Interim Results

 

TIDMBTP 
 
RNS Number : 5008R 
BNS Telecom Group plc 
30 April 2009 
 

30 April 2009 
BNS Telecom Group plc 
Interim Results and proposed cancellation from trading on AIM 
Jump in deferred income and cash generation underpins future growth 
 
 
BNS Telecom Group plc ("BNS", the "Company" or the "Group"), a leading telecoms 
service provider and IP carrier, publishes its interim results for the six 
months to 31 January 2009. 
Highlights: 
  *  Billings* grew year on year by 13.8% to GBP19.2 million (2008: GBP16.9 million) 
  *  Strong cash generation from continuing operations up 24% to GBP1.50 million 
  (2008: GBP1.21 million) 
  *  Total deferred income increased by 58% (GBP1.93 million) to GBP5.27 million as 
  at 31 January 2009 (31 July 2008: GBP3.34 million) 
  *  Recognised revenue from continuing operations increased by 5.7% to GBP17.32 
  million (2008: GBP16.39 million) 
  *  Group gross margin increased from 33.9% to 37.7% 
  *  Underlying EBITDA** GBP184,000 (2008: GBP749,000) includes new customer 
  acquisition costs but excludes increase in deferred income of GBP1.93 million 
  *  Reported net loss reduced to GBP283,000 (2008: loss GBP821,000) 
  *  Net borrowings reduced to GBP3.24 million (GBP4.31 million at 31 July 2008) 
  *  Banking facilities secured for further 12 months in January 2009 
  *  In excess of 2 million calls carried across the Group's IP switch every month 
  *  Further development of converged mobile products with the launch of Mobile 
  Office in March 2009 
 
Proposed delisting: 
  *  Current lack of liquidity in BNS shares 
  *  Directors consider Company's current market capitalisation to be disassociated 
  with inherent value of Company 
  *  The ongoing costs of the Company's shares being admitted to trading on AIM now 
  outweigh the benefits to the Company 
 
 
 
* Billings represents the value of products and services invoiced to customers. 
** Excluding discontinued business, exceptional items, share based payments and 
amortisation of intangible fixed assets. 
Garry Moat, Chief Executive, said: 
 
 
"We have continued to show strong cash generative growth, gaining market share 
as our products and services successfully address the growing demand for feature 
rich products which facilitate opex savings at no capex cost. 
 
 
"As anticipated our focus on securing a long term customer base with the 
associated jump in deferred income has resulted in a 25% drop in our debt during 
the first half of the current financial year and a significant jump in our 
forward visibility.  We remain well positioned, despite the current economic 
conditions, to continue to produce good cash generative growth. 
 
 
"The Board now believes that it is in the best interests of the Company and its 
shareholders to de-list from AIM and we will be convening a General Meeting to 
vote on this matter in due course. The lack of liquidity in our shares and 
ongoing costs associated with the AIM quotation outweigh the benefits that would 
be derived from its continuation." 
 
 
Enquiries: 
 
 
+----------------------------------------------+--------------------------+ 
| BNS Telecom Group plc                        |       Tel: [phone] | 
| Garry Moat, Chief Executive                  |                          | 
| Andrew Goldwater, Finance Director           |                          | 
+----------------------------------------------+--------------------------+ 
|                                              |                          | 
+----------------------------------------------+--------------------------+ 
| KBC Peel Hunt Ltd (Nominated Adviser &       |       Tel: [phone] | 
| Broker)                                      |                          | 
| David Anderson                               |                          | 
+----------------------------------------------+--------------------------+ 
|                                              |                          | 
+----------------------------------------------+--------------------------+ 
| College Hill                                 |       Tel: [phone] | 
| Adrian Duffield/Carl Franklin                |                          | 
+----------------------------------------------+--------------------------+ 
 
 
Overview 
 
 
The Group has continued to grow strongly during the first six months of the 
current financial year with billings up 14%, deferred income up 58% and the 
strong cash generation enabling BNS to reduce its net borrowings by 25%. 
The demand for supply, installation and maintenance of Internet Protocol (IP) 
products and services and mobile telephony, continues to be strong despite the 
current trading environment. Enterprises are looking to reduce and more tightly 
manage their operational costs whilst also exploiting new digital technologies 
to improve efficiencies.  BNS provides a broad range of related business 
critical telecommunication services within a single bundled package at very 
competitive prices. The Group's focus is on long term contractual relationships 
with potential up sales which provides a sound foundation to enhance revenue and 
profit potential per customer. 
The use of IP calls and sending IP data over wireless, fixed and mobile networks 
is driving the move towards complete mobility for business communications. 
Convenience, low-cost and the collaborative potential of combining voice, data 
and other services across numerous devices means that seamless fixed-mobile 
convergence - at a network, application and service level - is now a reality. 
 
 
Results and operating review 
Billings, representing the value of products and services invoiced to customers, 
were up 13.8% to GBP19.2 million for the six months to 31 January 2009 (2008: 
GBP16.9 million). Billings are the leading indicator of growth and one of the 
main key performance indicators used by BNS to measure progress against 
objectives. 
A significant proportion of revenue associated with the cash received up front 
from invoiced sales of IP products is recognised over the term of the customer's 
contract, which contributes to a future guaranteed revenue stream. The Group 
also converts many new customer orders into cash by introducing a third party 
finance company who lease the equipment and licenses to the end user. 
Accordingly, the success of the new technology IP-based products introduced 
during 2007 continues to drive cash generation. 
BNS generated strong operating cash flow of GBP1.5 million (2008: GBP1.2 
million).  After the final GBP0.2 million payment for the discontinued Network 
Services Division and the realisation of GBP0.2 million from the sale of part of 
the Group's fleet of motor vehicles, net borrowings were down by 25% to GBP3.24 
million (GBP4.31 million at 31 July 2008).Capital expenditure on plant and 
equipment during the period was GBP0.1 million. The Board expects net borrowing 
to reduce further during the remainder of the current financial year. 
Recognised revenue from continuing operations grew by GBP0.9 million to GBP17.3 
million excluding an increase in deferred income of GBP1.9 million (2008: 
GBP16.4 million).  Total deferred income grew by 58% from GBP2.0 million at 31 
January 2008 to GBP5.2 million at 31 January 2009 of which GBP0.3 million will 
be recognised in the second half of the financial year.  This growth reflects 
the increase in deferred revenues of GBP1.8 million from IP-based hardware sales 
which are released over the life of contracts, many of which are up to seven 
years.  Other deferred income relates to fixed line and maintenance revenues for 
which the movement over the period was broadly neutral. 
The focus on IP-based sales will continue and BNS expects deferred income to 
increase as billings increase, at a higher rate than revenue.  As deferred 
income is released to the income statement, an improvement in reported revenue 
and profits in 2009 is anticipated which will strengthen the Group's balance 
sheet. 
Group gross margin increased from 33.9% to 37.7% for the period ended 31 January 
2009 primarily due to the impact of buying gains and the change in product mix. 
The strong cash inflows on IP-based product sales do not initially fully 
translate to gross margin due the impact of deferring some revenue but expensing 
the full cost of customer acquisition. However, the recurring billings and 
revenues associated with new IP-based product sales such as IP calls, broadband 
line rental and seat rentals continue to grow and are starting to make a 
material impact on the profitability due to their overall high margins achieved. 
 
