13th Mar 2006 07:02
Fonebak plc13 March 2006 Fonebak plc INTERIM RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2005 Fonebak, the leading outsource provider for refurbishment, resale or recycling,and repair of mobile phone handsets and related products and services, todayannounces its interim results for the six months ended 31 December 2005. TheCompany has continued to make sound progress in each of its market and serviceareas and interim results are in line with market expectations, following theacquisition of Intec in July 2005 and growth in the original Fonebak market. FINANCIAL HIGHLIGHTS • Headline group turnover of £28.6 million (2004: £18.2 million) • Headline group operating profit, before goodwill amortisation and exceptional items, of £1.54 million (2004:£1.28 million) • Profit before taxation was £0.52 million (2004: loss of £0.56 million) (The comparative figures above are taken from the pro forma comparative information for 2004-05) OPERATING HIGHLIGHTS • Continued growth in Europe with increased client development and support services in Belgium, France, Portugal, Italy and Turkey. • Inbound handset volumes have shown a good increase on 2004 and Fonebak now receives over 30% of its product from mainland Europe • Outbound handset volumes climbing, with strong demand from developing economies where handsets are not subsidised and the cost is prohibitively expensive for the majority of the population • Return of handsets driven by the forthcoming Waste Electrical and Electronic Equipment ("WEEE") directive and increasing environmental and corporate social responsibility concerns Kathy Woodward, Chief Executive of Fonebak Plc, commented: "We are pleased to report that Fonebak's financial performance has been in linewith market expectations over the past six months. "Our client base, our strong customer relationships and our systems andfacilities provide the foundations to harness the tremendous opportunities inthe ever-developing mobile world. Our commitment to Corporate SocialResponsibility and the environment continues to be an important part of bothFonebak's culture and our service offering to our clients." 13 March 2006 Enquiries: Fonebak PlcKathy Woodward, Chief Executive Officer 01708 683400Pelham Public RelationsJames Henderson 020 7743 6673Charles Vivian 020 7743 6672 CHAIRMAN'S STATEMENT I am pleased to report that in the first six months of our financial yearFonebak has continued to make sound progress in each of its market and serviceareas and that interim results are in line with market expectations. Following the acquisition of Intec in July 2005 and growth in the originalFonebak market, turnover for the six months ended 31 December 2005 has grown to£28.6 million from £18.2 million for the comparative period in 2004. Operatingprofit before exceptional items and goodwill amortisation, despite additionalinvestment in a number of developmental activities, remains in line withexpectations at £1.54 million for the six months ended 31 December 2005,advancing from £1.28 million in comparison to the same period in 2004. Profitbefore taxation was £0.52 million for the six months to 31 December 2005compared to a loss of £0.56 million for the six months to 31 December 2004.(The comparative figures above are taken from the pro forma comparativeinformation for 2004-05.) Activities Fonebak's core activity, which builds on its long established environmental andcorporate social responsibility reputation, supplies a portfolio of servicessupporting mobile phone re-use and recycling. Our principal clients are networkoperators, retailers and manufacturers based throughout Europe and retail anddistribution customers in developing economies. Fonebak has continued to invest in widening its geographical presence,broadening its repair and refurbishment capability, and developing itssupporting information systems and customer service and marketing services. Allof these activities combine to deliver financial and environmental efficienciesto our Inbound Clients and affordable communications to our Outbound Customers. Market environment The mobile phone sector remains highly competitive. Technology, fashion andaggressive marketing to acquire and retain clients, by both networks andmanufacturers, continues to fuel handset sales and exchange initiatives.Fonebak has positioned its services to meet the varying client demands acrossthe full spectrum of post handset sale activities in an increasing number ofEuropean locations and has seen continuing growth in its inbound units receivedfor processing. At the same time, customers in our outbound markets, which are principally inemerging economies, rely on Fonebak to meet their needs for a consistent supplyof quality re-used handsets that fulfil a market requirement where the cost ofeven the lowest--priced new handset is still prohibitively expensive for amajority of their market population Intec acquisition The strategic acquisition of Intec announced on 1 August 2005, which is nowfully integrated into Fonebak, brought with it over twelve mobile phone handsetmanufacturer accreditations as well as extensive repair technology, knowledgeand skills that have combined with our low-cost operations in Romania, enablingus to maximise the re-use potential of inbound mobile handsets. Fonebak solution Despite many of our clients moving into an era focused on cost reduction,compliance with European environmental legislation and brand risk managementremain key in their business strategies. The Fonebak solution brings bothfinancial return and customer care support while enabling clients to manage thewhole life cycle of their handsets, incorporating and demonstrating the higheststandards of environmental care and corporate social responsibility. Environmental concern remains central to our own business strategy. We havecontinued to make good progress in our environmental initiatives under our WorldRecycling Support Programme. Current projects include United Nations, Nationaland International Government, Education and Charitable partnerships. Outlook In conclusion, we have a stable international management team in place with acommon set of values, which has demonstrated its ability to grow a profitableand cash-generative business. It has the experience and drive to take thecompany to the next stage of its development. The board remains confident indelivering results in line with its expectations for the year ending 30 June2006. Gordon Shields Chairman 13 March 2006 CHIEF EXECUTIVE'S STATEMENT Fonebak's strategy Fonebak's core business continues to be the provision of a portfolio of servicessupporting the mobile phone sector in a wide range of activities associated withmobile phone handset management. Our clients and customers are principallymobile phone network operators, retailers based in Europe and in the developingeconomies and handset manufacturers. The spectrum of our activities cover: • harnessing and maximising the financial returns of the very large number of handsets that are exchanged each year; • delivering a wide range of mobile phone handset insurance, warranty, and associated