Half Yearly Report

RNS Number : 9114T
EXPANSYS plc
14 December 2011
 

Embargoed: 0700hrs 14 December 2011

 

EXPANSYS PLC

("EXPANSYS" or the "Company")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2011

EXPANSYS plc, a leading global online retailer of wireless and consumer technology and provider of mobile network solutions, announces its interim results for the six months ended 31 October 2011.

 

Financial Highlights

 

-       Turnover increased 42% to £46.6m (H1 2010: £32.7m). This includes six months of DSNS and PJ Media, compared to three months in H1 2010

-       Adjusted profit before tax increased 13% to £1.6m (H1 2010: £1.4m)

-       Profit before tax £0.8m (H1 2010: loss of £39k)

-       Cash £4.0m (31 October 2010: £5.5m). Cash has reduced due to investment in growth areas of Asia and the US

Trading Highlights

-       Turnover of the retail business increased 28% to £34.5m (H1 2010: £26.9m)

Growth in turnover from websites (EXPANSYS.COM) of 64%

Growth in the retail businesses in Asia and the US of 122% and 95% respectively compared to H1 2010

Growth in Europe retail business of 19%

UK retail business remains a challenge and experienced a negative performance in terms of revenue and profits in this half

-       DSNS has improved core profitability through a more focused approach to suppliers and customers

-       PJ Media has been successful in new business development and has a strengthened pipe-line for H2

Bob Wigley, Chairman of EXPANSYS, commented:

 

"We are encouraged by the improvements across the Group in the first half and are seeing the strategic benefits of the 2010 acquisitions flowing through. We are focused on building on this momentum through the second half of the year which includes the retail division's important Christmas period."

 

Enquiries:

 

 

EXPANSYS plc

Anthony Catterson, CEO

Chris Ogle, CFO

 

 

Via M: Communications

Cenkos Securities

Stephen Keys or Camilla Hume

 

Tel: +44 (0) 20 7397 8900

skeys@cenkos.com / chume@cenkos.com

M:Communications

Nick Miles or Ben Simons

Tel  +44 (0)20 7920 2340

miles@mcomgroup.com / simons@mcomgroup.com

 

Investor relations website

www.EXPANSYS.plc.uk

 

CHAIRMAN'S STATEMENT

 

I am pleased to announce the results for the six months ended 31 October 2011 which show good progress against a backdrop of difficult trading conditions.

 

Financial Review

 

Total turnover for the Group in the period was £46.6 million representing an increase of 42% compared to the same period last year (H1 2010: £32.7 million). Turnover for the period includes a full six months of contribution from DSNS and PJ Media, acquired in July 2010, compared to only three months of H1 2010. Turnover from the EXPANSYS.com retail business increased by 28% to £34.5 million (H1 2010: £26.9 million).

 

The profit before tax as adjusted for the amortisation of intangibles, share-based payment, foreign exchange and exceptional items increased by 13% to £1.6 million (2010: £1.4 million).

 

Profit before tax for the period was £0.8 million (2010: loss of £39k).

 

Cash at the end of October 2011 remained strong at £4.0 million (H1 2010: £5.5 million). Cash has reduced primarily due to the working capital requirements of Asia and the US where we are already seeing a substantial improvement in trading performance supported by our increased investment.

 

 

Markets

 

EXPANSYS.com

Revenues from EXPANSYS's own websites grew by 64% in the first half of the year, driven primarily by Asia and the USA, with excellent growth for the first six months of the year of 122% and 95% respectively. As anticipated Europe continues to grow in revenue (+19%) although at a slower rate. The UK market remains our most challenging, and we saw negative performance in terms of revenue and profit in the first six months of the year, primarily because of difficult market conditions and management change as we moved location.

 

 

DSNS

DSNS performed ahead of expectations and signed a number of new contracts to supply national retailers in the UK with its sim-card product range, including Sainsbury's, WHSmith and Martin McColl. This lifted the total number of retail stores stocking DSNS products in the UK to 38,000, adding significant footprint to the UK's market leading sim-card distributor.

