4th Oct 2006 07:01
Fonebak plc04 October 2006 FONEBAK PLC ("Fonebak") PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2006 Fonebak plc, the leading outsource provider for mobile phone handset services,including fulfilment, repair, resale, recycling, and environmental supportservices, is pleased to announce their preliminary results for the year ended 30June 2006. Highlights Financial: > Turnover increased by 60.2% to £60.4 million (2005: £37.7 million*) > Operating profit before exceptional items and goodwill amortisation increased 18% to £3.75 million (2005: £3.18 million*) > Profit before tax before exceptional items and goodwill amortisation increased 20.1% to £3.3 million (2005: £2.7 million*) > Profit before tax increased 193.9% to £1.7 million (2005: £0.6 million*) > Basic earnings per share increased to 3.95p per share (2005: loss of 0.23p per share*) > Payment of first dividend of 1 pence per share proposed Operational: > Continued investment in new geographical markets including Italy and Turkey - now operating in 15 countries > Recognition as a leading exporter from the UK with the Queens Award for Export > The winning and renewal of major contracts, including O2, CPP/Homecare and DSG Retail > Volumes of handsets processed increased by 55% to 3.1 million in the 2005/ 2006 period from 2.0 million in 2004/2005 - including significant growth in volumes originating from Continental Europe > Acquisition of Intec Group Limited in July 2005 and DSG's Stoke based mobile phone repair and administration business in September 2006 - providing the foundation to develop the range of outsourced service solutions for our clients > Participation in both UK Government and United Nations working parties shaping the implementation of WEEE * The comparative figures for 2005 are taken from the unaudited pro forma profit and loss account information for the year ended 30 June 2005, which is presented with the statutory comparative information covering the 14-month period ended 30 June 2005 (which only contains 91/2 months of Fonebak trading). Commenting, Gordon Shields, Chairman, said: "I am pleased to report an excellent set of results for the first full year ofthe group post its flotation on AIM in 2005. The group grew both organicallyand by acquisition through the successful integration of the Intec acquisition,whilst continuing to invest in new geographical markets. Intec and the recentacquisition from DSG lay the foundations to develop the business into widermarkets through a range of outsourcing service solutions. The Group has startedtrading well in the first two months of the new financial year and I lookforward to another successful year ahead." 4 October 2006 Enquiries: FonebakKathy Woodward 01708 683414Arthur Crocker 01708 683016Pelham Public RelationsJames Henderson 020 7743 6673Philip Dennis 020 7743 6363 Overview This year has laid the foundations for the delivery of Fonebak future businessplans. The 2006 results reflect a year of continued development andconsiderable growth both in terms of turnover, geographical penetrationthroughout Europe, volume of handsets managed and widening of our servicepropositions. Financial results Our sales for the year ended 30 June 2006 were £60.4 million, which is aconsiderable increase over the £37.7 million of sales for the full year* ended30 June 2005. Underlying 2005/2006 turnover excluding the acquisition of Intecin July 2005 increased 19.3% to £45 million. The overall improvement reflectsthe wider services that we are now offering to our clients, revenues from theadditional countries where we now operate as well as the contribution from theacquisition of Intec. During the year, we were delighted to renew two of our major contracts with O2and Homecare Services, respectively. In addition, we consolidated ourrelationship with DSG International plc through winning a rolling annualcontract for the provision of mobile phone repair and administration services toDSG Retail. At the same time we acquired DSG's Stoke based mobile phone repairand administration business including the transfer of over 80 staff and theirfacilities in Trentham in September 2006. Our operating profit before goodwill amortisation and exceptional items for theyear ended 30 June 2006 was £3.75 million, compared with £3.18 million for thefull year* ended 30 June 2005. This is in line with City forecasts and shows an18% growth on the full year* to 30 June 2005, despite including the start upcosts of operations in Italy and Turkey of approximately £300,000. Profit before tax and before goodwill amortisation and exceptional items for theyear to 30 June 2006 increased to £3.3 million, compared to £2.7 million for thecorresponding period in 2004/2005. Basic earnings per share increased to 3.95p per share for the year