services; • providing our clients with the environmental management systems that allow them to comply with both local and international environmental legislation. While the revenues from the resale of mobile phone handsets plays a criticalrole in funding our clients' (those companies from whom we receive handsets) andcustomers' (those companies that buy handsets from us) market developmentinitiatives, the impact of environmental concerns and corporate socialresponsibility branding is of increasing importance for both our clients andcustomers. Our clients continue to see the management of returned handsets as beingbusiness critical in terms of both the forthcoming Waste Electrical andElectronic Equipment ("WEEE") directive and their environmental and corporatesocial responsibility branding. It is increasingly common for our clients to include the volume of returnedhandsets as a specific business measure and for them to identify the managementof returned handsets as a specific business and brand risk. Our objective is to be the outsourced service provider of choice providingaccess to an end-to-end service across the full spectrum of service requirementsassociated with handset management. Developing in-bound markets Over 15 million handsets are exchanged in the UK alone each year. We workclosely with our clients to promote ways to encourage their consumers to returnreplaced handsets. While many mobile phone networks and retailers offer theirclients financial or service incentives to return products, others promote theenvironmental or corporate social responsibility benefits of reuse andrecycling. Our marketing, customer care and market development team offer a portfolio ofservices to support our clients' own marketing activities. These servicesinclude: design, advertising, exhibition and media support services. Our strategy over the last six months has been to increase the range of serviceswe offer, including direct consumer services and support, with a range of client-driven incentive programs. Our direct consumer services have included direct-to-doorstep mailings to several million customers and direct-to-consumer rebatemanagement. The acquisition of Intec in July added breadth to our portfolio with its rangeof client and consumer repair services that it operates on behalf of majornetworks and retail clients. We have also continued to develop our European footprint and this now includesclient development and support services in Belgium, France, Portugal, Italy and,most recently, Turkey. Our inbound volumes for the last six months have shown a pleasing increase onthe same period in 2004 and we now receive over 30% of our product from mainlandEurope. Repair and refurbishing operations While our overall strategy is to be a post-sale mobile phone handset servicesmanager, rather than a dedicated mobile phone handset repair provider, we havenevertheless developed some of the most comprehensive repair and refurbishingfacilities in Europe to support our wider service proposition. The acquisition of Intec (through Intec Cellular Services) brought repairaccreditations for twelve different manufacturers to the group. Intec's UKfacilities complement our existing repair operations in Bucharest, Romania andenable the group to offer our clients best value processes allowing them tomaximise value from handsets whilst also meeting their environmental obligationsand their customer service standards. Developing outbound markets In 2004, the GSM Association noted that the usage of GSM handsets worldwide hadsurpassed 1 billion users and predicted that the next 1 billion GSM user marketwas about to come of age. During 2005, the GSM Association noted that GSMhandset users had surpassed 1.5 billion worldwide. Most recently in 2006, theGSM Association notes that GSM users are heading towards 2 billion worldwide. Against this background, there continues to be strong demand for our product indeveloping economies where handsets are not subsidised and where the cost of newhandsets is prohibitively expensive for the majority of the population. Fonebak has continued to build its brand reputation in Africa, Eastern Europeand Asia Pacific and is recognised as a leading supplier of quality refurbishedproducts that are priced at a significant discount to even the lowest priced newhandset. Our outbound customer relations remain strong as we continue to support ourcustomers as they build their own retail brands in each territory. World Recycling Support Programme We have over twenty years experience in managing recycling services for thetelecommunications industry and we have continued to participate in the fullrange of consultation forums, often on behalf of our clients, that will shapethe implementation of forthcoming legislation and associated guidelines. While the implementation of the WEEE legislation within the UK has been delayedonce again, we are confident that our systems and reporting already provide ourclients with full compliance. Our environmental credentials are at the heart of our business. In addition tothe services we provide to our clients and customers we are also committed toraising environmental awareness and corporate social responsibility in thegeographies in which we operate. Our recent initiatives include national and international media programmes,educational sponsorship, and training initiatives. We were delighted to beshort-listed as Corporate Social responsibility company of the year in theOrange-sponsored National business awards and equally pleased that, togetherwith our clients, we have been able to support over one thousand charities,which have collectively received over £1 million during the year from Fonebak-generated revenues. Summary We have a strong and stable management team that have been together since theearliest days of Fonebak. Undoubtedly, the attention that the success ofFonebak has generated has attracted new entrants into the market. However, webelieve that our client base, our strong customer relationships and our systemsand facilities provide the foundations to harness the tremendous opportunitiesin the ever-developing mobile world. We are confident that we can continue tocreate a business that will grow turnover, be cash generative and consistentlycontribute to raising environmental awareness. Kathy Woodward Chief Executive 13 March 2006 Fonebak plcConsolidated Profit and Loss Accountfor the six months ended 31 December 2005 with pro forma comparatives Unaudited Six months ended 31 December 2005 Before goodwill Goodwill amortisation amortisation and and exceptional Total exceptional items Acquisition Continuing items Total £'000 £'000 £'000 £'000 £'000 Note Turnover 3 20,837 7,746 28,583 - 28,583 Cost of sales (17,868) (6,411) (24,279) - (24,279) Gross Profit 2,969 1,335 4,304 - 4,304 Distribution costs (920) (225) (1,145) - (1,145)Administrative expenses 4 (725) (893) (1,618) (720) (2,338) Operating profit/(loss) 1,324 217 1,541 (720) 821 Net interest payable 5 (212) (28) (240) (59) (299) Profit/(loss) on ordinaryactivities beforetaxation 1,112 189 1,301 (779) 522 Tax on profit on ordinaryactivities 7 (391) (67) (458) 39 (419) Profit/(loss) for thefinancial period &retained profit/(loss) 721 122 843 (740) 103 Earnings/(loss) pershare: 8Basic 0.54pDiluted 0.53p There are no differences between the profit on ordinary activities beforetaxation or the retained loss for the period stated above and its historicalcost equivalent. Fonebak plcConsolidated Profit and Loss Accountfor the six months ended 31 December 2005 with pro forma comparatives(Second Page) Pro forma Pro forma Unaudited Unaudited Six months ended 31 December 2004 Year ended 30 June 2005 Before Before goodwill Goodwill goodwill Goodwill amortisation amortisation amortisation amortisation and and and and exceptional exceptional exceptional exceptional items items Total items items Total £'000 £'000 £'000 £'000 £'000 £'000 Turnover 18,245 - 18,245 37,728 - 37,728 Cost of sales (15,231) - (15,231) (31,082) - (31,082) Gross Profit 3,014 - 3,014 6,646 - 6,646 Distribution costs (784) - (784) (1,552) - (1,552)Administrative expenses (950) (280) (1,230) (1,915) (753) (2,668) Operating profit/(loss) 1,280 (280) 1,000 3,179 (753) 2,426 Net interest payable (179) (1,385) (1,564) (448) (1,385) (1,833) Profit/(loss) on ordinaryactivities before taxation 1,101 (1,665) (564) 2,731 (2,138) 593 Tax on profit on ordinaryactivities (374) 270 (104) (900) 270 (630) Profit/(loss) for thefinancial period &retained profit/(loss) 727 (1,395) (668) 1,831 (1,868) (37) Earnings/(loss) per share:Basic (4.39) p (0.23) pDiluted (4.39) p (0.23) p Fonebak plcConsolidated Statement of Total Recognised Gains and Lossesfor the six months ended 31 December 2005 with pro forma comparatives Pro forma Pro forma Unaudited Unaudited Unaudited Six months Six months Year ended ended ended 31 December 31 December 30 June 2005 2004 2005 £'000 £'000 £'000 Profit/(loss) for the financial period 103 (668) (37)Exchange adjustments offset in reserves 1 (125) (135) Total recognisedprofits/(losses) for the period 104 (793) (172) Reconciliation of movements in consolidated shareholders' fundsfor the six months ended 31 December 2005 with pro forma comparatives Pro forma Pro forma Unaudited Unaudited Unaudited Six months Six months Year ended ended ended 31 December 31 December 30 June 2005 2004 2005 £'000 £'000 £'000 Profit/(loss) for the financial period 103 (668) (37) Exchange adjustments offset in reserves 1 (125) (135)New shares issued (net of costs) - 150 3,910Net movement in funding balances with - 7,194 7,194SEGUITF 17 share option credit - 75 75 Net increase in equity shareholders' 104 6,626 11,007funds Opening equity shareholders' funds 15,288 4,281 4,281 Closing equity shareholders' funds 15,392 10,907 15,288 Fonebak plcConsolidated Balance Sheetat 31 December 2005 with pro forma comparatives Unaudited Unaudited Audited 31 December 31 December 30 June 2005 2004 2005 Note £'000 £'000 £'000 Fixed assetsIntangible assets 2 19,352 17,076 17,045Tangible assets 932 617 558 20,284 17,693 17,603 Current assetsStock 8,103 2,918 4,527Debtors 4,080 2,324 3,384Cash at bank and in hand 1,056 2,940 1,155 13,239 8,182 9,066 Creditors - amountsfalling due within one year:Bank loans & overdrafts (1,347) (8,906) (801)Deferred consideration (2,390) - -Other creditors (9,912) (5,884) (7,380) (13,649) (14,790) (8,181) Net current (liabilities)/assets (410) (6,608) 885 Total assets less current liabilities 19,874 11,085 18,488 Creditors - amountsfalling due after one year:Bank loans (4,500) - (3,200)Other creditors (88) (175) -Deferred taxation 106 - -Equity minority interests - (3) - Net assets 15,392 10,907 15,288 Capital and reservesCalled up share capital 384 71 384Share premium account 15,076 11,629 15,076Profit and loss account (68) (793) (172) Equity shareholders' funds 15,392 10,907 15,288 Fonebak plcConsolidated Cash Flow Statementfor the six months ended 31 December 2005 with pro forma comparatives Pro forma Pro forma Unaudited Unaudited Unaudited Six months Six months Year ended ended ended 31 December 31 December 30 June 2005 2004 2005 Note £'000 £'000 £'000 Net cash inflow from operating 9 1,447 2,776 3,692activities Returns on investments and servicingof financeInterest received 8 44 64Bank interest paid (244) (223) (511)Finance lease interest paid (4) - -Exceptional financing charges paid 5 - (300) (900) Net cash outflow from returns oninvestments and servicing of finance (240) (479) (1,347) Taxation (405) (721) (831) Capital expenditure and financialinvestmentPurchase of tangible fixed assets (117) (155) (202)Sale of tangible fixed assets - - 1 Net cash outflow from capitalexpenditure and financial investment (117) (155) (201) AcquisitionsPurchase of interest in subsidiary (1,789) - (562)undertakingCash acquired with subsidiaryundertakings (net of overdrafts) (669) - -Fonebak reorganisation costs - (450) (508) Net cash outflow from acquisitions (2,458) (450) (1,070) Net cash (outflow)/inflow before (1,773) 971 243financing FinancingIncrease in share capital - 150 5,150Costs associated with issue of shares - - (990)New borrowings 2,000 8,400 8,400Repayment of bank borrowings (300) - (4,900)Repayment of capital element of (25) - -finance leaseRepayment of loan note - - (162)Net movement in funding balances with - (9,707) (9,707)SEG Net cash outflow from financing 1,675 (1,157) (2,209) Decrease in net cash 10,11 (98) (186) (1,966) Fonebak plcNotes to Interim Report -31 December 2005with pro forma comparatives 1. Basis of preparation This part of the interim report with pro forma comparatives has been preparedunder the same accounting policies as those used for the most recent auditedfinancial statements contained in the annual report for the year ended 30 June2005. As set out in the annual report, the Fonebak business originally formed part ofShields Environmental Group plc ("SEG"). It was initially developed as anunincorporated division of SEG's UK subsidiary in 2001. SEG then acquired twosubsidiaries and formed two others. The four subsidiaries and theunincorporated division comprised the Fonebak business that was de-merged fromSEG on 15 September 2004 and acquired by Fonebak plc on the same date inexchange for the issue of shares. Prior to that date, Fonebak plc had been adormant company since its incorporation on 27 April 2004. Fonebak plc wasadmitted to trading on AIM on 31 March 2005. In accordance with UK GAAP, the acquisition of the Fonebak business wasaccounted for at fair value under acquisition accounting. Consequently, thestatutory accounts contained in the annual report cover the statutory accountingperiod of Fonebak plc from 27 April 2004 to 30 June 2005, and only contain theresults of the Fonebak business since 15 September 2004. In order to provide shareholders with more useful comparative information on theFonebak business for full accounting periods, unaudited pro forma combinedfinancial information was prepared both in the Admission Document dated 24 March2005 (prepared for the purposes of Fonebak's admission to trading on AIM on 31March 2005) and in the annual report for year ended 30 June 2005. The unauditedpro forma combined financial information for both periods has been prepared on aconsistent basis and in accordance with the accounting policies set out in theaudited financial statements for the year ended 30 June 2005. In this part of the Interim Report with pro forma comparatives, the interimfigures at 31 December 2005 are unaudited. The comparative figures at 31December 2004 are extracted from the Admission Document referred to above. Thecomparative figures for the year ended 30 June 2005 are extracted from unauditedpro forma financial information contained within the published annual report forthe year ended 30 June 2005. None of the financial information contained inthis interim report constitutes statutory financial statements. The financialstatements for the year ended 30 June 2005 were reported on withoutqualification by the auditors, and without any statement under section 237 (2)or (3) of the Companies Act 1985, and have been delivered to the Registrar ofCompanies. 