The traditional revenue streams of fixed line, calls traffic, hardware supply 
and maintenance have performed broadly in line with the Group's expectations 
despite the pressures arising from a highly competitive market. 
Underlying EBITDA from continuing operations was GBP184,000 (2008: GBP749,000). 
The decrease in underlying EBITDA and reported operating loss of GBP234,000 
(2008: profit GBP311,000) reflects the change in sales mix towards IP-based 
products.  These sales of IP based products include a significant amount of 
deferred income. The Group adopts a prudent policy of expensing all customer 
acquisition costs immediately. As a result, the EBITDA reflects the costs 
associated with acquiring new customers but does not benefit from future 
contracted revenue streams.  The release of deferred income on IP sales provides 
further forward visibility over earnings. 
Net finance costs were GBP194,000 (2008: GBP238,000). The Group had a net tax 
credit of GBP90,000 (2008: charge of GBP48,000) resulting from the recognition 
of a deferred tax asset in relation to current year losses. 
As stated in previous results releases, the Group closed its Network Services 
Division in late October 2007. The operating result of this discontinued 
operation is disclosed separately as a single amount in the income statement. 
The profit from discontinued operations during the period represents the release 
of a provision following the recovery of trade receivables which were fully 
provided against.  The Group reported a net loss for the period of GBP283,000 
(2008: loss of GBP821,000). 
In January 2009 agreement was reached to amend the Group's bank facilities with 
the revised terms comprising a term loan of GBP3.15 million and an overdraft 
facility of GBP1.0 million.These revised bank facilities provide the Group with 
adequate funding to meet the Group's current forecast requirements. 
The Group has recently secured additional contractual relationships with leading 
finance companies. Access to these additional lines of asset finance for our end 
customers reduces the Group's exposure to the tightening of credit conditions 
within the asset finance market. The Directors believe that this further 
supports the robustness of the business model. 
 
 
Operating review 
The Group's direct sales force continues to deliver consistently strong levels 
of new sales orders driven by the portfolio of IP-based products and services. 
This has resulted in strong cash generation as well as maintaining a substantial 
pipeline of future business. 
Performance within the traditional revenue streams of fixed line access and 
calls and hardware supply and maintenance have remained broadly in line with the 
Group's expectations.  Gross margins on recurring fixed line and calls billings 
have ended the period higher due to the full impact of buying gains.  The number 
of fixed lines connected by the Group was significantly boosted during the 
latter part of the previous financial year by the connection of over 4,000 lines 
across eight larger customers. The first of these lines were not connected until 
July 2008 and as a result, less than GBP80,000 of revenue was booked during the 
previous financial year. Together with separate agreements to supply mobile 
services to these customers the contracts are estimated to be worth in excess of 
GBP5 million in revenue over three years. 
As the numbers of customers taking IP-based products continues to grow, there 
will inevitably be a proportion of existing fixed line customers who are 
re-signed on longer term IP-based product and services contracts. Despite this 
emerging trend, at 31 January 2009 the number of lines connected by the Group 
was still broadly in line with the year on year comparator volume at 43,236 
(2008: 43,787). 
The Group's mobile business, 3g, has delivered robust results during the period 
with progress continuing to be made across a range of key indicators. The 
business subscriber mobile base across the Group at 31 January 2009 had risen to 
17,593 (31 July 2008: 16,976).  The Group continues to have a strong 
relationship with Vodafone and its other key suppliers. 
Despite the detrimental effect of industry wide pressure on tariffs from factors 
such as EU roaming price reductions resulting in a 12.9% reduction in mobile 
revenue, margins have remained strong. This strength has resulted from focussing 
on selling to high margin users. Further growth is expected to result from new 
products, competitive tariff offerings and also greater internal efficiencies. 
The Board also believes that the opportunity to cross-sell mobile products to 
the existing BNS customer base is still at a comparatively early stage of the 
process and represents considerable upside in 2009. 
Owning its own IP-based network, BNS controls the routing of calls, thereby 
ensuring the quality of calls being made. Its Network Operations Centre 
continues to play an important role in supporting and developing the IP-based 
product offerings. The Group expects to continue to develop enhanced products 
and features based on the IP platform. 
Revenue by product is also included below to provide further useful information 
when interpreting the financials. 
+------------------------------------------+--------------+--------------+ 
| REVENUE BY PRODUCT                       |         2009 |         2008 | 
+                                          +--------------+--------------+ 
|                                          |                                   (GBPm) |       (GBPm) | 
+------------------------------------------+------------------------------------------+--------------+ 
| IP-based products and services (amount   |          4.3 |          1.3 | 
| invoiced)                                |              |              | 
+------------------------------------------+--------------+--------------+ 
| Less: deferred income                    |        (1.9) |        (0.7) | 
+------------------------------------------+--------------+--------------+ 
| IP-based products and services revenue   |          2.4 |          0.6 | 
+------------------------------------------+--------------+--------------+ 
| Mobile services                          |          5.1 |          5.9 | 
+------------------------------------------+--------------+--------------+ 
| Fixed line access and calls              |          8.3 |          8.4 | 
+------------------------------------------+--------------+--------------+ 
| Traditional PBX systems and maintenance  |          1.5 |          1.5 | 
+------------------------------------------+--------------+--------------+ 
| Total revenue                            |         17.3 |         16.4 | 
+------------------------------------------+--------------+--------------+ 
 
