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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Eleksen Grp | LSE:ELG | London | Ordinary Share | GB00B12GJ944 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 9.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:2414E
Eleksen Group PLC
21 September 2007
ELEKSEN GROUP plc
("the Company")
INTERIM RESULTS FOR SIX MONTHS TO JUNE
21 September 2007
Eleksen Group plc, which makes smart fabric interfaces for devices such as
iPods, smart phones and MP3 players, today reported interim results for the six
months ended 30 June 2007.
Financial Highlights
*Turnover for first six months #581,000, in line with trading statement
(June 06: #1,804,000)
*Loss before taxation #3,209,000 (June 06: loss of #2,271,000)
*Good progress in delivering unit cost reduction programme
*Cost reduction measures have been identified
*Further funding required
Commercial Highlights
*Keyboard take up under way although slower than anticipated
*eSystem launched with strong market interest
Operational Highlights
*Repeat business from existing customers. Development of customer
relationships including product launches for
*Ermenegildo Zegna
*Bagir, suit provider to Marks & Spencer
*Opened Sales offices in Hong Kong and San Francisco
*Applied for patents associated with the eSystem
Commenting on the results Robin Shephard, Chief Executive, said: "These figures
are in line with our guidance to the market, a disappointing outcome for the
period which, nonetheless, saw some important developments for the business.
Eleksen stands to be a key player in the $1billion interactive apparel market.
Its eSystem, which means that users are able to control a wide number of
electronic devices from their wardrobe of enabled garments, has already
attracted interest from some important US apparel brands like Quicksilver, Roxy,
The North Face and Mountain Equipment. We have signed letters of intent for the
production of between 26 and 45 product lines already. We are currently
reviewing possible sources of additional funding and with strengthened sales
resources, comprehensive and targeted marketing programmes together with a firm
control of costs, Eleksen looks forward to the opportunities that this market
offers".
For further information, please contact
Eleksen Group plc 08700 727272
Robin Shephard, Chief Executive
Panmure Gordon 0207 459 3600
Andrew Godber
Cubitt Consulting 020 7367 5100
Michael Henman
Allison Reid
About Eleksen
Eleksen's core technology, ElekTex(R), enables fabric to be programmed, creating
touch sensitive controls for a wide range of electronic devices.
Eleksen's initial focus is on wearables, such as soft MP3 controllers integrated
into outdoor jackets, rucksacks and suits; and on soft, fabric keyboards for
smartphones and PDAs. A wide range of other applications may exist including
solutions for the toy, industrial, military, automotive and healthcare markets.
Further information on the Group is available at www.eleksen.com
CHAIRMAN'S STATEMENT
The first six months of the year have been a busy and challenging time for the
Group, during which a number of key objectives were achieved.
*Restructuring of the business' commercial front end
*Scaled manufacturing capability in Asia
*Opened Asia and US offices
*Product costs reduced significantly
However revenues have fallen in this half, both consecutively from the preceding
half, and by comparison with the same period in 2006. We have addressed this
disappointing result through the appointment of an outstandingly experienced VP
of Sales and through the launch of the eSystem.
The eSystem enables users to control a wide range of electronic devices from
their wardrobe of enabled garments.
It has already attracted interest from some important US apparel brands
including popular brands like Quicksilver, Roxy, The North Face and Mountain
Equipment.
Trading results
Turnover in the six months ended 30 June was # 581,000 (2006: #1,804,000) and
operating loss of #3,209,000 (2006: #2,271,000).
Operations
We have continued to deliver excellent levels of client support and performance.
The Company has demonstrated its ability to both scale production and manage its
cost of goods downwards. This coupled with the Company's new market strategy
will lead to significant increases in volumes.
The importance of first class customer service to the Company has led to the
opening of a Far East operation based out of Hong Kong.
Resourcing
A programme of migrating the skill sets from technology development to product
delivery is underway reflecting the key objectives of the business.
Sales function
David Doyle joined as VP Sales shortly after the end of the first half. He has
an important role to play in rapidly developing the company's revenue
performance and is well qualified to do so. David has 25 years of relevant
industry experience and was previously Vice President of Worldwide Sales at ARC
PLC for six years.