ended 30 June2006 from a loss of 0.23p per share for the full year ended 30 June 2005*. Onan adjusted basis (i.e. before amortisation and exceptional items), earnings pershare increased to 11.75p per share for the year ended 30 June 2006 fromearnings of 11.30p a share for the full year ended 30 June 2005*. We are also pleased to recommend the payment of a dividend for the first time of1 pence per share. * The comparative figures for 2005 are taken from the unaudited proforma profit and loss account information for the year ended 30 June 2005, whichis presented with the statutory comparative information covering the 14-monthperiod ended 30 June 2005 (which only contains 91/2 months of Fonebak trading). Creating a sustainable business solution Our robust systems and reporting have turned a potential environmental and brandrisk for our clients into clearly measurable outcomes that allow them todemonstrate corporate social responsibility as well as gain additional income. We now operate in over fifteen different countries, with the Fonebak solutionbenefiting clients not only in western Europe but also in wider geographies(principally Africa and Asia) where used handsets fulfil an importantcommunication service for large sectors of the population that are unable toafford the cost of new handsets. There has been considerable press and media comment about the potential mobilephone mountain generated from the estimated eighteen million handsets changedout in the UK alone each year. At the same time, there has also been muchdiscussion about the cost of compliance with the new European Waste Electricaland Electronic Equipment ("WEEE") legislation and the potential dangers arisingfrom consumer electrical and electronic waste. The success of Fonebak demonstrates that the mobile phone industry has a soundenvironmental, social and business solution in place. During the year, we havecollected over three million handsets for repair or refurbishment prior toresale in developing economies. Where resale is not possible, we have harnessedour extensive expertise in electronic waste management to ensure that product iseffectively recycled. Widening Fonebak's service offering Fonebak has now been working with its clients - the mobile phone networkoperators, handset manufacturers, retailers and large corporate organisations -for over five years to develop systems, infrastructure and a range of servicesthat not only deliver full compliance with environmental and waste legislation,but also minimise the cost implications for clients of using handsets as a toolin client acquisition and retention strategies - for example, the cost ofoffering a trade-in scheme. While working closely with our clients' marketing, supply, environmental andlogistics departments, we have developed our product management services toinclude retail return management, insurance support administration andfulfilment, excess stock management and repair, alongside our core activities ofrefurbishing, resale, recycling and environmental reporting. The acquisition of the Intec businesses (one of the UK's leading accreditedrepair and handset fulfilment centres) in July 2005 increased our technicalcapability, reinforced our relationship with the handset manufacturers andprovided the foundations for our new services focused on product replacementcost minimisation. Activities include helping the end customer with productqueries, remote diagnostics, repair and replacement solutions. Building on the new service concept, in September 2006 we acquired DSG's Stokebased mobile phone repair and administration business. This business includescall centre facilities and administration for wider product streams, includingphotographic and media products for mobile phones, as well as basicadministration for mobile phones. A platform for demonstrating CSR Our World Recycling Support programme continues to operate in all thegeographies where we have a presence. We are committed to developingenvironmental awareness, implementing take back initiatives and introducingskills programmes in each of these locations. As such, we were delighted to winthe Business in the Community Award for Market Place Innovation this year, whichrecognises our contribution to these activities. Employees We have continued to strengthen and develop our management team, and this hasincluded the recruitment of a number of senior managers in preparation forachieving our future growth objectives. As announced in June, Kathy Woodward will continue to work closely with theGroup to manage an effective continuity plan following her decision torelinquish the chief executive role for personal reasons. Although Kathy hasresigned as a director of the group, she will continue to work full time duringher notice period up to the end of March next