Interim Results

RNS Number:6039C
EBT Mobile China PLC
22 August 2007



For immediate Release                                             22 August 2007

                              EBT Mobile China plc
                            ("EBT" or "the Company")
             Interim Results for the six months ended 30 June 2007

EBT Mobile China plc (AIM: EBT), a leading China-based retailer of mobile phone
products and services, is pleased to announce its interim results for the six
months ended 30 June 2007.

Highlights

   *  Number of stores up by 65% to 238 (H1 2006: 144)
   *  Footprint increased to 26 cities (H1 2006: 16) including new openings in
      the affluent Eastern Region
   *  Revenue increased by 41% to RMB317.0m (#20.8m (1)) (H1 2006: RMB225.0m,
      #14.8m)
   *  Adjusted operating loss (2) of RMB7.7m (#0.5m) (H1 2006: RMB1.5m, #0.1m)
   *  Loss after tax narrowed to RMB9.8m (#0.6m) (H1 2006: RMB11.6m, #0.8m)
   *  Cash and cash equivalents of RMB126.5m (#8.3m) as at 30 June 2007
   *  Share placing in January raised #7.4m before expenses to fund strategic
      initiatives
   *  Acquisition of Shanghai Jingxin Jialing Telecommunications Co. Ltd. in
      February to strengthen EBT's relationships with China Mobile and Motorola
   *  Agreement signed with Motorola China in March to open Motorola-branded
      kiosks and shops in China
   *  Invested RMB2.5m (#0.16m) in cash to acquire 50% of the equity in
      Shanghai Jiaqi Telecommunications Co. to explore business opportunities in
      the fixed line arena
   *  Agreement to open 7 mobile phone stores within Tesco Hymall hypermarkets

note (1): for illustration purposes only, all figures in RMB are converted into
sterling, using the exchange rate of 15.2455 as at 30 June 2007

note (2): operating loss before share-based payments, foreign exchange movements
and acquisition related expenses

Zhang Ge, CEO of EBT said, "We continue to make significant progress in rolling
out our stores across the Eastern Region of China. As previously announced
whilst the timing for opening some new stores in the second half may be delayed
we remain on course to meet our targeted number of stores open by 2007 year
end.

"As our business continues to expand and gain critical mass, we are increasingly
seeing the benefits of our scale, both in revenue and cost terms. The Board
retains its positive outlook for the prospects of the Group and believes EBT is
well placed to become China's leading end to end provider of wireless products
and services".


For the six months       2007       2006       2007       2006        %
ended 30 June       unaudited  unaudited  unaudited  unaudited   Change
                         (#'m)*     (#'m)*    (RMB'm)    (RMB'm)

Revenue                  20.8       14.8      317.0      225.0     +41%

Gross profit              2.2        1.6       33.9       24.9     +36%

Adjusted operating      
loss**                   (0.5)      (0.1)      (7.7)      (1.5)

Operating loss           (0.9)      (0.8)     (13.6)     (12.1)

Adjusted loss           
after tax **             (0.3)      (0.1)      (4.0)      (1.1)

Loss after tax           (0.6)      (0.8)      (9.9)     (11.6)

EPS per share            -0.3p      -0.5p      -5fen      -7fen

Cash                      8.3        4.9      126.5       75.1

* figures in # are for illustrative purposes only, all translated using the RMB:
# exchange rate of 15.2455 as at 30 June 2007

** balance excludes the following expense items:

 1) share-based payments: in compliance with IFRS 2: Share-based Payments,
 share-based payments are measured at their fair value at the date of grant and
 recognised in the income statement over the vesting period. The share-based
 payment charges recorded in the income statement amounted to RMB1.0m (H1 2006:
 RMB8.7m), which are non-cash items;

 2) exchange gain/(loss): during 2007, sterling appreciated against the RMB,
 which has a net effect of RMB1.2m exchange losses in the income statement (H1
 2006: RMB1.9m exchange losses);

 3) acquisition-related expenses: during the year of 2007, EBT made one
 acquisition. These expenses of RMB3.8m cover the amortisation of intangible
 assets acquired and indirect transaction expenses.



For more information contact:

Terry Garrett / Stephanie Badjonat / John Moriarty
Weber Shandwick Financial                                          020 7067 0700

Aubrey Powell / Giles Stewart
Panmure Gordon (Broking) Limited                                   020 7459 3600



Chief Executive's Review

Substantial progress has been made since the start of the year to expand EBT's
position in the fast growing Chinese mobile phone market. In the first half of
2007 the number of stores has grown from 190 to 238 and we entered into 8 new
cities, raising the total to 26 cities compared to just 16 as at June 2006. In
particular we have continued to focus on the affluent Eastern region, expanding
our footprint in tier 2 and 3 cities (district capitals and county level cities
respectively).