Goodhope
The Company made sales to this customer in 2006 and 2007. Despite a number of
agreed payment plans, Goodhope have failed to meet these payments plans on a
timely basis. The Company has retained legal counsel in the US and an attachment
hearing is set for October 2007. Our lawyers have advised that they believe we
have a good case and are of the opinion that we will be successful at the
hearing. However the directors have taken a prudent view and included a
provision of #572,000 in these interim results.
Current Funding
The Board made a statement on the 28th August concerning the need for additional
funding. Since then, the Board has carried out a further analysis of the
Company's cashflows and is keeping the financial position under close review.
Due to the pressing need for further funding, which may or may not be
forthcoming, the Company is currently considering all available options and is
in discussions with a number of potential sources. The Company will make a
further announcement in due course.
Dividend
No dividend is proposed.
Going Concern
The accounts have been produced on a going concern basis. However , in common
with similar businesses at this stage of their development , the directors
recognise that there will remain a material uncertainty over the Group's ability
to realise future profitability and positive cashflows until the Group has
established a track record of profitable trading, cash generation and meeting
its working capital projections. The Group currently does not have sufficient
cash resources in place to continue to trade for the next 12 months. In order to
meet their on-going financial commitments, the directors are currently
negotiating further funding although at the date of this report no funding had
been secured.
There is, therefore, material uncertainty related to the above events and
conditions which may cast significant doubt on the Group's ability to continue
as a going concern and it maybe unable to realise its assets and discharge its
liabilities in the normal course of business
Conclusion and Outlook
These interim results are not indicative of Eleksen's potential. The company is
readily acknowledged as a leader in the emerging smart fabric market. Its newly
launched eSystem will radically change this landscape. Although revenues will
not benefit from this until 2008, the Directors are encouraged by strong and
immediate interest from more than 30 OEM customers within days of its launch.
The Company already has signed letters of intent for the production of between
26 and 45 eSystem enabled product lines.
Meanwhile, although revenues in 2007 have continued to be depressed, we have
seen some good customer wins and repeat orders throughout the year ; a good
example is Bagir's, iPod enabled fashion suit, now available through Marks &
Spencer.
Important and encouraging though such endorsement is, the Company remains
commercially focused on controlling costs and developing demand for its eSystem
which, together, will bring increasing revenues and profitability.
The Company is working to resolve the funding requirements for the business.
Company Registration No. 05372849 (England and Wales)
ELEKSEN GROUP PLC
INTERIM RESULTS FOR THE PERIOD 1 JANUARY 2007 TO 30 JUNE 2007
ELEKSEN GROUP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE PERIOD 1 JANUARY to 30 JUNE 2007
Unaudited Unaudited Unaudited
Period Period Year
1 January 1 January ended
to 30 June to 30 June 31 December
2007 2006 2006
Notes #'000 #'000 #'000
Revenue 581 1,804 3,498
Cost of sales (513) (1,360) (2,607)
__________ __________ __________
Gross profit 68 444 891
-----------------------------------------------------------------------------------
Other administrative expenses (2,455) (2,003) (4,361)
Write off of trade receivable (572) - -
Exceptional goodwill impairment - (743) (743)
-----------------------------------------------------------------------------------
Administrative expenses (3,027) (2,746) (5,104)
__________ __________ __________
Loss from operations (2,959) (2,302) (4,213)
Finance income 33 32 32
Finance costs (283) (1) (26)
__________ __________ __________
Loss before taxation (3,209) (2,271) (4,207)
Income tax expense - - 188
__________ __________ __________
Loss for the period 5 (3,209) (2,271) (4,019)
=========== =========== ==========
Loss per share (pence)
Basic and diluted 3 (7.84) (5.55) (9.81)
ELEKSEN GROUP PLC
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2007
Unaudited Unaudited Unudited
At 30 June At 30 June At 31 December
2007 2006 2006
#'000 #'000 #'000
ASSETS
Non-current Assets
Intangible assets 208 155 176
Property, plant and equipment 49 65 58