year. Kathy will also continue tobe associated with the Group following the appointment of a new Chief Executive. Our thanks go to our employees worldwide who continue to embrace our growthstrategies while also supporting our environmental values that have contributedso much to our continuing success. Outlook Fonebak enters the coming year with a sound foundation to continue to grow thebreadth of its service offering and its geographical presence, based on longestablished relationships with clients, customers and recycling partners. Thefirst months of the new financial year have started well and we look forward tothe year ahead with confidence. Consolidated income statementfor the year ended 30 June 2006 Continuing operations Year ended 30 June 2006 ------------------------------------------------------------------ Before Acquisition Total Goodwill Total goodwill continuing amortisation amortisation and and exceptional exceptional items items Note £'000 £'000 £'000 £'000 £'000 -------------- ----- ------------- ----------- ------------ ------------- ----------- Turnover 1 45,213 15,148 60,361 - 60,361 Cost of sales (38,624) (12,600) (51,224) - (51,224) -------------- ----- ------------- ----------- ------------ ------------- ----------- Gross Profit 6,589 2,548 9,137 - 9,137 Distribution costs (1,703) (462) (2,165) - (2,165) Administrative 2 (1,398) (1,827) (3,225) (1,404) (4,629) expenses -------------- ----- ------------- ---------- ------------ ------------- ---------- Operating profit 3,488 259 3,747 (1,404) 2,343 Net interest payable 3 (414) (54) (468) (132) (600) -------------- ----- ------------- --------- ------------ ------------- ---------- Profit on ordinary 1 3,074 205 3,279 (1,536) 1,743 activities before taxation Tax on profit on (941) (82) (1,023) 39 (984) ordinary activities -------------- ----- ------------- --------- ------------ ------------- ---------- Profit/(loss) for the 2,133 123 2,256 (1,497) 759 financial year ============== ===== ============= ========= ============ ============= ========= Earnings/(loss) 4 per share: Basic 3.95 p Diluted 3.87 p Dividends per share: 5 Final - proposed 1.00 p -------------- ------ ------------- --------- ------------ ------------- --------- Statutory comparatives to the consolidated income statement Continuing operations Audited 14 month period ended 30 June 2005 ------------------------------------ Before Goodwill Total goodwill amortisation amortisation and and exceptional exceptional items items Note £'000 £'000 £'000 -------- ---- ------------ ------------ ---------- Turnover 1 30,298 - 30,298 Cost of sales (24,655) - (24,655) -------- ---- ------------ ------------ ---------- Gross Profit 5,643 - 5,643 Distribution (1,255) - (1,255) costs Administrative 2 (1,503) (736) (2,239) expenses --------- ---- ------------ ------------ --------- Operating 2,885 (736) 2,149 profit Net interest 3 (458) (1,385) (1,843) payable --------- ---- ------------ ------------ --------- Profit on 1 2,427 (2,121) 306 ordinary activities before taxation Tax on profit (809) 270 (539) on ordinary activities --------- ---- ------------ ------------ -------- Profit/(loss) 1,618 (1,851) (233) for the financial year ========= ==== ============ ============ ======== Earnings/(loss) 4 per share: Basic (2.11) p Diluted (2.11) p Dividends per share: Final - - proposed --------- ----- ------------ ------------ ------- The statutory comparatives cover the 14-month accounting period fromincorporation on 27 April 2004 to 30 June 2005, during which there was only 91/2months of Fonebak trading activity. Full year comparatives to the consolidated income statement Continuing operations Unaudited pro forma Year ended 30 June 2005 ------------------------------------- Before Goodwill Total goodwill amortisation amortisation and and exceptional exceptional items items Note £'000 £'000 £'000 ---------- ---- --- ---- ----- ---- ------------ ------------ ---------- Turnover 37,728 - 37,728 Cost of sales (31,082) - (31,082) ---------- ---- --- ---- ----- ---- ------------ ------------ ---------- Gross Profit 6,646 - 6,646 Distribution (1,552) - (1,552) costs Administrative (1,915) (753) (2,668) expenses ----------- ---- --- ---- ----- ---- ------------ ------------ --------- Operating 3,179 (753) 2,426 profit Net interest (448) (1,385) (1,833) payable ----------- ---- --- ---- ----- ---- ------------ ------------ --------- Profit on 2,731 (2,138) 593 ordinary activities before taxation Tax on profit (900) 270 (630) on ordinary activities ----------- ---- --- ---- ----- ---- ------------ ------------ -------- Profit/(loss) 1,831 (1,868) (37) for the financial year =========== ==== === === ==== === ============ ============ ======== Earnings/ 4 (loss) per share: Basic (0.23) p Diluted (0.23) p Dividends per