately £165,000 of cost savings achieved by centralising operations at eg's office and streamlining the XTAQ business.

The addition of the Nuqleus software into the eg product set extends our ability to meet the back office optimisation requirements of our customers. Nuqleus is the logical entry product for customers who want to begin the measurement, management and improvement stages to transform their operational performance.

Against this background, a significant focus for the UK business in 2010 was converting XTAQ's pipeline and implementing the projects concerned. Orders for Nuqleus won during the year had a total value of approximately £1.1 million. The first project, with Aviva, moved to further roll-outs having successfully completed the pilot stage prior to acquisition. Other wins include contracts from Citibank and Bradford & Bingley, with a contract with Produban UK, part of the Santander group being closed at the end of the year.

The final consideration for XTAQ was £175,893 comprising £33,333 in cash and £142,560 in 5% Convertible Unsecured Loan Notes 2012, convertible at 82.5 pence per share. Since completion, options for 1.13 million eg shares, with a 4-year vesting period and an exercise price of 55 pence, have been awarded to key XTAQ employees on achievement of agreed sales targets.

Industry recognition

In July eg achieved ICT certification from Accredit UK in recognition of the high standard of our software product design and development. In September eg won the International Trade & Export category of the inaugural Birmingham Post Business Awards 2010.

People

eg is fortunate in being able to attract and retain good quality people and the Company is committed to providing training and career development programmes to enable this to continue.

At the end of 2010, 72 per cent of eg employees had been with the company for 5 years or more with the Staff Satisfaction Survey for 2010 showing an overall satisfaction score of 8.3 out of 10.

The Board would like to thank everyone at eg for their efforts during the past year.

 Future priorities

eg has demonstrated through the momentum achieved over the past year, that it has the management, products and scalable business model to capitalise on the substantial opportunities available in the emerging back office optimisation software market.

Following the successful integration of XTAQ and, with customer demand continuing to be strong, the Company will continue to grow its order pipeline in both the UK and overseas.

Elizabeth Gooch

Chief Executive Officer

24 March 2011

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 JANUARY 2011

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 JANUARY 2011

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 JANUARY 2011

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

The share based payment reserve is a reserve to recognise those amounts in retained earnings in respect of share based payments.

The own shares held reserve represents the shares held in trust by the eg solutions Employee Benefit Trust.

Retained earnings include the accumulated profits and losses arising from the consolidated statement of comprehensive income excluding foreign exchange differences.

The foreign exchange reserve comprises all exchange differences arising from the translation of the financial statements of overseas operations.

Other reserves represent the fair value adjustment to the convertible loan notes.

Notes

1. Basis of Preparation

The accounts for the year ended 31 January 2011 are in the final stages of completion. The auditors anticipate issuing an unmodified opinion.

The information in this preliminary results announcement has been prepared on the basis of the accounting policies which will be set out in the Group accounts for the year ended 31 January 2011 and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. Full accounts of eg solutions plc for the year ended 31 January 2010, which were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain statements under Section 498(2) or (3) of the Companies Act 2006.

The preliminary results announcement for the year ended 31 January 2011 was approved by the Board of Directors on 24 March 2011.

2. Business Combinations

Acquisition of XTAQ Limited

On 11 March 2010, the Group announced the acquisition of XTAQ Limited, a developer and supplier of business performance measurement software and associated services.

The consideration paid by the Company for XTAQ comprised of £33,333 in cash and the balance by the issue of £142,560 in 5 percent Convertible Unsecured Loan Notes 2012 ("Loan Notes"). On the second anniversary of their issue the Loan Notes are repayable or convertible into New Ordinary Shares at a price per share of 82.5p. The Company may require holders to convert if, for at least 20 consecutive business days, the average share price of an ordinary share in the Company shall be 82.5p. No premises or property lease liabilities were acquired.

Following completion of the acquisition of XTAQ its employees were granted an aggregate of up to 1,393,938 options to subscribe for new ordinary shares in the Company, at an exercise price of 55p, the closing mid-market price of an ordinary share in the Company on 10 March 2010, being the last business day prior to the acquisition. The number of options that may be exercised will depend, on a sliding scale, on the achievement of pre-determined XTAQ revenue performance in the 12 months ending 31 March 2011 and are subject to a 4 year vesting period from the date of issue.

Founded in 1993 XTAQ Limited was a privately owned business based in Bristol employing eight people. The business had developed its Nuqleus business performance measurement software which it distributed with support services to deliver improved operational performance and effectiveness. Customers can deploy Nuqleus strategically throughout the enterprise or as a point solution to address particular operational management information requirements. XTAQ's customers included Barclaycard, Citibank, GE Capital and Principality Building Society as well as a number of public sector clients.

In the year to 31 March 2009 XTAQ's audited turnover was £0.55 million, on which it incurred a loss before tax of £0.15 million. As at the same date XTAQ had a deficit on net assets of £0.05m.

The trade and net assets of XTAQ Limited were hived up to the parent company on 1 June 2010.

The consolidation and fair values of XTAQ Limited are shown below:

The fair value adjustments relate to the valuation of XTAQ development assets and tax liabilities identified at acquisition.

3. Revenue

An analysis of the Group's revenue is as follows:

4. Profit from operations

This is stated after charging:

5. Earnings per ordinary share

From continuing operations

EPS has been calculated using the following methodology:

Basic earnings per share are calculated by dividing the earnings attributable to ordinary shareholders by the number of weighted average ordinary shares during the period. The number of shares excludes shares held by an Employee Benefit Trust.

For diluted earnings per share, the number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. These represent share options granted to employees and 5% Convertible Loan Notes.

When the Basic EPS is a negative value, the effects of anti-dilutive potential ordinary shares are ignored in calculating diluted EPS.

6. Reconciliation of group profit before tax to net cash generated by operations

7. Availability of this announcement and Annual Report & Accounts

Copies of this announcement are available on the Company's website: www.eguk.co.uk. The Annual Report & Accounts and Notice of Annual General Meeting will be sent to shareholders in due course and will also be available on the Company's website from the date of posting.

- ENDS -