__________ __________ __________
Total Non-current Assets 257 220 234
Current Assets
Inventories 439 403 510
Trade and other receivables 593 1,170 1,607
Cash and cash equivalents 1,873 1,369 1,148
__________ __________ __________
Total Current Assets 2,905 2,942 3,265
TOTAL ASSETS 3,162 3,162 3,499
LIABILITIES
Current Liabilities
Trade and other payables (708) (941) (1,175)
Employee benefits (145) (264) (272)
Provisions for liabilities (176) (466) (696)
__________ __________ __________
Total Current Liabilities (1,029) (1,671) (2,143)
Non-current Liabilities
Interest bearing loans (5,239) - (1,471)
__________ __________ __________
Total Non-current Liabilities (5,239) - (1,471)
TOTAL LIABILITIES (6,268) (1,671) (3,614)
__________ __________ __________
NET (LIABILITIES)/ASSETS (3,106) 1,491 (115)
=========== ========== ==========
ELEKSEN GROUP PLC
CONSOLIDATED BALANCE SHEET (CONTINUED)
AS AT 30 JUNE 2007
Unaudited Unaudited Unaudited
At 30 June At 30 June At 31 December
2007 2006 2006
Notes #'000 #'000 #'000
EQUITY
Share capital 4 2,047 2,047 2,047
Share premium 5 494 494 494
Convertible loan equity reserve 5 76 - 18
Warrant equity element reserve 5 151 - 53
Foreign exchange reserve 5 12 - 10
Reverse acquisition reserve 5 15,381 15,310 15,381
Other reserves 5 56 6 (4)
Retained earnings 5 (21,323) (16,366) (18,114)
__________ __________ __________
TOTAL SHAREHOLDERS' FUNDS 6 (3,106) 1,491 (115)
=========== ========== ==========
ELEKSEN GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD 1 JANUARY TO 30 JUNE 2007
Unaudited Unaudited Unaudited
Period Period Year
1 January to 1 January to ended
to 30 June to 30 June 31 December
2007 2006 2006
#'000 #'000 #'000
Cash flows from operating activities
Net loss before taxation for the period (3,209) (2,271) (4,207)
Adjustments for:
Depreciation of property, plant and equipment 30 24 61
Amortisation of intangible assets 39 41 78
Impairment of goodwill - 743 743
Loss on disposal of intangibles - - 14
Investment income (33) (32) (32)
Income expense 283 1 26
Foreign exchange losses - - 10
Share based payment charge 60 2 5
__________ __________ __________
Operating profit before changes in working (2,830) (1,492) (3,302)
capital and provisions
Decrease/(increase) in trade and
other receivables 1,015 (69) (443)
(Increase)/decrease in inventories 70 (277) (384)
(Decrease)/increase in trade
payables and provisions (1,114) 444 936
Introduction of Bora Communications
plc receivables - 581 581
Introduction of Bora Communications
plc payables - (474) (474)
__________ __________ __________
Cash absorbed by operations (29) 205 216
Research and development tax credit - - 188
__________ __________ __________
Net cash flows from operating
activities (2,859) (1,287) (2,898)
__________ __________ __________
ELEKSEN GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
FOR THE PERIOD 1 JANUARY TO 30 JUNE 2007
Unaudited Unaudited Unaudited
Period Period Year
1 January to 1 January to ended
to 30 June to 30 June 31 December
2007 2006 2006
#'000 #'000 #'000
Net cash flows from operating
activities brought forwards (2,859) (1,287) (2,898)
Cash flows from investing activities
Reverse acquisition of legal parent undertaking - (863) (865)
Cash acquired with acquisition - 457 457
Purchases of property, plant and equipment (21) (48) (120)
Purchases of intangible assets (38) (28) (65)
Research and Development expenditure (33) - -
Interest received 33 32 32
__________ __________ __________
Net cash flows from/(used) in
investing activities (59) (450) (561)
Cash flows from financing activities
Proceeds from issue of ordinary shares - 360 359
Expenses paid in connection with share issue - (19) (19)
Exercise of share options - 45 45
Issue of convertible debt 4,000 - 1,682
Expenses paid in connection with debt issue (277) - (179)
Interest paid (80) (1) (2)
__________ __________ __________
Net cash flows from financing activities 3,643 385 1,886
__________ __________ __________
Net increase/(decrease) in cash and cash 725 (1,352) (1,573)
equivalents
========== ========== ==========
Opening cash and cash equivalents 1,148 2,721 2,721
__________ __________ __________
Closing cash and cash equivalents 1,873 1,369 1,148
========== ========== ==========
ELEKSEN GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD 1 JANUARY TO 30 JUNE 2007
1 Statement of accounting policies
1.1 Basis of preparation
The consolidated financial statements of Eleksen Group plc have been
prepared in accordance with International Financial Reporting Standards
as adopted by the EU. The Group has previously prepared its financial
statements under UK Generally Accepted Accounting Practice ("UK GAAP").