share: Final - - proposed ---------- ----- ---- ---- ----- ---- ------------ ------------ ------- Consolidated balance sheetas at 30 June 2006 30 June 2006 30 June 2005 ---------------- --------------- Note £'000 £'000 £'000 £'000 ------------------ ---- --------- -------- --- -------- --------- Fixed assets Intangible assets 19,120 17,045 Tangible assets 728 558 Investments - - ------------------ ---- --------- -------- --- -------- --------- 19,848 17,603 Current assets Stock 7,879 4,527 Debtors 6,570 3,384 Cash at bank and in hand 1,137 1,155 ------------------ ---- --------- -------- --- -------- --------- 15,586 9,066 Creditors - amounts (15,631) (8,181) falling due within one year ------------------ ---- ---------- -------- --- --------- --------- Net current assets (45) 885 ------------------ ---- --------- -------- --- -------- --------- Total assets less 19,803 18,488 current liabilities Creditors - amounts (3,754) (3,200) falling due after one year ------------------ ---- --------- -------- --- -------- --------- Net assets 1 16,049 15,288 ================== ==== ========= ========= === ======= ========= Capital and reserves Called up share capital 384 384 Share premium account 15,076 15,076 Profit and loss account 589 (172) ----------------- ----- --------- -------- ---- -------- --------- Equity shareholders' 16,049 15,288 funds ================= ===== ========= ========= ==== ======= ========= Consolidated cash flow statementfor the year ended 30 June 2006 Year ended 14 month period Unaudited 30 June 2006 ended 30 June Pro forma 2005 Year ended 30 June 2006 Note £'000 £'000 £'000 ------------------- ---- --- -------- --- ----- -------- --- ---- -------- Net cash inflow 6 2,900 2,738 3,692 from operating activities ------------------- ---- --- -------- --- ----- -------- --- ---- -------- Returns on investments and servicing of finance Interest received 18 52 64 Interest paid (486) (511) (511) Exceptional financing - (900) (900) charges paid ------------------- ---- --- -------- --- ----- -------- --- ---- -------- Net cash outflow from (468) (1,359) (1,347) returns on investments and servicing of finance ------------------- ---- --- -------- --- ----- --------- --- ---- -------- Taxation (888) (749) (831) ------------------- ---- --- -------- --- ----- -------- --- ---- -------- Capital expenditure and financial investment Purchase of intangible (5) - - fixed assets Purchase of tangible (172) (154) (202) fixed assets Sale of tangible fixed 72 1 1 assets ------------------- ---- --- -------- --- ----- -------- --- ---- -------- Net cash outflow from (105) (153) (201) capital expenditure and financial investment ------------------- ---- --- -------- --- ----- -------- --- ---- -------- Acquisitions Purchase of interest in (1,789) (562) (562) subsidiary undertaking Costs associated with - (508) (508) acquisition of Fonebak Cash acquired with (669) 2,649 - subsidiary undertakings (net of overdrafts) ------------------- ---- --- -------- --- ----- -------- --- ---- -------- Net cash (outflow) (2,458) 1,579 (1,070) /inflow from acquisitions ------------------- ---- --- --------- --- ----- -------- --- ---- -------- Net cash (outflow) (1,019) 2,056 243 /inflow before financing ------------------- ---- --- --------- --- ----- -------- --- ---- -------- Financing Increase in share - 5,150 5,150 capital Costs associated with - (990) (990) issue of shares New borrowings 2,000 - 8,400 Repayment of borrowings (900) (4,900) (4,900) Repayment of finance (98) - - lease (capital element) Repayment of loan note - (162) (162) Net movement in funding - - (9,707) balances with Shields Environmental Group plc and its remaining subsidiaries ------------------- ---- --- ------- --- ----- -------- --- ---- -------- Net cash inflow 1,002 (902) (2,209) /(outflow) from financing ------------------- ---- --- ------- --- ----- -------- --- ---- -------- ------------------- ---- --- ------- --- ----- -------- --- ---- -------- (Decrease)/increase in 7, 8 (17) 1,154 (1,966) net cash =================== ==== === ======== === ==== ======== === ==== ======== Consolidated statement of total recognised gains and lossesfor the year ended 30 June 2006 Year ended 14 month period 30 June 2006 ended 30 June 2005 ------------- ------------ £'000 £'000 ------------------------ ------ --------- --- ------ -------- Profit/(loss) for the year 759 (233) Exchange adjustments offset in 2 (14) reserves ------------------------ ------ --------- --- ------ -------- Total recognised gains and losses 761 (247) for the year ======================== ====== ========= === ====== ======== Reconciliation of movements in consolidated shareholders' fundsfor the year ended 30 June 2006 Year ended 14 month period 30 June 2006 ended 30 June 2005 --------------- ----------------- £'000 £'000 --------------------- ------- --------- --- --------- -------- Profit/(loss) for the year 759 (233) Exchange adjustments offset 2 (14) in reserves New shares issued - 15,460 UITF 17 share option credit - 75 --------------------- ------- --------- --- --------- -------- Net increase in equity 761 15,288 shareholders' funds Opening equity shareholders' 15,288 - funds --------------------- ------- --------- --- --------- -------- Closing equity shareholders' 16,049 15,288 funds ===================== ======= ========= === ======== ========= 1. 