2. Acquisition As noted above, Fonebak plc acquired the Fonebak business upon its demerger fromSEG on 15 September 2004. However, as the comparative information is preparedon a pro forma basis, the acquired Fonebak business is treated as a continuingbusiness throughout the period covered by this Interim Report. On 29 July 2005, the company acquired 100% of Intec Group Limited for an initialcash consideration of £1.7 million with a maximum additional cash considerationof £2.5 million payable on delivery of certain performance criteria over amaximum of two years to 30 June 2007. The acquisition was financed by a mixtureof existing cash resources and enlarged banking facilities. The term loan of£4.0 million at 30 June 2005 was extended to £6.0 million and the overdraftfacility of £3.5 million was extended to £4.5 million. In the opinion of the directors, it is likely that the full amount of thedeferred consideration will be payable following the end of the year to 30 June2006 and, accordingly, £2.5 million (discounted from the anticipated settlementdate) is included in the balance sheet as a liability due within one year. Intec's turnover for the year ending September 2004 was £15 million withoperating profit of £660,000, profit before tax of £634,000 and gross assets at30 September 2004 of £4.1 million. Intec's turnover for the 9 months ended 30June 2005 was £10.7 million with an operating loss of £517,000, loss before taxof £534,000 and gross assets at 30 June 2005 of £3.4 million. Fonebak plcNotes to Interim Report - 31 December 2005with pro forma comparatives (continued) 2. Acquisition (continued) The fair value of the Intec Group Limited net assets acquired (which wasconsidered to be the same as book value) and the consideration given is set outin the table below: Book value and fair value £'000 Fixed assets 456Current assets 3,482Short term borrowings (669)Other current liabilities (1,938)Long term liabilities (113) Fair value of net assets acquired 1,218Goodwill 2,902 4,120 Settled by:Cash consideration 1,700Costs of acquisition 89Deferred consideration 2,331 Total amount payable 4,120 The anticipated deferred consideration in respect of the acquisition of IntecGroup Limited of £2.5 million has been discounted from the anticipatedsettlement date at a rate of 6.0% p.a. to give a present value of £2.3 million.The difference between the present value and the anticipated payment will beaccrued and charged to interest payable over the period to the anticipatedsettlement date. 3. Segmental reporting Following the acquisition of Intec Group Limited, the Fonebak group has twoclasses of business: (i) the refurbishment and resale or recycling of mobilephones, accessories and related products, and related services ("EnvironmentalResale"), and (ii) the provision of logistics, repackaging, configuration andrepair of mobile phones ("Repair"). Part of the Intec business falls under the"Environmental Resale" class and part under the "Repair" class. Substantiallyall group turnover originates from the United Kingdom. An analysis of turnoverby geographical destination based on the address to which the invoice is sent tothe customer, and by class of business, is as follows: Turnover by geographical destination: Unaudited six months ended 31 December 2005 Pro forma Pro forma Unaudited Unaudited Six Year months ended ended Existing Acquired Total 31 30 June December 2004 2005 £'000 £'000 £'000 £'000 £'000 United Kingdom 2,176 5,936 8,112 929 2,137Continental 897 124 1,021 1,126 2,241EuropeAfrica 3,695 1,185 4,880 4,583 8,813Asia Pacific 14,069 501 14,570 11,607 24,537 Total 20,837 7,746 28,583 18,245 37,728 Turnover by class of business: Unaudited six months ended 31 December 2005 Pro forma Pro forma Unaudited Unaudited Six Year months ended ended Existing Acquired Total 31 30 June December 2004 2005 £'000 £'000 £'000 £'000 £'000 Environmental 20,837 5,328 26,165 18,245 37,728ResaleRepair - 2,418 2,418 - - Total 20,837 7,746 28,583 18,245 37,728 Fonebak plcNotes to Interim Report - 31 December 2005with pro forma comparatives (continued) 3. Segmental reporting (continued) An analysis of profit by geographical origin and by class of business is asfollows: Profit before tax by geographical origin: Pro forma Pro forma Unaudited Unaudited Unaudited Six months ended Six months ended Year ended 31 December 2005 31 December 2004 30 June 2005 Before After Before After Before After goodwill goodwill goodwill goodwill goodwill goodwill amortisation amortisation amortisation amortisation amortisation amortisation & & & & & & exceptional exceptional exceptional exceptional exceptional exceptional items items items items items items £'000 £'000 £'000 £'000 £'000 £'000 Operating profitUnited Kingdom 1,502 825 1,245 1,015 2,986 2,334Continental Europe 39 (11) 35 (15) 193 92 Total operating 1,541 814 1,280 1,000 3,179 2,426profitFinancing charges (240) (240) (179) (1,564) (448) (1,833) Profit before tax 1,301 574 1,101 (564) 2,731 593 Profit before tax by class of business: Pro forma Pro forma Unaudited Unaudited Unaudited Six months ended Six months ended Year ended 31 December 2005 31 December 2004 30 June 2005 Before After Before After Before After goodwill goodwill goodwill goodwill goodwill goodwill amortisation amortisation amortisation amortisation amortisation amortisation & & & & & & exceptional exceptional exceptional exceptional exceptional exceptional items items items items items items £'000 £'000 £'000 £'000 £'000 £'000 Operating profitEnvironmental 1,458 731 1,280 1,000 3,179 2,426ResaleRepair 83 83 - - - - Total operating 1,541 814 1,280 1,000 3,179 2,426profitFinancing charges (240) (240) (179) (1,564) (448) (1,833) Profit before tax 1,301 574 1,101 (564) 2,731 593 An analysis of profit by geographical origin and by class of business is asfollows: Net assets by geographical origin: Unaudited Unaudited Audited 31 December 31 December 30 June 2005 2004 2005 £'000 £'000 £'000 United Kingdom 15,228 10,857 15,101Continental Europe 216 50 187 Total 15,444 10,907 15,288 Net assets by class of business: Unaudited Unaudited Audited 31 December 31 December 30 June 2005 2004 2005 £'000 £'000 £'000 Environmental Resale 14,846 10,907 15,288Repair 598 - - Total 15,444 10,907 15,288 Fonebak plcNotes to Interim Report - 31 December 2005with pro forma comparatives (continued) 4. Goodwill amortisation and exceptional items Pro forma Pro forma Unaudited Unaudited Unaudited Six months Six months Year ended ended ended 31 December 31 December 30 June 2005 2004 2005 £'000 £'000 £'000 Goodwill amortisation 590 280 753Termination costs 130 - - Total 720 280 753 The termination costs in the six months to 31 December 2005 arose as a result ofa reorganisation of responsibilities upon the acquisition of Intec. 