 
Technology in the telecommunications sector 
Technological advances and increased broadband penetration have driven the VoIP 
revolution, allowing cheaper voice calls and providing a platform for innovative 
product offerings such as call recording, unified messaging, video calling and 
fax to email. 
BT's ongoing roll out of their 21st Century Network (21CN), a next-generation 
network underpinned by IP represents a clear statement from a market leading 
provider of its view of the market's future direction. 
In March 2009 BT Openreach revealed six UK locations where they plan to provide 
over 500,000 homes and businesses with access to broadband speeds of up to 
40Mb/s. The next set of locations serving a further million homes and businesses 
are expected to be announced in the autumn. This roll out is the latest part of 
the biggest investment programme to date and BT has pledged to spend GBP1.5 
billion by 2012 to ensure that 95% of the population will be within reach of 
their 21CN. With strong strategic relationships with some of the main service 
providers in the UK, BNS is already offering an IP-based portfolio of services 
in line with that of BT's 21CN. 
The Group's strategic shift to IP telephony will continue to drive growth at a 
time when traditional fixed line revenues are expected to decline. As the 
technology evolves, enabling users to access any service from any device at any 
time, integrated services will increasingly be key. As BNS broadens its product 
offering by adding further value-added services, this is expected to facilitate 
customer retention and acquisition. 
Since 31 January 2009, BNS made a further advance with the launch of its new 
Mobile Office product. This revolutionary new service provides true office and 
mobile phone convergence allowing users to take their office extension and its 
functionality wherever they go. This is made possible by combining BNS' own IP 
network and products with Vodafone's GSM network. The solution offers a flexible 
and resilient communications platform that utilises one number for all devices. 
Voice calls, faxes and e-mails can be simultaneously routed to various devices 
used by the customer whether this is a deskphone, mobile, PDA or notebook with a 
BNS softphone installed. 
Outlook 
The Board remains confident that BNS will continue to capitalise on the growth 
opportunities apparent in its marketplace and that the communications sector 
will continue to evolve based around IP technologies. As well as high levels of 
recurring revenues from a broad and diverse business customer base, the business 
critical nature of the Group's products and services means that it is less 
vulnerable to cuts in business' discretionary expenditure. 
With over 10,000 business customers there are numerous opportunities to expand 
the product portfolio. Higher conversions of upsales underpinned by long term 
contracted relationships are being translated into growing levels of higher 
margin, good quality revenue and cash generation. The strong customer 
proposition also facilitates enhanced retention capability in an increasingly 
competitive market. 
With a strong customer proposition and robust business model, the Directors 
believe that the Group's prospects are increasingly favourable. 
Proposal to de-list from AIM 
Background to and reasons for the Cancellation 
Against the background of the trading performance of the Group described in this 
statement and the share price performance of the Company, the Directors have 
recently undertaken a review of the benefit of the Company continuing to be 
traded on AIM. Having completed this review, which included consultation with 
the Company's advisers and a number of its major shareholders, the Directors 
have unanimously agreed that it would be in the best interests of the Company 
and its shareholders as a whole, if the admission of the Company's shares to 
trading on AIM is cancelled. 
The current economic crisis has led to significant falls in the values of the 
global stock markets, which have been exaggerated in small cap, low liquidity 
stocks. Whilst there are several factors affecting any company's share price, a 
key point for BNS is the lack of demand for the Company's shares and, in 
practical terms, a small free float, which further reduces demand. Like many 
other small companies traded on AIM, BNS has a tightly held register of 
shareholders. The current share register shows that more than 95 per cent of the 
shares are held by only 15 shareholders. Given the lack of liquidity in the 
shares, in practice, minority shareholders have not been able easily to trade 
their shares. 
It is the opinion of the Directors that, in the current market turmoil, the 
Company's current market capitalisation has become disassociated with the 
inherent value of the Company. The Directors believe that the adoption during 
the previous year of a cautious revenue recognition policy, which results in 
considerable levels of deferred income in the balance sheet, is not readily 
recognised by the stock market, despite strong cash generation from the Group's 
operating activities. The Directors also believe that a stagnant or falling 
share price has had a de-motivating effect on the business and its employees and 
also a potentially adverse impact on customer and supplier perception; 
The Directors also highlight the following: 
  *  the ongoing costs (both in terms of financial costs and senior management and 
  administrative time) of the Company's shares being admitted to trading on AIM 
  now outweigh the benefits to the Company - the proposed cancellation is expected 
  to reduce the overheads of the Company by in excess of GBP150,000 per annum and 
  the Directors consider that these funds could be better utilised in running the 
  business; 
  *  a lower level of public scrutiny will enable the Group to develop new 
  commercially sensitive business areas and perform better without increasingly 
  onerous disclosure requirements and the pressure a quoted company faces in 
  focusing on short term performance, rather than long-term growth; and 
  *  in light of the current performance of the share price and limited trading in 
  the shares, the Company's continued admission to trading on AIM may no longer 
  serve a useful function in terms of access to capital or the ability to use the 
  Shares to effect acquisitions. 
 
 
Effect of the cancellation on shareholders 
The principal effects of the cancellation would be: 
  *  there would no longer be a formal market mechanism enabling Shareholders to 
  trade their shares and the CREST facility will be cancelled; 
  *  the Company would not be bound to announce material events, nor to announce 
  interim results; and 
  *  the Company would no longer be required to comply with any of the corporate 
  governance requirements for quoted companies. 
 