Relationships with key handset manufacturers, major retailers and China Mobile,
the country's leading mobile network operator, remain strong, reflecting our
core partnership strategy of "Win with Winners" (3W), which remains highly
effective in driving our physical expansion.

A placing of new shares in early January raised #7.4m before expenses which
helped to fund a number of strategic initiatives as well as supporting the cash
demands of the store expansion programme. Despite further substantial investment
in developing the business, the balance sheet remains strong with cash and
equivalents of #8.3m as at 30 June 2007.

Business Review

EBT opened 48 stores during the period, taking the total number of stores to
238, an increase of 65% over June 2006 (H1 2006: 144). EBT's position as the
only specialist mobile phone retailer to be selected by China Mobile Shanghai to
operate within its retail outlets continues to generate opportunities and so far
we have opened 56 service halls/stores as per China Mobile's roll-out plan.

As part of EBT's roll out of new stores we continue to open new outlets with our
existing major retail partners such as Auchan, Carrefour, Lotus, Metro and
Trust-Mart and at the end of June there was a further significant development
when we announced that EBT had opened the first of 7 new stores within
hypermarkets operated by Tesco Hymall, Tesco plc's vehicle for expansion into
China.

We work closely with the leading handset manufacturers and during the half year
we entered into an agreement with Motorola China, the second largest mobile
phone manufacturer in China, to open Motorola-branded kiosks and shops, ranging
in size from 10 to 60 square metres, across the country.

In February, EBT acquired Shanghai Jingxin Jialing Telecommunications Co Ltd. to
strengthen the Company's relationships with China Mobile and Motorola. In the
following month EBT took a 50% interest in the equity of Shanghai Jiaqi
Telecommunications Co. Jiaqi provides us with the potential to explore business
opportunities in the fixed line arena as well as providing a full range of
telecommunication services to our customers in Shanghai. Both these acquisitions
have been completed and the Company looks forward to updating the market on
progress in due course.

Financial Review

In the six months to 30 June 2007, revenue increased by 41% to RMB317.0m (H1
2006: RMB225.0) which is the equivalent of #20.8m (1) (H1 2006 #14.8m) and gross
profit increased by 36% to RMB33.9m (H1 2006: RMB24.9m) or #2.2m (H1 2006: 
#1.6m). This is significant progress despite the lack of new handset releases by
the major manufacturers into the Chinese market. Fewer premium priced products
coming onto the market has impacted average unit prices and margins which
resulted in a slight reduction in gross margins to 10.7% in the first half,
compared to 11.0% in the same period of 2006.

Distribution costs increased by 64% to RMB27.0m (H1 2006: RMB16.5m) or #1.8m (H1
2006: #1.1m). As EBT continues to expand into tier 2 and 3 cities, management
intends to streamline procedures and internal structures in order to control
distribution costs.

Excluding the effect of foreign exchange, share-based payments and
acquisition-related expenses, the loss after tax was RMB4.0m (H1 2006: RMB1.1m)
or a loss of #0.3m (H1 2006: #0.1m). The loss for the period, including
share-based payments, the effect of foreign exchange and acquisition-related
expenses, was RMB9.9m (H1 2006:11.6m) or #0.6m (H1 2006: #0.8m).

The balance sheet remains strong and at 30 June 2006 cash and cash equivalents
amounted to RMB126.5m (H1 2006: RMB75.1m) equivalent to #8.3m (H1 2006: #4.9m).
Management intends to continue to improve logistics and inventory management to
maximise its working capital.

Outlook

As our business continues to expand and gain critical mass, we are increasingly
seeing the benefits of our scale, both in revenue and cost terms. The Board
retains its positive outlook for the prospects of the Group and believes EBT is
well placed to become China's leading end to end provider of wireless products
and services.


note (1): for illustration purposes only, all figures in RMB are converted into
sterling, using the exchange rate of 15.2455 as at 30 June 2007



EBT MOBILE CHINA PLC
UNAUDITED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2007

                                    Six months    Six months         Year
                                      ended 30      ended 30     ended 31
                                      Jun 2007      Jun 2006     Dec 2006
                                       RMB'000       RMB'000      RMB'000
CONTINUING OPERATIONS
Revenue                                316,971       225,031      495,107
Cost of sales                         (283,092)     (200,129)    (440,332)
                                    ______________________________________
Gross profit                            33,879        24,902       54,775

Other operating income                      14            59          918
Distribution costs                     (26,990)      (16,501)     (39,499)
Administrative expenses                (20,533)      (20,511)     (34,407)
                                    ______________________________________
Operating loss before financial        
guarantee                              (13,630)      (12,051)     (18,213)

Financial guarantee                          -             -       (2,268)
                                    ______________________________________
Operating loss                         (13,630)      (12,051)     (20,481)

