19th Sep 2005 07:01
Telit Communications PLC19 September 2005 Press Release 19 September 2005 Telit Communications PLC Interim Results for six months ended 30 June 2005 Telit Communications PLC ("Telit" or "the Company"), the global wirelesscommunications developer and distributor, today announces its maiden InterimResults for the six months ended 30 June 2005. Highlights • Turnover increased 23% to €36.6 million (2004: €29.9 million on a proforma basis).• Gross profit increased 40% to €6.6 million (2004: €4.7 million).• Gross profit margins increased to 18.04% in the first half of 2005 against 15.8% in the corresponding period of 2004.• Operating loss decreased by 45% to €1.2 million (2004: €2.2 million).• Pre-tax loss decreased 45% to €0.9 million (2004: €1.8 million loss excluding exceptional income from the write off of a loan made in the first half of 2004 of €12.1).• Significant growth achieved in the Branded EVAR Business Unit with sales increasing by 31.5% coupled with growth in gross profits. This division increased operating profits by 118% over the comparative period of 2004.• In the Data Products Business Unit, turnover increased 7.3% compared to the first half of 2004, leading to a 12% decrease in operating losses. The comparative results in the first half of 2004 are excluding technology licensing and module sales agreements of €1.2 million to a customer based in the Far East as this contract was terminated by Telit at the beginning of 2005.• Continued investment in the Data Products Business Unit, with particular emphasis on expansion of the sales network, through distribution agreements in 44 countries and through the opening of sales offices in a number of countries in order to establish and expand the Company's future sales. Commenting on the results, Oozi Cats, Chief Executive Officer of Telit, said:"Following Telit's successful admission to AIM, we have made significantprogress over the corresponding period in 2004. "We have significantly developed the Branded EVAR Business Unit, our cashgenerator, with direct sales to operators in Italy and Israel as well as salesin the open market. In addition, we have expanded our offering and now offer acomprehensive line of products to the market. "In the Data Products Business Unit, our future value creator, we have continuedto invest in research and development of new products with our customers. Wehave seen a significant expansion in the infrastructure of this division withparticular emphasis on the development of a global sales network. "We have significantly increased our marketing and distribution organization byentering into distribution agreements with 22 distributors in 44 countries. "In addition, we have continued our development of a direct sales organisationin new markets by opening sales offices in a number of countries. "We are very encouraged by our first half results, and we expect growth tocontinue." For further information: Telit Communications plcOozi Cats, Chief Executive Tel: 00 39 040 419 2491 www.telit.com ---------------- Media enquiries: AbchurchChris Lane / Katherine Murphy Tel: +44 (0) 20 7398 [email protected] www.abchurch-group.com------------------------------- ------------------------- CHIEF EXECUTIVE'S STATEMENT AND REVIEW Introduction We are pleased to present Telit Communications PLC's first Interim Report sincethe Company's successful flotation on AIM in April this year and I am delightedto be able to inform shareholders that we achieved strong growth for the sixmonth period ended 30 June 2005. During the first half of the year we completed our listing on AIM raising £23million to invest in our two main business units and in our expansion strategy.At the same time, we have continued revenue and profit growth. Corporate governance We are seeking to establish Telit as a U.K. company with high levels ofcorporate governance, financial reporting and controls, and investor relations.At Telit we have put in place a professional and experienced board, with twoindependent directors as well as remuneration and audit committees. We reportunder International Financial Reporting Standards, and we have recently launcheda new investor relation's web site at www.telit.com. Financial results In line