5. Exceptional financing cost In the six months ended 31 December 2005, £59,000 has been charged to interestpayable in respect of unwinding the discount applied to the deferredconsideration on the acquisition of Intec Group Limited (and added to thedeferred consideration outstanding at 31 December 2005). As this charge relatesto the acquisition of Intec, it has been shown in the column containing goodwillamortisation and exceptional items in the profit and loss account for the sixmonths ended 31 December 2005. As a result of entering into new financing arrangements as part of the de-mergerof the Fonebak business from SEG and its acquisition by Fonebak plc, thefollowing financing costs were incurred in the six months ended 31 December2004: a facility fee of £300,000; the issue of shares to the lender at adiscount of £485,000 to the Directors' estimate of their fair value; and aredemption premium of £600,000, payable upon the repayment of a £2.5 milliontranche of the debt. As the company had the option of repaying the debt at anytime following initial drawn down, the entire amount of these costs (£1,385,000)was charged to the profit and loss account in the six months to 31 December2004, and is disclosed as an exceptional financing cost. The relevant debt,together with the redemption premium, was repaid upon Admission to trading onAIM. The payment of the facility fee and the redemption premium totaling£900,000 is separately disclosed in the cash flow statement. 6. Staff numbers The average number of persons (including executive directors) employed duringthe period was as follows: Pro forma Pro forma Unaudited Unaudited Unaudited Six months Six months Year ended ended ended 31 December 31 December 30 June 2005 2004 2005 Number Number Number Production 345 162 164Sales and business development 14 13 11Administration 35 13 16 Total 394 188 191 7. Tax on profit on ordinary activities The taxation charge for the six months ended 31 December 2005 is based on theestimated tax rate for the full year. Fonebak plcNotes to Interim Report - 31 December 2005with pro forma comparatives (continued) 8. Earnings/(loss) per share The calculation of the basic earnings/(loss) per share is based on the earnings/(loss) attributable to ordinary shareholders divided by the weighted averagenumber of shares in issue during the period. The calculation of diluted earnings/(loss) per share is based on the basicearnings/(loss) per share, adjusted to allow for the issue of shares on theassumed conversion of all dilutive options. Reconciliations of the earnings/(loss) and weighted average number of sharesused in the calculations are set out below: Six months ended Six months ended Year ended 30 31 December 2005 31 December 2004 June 2005 Weighted Weighted Weighted average Profit average Loss average Loss no. per no. per Loss no. per Profit of shares share Loss of shares share of shares share £'000 Number Pence £'000 Number Pence £'000 Number Pence Basic profit/(loss) per share:Profit/(loss)attributable toordinary 103 19,199,995 0.54 p (668) 15,199,995 (4.39)p (37) 16,197,255 (0.23)pshareholders Effect of - 264,889 (0.01)p - - - - - -dilutive options Diluted loss per 103 19,464,884 0.53 p (668) 15,199,995 (4.39)p (37) 16,197,255 (0.23)pshare An adjusted earnings per share has also been presented, based on adjustments inrespect of exceptional items and the amortisation of goodwill. The effects ofthe adjustments are as follows: Six months ended Six months ended Year ended 30 June 2005 31 December 2005 31 December 2004 Weighted Weighted Weighted average Profit average Loss Earnings average Loss no. per no. per /(loss) no. per Profit of shares share Loss of shares share of shares share £'000 Number Pence £'000 Number Pence £'000 Number Pence Basic profit/(loss) per share 103 19,199,995 0.54 p (668) 15,199,995 (4.39)p (37) 16,197,255 (0.23)p Post tax effectof excludingamortisation ofgoodwill andexceptional items 740 - 3.85 p 1,395 - 9.17 p 1,868 - 11.53p Adjusted basicearnings per 843 19,199,995 4.39 p 727 15,199,995 4.78 p 1,831 16,197,255 11.30pshare Diluted loss per 103 19,464,884 0.53 p (668) 15,199,995 (4.39)p (37) 16,197,255 (0.23)pshare Effect of - - - - 56,333 0.01 p - 80,664 -dilutive options Post tax effectof excludingamortisation ofgoodwill andexceptional items 740 - 3.80 p 1,395 - 9.15 p 1,868 - 11.48p Adjusted diluted earnings per 843 19,464,884 4.33 p 727 15,256,328 4.77 p 1,831 16,277,919 11.25pshare Fonebak plcNotes to Interim Report - 31 December 2005with pro forma comparatives (continued) 9. Reconciliation of operating profit to net cash inflow from operatingactivities Pro forma Pro forma Unaudited Unaudited Unaudited Six months Six months Year ended ended ended 31 December 31 December 30 June 2005 2004 2005 £'000 £'000 £'000 Operating profit 821 1,000 2,426Depreciation charge 207 132 261Amortisation of goodwill 590 280 753Share option scheme - 75 75(Increase)/decrease in stock (2,771) 671 (938)Decrease/(increase) in debtors 1,343 (612) (1,535)Increase in creditors 1,257 1,230 2,650 Net cash inflow from operating 1,447 2,776 3,692activities 10. Reconciliation of net cash flow to movement in net debt Pro forma Pro forma Unaudited Unaudited Unaudited Six months Six months Year ended ended ended 31 December 31 December 30 June 2005 2004 2005 £'000 £'000 £'000 Net cash at beginning of period (2,846) 2,458 2,458Decrease in net cash (98) (186) (1,966)New borrowings (2,000) (8,400) (8,400)Borrowings repaid 300 - 4,900Loan note repaid - - 162Finance lease obligation acquired (172) - -Capital element of finance lease 25 - -repayments Net debt at end of period (4,791) (6,128) (2,846) 11. Analysis of net debt Cash in Total Debt Debt due hand and net due after Total Net at bank Overdrafts cash within one year debt Debt one year £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 1 July 2004 3,129 (9) 3,120 (662) - (662) 2,458Cash flow (189) 3 (186) (8,400) - (8,400) (8,586) At 31 December 2004 2,940 (6) 2,934 (9,062) - (9,062) (6,128) At 1 July 2004 3,129 (9) 3,120 (662) - (662) 2,458Cash flow (1,974) 8 (1,966) (3,338) - (3,338) (5,304)Non-cash changes - - - 3,200 (3,200) - - At 30 June 2005 1,155 (1) 1,154 (800) (3,200) (4,000) (2,846) At 1 July 2005 1,155 (1) 1,154 (800) (3,200) (4,000) (2,846)Cash flow (99) 1 (98) 300 (1,975) (1,675) (1,773)Acquisitionexcluding cash &overdrafts - - - (59) (113) (172) (172)Non-cash changes - - - (700) 700 - - At 31 December 2005 1,056 Nil 1,056 (1,259) (4,588) (5,847) (4,791) Fonebak plcConsolidated Profit and Loss Accountfor the six months ended 31 December 2005 with statutory comparatives Unaudited Six months ended 31 December 