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: Year ended 14 month period 30 June 2006 ended 30 June 2005 ------------------------------ ---------------- Existing Acquired Total £'000 £'000 £'000 £'000 ---------------- --------- --------- --------- --- ------ --------- United Kingdom 3,412 13,644 17,056 1,538 Continental Europe 1,790 356 2,146 1,759 Africa 6,266 - 6,266 7,618 Asia Pacific 33,745 1,148 34,893 19,383 ---------------- --------- --------- --------- --- ------ --------- Total 45,213 15,148 60,361 30,298 ================ ========= ========= ========= === ====== ========= Turnover by class of business: Year ended 14 month period 30 June 2006 ended 30 June 2005 -------------------------------- ------------ Existing Acquired Total £'000 £'000 £'000 £'000 ---------------- -------- --------- --------- --- ------ -------- Environmental Resale 45,213 10,180 55,393 30,298 Repair - 4,968 4,968 - ---------------- -------- --------- --------- --- ------ -------- Total 45,213 15,148 60,361 30,298 ================ ========= ========= ========= === ====== ========= In addition to the above disclosure, there was intra-segmental turnover of£501,000 in the "Repair" segment that has been eliminated on consolidation. Profit before tax by geographical origin: Year ended 14 month period 30 June 2006 ended 30 June 2005 ------------------------- ----------------- Before After Before After goodwill goodwill goodwill goodwill amortisation amortisation amortisation amortisation & & & & exceptional exceptional exceptional exceptional items items items items £'000 £'000 £'000 £'000 ------------------ ---------- --------- --- ---------- --------- Operating profit United Kingdom 3,625 2,216 2,793 2,128 Continental Europe 122 127 92 21 ------------------ ---------- --------- --- ---------- --------- Total operating profit 3,747 2,343 2,885 2,149 Financing charges (468) (600) (458) (1,843) ------------------ ---------- --------- --- ---------- --------- Profit before tax 3,279 1,743 2,427 306 ================== ========== ========= === ========== ========= Profit before tax by class of business: Year ended 14 month period 30 June 2006 ended 30 June 2005 ------------------------ ----------------- Before After Before After goodwill goodwill goodwill goodwill amortisation amortisation amortisation amortisation & & & & exceptional exceptional exceptional exceptional items items items items £'000 £'000 £'000 £'000 --------- ------------ ------------ -- ------------ ------------ Operating profit Environmental Resale 4,216 2,812 2,885 2,149 Repair (469) (469) - - --------- ------------ ------------ -- ------------ ------------ Total operating 3,747 2,343 2,885 2,149 profit Financing charges (468) (600) (458) (1,843) --------- ------------ ------------ -- ------------ ------------ Profit before tax 3,279 1,743 2,427 306 ========= ============ ============ == ============ ============ Net assets by geographical origin: At 30 June 2006 At 30 June 2005 --------------------- --------------- £'000 £'000 ------------------- -------- --------- --- --------- -------- United Kingdom 15,774 15,101 Continental Europe 275 187 ------------------- -------- --------- --- --------- -------- Total 16,049 15,288 =================== ======== ========= === ======== ========= Net assets by class of business: At 30 June 2006 At 30 June 2005 --------------- --------------- £'000 £'000 ------------------- -------- --------- --- --------- -------- Environmental Resale 15,972 15,288 Repair 77 - ------------------- -------- --------- --- --------- -------- Total 16,049 15,288 =================== ======== ========= === ======== ========= Impact of acquisitions The company acquired 100% of Intec Group Limited on 29 July 2005. Consequently,its results for the 11 months since acquisition to 30 June 2006 are included inthe acquired activities. The company was dormant from incorporation on 27 April2004 until the de-merger of the Fonebak business from Shields EnvironmentalGroup plc ("SEG") and its acquisition by the company on 15 September 2004. Inaddition, the 17% minority interest in Fonebak Servicii srl was acquired inApril 2005. Consequently, all reported results in the period ended 30 June 2005arose from acquired activities, which are ongoing. There were no otheracquisitions or disposals between 15 September 2004 and 20 June 2005. Goodwill amortisation and exceptional items Year ended 14 month period 30 June 2006 ended 30 June 2005 --------------- --------------- £'000 £'000 ------------------- -------- --------- --- --------- -------- Goodwill amortisation 1,274 736 Termination costs 130 - ------------------- -------- --------- --- --------- -------- Total 1,404 736 =================== ======== ========= === ======== ======== The termination costs in the year to 30 June 2006 arose as a result of areorganisation of responsibilities upon the acquisition of Intec. 