 

Our agreement with T-Mobile USA represented our first major push into the US sim distribution opportunity where, unlike Europe, the pre-pay and sim-only markets are nascent. This represents a significant long-term opportunity for the Group although the US sim business has already begun to contribute to revenues and profits.

 

PJ Media

PJ Media, the e-Commerce and web services business, won new business with existing customers, but more importantly, reshaped its approach to new business development, which has brought a significant number of new opportunities into the deal pipeline. We believe that PJ Media can benefit carriers worldwide through its unique IP and experience in the area of e-commerce, subscriber retention and subscriber ARPU development.

 

Outlook

 

We are encouraged by the improvements across the Group in the first half and are seeing the strategic benefits of the 2010 acquisitions flowing through. We are focused on building on this momentum through the second half of the year which includes the retail division's important Christmas period.

 

Bob Wigley

Chairman

13 December 2011

 

 

 

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the 6 months ended 31 October 2011

 



6 months ended

6 months ended



31 October 2011

31 October 2010


Note

£000

£000





Revenue


46,585

32,735





Cost of sales


(37,096)

(25,247)





Gross profit


9,489

7,488





Distribution costs


(3,070)

(2,507)





Exceptional administrative items

2

(74)

(295)

Amortisation of acquired intangibles


(487)

(925)

Share-based payments expense


(235)

(138)

Other administrative expenses


(4,832)

(3,650)





Administrative expenses


(5,628)

(5,008)





Operating profit / (loss)


791

(27)





Finance income


-

-

Finance costs


(6)

(12)





Profit / (Loss) before taxation

3

785

(39)





Income tax charge


(413)

(408)





Profit / (Loss) for the half year


372

(447)





Attributable to owners of the parent


367

(449)

Attributable to non-controlling interests


5

2





Currency translation differences


(142)

(91)





Total comprehensive income/(expense) for the half year


230

(538)





Attributable to owners of the parent


225

(540)

Attributable to non-controlling interests


5

2





Earnings per share (pence)




Basic earnings/(loss) per share for the half year

4

0.03p

(0.06p)

Diluted earnings/(loss) per share for the half year

4

0.03p

(0.06p)





Adjusted basic earnings per share for the half year *

4

0.10p

0.13p

Adjusted diluted earnings per share for the half year *

4

0.10p

0.12p

 

 

* The Directors believe that reporting adjusted measures provides a more useful comparison of business performance and reflects the way in which the business is controlled.  The method of calculating adjusted earnings is detailed in note 3.



GROUP STATEMENT OF FINANCIAL POSITION

 



As at

As at



31 October 2011

31 October 2010


Note

£000

£000

ASSETS




Non current assets




Plant and equipment


659

693

Intangible assets


50,887

51,844

Deferred income tax assets


1,456

1,365







53,002

53,902

Current assets




Inventories


4,112

3,159

Trade and other receivables


9,939

5,246

Cash and short term deposits


4,010

5,493







18,061

13,898





Total assets


71,063

67,800





LIABILITIES




Current liabilities




Trade and other payables


(14,253)

(10,668)

Financial liabilities


(56)

(77)

Income tax payable


(805)

(745)

Government grants


(8)

(43)

Provisions


(55)

(51)

 

Deferred income tax liabilities


(55)

-







(15,232)

(11,584)

Non current liabilities




Financial liabilities


(45)

(97)

Deferred income tax liabilities


-

(379)







(45)

(476)





Total liabilities


(15,277)

(12,060)









Net assets


55,786

55,740





Capital and reserves




Equity share capital


2,893

2,890

Equity share premium


37,562

61,215

Merger reserve


24,417

750

Currency translation


828

998

Retained earnings/(losses)


(9,959)

(10,151)





Equity attributable to equity holders of the parent company


55,741

55,702

Non-controlling interests


45

 

38





Total equity


55,786

55,740

 