Governance following the Cancellation 
The Directors' intention is that the Company should remain a public limited 
company but without having it shares admitted to trading on a public market. The 
Board will continue to include non-executive Directors to ensure appropriate 
independent judgement on issues of strategy, performance, resources and 
standards of conduct that they consider vital to the continued success of the 
Group. 
The Board recognises the value of good corporate governance as a positive 
contribution to the well being of the business and believes in applying these 
principles in a sensible and pragmatic manner. The Board has, therefore, taken 
the proposed cancellation as an opportunity to review and update its formal 
schedule of matters specifically reserved for the full Board's decision. 
Notwithstanding the proposed cancellation, the Company will continue to publish 
annual reports and accounts and to hold annual general meetings and other 
general meetings in accordance with the applicable statutory requirements and 
the Company's articles of association. Where the Board considers it to be in the 
interests of the Company to do so, it will continue to post certain additional 
information relating to the Company on its website. In addition, the City Code 
on Takeovers and Mergers will continue to apply to the Company for at least ten 
years following the date of Cancellation. 
Distributions to Shareholders 
In the context of the current economic turbulence, the Board currently intends 
to preserve the Group's cash resources. As and when the Directors believe the 
Company has sufficient resources to do so (having regard to the needs of the 
business), they intend to distribute a proportion of the Company's profits to 
Shareholders by way of dividend and or/share buybacks. The timing of any 
dividend or share purchase cannot be forecast, as they would always be dependent 
upon the circumstances at the time. There can be no guarantee that any 
distributions of the Company's profits to Shareholders will take place. 
Share trading facility following Cancellation 
The Directors are aware that following the proposed cancellation shareholders 
may still wish to acquire further shares or dispose of their shares and, 
accordingly, intend to use reasonable endeavours to create and maintain a 
matched bargain settlement facility. Under this facility shareholders or persons 
wishing to acquire shares will be able to leave an indication with the matched 
bargain settlement facility provider that they are prepared to buy or sell at an 
agreed price. In the event that the matched bargain settlement facility provider 
is able to match that order with an opposite sell or buy instruction, the 
matched bargain settlement facility provider will contact both parties and then 
effect the order. Shareholders who do not have their own broker may need to 
register with the matched bargain settlement facility provider as a new client. 
This can take some time to process and, therefore, shareholders who consider 
they are likely to avail themselves of this facility are encouraged to commence 
it at the earliest opportunity. The contact details of the matched bargain 
settlement facility provider once arranged will be made available to 
Shareholders on the Company's website. 
General Meeting 
Under the AIM Rules, it is a requirement that any cancellation of shares to 
trading on AIM must be approved by not less than 75 per cent. of votes cast by 
shareholders at a general meeting. Accordingly, a notice convening the Meeting, 
to be held at the offices of Muckle LLP at Time Central, 32 Gallowgate, 
Newcastle upon Tyne, NE1 4BF at 10.00 a.m. on 26 May 2009 will be sent to 
shareholders in due course. 
 
 Expected timetable 
+---------------------------------------------------------------------+--------------------------------+ 
| Posting of circular and form of proxy to shareholders               |                     1 May 2009 | 
+---------------------------------------------------------------------+--------------------------------+ 
| Latest time and date for receipt of forms of proxy                  |      10.00 a.m. on 24 May 2009 | 
+---------------------------------------------------------------------+--------------------------------+ 
| General meeting                                                     |      10.00 a.m. on 26 May 2009 | 
+---------------------------------------------------------------------+--------------------------------+ 
| Expected cancellation of trading of shares on AIM                   |       7.00 a.m. on 3 June 2009 | 
+---------------------------------------------------------------------+--------------------------------+ 
 
 
  Consolidated Income Statement 
 
 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
|                                        |        | (Unaudited) |  | (Unaudited) |  | (Audited) | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
|                                        |        |    6 months |  |    6 months |  |      Year | 
|                                        |        |       ended |  |       ended |  |     ended | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
|                                        |        |      31 Jan |  |      31 Jan |  |    31 Jul | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
|                                        |        |       2009  |  |        2008 |  |     2008  | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
|                                        |  Note  |     GBP'000 |  |     GBP'000 |  |   GBP'000 | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Billings                               |        |      19,195 |  |      16,867 |  |    34,239 | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
|                                        |        |             |  |             |  |           | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Revenue                                |        |      17,322 |  |      16,391 |  |    32,597 | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Cost of sales                          |        |    (10,795) |  |    (10,840) |  |  (21,719) | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Gross profit                           |        |       6,527 |  |       5,551 |  |    10,878 | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Distribution costs                     |        |     (1,894) |  |     (1,347) |  |   (3,248) | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Administrative expenses                |        |     (4,867) |  |     (3,893) |  |   (8,551) | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Trading (loss)/profit                  |        |       (234) |  |         311 |  |     (921) | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Group operating (loss)/profit          |        |       (234) |  |         311 |  |     (921) | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
|                                        |        |             |  |             |  |           | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Underlying EBITDA                      |        |         184 |  |         749 |  |       130 | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Depreciation                           |        |       (302) |  |       (219) |  |     (732) | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Amortisation                           |        |        (95) |  |        (95) |  |     (209) | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Share-based payments                   |        |        (21) |  |          26 |  |        35 | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Exceptional costs                      |        |           - |  |       (150) |  |     (145) | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Group operating (loss)/profit          |        |       (234) |  |         311 |  |     (921) | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
|                                        |        |             |  |             |  |           | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Finance income                         |        |           - |  |          34 |  |        90 | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Finance costs                          |        |       (194) |  |       (238) |  |     (435) | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| (Loss)/profit before income tax and    |        |       (428) |  |         107 |  |   (1,266) | 
| discontinued operations                |        |             |  |             |  |           | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Income tax credit/(expense)            |        |          90 |  |        (48) |  |       356 | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| (Loss)/profit after tax before         |        |       (338) |  |          59 |  |     (910) | 
| discontinued operations                |        |             |  |             |  |           | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Profit/(Loss) from discontinued        |        |          55 |  |       (880) |  |   (1,434) | 
| operations after tax                   |        |             |  |             |  |           | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Loss for the financial year            |        |       (283) |  |       (821) |  |   (2,344) | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Attributed to:                         |        |             |  |             |  |           | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Equity holders of the parent           |        |       (283) |  |       (821) |  |   (2,344) | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
|                                        |        |       (283) |  |       (821) |  |   (2,344) | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
|                                        |        |             |  |             |  |           | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Earnings per share - continuing        |        |             |  |             |  |           | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
|  - basic earnings per share            |   3    |      (0.67) |  |        0.12 |  |    (1.70) | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
|  - diluted earnings per share          |   3    |      (0.67) |  |        0.12 |  |    (1.70) | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
|                                        |        |             |  |             |  |           | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
|  - underlying basic EBITDA per share   |   3    |        0.37 |  |        1.50 |  |      0.26 | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
|                                        |        |             |  |             |  |           | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
| Earnings per share - total             |        |             |  |             |  |           | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
|  - basic earnings per share            |   3    |      (0.56) |  |      (1.64) |  |     (4.6) | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
|  - diluted earnings per share          |   3    |      (0.56) |  |      (1.64) |  |     (4.6) | 
+----------------------------------------+--------+-------------+--+-------------+--+-----------+ 
 
 
Billings do not represent the Group's statutory revenue. 
 
