Preliminary Results

RNS Number : 7570I

ServicePower Technologies PLC

18 March 2010

 

18 March 2010

ServicePower Technologies plc

("ServicePower" or the "Company")

Preliminary Results

 

ServicePower (AIM:SVR), a market leader for outsourced service and field management, announces its preliminary results for the period ended 31 December 2009.

 

Financial Highlights

·; Gross profit increased by 17% to £6.3 million (2008: £5.4 million)

·; Adjusted loss before tax* £1.1 million ( 2008: £2.5 million)

·; Loss before tax increased to £4.0 million (2008:profit £0.6 million) reflecting one-off restructuring costs, foreign exchange gains and losses and impairment loss on intangible assets

·; Cash balance at 31 December 2009 of £3.5 million (31 December 2008: £4.0 million due to the fundraising of £5.5 million September 2008).

 

*Adjusted for one-off restructuring costs of £0.9 million (2008: nil), foreign exchange loss of £1.2 million (2008: gain £3.1 million) and impairment loss of intangible assets £0.8 million (2008: nil).

 

Operational Highlights

·; Company-wide restructuring programme completed in the second half of the year resulting in ongoing costs and overheads now in line with recurring revenue streams.

·; 3 contracts signed in the US in the year for SERVICEOutsourcing: the key business strategy for ServicePower.

·; Sales and marketing focused strategy resulted in new contract wins across all of ServicePower's product range.

·; Launched ServiceStore in the US, a buying group for the independent servicer network which also offers a range of ServicePower products to the servicers.

 

Mark Duffin, CEO, ServicePower said, "ServicePower has had a productive year in spite of a difficult market place throughout the year. The Board completed a substantial Group-wide restructuring programme which is expected to result in considerable cost savings for the Group going forward. The business now has a good platform for growth, both organic and through very selective acquisitions.

 

"The sales and marketing focus has led to not only to the development of a healthy pipeline but we can report contract wins during the period across all of ServicePower's product range. We are particularly delighted to announce the signing of 3 contracts for the SERVICEOutsourcing offering which gives us much confidence in this as a key strategy for the future.

 

"We continue to believe that we offer a unique proposition within the outsourced services industry, a view which is being supported by these contract wins and we therefore look forward to the future with optimism."

 

For further information, please contact:

 

ServicePower Technologies Plc	FinnCap
Tel: +1 410 571 6333	Tel: 020 7600 1658
Mark Duffin, Chief Executive Officer	Marc Young
	Charlotte Stranner

 

About ServicePower

ServicePower, publicly traded on the AIM market operated by the London Stock Exchange (AIM:SVR), allows companies to locate their employed field resources in the right geography, ensure they have the right mix of skills, and outside this geography create a network of independent, authorised service contractors whose costs are efficiently managed by our sophisticated warranty management software. The schedules and routes for both the employed field resources and the independent servicers are optimised by ServicePower's technology to ensure the right balance between the cost of operations and ensuring customers receive a superior service experience.

 

Joint statement of the Chairman and Chief Executive

_________________________________________________________________________________________

 

Introduction

 

ServicePower is pleased to announce that 2009 was a constructive year for the Company as it restructured and re-aligned the business for incremental growth. The Company undertook a wide-reaching and successful cost-cutting and restructuring programme that brought the Company's ongoing overheads in line with its recurring revenue streams. This achievement would not have been possible without the hard work and dedication of the staff at ServicePower.

 

While the market place remained very tough the board believes that the business will be well placed to benefit from any upturn in economic sentiment while being well positioned to weather difficult markets. The Board considers that the business now resembles an excellent platform to grow the business both organically and through very selective acquisitions.

The strategy of the Company remains that of the last two years, namely as a sales and marketing led business which is focussed on outsourced field management services with a dual offering of either a software licence solution or fully managed service for its clients.

 

The Company remains focussed on increasing regular transactional business, thereby improving visibility of revenue and costs, ensuring that ServicePower will continue to be a leading supplier of scheduling and full service solutions for the field service market place.