with the indications we provided in our trading update on 13 July 2005,the results for the first half of the year have been consistent with ourexpectations and demonstrate significant improvement in the Company'sperformance. Sales reached €36.6 million in the first half of the year, an increase of 23%,with the gross profit margin reaching a level of 18%, an increase of 14% againstthe first half of 2004. These improvements in sales and gross profit margin have led to a 45% decreasein operating losses. Branded EVAR Business Unit The Branded EVAR business unit is currently Telit's main revenue and profitgenerator. The Branded EVAR division develops software and hardware in its laboratorieslocated in Trieste, Italy and Tel Aviv, Israel for integration into cellularphones as well as other cellular-communication-based devices. We offer acomprehensive product portfolio that includes several different types of mobilehandsets, including CDMA, GSM, Smartphones and UMTS phones. Telit incorporatesits own comprehensive design and then distributes the products to the mainmobile operators and independent resellers under the well-known brand Telit. During the first half of 2005 sales from Branded EVAR increased by approximately31.5% compared to the first half of the prior year. In addition to the increasein sales, the gross profit margin increased by 29% reaching a level of 17% inthe first half of 2005. These solid results have led to a 118% increase in operating profits for theBranded EVAR Business Unit compared to the corresponding period last year. We have significantly increased sales to operators particularly in Israel andItaly. During this period, the Company appointed Renato Tomasini as head of BrandedEVAR for Italy. Mr. Tomasini brings 15 years of experience with Telit, Motorola,Siemens and Mobile Italia, and as General Manager of the mobile phone divisionof LG Electronics Italy. The Company has increased its number of suppliers from three in 2004 to seven in2005. New agreements with cellular equipment suppliers from the Far East,including Bellwave, Amoi and ZTE will enable us to broaden our line of products,as well as to offer a full range of devices to the market from entry level toUMTS phones. In addition, we have maintained our strong relationship withCuritel, a Korean supplier, in the CDMA market and expanded our cooperation witha new line of UMTS devices. The new supplier agreements will allow Telit's Branded EVAR division tointroduce a total of twelve new handsets this year compared with the fivehandsets that we introduced in 2004. Our sales in the open market in Italy were generated by distribution agreementswith some of the largest distributors in Italy. We have continued our productiverelationship with ADR throughout Italy, and we are finalizing an agreement withthree additional distributors to cover 70% of the retail stores throughoutItaly. As a result of these sales activities, we expect to be able to sustain ourgrowth rates in this highly profitable and cash generative business. Customersatisfaction with our Company's products is encouraging, and we expect sales toincrease as customers experience Telit's quality of service. Data Products Business Unit The development of the Data Products business unit is the key to our futurevalue creation, and we have invested heavily in it.The Data Products division conducts broad research and development to enable theCompany to offer an advanced and diverse array of product models. We have a fullline of machine-to-machine (m2m) GSM/GPRS products based on our proprietarytechnology. Our data products are suitable for a variety of applications,including remote metering and monitoring, vending machines, security systems,fleet management and point of sales terminals. Our offering contained two products in 2004 and has grown to six products in thefirst half of 2005. During the first half of 2005, our sales were focused onexisting products as well as new models including Trizium. Telit's GSM/GPRSproducts, Trizium-Quad and GM862-Quad modules, provide GPRS Class 10 capabilityand are now certified as "RoHS compliant". This certification conforms to theEuropean Union Restriction of Hazardous Substances (RoHS) directive (EUDirective 2002/95/EG). The