Investment revenue                       3,756           440        1,775
                                    ______________________________________
Loss before tax                        (9,874)      (11,611)     (18,706)
                                    
Taxation                                     -           (3)        (470)
Loss for the year                      (9,874)      (11,614)     (19,176)
                                    ______________________________________
                                    ______________________________________
Attributable to equity holders of      
the parent                             (9,874)      (11,614)     (19,176)
                                    ______________________________________
                                    ______________________________________

                                           RMB           RMB          RMB
Loss per share
Basic                                   (0.05)        (0.07)       (0.11)
                                    ______________________________________
                                    ______________________________________


UNAUDITED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
FOR THE SIX MONTHS ENDED 30 JUNE 2007

                                   Six months     Six months         Year
                                     ended 30       ended 30     ended 31
                                     Jun 2007       Jun 2006     Dec 2006
                                      RMB'000        RMB'000      RMB'000

Exchange differences on                   
translation of foreign operations
and net gain/(loss) recognised
directly in equity                        676          3,458        7,446

Loss for the year                     (9,874)       (11,614)     (19,176)
                                    ______________________________________
Total recognised income and           
expense for the year                  (9,198)        (8,156)     (11,730)
                                    ______________________________________
                                    ______________________________________
Attributable to equity holders of     
the parent                            (9,198)        (8,156)     (11,730)
                                    ______________________________________
                                    ______________________________________

(for illustrative purposes, figures in RMB can be converted into #, using the
RMB:# exchange rate of 15.2455 as at 30 June 2007)



EBT MOBILE CHINA PLC
UNAUDITED CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2007

                                    As at 30         As at 31
                                      Jun 07         Dec 2006
                                     RMB'000          RMB'000
Non-current assets
Investment in subsidiaries             2,500                -
Other intangible assets                6,619               60
Property, plant and equipment          3,160            2,561
                                    __________________________
                                      12,279            2,621
                                    __________________________

Current assets
Inventories                           75,285           58,743
Trade receivables                     64,125           52,184
Other receivables                     14,604            3,525
Cash and cash equivalents            126,457           52,959
Deposits and prepayments              44,451           37,605
Prepaid taxes                              -            1,787
                                    __________________________
                                     324,922          206,803
                                    __________________________
TOTAL ASSETS                         337,201          209,424
                                    __________________________
                                    __________________________

Current liabilities
Trade payables                        29,987           24,807
Notes payables                        22,232           19,459
Accruals and other payables           12,525            4,857
Provisions                             2,298            2,268
Other tax liabilities                    744            2,689
                                    __________________________
                                      67,786           54,080
                                    __________________________
Net current assets                   257,136          152,723
Total liabilities                     67,786           54,080
                                    __________________________
NET ASSETS                           269,415          155,344
                                    __________________________
                                    __________________________

EQUITY
Share capital                         53,505           52,958
Share premium account                286,272          173,169
Other reserves                        97,193           86,898
Retained losses                    (167,555)        (157,681)
                                    __________________________
TOTAL EQUITY                         269,415          155,344
                                    __________________________
                                    __________________________

(for illustrative purposes, figures in RMB can be converted into #, using the
RMB:# exchange rate of 15.2455 as at 30 June 2007)



EBT MOBILE CHINA PLC
UNAUDITED CONSOLIDATED CASHFLOW
FOR THE SIX MONTHS ENDED 30 JUNE 2007
                                                  Six          Six        
                                               months       months        Year
                                             ended 30     ended 30    ended 31
                                             Jun 2007     Jun 2006    Dec 2006
                                              RMB'000      RMB'000     RMB'000

CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax from continuing operations    (9,874)     (11,611)    (18,706)
Adjustments for:
Depreciation of property, plant and              
equipment                                         370          294         621
Amortisation of intangible assets               2,776           11          23
Share-based payments expense                      970        8,650      12,258
Loss/(gain) on disposals of property, plant        
and equipment                                      14         (47)        (47)
Allowances for doubtful debts                       -            -         327
Interest income                               (3,778)        (440)     (1,775)
Net foreign exchange loss                       1,335            -       3,741
                                             __________________________________
Operating cash flows before movements in      
working capital                               (8,187)      (3,143)     (3,558)
(Increase)/decrease in inventory             (16,542)     (20,145)    (29,544)
(Increase)/decrease in notes receivable             -          626         626
(Increase)/decrease in trade receivables     (11,941)     (20,006)    (29,815)
(Increase)/decrease in other receivables     (11,079)      (2,465)       (810)
(Increase)/decrease in deposits and           
prepayments                                   (6,846)        5,729    (28,237)
(Increase)/decrease in amounts due from a           
related party                                       -           50          50
Increase/(decrease) in prepaid taxes            1,787        2,331       1,924
Increase/(decrease) in trade payables           5,180        (264)       6,265
Increase/(decrease) in accruals and other      
payables                                        7,668      (9,761)    (13,745)
Increase/(decrease) in provisions                  30            -       2,268
Increase/(decrease) in notes payables           2,773      (3,814)      13,167
Increase/(decrease) in other tax              
liabilities                                   (2,419)        (812)       1,290
Increase/(decrease) in amounts due to              
related parties                                     -      (1,070)     (1,070)
                                             __________________________________
Cash generated from/(used in) operations     (39,576)     (52,744)    (81,189)