The unaudited financial information presented in this document has been
prepared on the basis of the expected accounting policies which the
Group will comply with in the accounts to 31 December 2007 and on the
basis of all International Financial Reporting Standards ('IFRS'),
including International Accounting Standards ('IAS') and
interpretations issued by the International Accounting Standards Board
('IASB') and its committees, as adopted by the EU. These are subject to
ongoing amendment by the IASB and subsequent endorsement by the
European Commission and are therefore subject to possible change. As a
result, information contained within this release will require updating
for any subsequent amendment to IFRS required for first time adoption
or those new standards that the Group may elect to adopt early. An
explanation of how the transition to IFRS has affected the previously
reported financial results is provided in note 8.
The accounting policies set out below, have, unless otherwise stated,
been applied consistently to all periods presented in these Group
financial statements and in preparing an opening IFRS balance sheet at
1 January 2006.
The Group financial statements are presented in sterling and all values
are rounded to the nearest thousand pounds (#'000s), except where
otherwise indicated.
1.2 Going concern
The accounts have been produced on a going concern basis. However, in
common with similar businesses at this stage of their development, the
directors recognise that there will remain a material uncertainty over
the Group's ability to realise future profitability and positive
cashflows until the Group has established a track record of profitable
trading, cash generation and meeting its working capital projections. The
Company currently does not have sufficient cash resources in place to
continue to trade for a 12 month period.
There is, therefore, material uncertainty related to the above events and
conditions which may cast significant doubt on the entity's ability to
continue as a going concern and it maybe unable to realise its assets and
discharge its liabilities in the normal course of business.
ELEKSEN GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD 1 JANUARY TO 30 JUNE 2007
1.3 Basis of consolidation
The consolidated financial statements incorporate the financial statements
of the Group controlled by the Eleksen Group plc and its subsidiaries.
Control is achieved where the Group has the power to govern the financial
and operating policies of an investee entity so as to obtain benefits from
its activities. The results of subsidiaries acquired or sold are included
in the consolidated financial statements from the date control commences to
the date control ceases. The financial statements of subsidiaries are
prepared for the same reporting year as the parent company, using
consistent accounting policies. All inter-company transactions, balances,
income and expenditure are eliminated on consolidation.
On 3 May 2006 Bora Communications Plc ('Bora') an AIM listed cash shell
company acquired Eleksen Limited. Due to a number of factors surrounding
the transaction it was accounted for as a reverse acquisition with Eleksen
Limited being deemed to be the acquirer. The reverse acquisition reserve
comprises principally of the pre-acquisition reserves of Eleksen Limited,
elimination of the investment in Eleksen Limited, elimination of the net
assets of Bora on consolidation, and costs directly attributable to the
acquisition. The company subsequently changed its name from Bora
Communications Plc to Eleksen Group Plc.
1.4 IFRS 1 exemptions
IFRS 1, "First-time Adoption of International Financial Reporting Standards"
sets out the rules that the Group must follow when it adopts IFRS for the
first time. Under this standard the Group is required to establish its IFRS
accounting policies as at 31 December 2007 and, in general, apply these
retrospectively to determine the IFRS opening balance sheet at its date of
transition, 1 January 2006.
IFRS 1 provides a number of optional exemptions to this general principle. Set
out below is a description of the significant first time adoption choices made
by the Group.
Share based payments (IFRS 2)
Consistent with the Group's approach under UK GAAP the Group has elected to
apply IFRS 2 "Share-based Payment" only to those equity settled awards that
were granted after 7 November 2002 and not yet vested at 1 January 2006.