Data Products division achieved sales growth of 7.3% compared to the firsthalf of 2004, and this has led to a 12% decrease in operating loss. Thecomparative results in the first half of 2004 exclude sales of €1.2 million forlicensing of technology and modules sales agreements to a customer based in theFar East. These licensing and sales agreements were terminated by Telit at thebeginning of 2005. Performance in the year to date, along with our reinforced focus on the m2mbusiness, has positioned Telit as a leading supplier in the Italian market. We have significantly expanded the infrastructure of the Data Products divisionwith particular emphasis on the development of a global sales network.During the first half of the year, we intensified marketing efforts in thisfield demonstrated by our participation in international exhibitions includingthe 3GSM World Congress in Cannes, France and CeBit 2005 in Hanover, Germany. Bydisplaying Telit's portfolio of products in this way, we have generated anetwork of connections, and have developed processes and customisations forfuture customers, which we expect to yield significant benefits in terms ofincreased sales over the next two years.In addition, we have significantly increased our marketing and distributionchannels by entering into distribution agreements in 44 countries, includingagreements with: • Microdis covering Turkey, Poland, Czech Republic, Slovakia, Hungary, Baltic States and CIS countries,• Azzurri Technologies covering Germany, Austria and Switzerland,• Sequoia covering UK and Ireland, and• Elektroinvest covering Bulgaria We also have initiated a marketing campaign with our existing distributor, ArrowSouthern Europe, to strengthen our market position in Spain and Portugal. In addition to the development of indirect sales via distributors, we havecontinued the development of a direct sales network in new markets by openingsatellite sales offices in Denmark, UK, Spain and Israel. In the second half ofthe year, we anticipate opening further satellite sales offices in Germany andItaly. During the period, we sold wireless data cards to cellular operators Wind(Italy) and KPN (Netherlands) and signed agreements with Base (Belgium) andEplus (Germany) for future sales. The potential growth of the Data Products division depends on our continuingsuccessful development of state of the art products as well as on securing thenecessary distribution agreements. At this point, our team of engineers aresupporting up to 500 new customer designs in progress. We are pleased to report a number of developments, which we believe willsignificantly develop future sales over the next two years. These developmentsinclude: • Selection by DKTS, a leading systems integrator, to supply GPRS modules forthe connection of cash registers in Serbia and Montenegro. IR Electronic, anArrow company, will act as Telit's distribution partner for this transaction. Weexpect the Company's participation in this new application field to lead tosignificant future sales. • Signing a Memorandum of Understanding with the European Commission's EmergencyCall initiative ("eCall") in order to secure an EU-wide commitment to creatingan in-vehicle emergency call service to help reduce the number of fatalities andaccidents on European roads. An on-board GSM-based emergency call system cansignificantly shorten the time it takes emergency services to be deployed. Theconsequence of the eCall campaign is that all cars sold from 2009 will beequipped with GPRS modules. Telit will be at the forefront of this campaign andwe will be able to position ourselves as a key supplier. • Appointment of Chicco Testa as a member of the Board of Directors of ourItalian subsidiary. Mr. Testa served as Chairman of the Board at ENEL SpA (theItalian provider of power and gas) and was a founder and member of the Board ofDirectors at WIND SpA. Mr. Testa is currently a member of the Board of Directorsof Rothschild SpA, Executive President at Roma Metropolitane SpA (the companybuilding the new underground lines in Rome), Vice Chairman of the World EnergyCouncil and Senior Partner of the Franco Bernabe Group, which owns severalinvestments in the IT sector. Signing an agreement with the Fondazione Ugo Bordoni ("FUB"), a foundation underthe control of the Italian Ministry of Communications. FUB is a non-profitorganisation, which has sole responsibility for implementing the Italiangovernment's strategy to switch from analogue to Digital Terrestrial Television(DTT) nationally commencing in February 2006. FUB and Telit have agreed tojointly develop a new concept for interactive TV services. The new concept isbased on a universal remote control incorporating a GSM/GPRS module and a basicSet-Top Box. Telit will provide to the market the universal remote control,which contains a patented wireless module technology designed by Telit. Prior toa rollout in Italy nationally, an initial government backed rollout is expectedto commence next February in Sardinia, a region in Italy with an estimated500,000 households. Outlook I am encouraged by our first half results and expect growth to continue. We are progressing with our strategy of expanding our product lines, enteringinto new markets and further developing marketing and sales capability in boththe Branded EVAR and in the Data Products markets. Telit will continue to be alert to new opportunities. We look to the future withconfidence. Oozi CatsChief Executive Officer CONSOLIDATED INCOME STATEMENT(Euro in thousands) Six months Six months Year ended ended ended 30 30 31 December June June 2 0 0 5 2 0 0 4 2 0 0 4 Unaudited Unaudited Audited ____________ ____________ __________ Revenues 36,624 29,877 75,343Cost of sales 30,018 25,159 63,174 ____________ ____________ __________Gross profit 6,606 4,718 12,169 Research and developmentexpenses (1,843) (2,482) (4,201)Selling and marketingexpenses (2,193) (1,267) (2,143)General and administrativeexpenses (3,760) (3,146) (7,602) ____________ ____________ __________Operating loss (1,190) (2,177) (1,777) Financial expenses, net (338) (315) (650) ____________ ____________ __________Operating loss afterfinancial expenses, net (1,528) (2,492) (2,427) Other income 583 12,814 12,093 ____________ ____________ __________(Loss) income before incometaxes (945) 10,322 9,666 Income taxes (494) (126) (327) ____________ ____________ __________(Loss) income after incometaxes (1,439) 10,196 9,339 Equity in results ofinvestees, net (87) (75) (321) ____________ ____________ __________Net (loss) income for the periodfrom continuing operations (1,526) 10,121 9,018 Loss for the period fromdiscontinued operations (391) (298) (596) ___________ ___________ __________ (Loss) income for theperiod (1,917) 9,823 8,422 ========== ========== ========= Basic (loss) earnings pershare (in Cents) (6.27) 54.87 47.05 ========== ========== =========Diluted (loss) earnings pershare (in Cents) (6.27) 54.87 47.05 ========== ========== ========= The accompanying notes are an integral part of the financial statements. CONSOLIDATED BALANCE SHEET (Euro in thousands) 30 June 30 June 31 December 2 0 0 5 2 0 0 4 2 0 0 4 Unaudited Unaudited Audited ___________ ___________ ___________ASSETS Current assetsCash and cashequivalents 24,871 1,119 582Trade accountsreceivable 22,431 18,767 34,777Receivables andother currentassets 5,820 3,026 8,400Inventory 9,615 12,971 6,093 ___________ ___________ ___________ 62,737 35,883 49,852 ----------- ----------- ----------- Non-current assetsInvestment inassociate 716 1,034 746Deferredexpenses 56 40 46Property, plantand equipment 1,353 1,654 1,558Intangibleassets 574 158 86Deferred incometax asset 3,678 3,674 3,687 ___________ ___________ ___________ 6,377 6,560 6,123 ----------- ----------- ----------- ___________ ___________ ___________ 69,114 42,443 55,975 =========== =========== ===========LIABILITIES AND SHAREHOLDERS'EQUITY Current liabilitiesShort-termborrowings frombanks and otherlenders 18,824 11,023 28,022Trade accountspayable 5,134 15,983 6,297Payables andother currentliabilities 3,990 5,260 9,633 ___________ ___________ ___________ 27,948 32,266 43,952 ----------- ----------- -----------Non current liabilitiesLoan fromparent company 4,073 556 4,121Retirementbenefit costs 1,762 1,549 1,591Provisions andother long-termliabilities 73 185 159 ___________ ___________ ___________ 5,908 2,290 5,871 ----------- ----------- -----------Shareholders' equityShare capital 627 - -Other reserve (260) - -Share premium 