 

Financial Review

 

The Company has two segments, Service Operations and Service Scheduling.

Total revenue for the year increased by 16% to £18.1 million (2008: £15.6 million). Service Operations revenue increased by 13% to £10.3 million (2008: £9.1 million) whilst Service Scheduling licence and consultancy revenue increased by 20% to £7.8 million (2008: £6.5 million).

 

A breakdown of revenue from the Service Operations segment is as follows:

 

	2009	2008
	£ million	£ million
Hosting / SaaS	2.9	2.7
Operations US	2.9	3.9
Operations UK	4.5	2.5
Total	10.3	9.1

A breakdown of revenue from the Service Scheduling segment is as follows:

 

	2009	2008
	£ million	£ million
Licences	2.4	2.5
Implementation / Support	4.8	3.1
Mobility	0.6	0.9
Total	7.8	6.5

 

The Company continued to invest in enhancement of functionalities across all of its product range, investing £0.6 million in 2009 (2008: £1.2 million).

 

Gross profit for the period increased at a similar rate to revenue, up by 17% to £6.3 million (2008 restated: £5.4 million) such that margin remained steady at 35%.

 

The total loss before tax was £4.0 million, from a profit of £0.6 million in 2008. This includes the following;

 

	2009	2008
	£ million	£ million
One-time cost for restructuring	(0.9)	-
Reported (loss)/gain on currency
translation	(1.2)	3.1
Impairment loss on intangible
assets	(0.8)	-
Total one-time costs and
currency translation
(expense)/income	(2.9)	3.1
Adjusted loss for one-off
costs and currency translation	(1.1)	(2.5)

 

 

Basic loss per share for the year was 2.2p (2008: earnings per share of 2.4p).

 

Cash balances decreased to £3.5 million at 31 December 2009 from £4.0 million at 31 December 2008. The directors cannot recommend the payment of a dividend at this time. Further information on the going concern basis of preparation is included in note 2.

 

Operational Review

 

Restructuring

 

As reported in the interim statement, ServicePower executed a wide-reaching restructuring programme during the year. This had long been deemed necessary by the Board but the scale of the implementation of these changes had previously proved restrictive. However, the prior restructuring and fund-raising in 2008 gave ServicePower the resources required to see the changes through and this, coupled with the need to react to recessionary markets, expedited the process.

 

The restructuring included the reduction of staff numbers from headcount of 128 at the beginning of the year to 90 by the end. Most of the redundancies took place in the second half of the year due to contractual obligations. As a result of the staff cuts the management structure has been streamlined and a pay review, also implemented during the year, resulted in a number of salary reductions.

 

However, ServicePower recognises that it operates in a knowledge-based industry and requires a highly skilled workforce particularly within the product development teams. Consequently to maintain skill levels, flexibility and an ability to respond to market and client demands promptly, ServicePower has developed a partnership with an offshore software development company. The in-house product development teams will take care of upgrades and maintenance, while any customer funded functionality upgrades will be produced in partnership with the outsourced development centre. The customer support team, unaffected by the cost cutting, remains in-house.

 

The cost of the redundancies accounted for approximately £0.8 million of the total £0.9 million one-off costs in the year and, in actual terms, cost savings resulting directly from staff cuts are expected to equate to approximately £2.2 million per annum from the beginning of 2010.

 

In addition, at the year end, the Board reviewed the business strategy of the Company. The review included the project known as Field Service in a Box, which is an application first developed in 2005 for the small independent servicer market, and receives job details, driving instructions and GPS tracking via a mobile phone. It was concluded that as management regard the future revenues from this project to be unknown, and there can be no certainty, at this stage, regarding future cashflows to be generated, the development costs incurred in prior years of £0.8 million should be fully impaired. The impairment is a non-cash adjustment. The product will continue to be developed on a smaller scale in-house and the strategy to market for the product will be through SERVICEStore.