GROUP STATEMENT OF CHANGES IN EQUITY

For the 6 months ended 31 October 2011

 

 


Equity

share

capital

£000

 

Equity

share

premium

£000

 

Merger

reserve

£000

Currency

translation

reserve

£000

 

Retained

earnings

£000

Non-controlling interests

£000

 

Total

equity

£000

At 1 May 2011

2,890

37,552

24,417

970

(10,561)

40

55,308

Equity share issue

3

-

-

-

-

-

3

Cost associated with equity share issue

-

-

-

-

-

-

-

Share-based payment

-

10

-

-

235

-

245

Profit for the period

-

-

-

-

367

5

372

Exchange differences*

-

-

-

(142)

-

-

(142)









At 31 October 2011

2,893

37,562

24,417

828

(9,959)

45

55,786

 

 


Equity

share

capital

£000

 

Equity

share

premium

£000

 

Merger

reserve

£000

Currency

translation

reserve

£000

 

Retained

earnings

£000

Non-controlling interests

£000

 

Total

equity

£000

At 1 May 2010

445

10,641

750

1,089

(9,840)

-

3,085

Equity share issue

2,445

52,327

-

-

-

-

54,772

Cost associated with equity share issue

-

(1,753)

-

-

-

-

(1,753)

Share based payment

-

-

-

-

138

-

138

Acquisitions

-

-

-

-

-

36

36

Loss for the period

-

-

-

-

(449)

2

(447)

Exchange differences*

-

-

-

(91)

-

-

(91)









At 31 October 2010

2,890

61,215

750

998

(10,151)

38

55,740

 

*Exchange differences relate to the retranslation of net assets of subsidiary undertakings.



GROUP CASH FLOW STATEMENT

For the 6 months ended 31 October 2011

 



6 months ended

6 months ended



31 October 2011

31 October 2010 2009


Note

£000

£000

Operating activities




Profit / (loss) for the half year


372

(447)

Income tax expense


413

408

Net interest charge


6

12

Equity-settled share-based payment expense


245

138

Foreign exchange


(25)

62

Depreciation


138

154

Amortisation of intangible assets


604

1,191

Cash flow from operating activities before changes in working capital


1,753

1,518

Decrease / (increase) in inventories


309

(971)

(Increase) / decrease in trade and other receivables


(3,864)

1,099

Increase / (decrease) in trade and other payables


1,318

(750)

Cash (used in)/ generated from operations


(484)

896

Interest paid


(6)

(12)

Income tax paid


(49)

(302)

Net cash flow (used in)/ generated from operating activities


(539)

582





Purchase of property, plant and equipment


(117)

(18)

Purchase of intangible assets


(360)

(231)

Purchase of subsidiaries


-

(13,443)

Cash acquired with subsidiaries


-

417

Cash flow used in investing activities


(477)

(13,275)





Issue of ordinary share capital


-

30,000

Fees associated with share issue


-

(1,753)

Capital repayment of borrowings


(27)

(10,985)

Capital repayment of finance leases and hire purchase contracts


(11)

(17)

Net cash (paid) / received from financing activities


(38)

17,245





(Decrease) / Increase in cash and cash equivalents


(1,054)

4,552





Cash and cash equivalents as at 1 May


5,060

924

Effects of exchange rate changes


4

17

Cash and cash equivalents as at 31 October


4,010

5,493

 



 

NOTES

 

1.  Basis of preparation and accounting policies

 

The financial information comprises the unaudited results for the six months ended 31 October 2011 and 31 October 2010.

 

The condensed consolidated financial statements for the six months ended 31 October 2011 should be read in conjunction with the annual financial statements for the year ended 30 April 2011 which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.  The Auditors' Report on those statements was unqualified and did not contain any statements under section 498 of the Companies Act 2006.

The Group's principal accounting policies used in preparing this information are as stated in the financial statements for the year ended 30 April 2011, which have been filed with the Registrar of Companies, and are available on our website www.EXPANSYS.com .