2005 Before goodwill Goodwill amortisation amortisation and and exceptional Total exceptional items Acquisition Continuing items Total Note £'000 £'000 £'000 £'000 £'000 Turnover C 20,837 7,746 28,583 - 28,583 Cost of sales (17,868) (6,411) (24,279) - (24,279) Gross Profit 2,969 1,335 4,304 - 4,304 Distribution costs (920) (225) (1,145) - (1,145)Administrative expenses D (725) (893) (1,618) (720) (2,338) Operating profit/(loss) 1,324 217 1,541 (720) 821 Net interest payable E (212) (28) (240) (59) (299) Profit/(loss) on ordinaryactivities beforetaxation 1,112 189 1,301 (779) 522 Tax on profit on ordinaryactivities G (391) (67) (458) 39 (419) Profit/(loss) for thefinancial period &retained profit/(loss) 721 122 843 (740) 103 Earnings/(loss) pershare: HBasic 0.54pDiluted 0.53p There are no differences between the profit on ordinary activities beforetaxation or the retained loss for the period stated above and its historicalcost equivalent. Fonebak plcConsolidated Profit and Loss Accountfor the six months ended 31 December 2005 with statutory comparatives(Second Page) Unaudited Audited Eight months ended 31 December 2004 14 month period ended 30 June 2005 Before Before goodwill Goodwill goodwill Goodwill amortisation amortisation amortisation amortisation and and and and exceptional exceptional exceptional exceptional items items Total items items Total £'000 £'000 £'000 £'000 £'000 £'000 Turnover 10,815 - 10,815 30,298 - 30,298 Cost of sales (8,803) - (8,803) (24,655) - (24,655) Gross Profit 2,012 - 2,012 5,643 - 5,643 Distribution costs (486) - (486) (1,255) - (1,255)Administrative expenses (538) (264) (802) (1,503) (736) (2,239) Operating profit/(loss) 988 (264) 724 2,885 (736) 2,149 Net interest payable (191) (1,385) (1,576) (458) (1,385) (1,843) Profit/(loss) onordinary activitiesbefore taxation 797 (1,649) (852) 2,427 (2,121) 306 Tax on profit onordinary activities (282) 270 (12) (809) 270 (539) Profit/(loss) for thefinancial period &retained profit/(loss) 515 (1,379) (864) 1,618 (1,851) (233) Earnings/(loss) pershare:Basic (9.77) p (2.11) pDiluted (9.77) p (2.11) p Fonebak plcConsolidated Statement of Total Recognised Gains and Lossesfor the six months ended 31 December 2005 with statutory comparatives Unaudited Unaudited Audited Six months ended Eight months ended 14 Months ended 31 December 2005 31 December 2004 30 June 2005 £'000 £'000 £'000 Profit/(loss) for the financial 103 (864) (233)periodExchange adjustments offset in 1 (4) (14)reserves Total recognised profits/(losses) for the period 104 (868) (247) Reconciliation of movements in consolidated shareholders' fundsfor the period ended 31 December 2005 with statutory comparatives Unaudited Unaudited Audited Six months ended Eight months ended 14 Months ended 31 December 2005 31 December 2004 30 June 2005 £'000 £'000 £'000 Profit/(loss) for the financial 103 (864) (233)period Exchange adjustments offset in 1 (4) (14)reservesNew shares issued (net of costs) - 11,700 15,460UITF 17 share option credit - 75 75 Net increase in equity shareholders' 104 10,907 15,288funds Opening equity shareholders' funds 15,288 - - Closing equity shareholders' funds 15,392 10,907 15,288 Fonebak plcConsolidated Balance Sheetat 31 December 2005 with statutory comparatives Unaudited Unaudited Audited 31 December 31 December 30 June 2005 2004 2005 Note £'000 £'000 £'000 Fixed assetsIntangible assets B 19,352 17,076 17,045Tangible assets 932 617 558 20,284 17,693 17,603 Current assetsStock 8,103 2,918 4,527Debtors 4,080 2,324 3,384Cash at bank and in hand 1,056 2,940 1,155 13,239 8,182 9,066 Creditors - amounts falling due within one year:Bank loans & overdrafts (1,347) (8,906) (801)Deferred consideration (2,390) - -Other creditors (9,912) (5,884) (7,380) (13,649) (14,790) (8,181) Net current (liabilities)/assets (410) (6,608) 885 Total assets less current liabilities 19,874 11,085 18,488 Creditors - amounts falling due after one year:Bank loans (4,500) - (3,200)Other creditors (88) (175) -Deferred taxation 106 - -Equity minority interests - (3) - Net assets 15,392 10,907 15,288 Capital and reservesCalled up share capital 384 71 384Share premium account 15,076 11,629 15,076Profit and loss account (68) (793) (172) Equity shareholders' funds 15,392 10,907 15,288 Fonebak plcConsolidated Cash Flow Statementfor the six months ended 31 December 2005 with statutory comparatives Unaudited Unaudited Audited Six months ended Eight months ended 14 months ended 31 December 2005 31 December 2004 30 June 2005 Note £'000 £'000 £'000 Net cash inflow from operating I 1,447 1,801 2,738activities Returns on investments and servicingof financeInterest received 8 32 52Bank interest paid (244) (222) (511)Finance lease interest paid (4) - -Exceptional financing charges paid - (300) (900) Net cash outflow from returns oninvestments and servicing of finance (240) (490) (1,359) Taxation (405) (638) (749) Capital expenditure and financialinvestmentPurchase of tangible fixed assets (117) (88) (154)Sale of tangible fixed assets - - 1 Net cash outflow from capitalexpenditure and financial investment (117) (88) (153) AcquisitionsPurchase of interest in subsidiary (1,789) - (562)undertakingCash acquired with subsidiary undertakings (net of overdrafts) (669) 2,649 2,649Fonebak reorganisation costs - (450) (508) Net cash (outflow)/inflow from (2,458) 2,199 1,579acquisitions Net cash (outflow)/inflow before (1,773) 2,784 2,056financing FinancingIncrease in share capital - 150 5,150Costs associated with issue of - - (990)sharesNew borrowings 2,000 - -Repayment of bank borrowings (300) - (4,900)Repayment of capital element of (25) - -finance leaseRepayment of loan note - - (162) Net cash outflow from financing 1,675 150 (902) (Decrease)/increase in net cash J,K (98) 2,934 1,154 Fonebak plc Notes to Interim Report - 31 December 2005with statutory comparatives A. Basis of preparation This part of the interim report with statutory comparatives has been preparedunder the same accounting policies as those used for the most recent auditedfinancial statements contained in the annual report for the year ended 30 June2005. As set out in the annual report, the Fonebak business originally formed part ofShields Environmental Group plc ("SEG"). It was initially developed as anunincorporated division of SEG's UK subsidiary in 2001. SEG then acquired twosubsidiaries and formed two others. The four subsidiaries and theunincorporated division comprised the Fonebak business that was de-merged fromSEG on 15 September 2004 and acquired by Fonebak plc on the same date inexchange for the issue of shares. Prior to that date, Fonebak plc had been adormant company since its incorporation on 27 April 2004. Fonebak plc wasadmitted to trading on AIM on 31 March 2005. In accordance with UK GAAP, the acquisition of the Fonebak business wasaccounted for at fair value under acquisition accounting. Consequently, thestatutory accounts contained in the annual report cover the statutory accountingperiod of Fonebak plc from 27 April 2004 to 30 June 2005, and only contain theresults of the Fonebak business since 15 September 2004. In this Interim Report, the interim