 

Product Review

 

In North America, ServicePower released a new product called SERVICEStore. It is a buying group for the Company's independent servicers, and provides access to product discounts aimed at reducing their back office costs while also offering a range of ServicePower products previously not marketed to servicers due to cost, but now affordable through a SaaS offering. This powerful platform will enable the Company to create a servicer community and establish an elite servicer group across many trades, which will open up new markets for the business.

 

SERVICEStats, a management information system, was launched in 2008 and this compelling offering has been developed and sold to a number of existing clients. Going forward the Company plans to sell the offering both on a traditional licence basis and as a SaaS offering. The future opportunity for ServicePower is to be able to offer a wider business intelligence offering around field service and outsourced management.

 

SERVICEOutsourcing was also launched in 2008. This is a unique, turnkey solution which offers customers a fully outsourced, white-labelled, field-service network. The SERVICEOutsourcingservice recruits, trains, certifies and optimises the performance of a network of independent field service personnel. This can be offered to any organisation in any industry or geography that either desires a field service network but cannot build one, or wishes to outsource its existing field service operations.

 

The Company has established new independent servicer networks in four trades during the year in the North American home improvement market. Home improvement retailers will access the servicer network via SERVICEOutsourcing to offer an installation service to customers who have purchased their goods. The Company is encouraged by the market opportunity and is developing a new software platform that will have global functionality for both installation and warranty claims.

 

SERVICEOutsourcing is the key business strategy for ServicePower and the Company is experiencing huge interest in the potential of the offering, with the four trade networks in place; tier 2 and 3 clients will be targeted in the first instance.

 

Partnerships and Customers

 

During the year ServicePower has signed a number of important strategic partnerships with Guidewire Software, Point X, and Jigsaw Business Networks, all of which give the Company an opportunity to sell to a wider market. This strategy will remain core to the company throughout 2010 and the business will branch into other countries during the year through this strategy. As well as helping ServicePower win new contracts the partnerships have greatly increased the Company's capacity to execute transactional SaaS business which is a fundamental element of ServicePower's strategy.

North America

ServicePower's sales and marketing focus on existing products also continues to produce results. During the year ServicePower won two new contracts in North America for its hosted software and services solution; Flextronics and a leading U.S. based supplier of extended warranty service contracts both signed contracts for three year terms. GEC&I, the global consumer appliance supplier, has been a key customer and partner of ServicePower for a number of years and has renewed its original agreement with ServicePower which covers repair work within its appliance division in the U.S for another three years.

Several new contracts were also entered into with global consumer electronics, appliances, insurance and service companies in North America, which have the potential value in excess of $1million over the next three years. ServicePower has also signed three exclusive five year contracts for SERVICEOutsourcing service; these are with International Greenhouse Contractors (IGC), a North American distributor of greenhouses, Systems Trading Corporation, also a North American distributor of greenhouses and Hubbell Electric Heaters, a North American manufacturer of water heaters, to provide a fully outsourced field service network for the installation of their products.

In addition, two service scheduling licence contracts were signed in 2009, both in North America; SGS Inc, schedule inspection engineers and a company who schedule maintenance engineers for their battery and generator products.

United Kingdom and Europe

In the UK, a contract commenced in September 2009 to manage the despatch of jobs using ServicePower's hosted software to manage independent servicers who provide 24 hour home emergency services on behalf of a major insurance company and domestic bank.

In addition, as announced in 2008, ServicePower signed a contract with E.ON Property Services UK to provide a total end to end solution for their entire service operation. The provision of all the services was completed in June 2009 and the project is now fully operational.

Growth Strategy

 

The Company has maintained a constant and cost effective sales and marketing strategy in relation to existing products in its traditional consumer appliance sector. However the products are versatile and can be sold in a variety of other markets and as such ServicePower is now targeting additional markets where the opportunities are regarded to be the greatest.