Under UK GAAP all share based payments have been fair valued under FRS 20
"Share Based Payment" which is in line with the accounting treatment under
IFRS 2.
Business combinations (IFRS 3)
The Group has elected to apply IFRS 3 "Business Combinations" prospectively
from the date of transition to IFRS rather than to restate previous business
combinations prior to 1 January 2006.
There were no business combinations prior to 1 January 2006 and hence no
goodwill held previously.
ELEKSEN GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD 1 JANUARY TO 30 JUNE 2007
1.5 Revenue recognition
Revenue is measured at the fair value of consideration received or receivable
and represents amounts receivable for the sale of smart fabric interfaces in
the normal course of business, net of discounts, VAT and other sales-related
taxes, and provisions for returns and cancellations.
Revenue in respect of product sales is recognised when the significant risks
and rewards of ownership of the goods have passed to the buyer and the amount
of revenue can be measured reliably.
1.6 Pensions
The Group contributes to group personal pension schemes for its staff
according to individual's contract terms. Contributions payable by the group
to these schemes are charged to the income statement in the period to which
they relate. All such schemes are defined contribution arrangements, the
assets of which are held separately from the Group.
1.7 Research and development
Research expenditure is charged to income in the year in which it is
incurred.
Expenditure incurred in the development of products is capitalised as an
intangible asset only when:
- technical feasibility has been demonstrated;
- adequate technical, financial and other resources exist to complete the
development, which the Group intends to complete and use;
- future economic benefits expected to arise are deemed probable; and
the costs can be reliably measured.
Development costs not meeting these criteria are expensed in the income
statement as incurred. Capitalised development costs, classified as
intangible assets, arising from product development are amortised on a
straight-line basis over their useful economic lives once the related
products are available to use.
1.8 Share based payment
The Group operates a number of equity-settled, share-based compensation
plans. The fair value of the employee services received in exchange for the
grant of the options is recognised as an expense with a corresponding
increase in equity. The total amount to be expensed over the vesting period
is determined by non-market vesting conditions. Non-market vesting
conditions are included in assumptions about the number of options that are
expected to vest. At each balance sheet date, the Group revises its
estimates of the number of options that are expected to vest. It recognises
the impact of the revision to original estimates, if any in the income
statement with a corresponding adjustment to equity.
Deferred tax is recognised where it is likely that share relief will be
available on the difference between exercise price and market price at the
balance sheet date.
1.9 Finance costs
Finance costs are charged to the profit and loss account over the term of
the debt so that the amount charged is at a constant rate on the carrying
amount. Finance costs include issue costs, which are initially recognised as
a reduction in the proceeds of the associated capital instrument.
ELEKSEN GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD 1 JANUARY TO 30 JUNE 2007
1.10 Taxation
Current tax is based on taxable profit for the year and any adjustment
to tax payable in respect of previous years. Taxable profit differs
from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in
other years and it further excludes items that are never taxable or
deductible.
Deferred tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial
statements. However, the deferred tax is not accounted for, if it
arises from initial recognition of an asset or liability in a
transaction other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss.
Deferred tax is determined using tax rates (and laws) that have been
enacted or substantively enacted by the balance sheet date and are
expected to apply when the related deferred tax asset is realised or
the deferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable
that future taxable profit will be available against which the
temporary differences can be utilised. The carrying amount of the
deferred tax asset is reviewed at each balance sheet date and reduced
to the extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to be
recovered.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same
taxation authority and the Group intends to settle its current tax
assets and liabilities on a net basis.
1.11 Goodwill
Goodwill represents the difference between the cost of the business
combination and the fair value of identifiable assets, liabilities and
contingent liabilities acquired. Identifiable intangibles are those
which can be sold separately or which arise from legal rights regardless
of whether those rights are separable. Goodwill is recognised in the
balance sheet as an intangible and is not amortised.
After initial recognition, goodwill is stated at cost less any
accumulated impairment losses, with the carrying value being reviewed
for impairment, at least annually and whenever events or changes in
circumstances indicate that the carrying value may be impaired. Goodwill
is allocated to cash generating units and is tested annually for
impairment. Any impairment is recognised immediately in the income
statement and is not subsequently reversed.
All goodwill arising from the consolidation has been fully impaired.