figures at 31 December 2005 are unaudited.The comparative figures at 31 December 2004 are extracted from the AdmissionDocument referred to above. The comparative figures for the year ended 30 June2005 are extracted from audited financial information contained within thepublished annual report for the year ended 30 June 2005. None of the financialinformation contained in this interim report constitutes statutory financialstatements. The financial statements for the year ended 30 June 2005 werereported on without qualification by the auditors, and without any statementunder section 237 (2) or (3) of the Companies Act 1985, and have been deliveredto the Registrar of Companies. B. Acquisition As noted above, the company was dormant from the date of its incorporation on 27April 2004 until it acquired the Fonebak business upon its demerger from SEG on15 September 2004. In addition, the 17% minority interest in Fonebak Serviciisrl was acquired in April 2005. Consequently, all reported results in theperiods ended 31 December 2004 and 30 June 2005 arose from acquired activities,which are ongoing. There were no other acquisitions or disposals between 15September 2004 and 30 June 2005. On 29 July 2005, the company acquired 100% of Intec Group Limited for an initialcash consideration of £1.7 million with a maximum additional cash considerationof £2.5 million payable on delivery of certain performance criteria over amaximum of two years to 30 June 2007. The acquisition was financed by a mixtureof existing cash resources and enlarged banking facilities. The term loan of£4.0 million at 30 June 2005 was extended to £6.0 million and the overdraftfacility of £3.5 million was extended to £4.5 million. In the opinion of the directors, it is likely that the full amount of thedeferred consideration will be payable following the end of the year to 30 June2006 and, accordingly, £2.5 million (discounted from the anticipated settlementdate) is included in the balance sheet as a liability due within one year. Intec's turnover for the year ending September 2004 was £15 million withoperating profit of £660,000, profit before tax of £634,000 and gross assets at30 September 2004 of £4.1 million. Intec's turnover for the 9 months ended 30June 2005 was £10.7 million with an operating loss of £517,000, loss before taxof £534,000 and gross assets at 30 June 2005 of £3.4 million. Fonebak plcNotes to Interim Report - 31 December 2005with statutory comparatives (continued) B. Acquisition (continued) The fair value of the Intec Group Limited net assets acquired (which wasconsidered to be the same as book value) and the consideration given is set outin the table below: Book value and fair value £'000 Fixed assets 456Current assets 3,482Short term borrowings (669)Other current liabilities (1,938)Long term liabilities (113) Fair value of net assets acquired 1,218Goodwill 2,902 4,120 Settled by:Cash consideration 1,700Costs of acquisition 89Deferred consideration 2,331 Total amount payable 4,120 The anticipated deferred consideration in respect of the acquisition of IntecGroup Limited of £2.5 million has been discounted from the anticipatedsettlement date at a rate of 6.0% p.a. to give a present value of £2.3 million.The difference between the present value and the anticipated payment will beaccrued and charged to interest payable over the period to the anticipatedsettlement date. C. Segmental reporting Following the acquisition of Intec Group Limited, the Fonebak group has twoclasses of business: (i) the refurbishment and resale or recycling of mobilephones, accessories and related products, and related services ("EnvironmentalResale"), and (ii) the provision of logistics, repackaging, configuration andrepair of mobile phones ("Repair"). Part of the Intec business falls under the"Environmental Resale" class and part under the "Repair" class. Substantiallyall group turnover originates from the United Kingdom. An analysis of turnoverby geographical destination based on the address to which the invoice is sent tothe customer, and by class of business, is as follows: Turnover by geographical destination: Unaudited six months ended 31 December 2005 Unaudited Audited Existing Acquired Total Eight months ended 14 Months ended 31 December 2004 30 June 2005 £'000 £'000 £'000 £'000 £'000 United Kingdom 2,176 5,936 8,112 314 1,538Continental 897 124 1,021 677 1,759EuropeAfrica 3,695 1,185 4,880 3,388 7,618Asia Pacific 14,069 501 14,570 6,436 19,383 Total 20,837 7,746 28,583 10,815 30,298 Turnover by class of business: Unaudited six months ended 31 December 2005 Unaudited Audited Existing Acquired Total Eight months ended 14 Months ended 31 December 2004 30 June 2005 £'000 £'000 £'000 £'000 £'000 Environmental 20,837 5,328 26,165 10,815 30,298ResaleRepair - 2,418 2,418 - - Total 20,837 7,746 28,583 10,815 30,298 Fonebak plcNotes to Interim Report - 31 December 2005with statutory comparatives (continued) C. Segmental reporting (continued) An analysis of profit by geographical origin and by class of business is asfollows: Profit before tax by geographical origin: Unaudited Unaudited Audited Six months ended Eight months ended 14 Months ended 31 December 2005 31 December 2004 30 June 2005 Before After Before After Before After goodwill goodwill goodwill goodwill goodwill goodwill amortisation amortisation amortisation amortisation amortisation amortisation & & & & & & exceptional exceptional exceptional exceptional exceptional exceptional items items items items items items £'000 £'000 £'000 £'000 £'000 £'000 Operating profitUnited Kingdom 1,502 825 945 698 2,793 2,128Continental Europe 39 (11) 43 26 92 21 Total operating 1,541 814 988 724 2,885 2,149profitFinancing charges (240) (240) (191) (1,576) (458) (1,843) Profit before tax 1,301 574 797 (852) 2,427 306 Profit before tax by class of business: Unaudited Unaudited Audited Six months ended Eight months ended 14 Months ended 31 December 2005 31 December 2004 30 June 2005 Before After Before After Before After goodwill goodwill goodwill goodwill goodwill goodwill amortisation amortisation amortisation amortisation amortisation amortisation & & & & & & exceptional exceptional exceptional exceptional exceptional exceptional items items items items items items £'000 £'000 £'000 £'000 £'000 £'000 Operating profitEnvironmental 1,458 731 988 724 2,885 2,149ResaleRepair 83 83 - - - - Total operating 1,541 814 988 724 2,885 2,149profitFinancing charges (240) (240) (191) (1,576) (458) (1,843) Profit before tax 1,301 574 797 (852) 2,427 306 An analysis of profit by geographical origin and by class of business is asfollows: Net assets by geographical origin: Unaudited Unaudited Audited 31 December 31 December 30 June 2005 2004 2005 £'000 £'000 £'000 United Kingdom 15,228 10,857 15,101Continental Europe 216 50 187 Total 15,444 10,907 15,288 Net assets by class of business: Unaudited Unaudited Audited 31 December 31 December 30 June 2005 2004 2005 £'000 £'000 £'000 Environmental Resale 14,846 10,907 15,288Repair 598 - - Total 15,444 10,907 15,288 Fonebak plcNotes to Interim Report - 31 December 2005with statutory comparatives (continued) D. Goodwill