3. Exceptional financing cost In the year ended 30 June 2006, £132,000 has been charged to interest payable inrespect of unwinding the discount applied to the deferred consideration on theacquisition of Intec Group Limited (and added to the deferred considerationoutstanding at 30 June 2006). As this charge relates to the acquisition ofIntec, it has been shown in the column containing goodwill amortisation andexceptional items in the profit and loss account for the year ended 30 June2006. 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 period ended 30 June 2005: afacility fee of £300,000; the issue of shares to the lender at a discount of£485,000 to the Directors' estimate of their fair value; and a redemptionpremium of £600,000, payable upon the repayment of a £2.5 million tranche of thedebt. As the company had the option of repaying the debt at any time followinginitial drawn down, the entire amount of these costs (£1,385,000) was charged tothe profit and loss account in the period ended 30 June 2005, and is disclosedas an exceptional financing cost. The relevant debt, together with theredemption premium, was repaid upon Admission to trading on AIM. The payment ofthe facility fee and the redemption premium totaling £900,000 is separatelydisclosed in the cash flow statement. 4. 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 year. 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: Year ended 30 June 14 month period ended 30 June 2006 2005 ------------------------------- ---------------------------- Earnings Weighted Earnings Loss Weighted Loss average no. per average no. per of shares share of shares share £'000 Number Pence £'000 Number Pence ----------- -------- -------- -------- --- -------- -------- -------- Basic earnings/ (loss) per share: Earnings/ 759 19,199,995 3.95 p (233) 11,052,748 (2.11) p(loss) attributable to ordinary shareholders Effect of - 404,006 (0.08)p - - - dilutive options ----------- -------- -------- -------- --- -------- -------- -------- Diluted 759 19,604,001 3.87 p (233) 11,052,748 (2.11) pearnings/ (loss) per share =========== ======== ======== ======== === ======= ======== ======= 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: Year ended 30 June 14 month period ended 30 June 2006 2005 ------------------------------ ------------------------------- Earnings Weighted Earnings (Loss)/ Weighted (Loss)/ average no. per earnings average no. earnings of shares share of shares per share £'000 Number Pence £'000 Number Pence ------------- ------- -------- ------ --- -------- -------- -------- Basic 759 19,199,995 3.95 p (233) 11,052,748 (2.11) pearnings/ (loss) per share Post tax 1,497 - 7.80 p 1,851 - 16.75 p effect of excluding amortisation of goodwill and exceptional items ------------ ------- -------- ------ --- -------- -------- -------- Adjusted 2,256 19,199,995 11.75 p 1,618 11,052,748 14.64 p basic earnings per share ============ ======= ======== ====== === ======== ======== ======== Diluted 759 19,604,001 3.87 p (233) 11,052,748 (2.11) pearnings/ (loss) per share Effect of - - - - 68,331 0.01 p dilutive options Post tax 1,497 - 7.64 p 1,851 - 16.65 p effect of excluding amortisation of goodwill and exceptional items ------------ ------- -------- ------ ---- -------- -------- -------- Adjusted 2,256 19,604,001 11.51 p 1,618 11,121,079 14.55 p diluted earnings per share ============ ======= ======== ====== ==== ======== ======== ======== Additional information on earnings per share relating to the unaudited pro formayear ended 30 June 2005 is calculated as follows: the calculation of the basicunaudited pro forma (loss)/earnings per share is based on the unaudited proforma (loss)/earnings attributable to ordinary shareholders divided by theweighted average number of shares in issue on the assumption that the capitalstructure following the reorganisation of SEG and the acquisition of the Fonebakbusiness by the company on 15 September 2004 had been in place since thebeginning of the period of the pro forma information on 1 July 2004, adjustedfor the effects of the bonus issue that took place on 21 March 2005. The calculation of diluted (loss)/earnings per share is based on the basic(loss)/earnings per share, adjusted to allow for the issue of shares on theassumed conversion of all dilutive options. Reconciliations of the (loss)/earnings and weighted average number of sharesused in the calculations are set our below: Unaudited pro forma Year ended 30 June 2005 ----------------------------------- Earnings Weighted Loss average no. per share of shares £'000 Number Pence ----------- ------- ------- ------- --- --------- ---------- -------- Basic loss per share: Loss (37) 16,197,255 (0.23) p attributable to ordinary shareholders Effect of - - - dilutive options ----------- ------- ------- ------- --- --------- ---------- -------- Diluted loss (37) 16,197,255 (0.23) p per share =========== ======= ======= ======= === ========= ========== ======= 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: Unaudited pro forma Year ended 30 June 2005 --------------------------------- Earnings Weighted (Loss)/ average no. earnings of shares per share £'000 Number Pence ----------- ------- ------- ------- --- -------- ---------- ---------- Basic loss (37) 16,197,255 (0.23) p per share Post tax 1,868 - 11.53 p effect of excluding amortisation of goodwill and exceptional items ----------- ------- ------- ------- --- -------- --------- ---------- Adjusted 1,831 16,197,255 11.30 p basic earnings per share =========== ======= ======= ====== === ======== =========== ========== Diluted loss (37) 16,197,255 (0.23) p per share Effect of - 80,664 - dilutive options Post tax 1,868 - 11.48 p effect of excluding amortisation of goodwill and exceptional items ---------- ------- ------- ------ ---- -------- --------- ---------- Adjusted 1,831 16,277,919 11.25 p diluted earnings per share ========== ======= ======= ====== ==== ======== =========== ========== 5. Dividends The company proposes to pay a final dividend in respect of the year ended 30June 2006 of 1 pence per share, totaling £192,000, which will be recorded in theyear ending 30 June 2007. 6. Reconciliation of operating profit to net cash inflow from operatingactivities Year ended 14 month period 30 June 2006 ended 30 June 2005 -------------- ---------------- £'000 £'000 --------------------- ------- --------- --- --------- -------- Operating profit 2,343 2,149 Depreciation charge 391 207 Amortisation of goodwill 1,274 736 Share option scheme - 75 Increase in stock (2,514) (1,271) Increase in debtors (1,109) (1,658) Increase in creditors 2,515 2,500 --------------------- ------- --------- --- --------- -------- Net cash inflow from 2,900 2,738 operating activities ===================== ======= ========= === ======== ======== 7. Reconciliation of net cash flow to movement in net debt Year ended 14 month period 30 June 2006 ended 30 June 2005 --------------- ---------------- £'000 £'000 ------------------- -------- --------- --- --------- --------- Net cash at beginning of (2,846) - year (Decrease)/increase in net (17) 1,154 cash Borrowings acquired - (9,062) (including loan note) New borrowings (2,000) - Borrowings repaid 900 4,900 Loan note repaid - 162 New finance leases: - acquired with Intec (172) - - other new leases (4) - Repayment of finance 98 - leases ------------------- -------- --------- --- --------- --------- Net debt at end of year (4,041) (2,846) =================== ======== ========= === ======== ========= 8. Analysis of net debt Cash in Overdrafts Total Debt due Debt due Total Net hand net within after debt Debt and cash one year one year at bank £'000 £'000 £'000 £'000 £'000 £'000 £'000 ----------- ------- -------- ------- ------- ------- ------- ------- At 1 July 2005 1,155 (1) 1,154 (800) (3,200) (4,000) (2,846) Cash flow (18) 1 (17) 998 (2,000) (1,002) (1,019) Acquisition - - - (59) (113) (172) (172) excluding cash & overdrafts) Non-cash - - - (1,563) 1,559 (4) (4) changes ----------- ------- -------- ------- ------- ------- ------- ------- At 30 June 2006 1,137 - 1,137 (1,424) (3,754) (5,178) (4,041) =========== ======= ======= ======= ======= ======= ======= ======= 9. Basis of preparation The financial information set out above does not constitute the company'sstatutory accounts for the years ended 30 June 2006 or 2005 but is derived fromthose accounts. Statutory accounts for 2005 have been delivered to the registrarof companies, and those for 2006 will be delivered in due course. The auditorshave reported on those accounts; their reports were unqualified and did notcontain statements under section 237(2) or (3) of the Companies Act 1985. Copies of this announcement will be available from the Company's registeredoffice at Unit 2, Eurocourt, Oliver Close, West Thurrock, Essex RM20 3EE. - ENDS - This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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