 

SERVICEOutsourcing is the core product to this strategy as ServicePower believes there is significant demand for this unique service, particularly in the retail markets. The strategy will be to target successive market sectors to enable growth to be at a consistent and manageable pace. ServicePower is currently targeting the home improvement sector and has signed four contracts to date to provide installation services.

 

Board and Management changes

 

In July 2009, Nan Kreamer stepped down as Interim CFO and in October 2009 ServicePower appointed Sally Gillings to the Board as Finance Director. Sally has been with the company as Financial Controller for 8 years and her first-hand experience and knowledge of the Company will be of great value to ServicePower in driving the restructured and more financially efficient business.

Outlook

 

ServicePower has had a productive year, undertaking a major restructuring that allows the business to be in charge of its own destiny. The Company has successfully forged new partnerships with leading retailers and manufacturers who are increasingly recognising the quality of its products and services. With new products and a focussed strategy the Company has built up a healthy pipeline of potential business and the Board looks forward with confidence to the opportunities for 2010 and beyond.

 

 

Lindsay Bury, Chairman Mark Duffin, CEO

18 March 2010

 

 

 

 

 

 

	Note		2009	2008
			£'000	£'000
Revenue - Service Scheduling			7,793	6,536
- Service Operations			10,315	9,102
			_________	_________
Total revenue	3		18,108	15,638
Cost of sales			(11,813)	(10,237)
			_________	_________
Gross profit			6,295	5,401
			_________	_________
Administrative expenses- other expenses			(7,219)	(7,889)
- restructuring costs			(900)	-
- impairment of intangible
assets			(822)	-
- foreign exchange (loss)/gain			(1,196)	3,060
			_________	_________
			(10,137)	(4,829)
			_________	_________
Total (loss)/profit from operations			(3,842)	572
Investment revenue			2	50
Finance costs			(177)	(69)
			_________	_________
(Loss)/profit before taxation	4		(4,017)	553
Taxation			(165)	295
			_________	_________
(Loss)/profit for the year			(4,182)	848
			_________	_________
(Loss)/profit per share
Basic	5		(2.2)p	2.4p
			_________	_________

 

Diluted

5

(2.2)p

2.2p

_________

_________

 

 

All amounts relate to continuing activities.

 

 

 

 

 

		2009 £'000		2008 £'000
Exchange differences on translation of foreign operations		659	(2,314)
Net income/(loss) recognised directly in equity		659	(2,314)
(Loss)/profit for the year		(4,182)	848
Total comprehensive income for the year		(3,523)	(1,466)

 

 

 

 

 

		Equity attributable to equity holders of the Company
	Share capital		Share premium account	Share scheme reserve	Exchange translation reserve		Equity reserve		Merger reserve		Retained reserves		Total
	£'000		£'000	£'000	£'000	£'000		£'000		£'000		£'000
Balance at 1 January 2008	8,926		15,206	414	343	-		(3,008)		(19,787)		2,094
Profit for the period	-		-	-	-	-		-		848		848
Other comprehensive income
for the period	-		-	-	(2,314)	-		-		-		(2,314)
Total comprehensive income
for the period	-		-	-	(2,314)	-		-		848		(1,466)
Issue of share capital	1,000		3,420	-	-	-		-		-		4,420
Credit to equity for equity-settled
share-based payments	-		-	64	-	-		-		-		64
Equity component of convertible
loan notes	-		-	-	-	13		-		-		13
Balance at 31 December 2008	9,926		18,626	478	(1,971)	13		(3,008)		(18,939)		5,125
Loss for the period	-		-	-	-	-		-		(4,182)		(4,182)
Other comprehensive income
for the period	-		-	-	659	-		-		-		659
Total comprehensive income
for the period	-		-	-	659	-		-		(4,182)		(3,523)
Credit to equity for equity-settled
share-based payments	-		-	80	-	-		-		-		80
Balance at 31 December 2009	9,926		18,626	558	(1,312)	13		(3,008)		(23,121)		1,682