amortisation and exceptional items Unaudited Unaudited Audited Six months Eight months 14 Months ended ended ended 31 December 31 December 30 June 2005 2004 2005 £'000 £'000 £'000 Goodwill amortisation 590 264 736Termination costs 130 - - Total 720 264 736 The termination costs in the six months to 31 December 2005 arose as a result ofa reorganisation of responsibilities upon the acquisition of Intec. E. Exceptional financing cost In the six months ended 31 December 2005, £59,000 has been charged to interestpayable in respect of unwinding the discount applied to the deferredconsideration on the acquisition of Intec Group Limited (and added to thedeferred consideration outstanding at 31 December 2005). As this charge relatesto the acquisition of Intec, it has been shown in the column containing goodwillamortisation and exceptional items in the profit and loss account for the sixmonths ended 31 December 2005. As a result of entering into new financing arrangements as part of the de-mergerof the Fonebak business from SEG and its acquisition by Fonebak plc, thefollowing financing costs were incurred in the six months ended 31 December2004: a facility fee of £300,000; the issue of shares to the lender at adiscount of £485,000 to the Directors' estimate of their fair value; and aredemption premium of £600,000, payable upon the repayment of a £2.5 milliontranche of the debt. As the company had the option of repaying the debt at anytime following initial drawn down, the entire amount of these costs (£1,385,000)was charged to the profit and loss account in the six months to 31 December2004, and is disclosed as an exceptional financing cost. The relevant debt,together with the redemption premium, was repaid upon Admission to trading onAIM. The payment of the facility fee and the redemption premium totaling£900,000 is separately disclosed in the cash flow statement. F. Staff numbers The average number of persons (including executive directors) employed duringthe period was as follows: Unaudited Unaudited Audited Six months Eight months 14 Months ended ended ended 31 December 31 December 30 June 2005 2004 2005 Number Number Number Production 345 158 164Sales and business development 14 13 11Administration 35 14 16 Total 394 185 191 G. Tax on profit on ordinary activities The taxation charge for the six months ended 31 December 2005 is based on theestimated tax rate for the full year. Fonebak plcNotes to Interim Report - 31 December 2005with statutory comparatives (continued) H. Earnings/(loss) per share The calculation of the basic earnings/(loss) per share is based on the earnings/(loss) attributable to ordinary shareholders divided by the weighted averagenumber of shares in issue during the period. The calculation of diluted earnings/(loss) per share is based on the basicearnings/(loss) per share, adjusted to allow for the issue of shares on theassumed conversion of all dilutive options. Reconciliations of the earnings/(loss) and weighted average number of sharesused in the calculations are set out below: Six months ended Eight months ended 14 Months ended 31 December 2005 31 December 2004 30 June 2005 Weighted Weighted Weighted average Profit average Loss average Loss no. per no. of per no. per Profit of shares share Loss shares share Loss of shares share £'000 Number Pence £'000 Number Pence £'000 Number Pence Basic profit/(loss) per share:Profit/(loss)attributable toordinary 103 19,199,995 0.54 p (864) 8,839,217 (9.77)p (233) 11,052,748 (2.11)pshareholders Effect of - 264,889 (0.01)p - - - - - -dilutive options Diluted loss per 103 19,464,884 0.53 p (864) 8,839,217 (9.77)p (233) 11,052,748 (2.11)pshare An adjusted earnings per share has also been presented, based on adjustments inrespect of exceptional items and the amortisation of goodwill. The effects ofthe adjustments are as follows: Six months ended Eight months ended 14 Months ended 31 December 2005 31 December 2004 30 June 2005 Weighted Weighted Weighted average Profit average Loss Earnings average Loss no. per Loss no. of per /(loss) no. per Profit of shares share shares share of shares share £'000 Number Pence £'000 Number Pence £'000 Number Pence Basic profit/(loss) per share 103 19,199,995 0.54 p (864) 8,839,217 (9.77)p (233) 11,052,748 (2.11)p Post tax effectof excludingamortisation ofgoodwill andexceptional items 740 - 3.85 p 1,379 - 15.60 p 1,851 - 16.75 p Adjusted basic earnings per 843 19,199,995 4.39 p 515 8,839,217 5.83 p 1,618 11,052,748 14.64 p share Diluted loss per 103 19,464,884 0.53 p (864) 8,839,217 (9.77)p (233) 11,052,748 (2.11)pshare Effect of - - - - 56,333 0.06 p - 68,331 0.01 pdilutive options Post tax effectof excludingamortisation ofgoodwill andexceptional items 740 - 3.80 p 1,379 - 15.50 p 1,851 - 16.65 p Adjusted diluted earnings per 843 19,464,884 4.33 p 515 8,895,550 5.79 p 1,618 11,121,079 14.55 p share Fonebak plcNotes to Interim Report - 31 December 2005with statutory comparatives (continued) I. Reconciliation of operating profit to net cash inflow from operatingactivities Unaudited Unaudited Audited Six months Eight months 14 Months ended ended ended 31 December 31 December 30 June 2005 2004 2005 £'000 £'000 £'000 Operating profit 821 724 2,149Depreciation charge 207 78 207Amortisation of goodwill 590 264 736Share option scheme - 75 75(Increase)/decrease in stock (2,771) 338 (1,271)Decrease/(increase) in debtors 1,343 (674) (1,658)Increase in creditors 1,257 996 2,500 Net cash inflow from operating 1,447 1,801 2,738activities J. Reconciliation of net cash flow to movement in net debt Unaudited Unaudited Audited Six months Eight months 14 Months ended ended ended 31 December 31 December 30 June 2005 2004 2005 £'000 £'000 £'000 Net cash at beginning of period (2,846) - -(Decrease)/increase in net cash (98) 2,934 1,154New borrowings (2,000) - -Borrowings acquired (including loan - (9,062) (9,062)note)Borrowings repaid 300 - 4,900Loan note repaid - - 162Finance lease obligation acquired (172) - -Capital element of finance lease 25 - -repayments Net debt at end of period (4,791) (6,128) (2,846) Fonebak plcNotes to Interim Report - 31 December 2005with statutory comparatives (continued) K. Analysis of net debt Cash in Total Debt Debt due hand and net due after Total Net at bank Overdrafts cash within one year debt Debt one year £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 27 April 2004 - - - - - - -Cash flow 2,940 (6) 2,934 - - - 2,934Acquisitionexcluding cash &overdrafts - - - (9,062) - (9,062) (9,062) At 31 December 2004 2,940 (6) 2,934 (9,062) - (9,062) (6,128) At 27 April 2004 - - - - - - -Cash flow 1,155 (1) 1,154 5,062 - 5,062 6,216Acquisitionexcluding Cash & overdrafts - - - (9,062) - (9,062) (9,062)Non-cash changes - - - 3,200 (3,200) - - At 30 June 2005 1,155 (1) 1,154 (800) (3,200) (4,000) (2,846) At 1 July 2005 1,155 (1) 1,154 (800) (3,200) (4,000) (2,846)Cash flow (99) 1 (98) 300 (1,975) (1,675) (1,773)Acquisitionexcluding cash &overdrafts - - - (59) (113) (172) (172)Non-cash changes - - - (700) 700 - - At 31 December 2005 1,056 Nil 1,056 (1,259) (4,588) (5,847) (4,791) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
BLTG.L