 
 
 
  Consolidated Statement of Recognised Income and Expense 
 
 
+---------------------------------------+-------------+-----+-------------+-----+-----------+ 
|                                       | (Unaudited) |     | (Unaudited) |     | (Audited) | 
+---------------------------------------+-------------+-----+-------------+-----+-----------+ 
|                                       |           6 |     |           6 |     |      Year | 
|                                       |      months |     |      months |     |     ended | 
|                                       |       ended |     |       ended |     |           | 
+---------------------------------------+-------------+-----+-------------+-----+-----------+ 
|                                       |      31 Jan |     |      31 Jan |     |    31 Jul | 
+---------------------------------------+-------------+-----+-------------+-----+-----------+ 
|                                       |       2009  |     |        2008 |     |     2008  | 
+---------------------------------------+-------------+-----+-------------+-----+-----------+ 
|                                       |     GBP'000 |     |     GBP'000 |     |   GBP'000 | 
+---------------------------------------+-------------+-----+-------------+-----+-----------+ 
| Deferred tax on share options         |           - |     |        (34) |     |         - | 
+---------------------------------------+-------------+-----+-------------+-----+-----------+ 
| Income recognised directly in equity  |           - |     |        (34) |     |         - | 
+---------------------------------------+-------------+-----+-------------+-----+-----------+ 
| Loss for the year                     |       (283) |     |       (821) |     |   (2,344) | 
+---------------------------------------+-------------+-----+-------------+-----+-----------+ 
| Total recognised income and expense   |       (283) |     |       (855) |     |   (2,344) | 
| for the year                          |             |     |             |     |           | 
+---------------------------------------+-------------+-----+-------------+-----+-----------+ 
| Attributed to:                        |             |     |             |     |           | 
+---------------------------------------+-------------+-----+-------------+-----+-----------+ 
| Equity holders of the parent          |       (283) |     |       (855) |     |   (2,344) | 
+---------------------------------------+-------------+-----+-------------+-----+-----------+ 
|                                       |             |     |             |     |           | 
+---------------------------------------+-------------+-----+-------------+-----+-----------+ 
 
 
  Consolidated Balance Sheet 
 
 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
|                                     |       | (Unaudited) |  | (Unaudited) |  | (Audited) | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
|                                     |       |       As at |  |       As at |  |     As at | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
|                                     |       |      31 Jan |  |      31 Jan |  |    31 Jul | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
|                                     |       |       2009  |  |        2008 |  |     2008  | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
|                                     | Note  |     GBP'000 |  |     GBP'000 |  |   GBP'000 | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Assets                              |       |             |  |             |  |           | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Non-current assets                  |       |             |  |             |  |           | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Property, plant and equipment - at  |       |         479 |  |         479 |  |       479 | 
| revaluation                         |       |             |  |             |  |           | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Property, plant and equipment - at  |       |       1,468 |  |       1,563 |  |     1,672 | 
| cost                                |       |             |  |             |  |           | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Goodwill                            |       |       3,843 |  |       3,843 |  |     3,843 | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Other intangible assets             |       |       1,140 |  |       1,353 |  |     1,259 | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Trade and other receivables         |       |         797 |  |           - |  |       797 | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Deferred tax assets                 |       |         439 |  |           - |  |       375 | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
|                                     |       |       8,166 |  |       7,238 |  |     8,425 | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Current assets                      |       |             |  |             |  |           | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Inventories                         |       |         588 |  |         372 |  |       456 | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Trade and other receivables         |       |       4,347 |  |       4,075 |  |     3,952 | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Current income tax receivable       |       |           - |  |         265 |  |         - | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Cash and cash equivalents           |       |           2 |  |       1,478 |  |         2 | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
|                                     |       |       4,937 |  |       6,190 |  |     4,410 | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Total assets                        |       |      13,103 |  |      13,428 |  |    12,835 | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Liabilities                         |       |             |  |             |  |           | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Current liabilities                 |       |             |  |             |  |           | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Borrowings                          |       |     (2,881) |  |     (1,353) |  |   (3,924) | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Trade and other payables            |       |     (6,809) |  |     (7,508) |  |   (7,091) | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Deferred income                     |       |     (2,453) |  |     (1,411) |  |   (1,900) | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Current income tax payable          |       |        (86) |  |        (86) |  |      (86) | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Derivative financial instruments    |       |        (14) |  |        (41) |  |      (14) | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
|                                     |       |    (12,243) |  |    (10,399) |  |  (13,015) | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Net current liabilities             |       |     (7,306) |  |     (4,209) |  |   (8,605) | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Non-current liabilities             |       |             |  |             |  |           | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Borrowings                          |       |       (362) |  |     (2,920) |  |     (391) | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Deferred income                     |       |     (2,820) |  |       (573) |  |   (1,439) | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Deferred tax liabilities            |       |       (286) |  |       (331) |  |     (312) | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Provisions                          |       |        (16) |  |        (69) |  |      (40) | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
|                                     |       |     (3,484) |  |     (3,893) |  |   (2,182) | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Total liabilities                   |       |    (15,727) |  |    (14,292) |  |  (15,197) | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Net liabilities                     |       |     (2,624) |  |       (864) |  |   (2,362) | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
|                                     |       |             |  |             |  |           | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Capital and reserves                |       |             |  |             |  |           | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Share capital                       |  4    |       5,012 |  |       5,012 |  |     5,012 | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Share premium                       |  4    |       2,245 |  |       2,245 |  |     2,245 | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Other reserves                      |  4    |     (3,939) |  |     (3,939) |  |   (3,939) | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Retained earnings                   |  4    |     (5,942) |  |     (4,182) |  |   (5,680) | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Total shareholders' deficit         |  4    |     (2,624) |  |       (864) |  |   (2,362) | 
+-------------------------------------+-------+-------------+--+-------------+--+-----------+ 
 