29,602 - -Translationadjustments (128) (581) (915)Retainedearnings 5,417 8,468 7,067 ___________ ___________ ___________ 35,258 7,887 6,152 ----------- ----------- ----------- 69,114 42,443 55,975 ========== ========== ========== The accompanying notes are an integral part of the financial statements. CONSOLIDATED CASH FLOW STATEMENT (Euro in thousands) Six Months Six Months Year ended ended ended June 30 June 30 31 December 2 0 0 5 2 0 0 4 2 0 0 4 Unaudited Unaudited Audited ____________ ____________ ___________CASH FLOWS - OPERATINGACTIVITIESNet (loss)income for theperiod (1,917) 9,823 8,422Adjustments to reconcile loss tonet cash provided by(used in)continuingoperatingactivities(Appendix A) 7,294 (23,605) (43,366) ____________ ____________ ___________Net cash provided by used incontinuingoperatingactivities 5,377 (13,782) (34,944)Net cash provided by used indiscontinuedoperatingactivities (388) (214) (429) ____________ ____________ ___________Net cashprovided by(used in)operatingactivities 4,989 (13,996) 35,373 ------------ ------------ ----------- CASH FLOWS - INVESTINGACTIVITIESAdditions tofixed assets (65) (98) (298)Proceeds fromdisposal offixed assets 15 196 215Additions tofinancialassets (190) - -Investment inassociate - (147) (409)Addition tointangibleassets (542) (10) (10) ____________ ____________ ___________Net cash usedin investingactivities (782) (59) (502) ------------ ------------ -----------CASH FLOWS - FINANCINGACTIVITIESShort-termborrowingsfrom banks andothers, net (10,257) 9,071 26,234Proceeds fromissuance ofshare capital 29,969 - -Loan from aparent company - - 4,121 ____________ ____________ ___________Net cashprovided byfinancingactivities 19,712 9,071 30,355 ------------ ------------ -----------Effect ofexchange ratedifferences 370 - (1) ------------ ------------ ----------- ____________ ____________ ___________Increase(decrease) incash and cashequivalents 24,289 (4,984) (5,521) Cash and cashequivalents-balance at beginningofperiod 582 6,103 6,103 ____________ ____________ ___________Cash and cashequivalents-balance at endof period 24,871 1,119 582 =========== =========== ========== Supplemental disclosure of cashflow information:Interest paid 363 207 503 =========== =========== ==========Income taxespaid 352 303 609 =========== =========== ========== The accompanying notes are an integral part of the financial statements. CONSOLIDATED CASH FLOW STATEMENT(Euro in thousands) Appendix A - Adjustments to reconcile net income to net cash provided byoperating activities Six months Six months Year ended ended ended 30 June 30 June 31 December 2 0 0 5 2 0 0 4 2 0 0 4 Unaudited Unaudited Audited ____________ ____________ ___________ Income and expenses not involvingcash flows:Depreciation and amortisation 333 365 665Deferred taxes 14 9 (5)Other loss (income) - 128 (3)Write-off of long term loan - (12,121) (12,090)Increase (decrease) in liabilityfor retirement benefit costs 170 (9) 33Capital fund to employees 267 - -Erosion of deposit designatedfor investment in associate (23) - 3Equity in results of associate 87 75 321Discontinued operations 391 298 596 Changes in assets and liabilities:Decrease (increase) in tradereceivables 13,725 (8,251) (24,685)Decrease (increase) in receivablesand othercurrent assets 2,815 4,797 (685)Increase in inventory (3,463) (8,609) (1,889)(Increase) decrease in tradepayables (1,047) 4,876 (4,563)(Increase) decrease in othercurrent liabilities (5,975) (5,163) (1,064) ___________ ___________ __________ 7,294 (23,605) (43,366) =========== =========== ========== The accompanying notes are an integral part of the financial statements. STATEMENT OF CHANGES IN EQUITY(Euro in thousands) Six months ended 30 June 2005 (Unaudited) ------------------------------------------- Share Other Share Translation Retained capital reserve premium, adjustment earnings Total net __________ ________ _________ __________ __________ ________ Balance- 1January, - - - (915) 7,067 6,1522005 Reverseacquisitioncapitaladjustment - - - - - -Issue ofshare 388 (260) - - - 128capitalInitialpublic 239 - 29,602 - - 29,841offeringTranslationadjustments,net - - - 787 - 787Compensationforemployeesoptions - - - - 267 267planNet loss forthe period - - - - (1,917) (1,917) _________ ________ ________ _________ _________ ________ Balance-30June 2005 627 (260) 29,602 (128) 5,417 35,258 ========= ======= ======== ========= ========= ======= Six months ended 30 June 2004 ------------------------------- Share Translation Retained capital adjustment earnings Total _________ _________ _________ _________ Balance- 1 January 2004 - (645) (1,355) (2,000)Translation adjustments,net - 64 - 64Net income for the period - - 9,823 9,823 __________ ___________ __________ __________ Balance-30 June 2004 - (581) 8,468 7,887 ========= ========= ========= ========= Year ended 31 December 2004 ----------------------------- Share Translation Retained Capital adjustment earnings Total _________ _________ _________ _________ Balance- 1 January 2004 - (645) (1,355) (2,000)Translation adjustments,net - (270) - (270)Net income for the period - - 8,422 8,422 __________ ___________ __________ __________ Balance-31 December 2004 - (915) 7,067 6,152 ========== ========== ========= ========= The accompanying notes are an integral part of the financial statements. NOTES TO THE INTERIM FINANCIAL STATEMENTAT 30 JUNE 2005 (UNAUDITED) 1. Telit Communications PLC ("the Company") was incorporated and registered inEngland and Wales as a public limited company on 30 November 2004 under theCompanies Act 1985.On 4 April 2005, the Company completed an Initial Public Offering on the AIMMarket, for the issue of 16,428,571 ordinary shares, at a price of 140 p. pershare, for aggregate proceeds of 20.5 million (approximately • 30 million), netof certain issuance costs and expenses. The Company has control over two Israeli consolidated subsidiary companies - DaiTelecom Holdings (2000) Ltd. (formerly Polar Trade and Services Ltd.-"DaiIsrael"), of which the Company holds 100% of its issued and paid in capital, andDai Telecom Ltd., of which the Company holds directly 20% of its issued and paidin capital, and indirectly an additional 80% through the Holdings in Dai TelecomHoldings (2000) Ltd. The company also owns 100% of the issued and paid incapital of Dai Telecom SPA ("Dai Italy) (all together - "the Group"). The Groupis currently engaged in the following two main activities: • Data Product (DP) - Development manufacturing and sale of modules - cellularproducts for transmitting data designed for the (machine-to-machine) telecommarket and services entailing the development and licensing of cellulartechnology to third parties based on the Company's technological property.• Branded Enhanced Value Added Reseller (BEVAR) - Distribution of cellularproducts manufactured in the Far East on the Israeli, Italian and Europeanmarket and rendering warranty on this equipment. 2. The consolidated interim financial statements of the Company has beenprepared on the accounting policies set out in the Group's 30 June 2004statutory accounts and have not been audited. The interim financial statementsdo not constitute statutory accounts within the meaning of Section 240 of theCompanies Act 1985. The Company has treated the acquisition of Dai Telecom Holdings (2000) Ltdaccording to the reverse acquisition method described in IFRS 3. Accordingly theacquisition has been treated as if Dai Telecom Holdings (2000) Ltd had acquiredthe Company. The comparative figures relate to Dai Telecom Holdings (2000) Ltd.The accounting policies applied in these interim financial statements areconsistent with those of Dai Telecom Holdings (2000) Ltd for the year ended 31December 2004 which were prepared under International Financing ReportingStandards (IFRS). 3. (Loss) earnings per share: 6 months ended 6 months ended Year ended 30 June 30 June 31 December 2005 2004 2004 (Loss) earnings for the period (1,917) 9,823 8,422Weighted average number ofequity shares in issue 30,558,033 17,901,785 17,901,785Basic (Loss) earnings per sharefrom continued operation (4.99) 56.53 50.38Basic loss per share fromdiscontinued operation (1.28) (1.66) (3.33)Basic (Loss) earnings per share (6.27) 54.87 47.05Diluted (loss) earnings pershare from continued operation (4.99) 56.53 50.38Diluted (loss) earnings pershare from discontinuedoperations (1.28) (1.66) (3.33)Diluted (loss) earnings pershare (6.27) 54.87 47.05 The calculation of basic (loss) earnings per share is based on the loss for thesix months and on a weighted average number of ordinary shares of 1p each inissue during the period. The diluted (loss) earnings per share for the currentperiod includes the impact of 1,141,071 outstanding ordinary share optionsduring the period. 