 

2.  Exceptional items

 


6 months ended

6 months ended


31 October 2011

31 October 2010


£000

£000

Administrative expenses



Costs associated with acquisitions


385

Other, including movement in restructuring provisions

74

(90)




Total exceptional costs

74

295

 

3.  Adjusted measures

 

The Directors believe that reporting adjusted measures provides a more useful comparison of business performance and reflects the way in which the business is controlled.

 

The tables below illustrate how the key adjusted measures are calculated.


6 months ended

6 months ended


31 October 2011

31 October 2010


£000

£000




Profit (loss) before tax for the half year (as reported)

785

(39)

Add back:



     Amortisation of acquired intangibles

487

925

     Exceptional items

74

295

     Foreign exchange

(25)

62

     Share-based payments expense

235

138




Adjusted profit before tax for the half year

1,556

1,381

 


6 months ended

6 months ended


31 October 2011

31 October 2010


£000

£000




Profit (loss) for the half year attributable to equity holders of the parent company (as reported)

367

(449)

Add back:



     Amortisation of acquired intangibles

487

925

 

     Exceptional items

74

295

 

     Foreign exchange

(25)

62

 

     Share-based payments expense

235

138

 




 

Adjusted profit for the half year attributable to equity holders of the parent company

1,138

971

 

Calculations for adjusted earnings per share use adjusted profit for the half year attributable to equity holders of the parent company (shown above) and are detailed in note 4.

 

4.  Earnings per ordinary share

 

Basic earning per share amounts are calculated by dividing earnings/(loss) for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.

 

Diluted earnings per share for the year amounts are calculated by dividing the loss attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

 

The following reflects the income and share data used in the basic and diluted earnings per share computations:

 


6 months ended

6 months ended


31 October 2011

31 October 2010


£000

£000

Profit (loss) for the period

372

(447)

Less earnings attributable to non-controlling interests

(5)

(2)




Profit (loss) attributable to equity holders of the parent

367

(449)

 


6 months ended

6 months ended


31 October 2011

31 October 2010


'000

'000




Basic weighted average number of shares

1,156,722

737,073

Dilutive potential ordinary shares:



      Employee and consultant options

11,082

41,805




Diluted weighted average number of shares

1,167,804

778,878

 

Where ordinary shares are issued at a discount to the market price, the weighted average number of shares should reflect that the discount is effectively a bonus given to shareholders for no consideration.  The weighted average number of shares in the current year and prior year reflect this. 

 

The amounts for earnings per share are as follows:

 


6 months ended

6 months ended


31 October 2011

31 October 2010




Basic earnings (loss) per share

0.03p

(0.06)p




Diluted earnings (loss) per share

0.03p

(0.06)p

 

 

Adjusted earnings per ordinary share

 

The Directors believe that reporting adjusted measures provides a more useful comparison of business performance and reflects the way in which the business is controlled.

 

To this end, basic and diluted earnings per share are also presented on this basis below. 



 

Adjusted profit for the half year attributable to equity holders of the parent is calculated in note 3 above, and is as follows:

 


6 months ended

6 months ended


31 October 2011

31 October 2010


£000

£000







Adjusted profit attributable to equity holders of the parent

1,138

971

                                                                               

 

The amounts for adjusted earnings per share using this adjusted profit for the half year attributable to equity holders of the parent are as follows:

 


6 months ended

6 months ended


31 October 2011

31 October 2010




Adjusted basic earnings per share

0.10p

0.13p




Adjusted diluted earnings per share

0.10p

0.12p

 

 

5.    Approval by the Board of Directors and Audit Committee

 

The interim statement was approved by the Board of Directors and the Audit Committee on 13 December 2011 and is neither audited nor reviewed by the Group's auditors.

 

The Directors of EXPANSYS plc are listed in the EXPANSYS plc Annual Report for 30 April 2011.  A list of current directors is maintained on the EXPANSYS plc website www.EXPANSYS.com .

 

 

 

 


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