 
  Consolidated Cash Flow Statement 
 
 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
|                                            |       | (Unaudited) |  | (Unaudited) |  | (Audited) | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
|                                            |       |    6 months |  |    6 months |  |      Year | 
|                                            |       |       ended |  |       ended |  |     ended | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
|                                            |       |      31 Jan |  |      31 Jan |  |    31 Jul | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
|                                            |       |       2009  |  |        2008 |  |     2008  | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
|                                            | Note  |     GBP'000 |  |     GBP'000 |  |   GBP'000 | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Cash flows from operating activities       |       |             |  |             |  |           | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Cash generated from continuing operations  |  5    |       1,499 |  |       1,211 |  |     2,413 | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Interest received                          |       |           - |  |          31 |  |        63 | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Interest paid on bank loans and overdrafts |       |           - |  |       (200) |  |      (21) | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Interest element of finance lease payments |       |        (28) |  |           - |  |      (44) | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Tax received/(paid)                        |       |           - |  |         218 |  |       218 | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Cash flow from operating activities in     |       |       1,471 |  |        1260 |  |     2,630 | 
| continuing operations                      |       |             |  |             |  |           | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Cash flow from operating activities in     |       |       (199) |  |     (1,159) |  |   (2,318) | 
| discontinued operations                    |       |             |  |             |  |           | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Total cash flow from operating activities  |       |       1,272 |  |         101 |  |       312 | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
|                                            |       |             |  |             |  |           | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Cash flows from investing activities       |       |             |  |             |  |           | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Purchase of property, plant and equipment  |       |        (78) |  |       (120) |  |     (190) | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Proceeds from sale of plant and equipment  |       |         220 |  |          25 |  |        99 | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Amount loaned to Director                  |       |           - |  |           - |  |   (1,263) | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Amounts repaid by Director                 |       |           - |  |           - |  |       498 | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Purchase of intangible assets              |       |           - |  |         (7) |  |      (18) | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Cash flow from investing activities in     |       |         142 |  |       (102) |  |     (874) | 
| continuing operations                      |       |             |  |             |  |           | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Cash flow from investing activities in     |       |           - |  |           - |  |         - | 
| discontinued operations                    |       |             |  |             |  |           | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Total cash flow from investing activities  |       |         142 |  |       (102) |  |     (874) | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
|                                            |       |             |  |             |  |           | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Cash flows from financing activities       |       |             |  |             |  |           | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Repayment of bank loans                    |       |       (588) |  |       (416) |  |   (1,175) | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Capital element of finance lease payments  |       |       (237) |  |       (201) |  |     (466) | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Dividends paid                             |       |           - |  |           - |  |         - | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Cash flow from financing activities in     |       |       (825) |  |       (617) |  |   (1,641) | 
| continuing operations                      |       |             |  |             |  |           | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Cash flow from financing activities in     |       |           - |  |           - |  |         - | 
| discontinued operations                    |       |             |  |             |  |           | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Total cash flow from financing activities  |       |       (825) |  |       (617) |  |   (1,641) | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Net increase / (decrease) in cash and cash |  6    |         589 |  |       (618) |  |   (2,203) | 
| equivalents                                |       |             |  |             |  |           | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Cash and cash equivalents at start of      |  6    |       (107) |  |       2,096 |  |     2,096 | 
| period                                     |       |             |  |             |  |           | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
| Cash and cash equivalents at end of period |       |         482 |  |       1,478 |  |     (107) | 
+--------------------------------------------+-------+-------------+--+-------------+--+-----------+ 
 
 
 
 
  Condensed Consolidated Interim Financial Information for the six months ended 
31 January 2009 
 
 
Notes to the Consolidated Interim Financial Information 
 
 
 
 
1. Basis of Preparation 
BNS Telecom Group plc (the "Company") is a company domiciled in the United 
Kingdom. The condensed consolidated interim financial statements of the Company 
for the six months ended 31 January 2009 comprise the Company and its subsidiary 
undertakings (together referred to as the "Group"). 
The condensed consolidated interim financial information (the interim financial 
information) has been prepared in accordance with EU Endorsed International 
Financial Reporting Standards (IFRS) and IFRIC interpretations and the Companies 
Act 1985 applicable to companies reporting under IFRS. The financial information 
has been prepared on the same basis and using the same accounting policies as 
used in the financial statements for the year ended 31 July 2008. 
The interim results are not reviewed by the auditors, Ernst & Young LLP. 
 
 
2. Taxation 
The interim tax charge is based on an estimate of the likely effective tax rate 
for the full year, expressed as a percentage of the expected results for the 
year and then applied to the profit/loss before tax. 
 
 
 
 
3. Earnings per share 
(a) Continuing 
The calculation of continuing basic earnings per share is based on the 
(loss)/profit for the period after taxation but before discontinued operations 
and a weighted average number of ordinary shares outstanding during the period 
as follows: 
+------------------------------+-------------------------+----------------+---+--------------+---+------------+ 
|                              |                         | 6 months ended |   |     6 months |   | Year ended | 
|                              |                         |                |   |        ended |   |            | 
+------------------------------+-------------------------+----------------+---+--------------+---+------------+ 
|                              |                         |         31 Jan |   |       31 Jan |   |     31 Jul | 
+------------------------------+-------------------------+----------------+---+--------------+---+------------+ 
|                              |                         |           2009 |   |         2008 |   |       2008 | 
+------------------------------+-------------------------+----------------+---+--------------+---+------------+ 
|                              |                         |        GBP'000 |   |      GBP'000 |   |    GBP'000 | 
+------------------------------+-------------------------+----------------+---+--------------+---+------------+ 
|                              |                         |    (Unaudited) |   |  (Unaudited) |   |  (Audited) | 
+------------------------------+-------------------------+----------------+---+--------------+---+------------+ 
| (Loss)/profit for the period                           |          (338) |   |           59 |   |      (910) | 
+--------------------------------------------------------+----------------+---+--------------+---+------------+ 
|                              |                         |                |   |              |   |            | 
+------------------------------+-------------------------+----------------+---+--------------+---+------------+ 
|                              |                         |         Shares |   |       Shares |   |     Shares | 
+------------------------------+-------------------------+----------------+---+--------------+---+------------+ 
|                              |                         |           '000 |   |         '000 |   |       '000 | 
+------------------------------+-------------------------+----------------+---+--------------+---+------------+ 
| Weighted average number of shares - basic              |         50,123 |   |       50,123 |   |     50,123 | 
+------------------------------+-------------------------+----------------+---+--------------+---+------------+ 
 
 
 