 

 

 

		2009	2008	2007
		£'000	£'000	£'000
Assets
Non-current assets
Intangible assets		409	1,770	1,550
Property, plant and equipment		369	317	180
		_________	_________	_________
		778	2,087	1,730
		_________	_________	_________
Current assets
Inventories		51	65	-
Finance lease receivables		-	-	88
Trade and other receivables		4,005	4,808	2,955
Cash and cash equivalents		3,543	3,956	1,520
		_________	_________	_________
		7,599	8,829	4,563
		_________	_________	_________
Total assets		8,377	10,916	6,293
		_________	_________	_________
Current liabilities
Trade creditors and accruals		(3,427)	(2,674)	(2,697)
Deferred revenue		(2,005)	(1,942)	(1,430)
Other creditors		(30)	(120)	(72)
Convertible loan note		(1,233)	(1,055)	-
		_________	_________	_________
		(6,695)	(5,791)	(4,199)
		_________	_________	_________
		_________	_________	_________
Net assets		1,682	5,125	2,094
		_________	_________	_________
Equity
Share capital		9,926	9,926	8,926
Share premium account		18,626	18,626	15,206
Share scheme reserve		558	478	414
Exchange translation reserve		(1,312)	(1,971)	343
Equity reserve		13	13	-
Merger reserve		(3,008)	(3,008)	(3,008)
Retained earnings deficit		(23,121)	(18,939)	(19,787)
		_________	_________	_________
Total equity		1,682	5,125	2,094
		_________	_________	_________

 

The financial statements of Servicepower Technologies plc, registration number 3941006 were approved by the Board of Directors and authorised for issue on 18 March 2010. They were signed on its behalf by:

M Duffin

 

 

Director

18 March 2010

 

 

 

	Note	2009	2008
		£'000	£'000
Net cash outflow from operating activities	6	(122)	(3,165)
		_________	_________
Investing activities
Interest received		2	50
Purchases of property, plant and equipment		(244)	(223)
Expenditure on intangible assets		(62)	(128)
Receipt from sale of tangible fixed assets		-	7
		_________	_________
Net cash used in investing activities		(304)	(294)
		_________	_________
Financing activities
Proceeds on issue of shares		-	4,420
Proceeds on issue of convertible bridging loan		-	1,000
		________	_________
Net cash from financing activities		-	5,420
		_________	_________
Net (decrease)/increase in cash and cash equivalents		(426)	1,961
Cash and cash equivalents at beginning of year		3,956	1,520
Effect of exchange rate changes		13	475
		__________	_________
Cash and cash equivalents at end of year		3,543	3,956
		_________	_________

 

 

Notes to the financial statements for the year ended 31 December 2009

_________________________________________________________________________________________

 

1 Basis of accounting

 

The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union. Whilst the financial information included in this preliminary announcement has been computed in accordance with International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRSs in May 2010.

 

In the current financial year, the Group has adopted International Financial Reporting 8 "Operating Segments" and International Accounting Standard 1 "Presentation of Financial Statements" (revised 2007).

Upon adoption of IFRS 8, there have been no changes to the segments reported in the financial statements. However, there has been a change in the allocation of expenses between cost of sales and administrative expenses, to ensure consistency with the manner in which costs are allocated and reported to the Board and Chief Executive. The prior year comparatives have been restated as shown in note 3.

 

2 Going concern

 

A significant portion of cash receipts comes from the sale of large software licences. The signing of contracts by large corporate customers can be difficult to predict due to long procurement cycles and therefore there is uncertainty in forecasting the timing and quantum of cash receipts from these customers.

 

During the year, the Group has continued its SERVICEOperations business which provides a regular revenue stream and cash funding to the Group. During the period the Group implemented a wide-ranging cost cutting programme in order to conserve cash. The annualised savings as a result of the restructuring amounts to £2,200,000.