4. The Directors have not declared an interim dividend. 5. The Company was incorporated with a share capital of 50,000 divided into50,000 ordinary shares of 1 each of which two shares were in issue. On 24 March, 2005 the Company passed an ordinary resolution to sub-divide theissued and authorised ordinary shares of 1 each in the capital of the Companyinto 100 shares of 1p each, and an ordinary resolution to increase theauthorized share capital of the Company to £800,000 divided into 80,000,000shares of 1p each. On 24 March 2005, the Company issued to its parent company - Polar InvestmentsLtd., 17,901,785 ordinary shares of 1p each in the capital of the Company. Inaddition, the Company allotted 3,883,925 ordinary shares of 1p each to certainofficers and directors of the Group, in consideration for their waiver ofoptions held by them over shares in Dai Israel and Dai Italy. On 4 April 2005, the Company completed an Initial Public Offering on the LondonAIM Market, for the issuance of 16,428,571 ordinary shares, at a price of 140pper a share, for an aggregate proceed of 20,515,000 (approximately €30 million),net of certain issuance costs and expenses. 6. Following the final settlement of all controversies between the Company'ssubsidiaries Dai Italy and Nuove Iniziative SpA and the mutual waivers of allclaims filed by Dai Italy and Finmek S.p.A, Dai Italy recorded net income of€548,000 resulting from offsetting of all the outstanding balances between theparties. The net income has been recorded as other income in the incomestatement for the six months ended 30 June 2005. 7. In November 2004, a lawsuit was filed against Dai Italy by a third partyclaiming compensation for damages suffered as a consequence of alleged breachesof obligations under two contracts executed between the parties on 28 October2002. The third party is claiming an amount of R$ 10.9 million, equivalent toapproximately US$ 3.8 million. Dai Italy has filed a defence brief. Dai Italy'smanagement, based on legal advice, believe it is probable that Dai Italy willmake no payment. 8. Pursuant to the restructuring of Dai Italy which commenced on its acquisitionin 2002, Dai Italy is expected to incur dismissal costs in the second half of2005 under Italian labour legislation of approximately €800,000. In the past theCompany has had to make payments in respect of the dismissed employees, suchpayments will no longer be made following payment of the above mentioned sum. 9. Pursuant to an agreement between the Company, Great Court Capital LLC and SDPartners LLC (together "SD Partners") referred to in the AIM Admission document,SD Partners received payments of £500,000 and US$50,000 and are entitled to awarrant to purchase 492,857 ordinary shares in the Company at the Placing Priceat the time of the Company's flotation on AIM. 10. For management purposes, the group is currently organised into two operatingdivisions, Data Products and Branded Enhanced Value Added Reseller ("BEVAR").These divisions are the basis on which the Group reports its segmentinformation. Segment information of these businesses is presented below. Six months ended Year ended June 30 31 December 2 0 0 5 2 0 0 4 2 0 0 4 Unaudited Unaudited Audited _______________ ______________ ____________ REVENUESBEVAR 32,105 24,417 63,583 _______________ ______________ ____________ DATA PRODUCT 4,519 5,460 10,738 _______________ ______________ ____________ CONSOLIDATEDExternalrevenues 36,624 29,877 74,321Unallocatedincome - - 201 _______________ ______________ ____________ Total revenue 36,624 29,877 74,522 --------------- --------------- ---------------OPERATING PROFIT (LOSS)BEVAR 2,261 1,038 3,340Data Product (3,074) (3,215) (6,000)Unallocatedincome - - 201 _______________ ______________ ____________ (813) (2,177) (2,459)Unallocatedcorporateexpenses (377) - (126) Operating loss (1,190) (2,177) (2,585) --------------- --------------- --------------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
TCM.L