 
(b) Total 
The calculation of the basic earnings per share is based on the loss 
attributable to ordinary shareholders divided by the weighted average number of 
ordinary shares outstanding during the period as follows: 
+----------------------+-------------------+-------------+--+-------------+--+-----------+ 
|                      |                   |    6 months |  |    6 months |  |     Year  | 
|                      |                   |       ended |  |      ended  |  |    ended  | 
+----------------------+-------------------+-------------+--+-------------+--+-----------+ 
|                      |                   |      31 Jan |  |      31 Jan |  |    31 Jul | 
+----------------------+-------------------+-------------+--+-------------+--+-----------+ 
|                      |                   |        2009 |  |        2008 |  |      2008 | 
+----------------------+-------------------+-------------+--+-------------+--+-----------+ 
|                      |                   |     GBP'000 |  |     GBP'000 |  |   GBP'000 | 
+----------------------+-------------------+-------------+--+-------------+--+-----------+ 
|                      |                   | (Unaudited) |  | (Unaudited) |  | (Audited) | 
+----------------------+-------------------+-------------+--+-------------+--+-----------+ 
| Loss for the period                      |       (283) |  |      (821)  |  |   (2,344) | 
+------------------------------------------+-------------+--+-------------+--+-----------+ 
|                      |                   |             |  |             |  |           | 
+----------------------+-------------------+-------------+--+-------------+--+-----------+ 
|                      |                   |      Shares |  |      Shares |  |    Shares | 
+----------------------+-------------------+-------------+--+-------------+--+-----------+ 
|                      |                   |        '000 |  |        '000 |  |      '000 | 
+----------------------+-------------------+-------------+--+-------------+--+-----------+ 
| Weighted average number of shares -      |      50,123 |  |      50,123 |  |    50,123 | 
| basic                                    |             |  |             |  |           | 
+----------------------+-------------------+-------------+--+-------------+--+-----------+ 
 
 
(c) Diluted 
The calculation of diluted (loss)/earnings per share in respect of continuing 
operations for all periods is the same as the basic earnings per share as 
calculated above. There is no difference as the exercise of options would have 
the effect of reducing the loss per ordinary share and is therefore not dilutive 
under the terms of IAS 33. 
 
 
(d) Underlying basic EBITDA per share 
A reconciliation of the results for the periods used to calculate basic earnings 
per share to underlying EBITDA used to calculate the underlying basic EBITDA per 
share is set out below: 
 
 
+---------------------------------------+--+--+-------------+--+-------------+--+-----------+ 
|                                       |     |    6 months |  |    6 months |  |      Year | 
|                                       |     |       ended |  |       ended |  |     ended | 
+---------------------------------------+-----+-------------+--+-------------+--+-----------+ 
|                                       |     |      31 Jan |  |      31 Jan |  |    31 Jul | 
+---------------------------------------+-----+-------------+--+-------------+--+-----------+ 
|                                       |     |       2009  |  |       2008  |  |     2008  | 
+---------------------------------------+-----+-------------+--+-------------+--+-----------+ 
|                                       |     |     GBP'000 |  |     GBP'000 |  |   GBP'000 | 
+---------------------------------------+-----+-------------+--+-------------+--+-----------+ 
|                                       |     | (Unaudited) |  | (Unaudited) |  | (Audited) | 
+---------------------------------------+-----+-------------+--+-------------+--+-----------+ 
| Loss for the period                   |     |       (283) |  |       (821) |  |   (2,344) | 
+---------------------------------------+-----+-------------+--+-------------+--+-----------+ 
| Net finance costs                     |     |         194 |  |         204 |  |       345 | 
+---------------------------------------+-----+-------------+--+-------------+--+-----------+ 
| Depreciation and amortisation         |     |         397 |  |         314 |  |       941 | 
+---------------------------------------+-----+-------------+--+-------------+--+-----------+ 
| Share-based payments                  |     |          21 |  |        (26) |  |      (35) | 
+---------------------------------------+-----+-------------+--+-------------+--+-----------+ 
| Exceptional costs                           |           - |  |         150 |  |       145 | 
+---------------------------------------------+-------------+--+-------------+--+-----------+ 
| Tax                                      |  |        (90) |  |          48 |  |     (356) | 
+------------------------------------------+--+-------------+--+-------------+--+-----------+ 
| (Profit)/loss after tax in respect of    |  |        (55) |  |         880 |  |     1,434 | 
| discontinued operations                  |  |             |  |             |  |           | 
+------------------------------------------+--+-------------+--+-------------+--+-----------+ 
| Underlying EBITDA                           |         184 |  |         749 |  |       130 | 
+---------------------------------------+--+--+-------------+--+-------------+--+-----------+ 
 
 
 
 
4. Capital and reserves 
Reconciliation of movements in equity 
 
 
+------------------------------+---------+----------+----------+-----------+------------+ 
|                              |   Share |    Share |    Other |  Retained |      Total | 
|                              | capital |  premium | reserves |  earnings |     equity | 
+------------------------------+---------+----------+----------+-----------+------------+ 
|                              | GBP'000 |  GBP'000 |  GBP'000 |   GBP'000 |    GBP'000 | 
+------------------------------+---------+----------+----------+-----------+------------+ 
| At 1 August 2007             |  5,012  |   2,245  |  (3,939) |  (3,301)  |        17  | 
+------------------------------+---------+----------+----------+-----------+------------+ 
| Total recognised income and  |     -   |      -   |      -   | (2,344)   |  (2,344)   | 
| expense                      |         |          |          |           |            | 
+------------------------------+---------+----------+----------+-----------+------------+ 
| Equity-settled share-based   |     -   |      -   |      -   |       35  |        35  | 
| payments                     |         |          |          |           |            | 
+------------------------------+---------+----------+----------+-----------+------------+ 
| At 31 July 2008              |  5,012  |   2,245  |  (3,939) |   (5,680) |    (2,362) | 
+------------------------------+---------+----------+----------+-----------+------------+ 
| Total recognised income and  |     -   |      -   |      -   |     (283) |      (283) | 
| expense                      |         |          |          |           |            | 
+------------------------------+---------+----------+----------+-----------+------------+ 
| Equity-settled share-based   |     -   |      -   |      -   |        21 |         21 | 
| payments                     |         |          |          |           |            | 
+------------------------------+---------+----------+----------+-----------+------------+ 
| At 31 July 2008              |  5,012  |   2,245  |  (3,939) |   (5,942) |    (2,624) | 
+------------------------------+---------+----------+----------+-----------+------------+ 
 