 

In addition, in the prior year, it raised £5.4 million of cash, net of expenses, through the issue of shares and convertible loan notes to strengthen the Group's financial position and enable it to expand its operations. At 31 December 2009 the Group had net assets of £1,682,000 including £3,543,000 of cash and cash equivalents (31 December 2008 - net assets of £5,125,000 including £3,956,000 of cash and cash equivalents).

 

Based on cashflow forecasts which take into account current sales orders and opportunities, expenditure forecasts and the Group's current cash balance, the directors consider it appropriate to prepare the Group's financial statements on the going concern basis.

 

  

3 Business segments

 

In prior periods, segment information reported externally was analysed on the basis of the Group's business streams namely, software licences which provide scheduling solutions and service operations which provides claims and despatch processing in the consumer electronics market. This method of segment analysis is also used to report to the Board and the Chief Executive.

 

Segment information about these businesses is presented below:

 

2009	Service	Service	Group
	Scheduling	Operations	Total
	2009	2009	2009
	£'000	£'000	£'000
Revenue from external sales	7,793	10,315	18,108
Segment profit before impairment	2,974	1,106	4,080
Impairment loss	-	(822)	(822)
Segment profit after impairment	2,974	284	3,258
Central administration costs - other			(5,004)
Foreign exchange loss			(1,196)
Restructuring costs			(900)
Total central administration costs			(7,100)
Investment income			2
Finance costs			(177)
Loss before tax			(4,017)
Taxation			(165)
Loss after tax			(4,182)

 

 

 

 

2008 restated
	Service	Service	Group
	Scheduling	Operations	Total
	2008	2008	2008
	£'000	£'000	£'000
Revenue from external sales	6,536	9,102	15,638
Segment profit/(loss)	2,540	(39)	2,501
Central administration costs - other			(4,989)
Foreign change gain			3,060
Total central administration costs			(1,929)
Investment income			50
Finance costs			(69)
Profit before tax			553
Taxation			295
Profit after tax			848

 

The accounting policies of the reportable segments are the same as the Group's accounting policies described in note 1. Segment profit represent the profit earned by each segment without allocation of the share of the profits of associates, central administration costs including directors' salaries, investment revenue and finance costs, and income tax expense. This is the measure reported to the Group's Chief Executive for the purpose of resource allocation and assessment of segment performance.

 

The Group sells software licences to global organisations which may have lengthy procurement processes. For this reason forecasting revenue relating to these contracts is unpredictable and the cash receipts therefore uneven.

 

 

Segment assets

 

	2009	2008
	£'000	£'000
Service scheduling	1,730	3,581
Service operations	3,090	3,350
Total segment assets	4,820	6,931
Unallocated assets	3,557	3,985
Total consolidated assets	8,377	10,916

 

For the purposes of monitoring segment performance and allocating resources between segments the Group's Chief Executive monitors the tangible, intangible and financial assets attributable to each segment. All assets are allocated to reportable segments with the exception of other financial assets (except for trade and other receivables) and tax assets.

 

 

 

Other segment information

	Depreciation and amortisation and impairment losses		Additions to non-current assets
	2009	2008	2009	2008
	£'000	£'000	£'000	£'000
Service scheduling	65	84	53	258
Service operations	1,350	416	253	93
Group total	1,415	500	306	351

 

 

Revenues from major products and services were as follows:

 

The Group's revenues from its major products and services were as follows:

 

			2009	2008
			£'000	£'000
Service scheduling			7,793	6,550
Service operations			10,315	9,088
Group total			18,108	15,638

 

Geographical information

The Group's operations are located in the United States of America, the United Kingdom and the rest of Europe. The Group's revenue from external customers and information about its segment assets by geographical location are detailed below irrespective of the origin of the services:

 

	Revenue from external customers		Non-current assets
	2009	2008	2009	2008
	£'000	£'000	£'000	£'000
United States of America	10,241	11,807	1,497	1,970
United Kingdom	7,788	3,753	103	117
Rest of Europe	79	78	-	-
	18,108	15,638	1,600	2,087