Income tax paid                                   474        (334)       (335)
                                             __________________________________
Net cash generated from/(used in) operating  
activities                                   (39,102)     (53,078)    (81,524)
                                             __________________________________

CASH FLOWS FROM INVESTING ACTIVITIES
Interest received                               3,778          440       1,775
Proceeds on disposal of property, plant and        
equipment                                          79           57          57
Purchase of property, plant and equipment     (1,062)        (516)       (889)
Purchase of intangible assets                   (685)         (19)        (20)
Acquisition of subsidiary                     (2,500)            -           -
                                             __________________________________
Net cash generated from/(used in) investing     
activities                                      (390)         (38)         923
                                             __________________________________

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds on issue of shares                   113,650       70,563      75,625 
                                             __________________________________
Net cash from financing activities            113,650       70,563      75,625 
                                             __________________________________

NET INCREASE IN CASH AND CASH EQUIVALENTS      74,158       17,447     (4,976)

CASH AND CASH EQUIVALENTS AT BEGINNING OF      
YEAR                                           52,959       54,230      54,230
Effect of foreign exchange rate change          (660)        3,458       3,705
                                             __________________________________
CASH AND CASH EQUIVALENTS AT END OF YEAR      126,457       75,135      52,959
                                             __________________________________
                                             __________________________________

(for illustrative purposes, figures in RMB can be converted into #, using the
RMB:# exchange rate of 15.2455 as at 30 June 2007)



EBT MOBILE CHINA PLC
NOTES TO THE UNAUDITED INTERIM ACCOUNTS
FOR THE SIX MONTHS ENDED 30 JUNE 2007

1.   Basis of preparation

This interim financial information does not constitute statutory financial
statements within the meaning of section 240 of the Companies Act 1985. The
financial information for the six months ended 30 June 2007 and 30 June 2006 has
not been audited. The information relating to the year ended 31 December 2006 is
an extract from the audited financial statements for that year on which the
auditors gave an unqualified audit report.

The financial statements have been prepared in accordance with applicable
International Financial Reporting Standards (IFRSs) adopted for use in the
European Union and therefore comply with Article 4 of the EU IAS Regulation. The
principal accounting policies of the Group are set out in the Group's 2006
annual report and financial statements.

2.   Basis of consolidation

The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company. Control is achieved where
the Company has the power to govern the financial and operating policies of an
investee entity so as to obtain benefits from its activities.

3.   Revenue recognition

Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for goods and services provided in
the normal course of business, net of discounts and other sales-related tax.
Sales of mobile phones and phone cards are recognised when goods are delivered
and titles have been passed. Where the Group recognises revenue through the sale
of goods out of retail stores within department stores and hypermarkets, the
revenue is recognised at the gross value billed to the customer rather than the
net value retained after costs incurred with the department stores and
hypermarkets.

4.   Presentation currency

The individual financial statements of each Group company are presented in the
currency of the primary economic environment in which it operates (its
functional currency). For the purpose of the consolidated financial statements,
the results and financial position of each Group company are expressed in
Renminbi (RMB), which is the presentation currency for the consolidated
financial statements.

5.   Share-based payments

The Group has applied the requirements of IFRS 2 Share-based Payments. In
accordance with the transitional provisions, IFRS 2 has been applied to all
grants of equity instruments after 7 November 2002 that were unvested at 1
January 2005. The Group issues equity-settled payments to certain employees.
Equity-settled share-based payments are measured at fair value (excluding the
effect of non market-based vesting conditions) at the date of grant. The fair
value determined at the grant date of the equity-settled share-based payments is
expensed on a straight-line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest and adjusted for the effect of non
market-based vesting conditions.

6.   Business Combinations

The cost of the acquisition is measured at the aggregate of the fair value, at
the date of exchange, of assets given, liabilities incurred or assumed, and
equity instruments issued by the Group in exchange for control, plus any costs
directly attributable to the business combination.  In February 2007, EBT
acquired the business from Jingxin Jialing Telecommunication Co., Ltd..  The
acquisition consideration was comprised of cash of #0.13m cash and up to 2.4
million ordinary shares of EBT Mobile China plc. The share consideration is
subject to adjustments of the operating status of the store in the two years
following the acquisition date.




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