 
 
 
  5. Cash generated from continuing operations 
 
 
 
 
+-----------------------------------+-------------------------------------------------------+-------------+---+-----------+ 
|                                   |                                               31 Jan  |      31 Jan |   |   31 Jul  | 
|                                   |                                                  2009 |        2008 |   |      2008 | 
+-----------------------------------+-------------------------------------------------------+-------------+---+-----------+ 
|                                   |                                               GBP'000 |     GBP'000 |   |   GBP'000 | 
+-----------------------------------+-------------------------------------------------------+-------------+---+-----------+ 
|                                   |                                           (Unaudited) | (Unaudited) |   | (Audited) | 
+-----------------------------------+-------------------------------------------------------+-------------+---+-----------+ 
| Loss for the year                 |                                                 (283) |       (821) |   |   (2,344) | 
+-----------------------------------+-------------------------------------------------------+-------------+---+-----------+ 
| (Profit)/loss after tax on        |                                                  (55) |        880  |   |    1,434  | 
| discontinued operations           |                                                       |             |   |           | 
+-----------------------------------+-------------------------------------------------------+-------------+---+-----------+ 
| Depreciation and other non-cash   |                                                       |             |   |           | 
| items:                            |                                                       |             |   |           | 
+-----------------------------------+-------------------------------------------------------+-------------+---+-----------+ 
|   Depreciation                    |                                                   312 |        211  |   |       732 | 
+-----------------------------------+-------------------------------------------------------+-------------+---+-----------+ 
| Amortisation of intangible        |                                                   119 |        104  |   |       209 | 
| assets                            |                                                       |             |   |           | 
+-----------------------------------+-------------------------------------------------------+-------------+---+-----------+ 
| Loss on disposal of plant and     |                                                    11 |          -  |   |       48  | 
| equipment                         |                                                       |             |   |           | 
+-----------------------------------+-------------------------------------------------------+-------------+---+-----------+ 
|   Share based payments            |                                                    21 |        (26) |   |     (35)  | 
+-----------------------------------+-------------------------------------------------------+-------------+---+-----------+ 
| Changes in working capital:       |                                                       |             |   |           | 
+-----------------------------------+-------------------------------------------------------+-------------+---+-----------+ 
|   Increase in inventories         |                                                 (132) |        (58) |   |    (143)  | 
+-----------------------------------+-------------------------------------------------------+-------------+---+-----------+ 
| Increase in trade and other       |                                                 (420) |       (487) |   |    (410)  | 
| receivables                       |                                                       |             |   |           | 
+-----------------------------------+-------------------------------------------------------+-------------+---+-----------+ 
|   Increase/(decrease) in payables |                                                  (96) |        534  |   |       957 | 
+-----------------------------------+-------------------------------------------------------+-------------+---+-----------+ 
|   Increase in deferred income     |                                                 1,934 |        622  |   |     1,977 | 
+-----------------------------------+-------------------------------------------------------+-------------+---+-----------+ 
| Finance revenue                   |                                                     - |        (34) |   |      (90) | 
+-----------------------------------+-------------------------------------------------------+-------------+---+-----------+ 
| Finance costs                     |                                                   178 |        238  |   |      435  | 
+-----------------------------------+-------------------------------------------------------+-------------+---+-----------+ 
| Tax                               |                                                  (90) |          48 |   |     (356) | 
+-----------------------------------+-------------------------------------------------------+-------------+---+-----------+ 
| Cash generated from continuing    |                                                 1,499 |      1,211  |   |    2,414  | 
| operations                        |                                                       |             |   |           | 
+-----------------------------------+-------------------------------------------------------+-------------+---+-----------+ 
 
 
 
 
6. Analysis of movements in net borrowing 
 
 
 
 
+----------------------------------+----------+--+----------+--+----------+--+------------+ 
|                                  |    As at |  |          |  |          |  |      As at | 
+----------------------------------+----------+--+----------+--+----------+--+------------+ 
|                                  |    1 Aug |  |          |  | Non-cash |  |     31 Jan | 
+----------------------------------+----------+--+----------+--+----------+--+------------+ 
|                                  |     2008 |  |     Cash |  |    items |  |       2009 | 
|                                  |          |  |    flows |  |          |  |            | 
+----------------------------------+----------+--+----------+--+----------+--+------------+ 
|                                  |  GBP'000 |  |  GBP'000 |  |  GBP'000 |  |    GBP'000 | 
+----------------------------------+----------+--+----------+--+----------+--+------------+ 
| Cash                             |       2  |  |      496 |  |       -  |  |       498  | 
+----------------------------------+----------+--+----------+--+----------+--+------------+ 
| Bank overdraft                   |    (109) |  |       93 |  |       -  |  |       (16) | 
+----------------------------------+----------+--+----------+--+----------+--+------------+ 
| Cash and cash equivalents        |   (107)  |  |      589 |  |       -  |  |        482 | 
+----------------------------------+----------+--+----------+--+----------+--+------------+ 
| Bank loans                       |  (3,513) |  |     588  |  |     (82) |  |    (3,007) | 
+----------------------------------+----------+--+----------+--+----------+--+------------+ 
| Finance leases and hire purchase |    (693) |  |     237  |  |    (260) |  |      (716) | 
| contracts                        |          |  |          |  |          |  |            | 
+----------------------------------+----------+--+----------+--+----------+--+------------+ 
| Net borrowings                   |  (4,313) |  |    1,414 |  |    (342) |  |    (3,241) | 
+----------------------------------+----------+--+----------+--+----------+--+------------+ 
 
 
 
 
7. Publication of non-statutory financial statements 
 
 
The financial information contained in the interim statements does not 
constitute statutory accounts as defined in section 240 of the Companies Act 
1985 and the results are unaudited. The financial information for the year to 31 
July 2008 and the six months ended 31 January 2008 have been extracted from the 
Group's 2008 Annual Report and IFRS transitional document. 
 
 
The 2008 Annual Report has been filed with the Registrar of Companies. The audit 
report on the Annual Report 2007 was unqualified and did not contain a statement 
under Section 237 (2) or (3) of The Companies Act. 
 
 
8.    Approval by the Board of Directors 
 
 
The interim Report was approved by the Board of Directors on the 30 April 2009. 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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