 

 

 

Information about major customers

 

Included in revenues arising from service scheduling are revenues of approximately £2.1 million (2008: £0.3 million) which arose from sales to a customer whose turnover represents more than 10 per cent of Group revenue. Included in revenues arising from service operations are revenues of approximately of £2.5 million (2008: £3.3 million) and £2.1 million (2008: nil) which arose from sales to customers whose turnover represent more than 10 per cent of Group revenue.   4 (Loss)/profit for the year before taxation   (Loss)/profit for the year before taxation has been arrived at after charging/(crediting):   2009 2008 £'000 £'000 Net foreign exchange losses/(gains) 1,196 (3,060) Research and development costs 645 1,219 Depreciation of property, plant and equipment 144 117 Amortisation of internally generated intangible assets 423 383 Staff costs 7,357 7,079 Impairment loss recognised on trade receivables and finance lease 68 543 Impairment loss recognised on intangible assets 822 - Cost of inventories recognised as an expense 7 254 Cost of restructuring (see below) 900 - Auditors' remuneration for audit services 71 82     Amounts payable to Deloitte LLP and their associates by the Group in respect of non-audit services were £43,000 (2008: £117,000). During the second half of the year, a Group-wide restructuring was carried out which resulted in the average number of staff employed during the year reduce to 104 compared to 137 in the previous year. The staff termination costs amounted to £761,000 (2008: nil) and a provision for an onerous lease amounted to £139,000 (2008:nil). At the end of the year, the Board, having reviewed the business strategy for a project known as FSS in a box, concluded that the product development expenditure held as an intangible asset, to the value of £822,000 should be fully impaired.

 

 5 Loss per share

 

The calculation of the basic and diluted earnings per share is based on the following data:

(Loss)/Earnings

2009 2008 £'000 £'000 (Loss)/earnings for the purposes of basic earnings per share being

 net profit attributable to equity holders of the parent (4,182) 848

 

Effect of dilutive potential ordinary shares:

 Interest on convertible loan notes (net of tax) - 46

________ ________

(Loss)/earnings for the purposes of diluted earnings per share (4,182) 894

_________ _________

 

Number of shares

2009 2008 Number Number Weighted average number of ordinary shares for the purposes of

 basic (loss)/earnings per share 189,526,299 35,278,764

 

Effect of dilutive potential ordinary shares:

Convertible bridging loan - 5,489,649

________ ________

189,529,299 40,768,413

_________ _________

 

(Loss)/earnings per share

2009 2008 pence pence

 

Basic (loss)/earnings per share (2.2)p 2.4p

________ ________

 

Diluted (loss)/earnings per share (2.2)p 2.2p

_________ _________

 

In the current year, as the Group is loss making, the share options and convertible loan notes are anti-dilutive.

 

 

6 Notes to the cash flow statement

		2009 £'000	2008 £'000
(Loss)/profit from operations		(3,842)	572
Adjustments for:
Depreciation of property, plant and equipment		144	117
Amortisation of intangible assets		423	383
Impairment losses on intangible assets		822	-
Bad debt expense		83	471
Share-based payments provision		80	64
Loss on disposal of property, plant and equipment		24	-
Operating cash flows before movements in working capital		(2,266)	1,607
Decrease/(increase) in inventories		7	(65)
Decrease/(increase) in receivables		55	(2,265)
Increase/(decrease) in payables		1,932	(2,442)
Cash used by operations		(272)	(3,165)
Income taxes received		150	-
Net cash used in operating activities		(122)	(3,165)

 

7 Non statutory information note

 

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2009 or 2008, but is derived from those accounts. Statutory accounts for 2008 have been delivered to the Registrar of Companies and those for 2009 will be delivered following the Company's annual meeting. The auditors reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under s498 (2) or (3) Companies Act 2006 or the equivalent preceding legislation.

 

 

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