1.12 Patents
Patents are valued at cost less accumulated amortisation. Capitalised
costs are legal and professional costs. Amortisation is calculated to
write off the cost in equal annual instalments over four years. Patents
are internally generated and are granted for twenty years.
ELEKSEN GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD 1 JANUARY TO 30 JUNE 2007
1.13 Property, plant and equipment
Property, plant and equipment are stated at cost less depreciation.
Depreciation is calculated to write off the cost of each asset in equal
annual instalments over its expected useful life, as follows:
Plant and machinery 2 years
The carrying values of fixed assets are reviewed for impairment when a
triggering event arises that indicates assets might be impaired. Impairment
is assessed by comparing the carrying value of the asset against the higher
of its realisable value and its value in use. Any provision for impairment is
charged to the profit and loss account in the year concerned. Useful lives
and residual values are reviewed annually.
1.14 Intangible assets
Intangible assets acquired separately and internally generated intangible
assets are measured on initial recognition at cost. The cost of intangible
assets acquired in a business combination is fair value as at the date of
acquisition. Following initial recognition, intangible assets are carried
at cost less any accumulated amortisation and any accumulated impairment
losses.
The useful lives of intangible assets are assessed to be either finite or
indefinite. Intangible assets with finite lives are amortised over the
useful economic life and assessed for impairment whenever there is an
indication that the intangible asset may be impaired. The amortisation
period and the amortisation method for an intangible asset with a finite
useful life are reviewed at least at each financial year end. Amortisation
is calculated to write off the cost of each asset in equal annual
instalments over its expected useful life, as follows:
Computer software 2 years
Patents and trademarks 4 years
Product development 4 years
1.15 Business Combinations
Business combinations are accounted for using the purchase method. The cost
of acquisition is measured at the aggregate of the fair values, at the date
of exchange, of assets given, liabilities incurred or assumed, and equity
instruments issued by the Group in exchange for control of the acquiree,
plus any costs attributable to the business combination. The acquiree's
identifiable assets, liabilities and contingent liabilities that meet the conditions for
recognition under IFRS 3 'Business Combinations' are recognised at fair
value at the acquisition date, except for non-current assets (or disposal
groups) that are classified as held for sale in accordance with IFRS 5
'Non-Current Assets Held for Sale and Discontinued Operations', which are
recognised and measured at fair value less costs to sell.
On 3 May 2006 Bora Communications Plc ('Bora') an AIM listed cash shell
company acquired Eleksen Limited. Due to a number of factors surrounding
the transaction it was accounted for as a reverse acquisition with Eleksen
Limited being deemed to be the acquirer.
Goodwill amounting to #743k arose on the difference between the fair value
of the consideration paid and the fair value of the net assets acquired
from Bora at the date of reverse acquisition. The goodwill was fully
impaired at the date of acquisition.
1.16 Inventories
Inventory is valued at the lower of cost and net realisable value. Cost is
based on cost of purchase on a weighted average basis. Work in progress and
finished goods include labour and attributable overheads. Net realisable
value is based on estimating selling price less additional costs to
completion and disposal. An allowance is made for obsolete, slow moving or
defective items where appropriate.
ELEKSEN GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD 1 JANUARY TO 30 JUNE 2007
1.17 Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprises cash at bank and
short term deposits with an original maturity of three months or less. For
the purposes of the consolidated cash flow statement, cash and cash
equivalents consists of cash and cash equivalents, as previously defined,
net of outstanding bank overdrafts.
1.18 Provisions
A provision is recognised in the balance sheet when the Group has a present
legal or constructive obligation as a result of a past event, and it is
probable that an outflow of economic benefits will be required to settle
the obligation. If the event is material, provisions are determined by
discounting the expected future cash flows at a pre tax rate that reflects
current market assessments of the time value of money and, where
appropriate, the risks specific to the liability.
1.19 Leases and hire purchase contracts
Assets acquired under leases and hire purchase contracts are capitalised
and disclosed under property, plant and equipment at their estimated fair
value, or, if lower, the present value of the minimum lease payments on the
inception of each lease or contract and depreciated over their estimated
useful lives. The capital element of the future payments is treated as a
liability and the total finance charge is allocated over the period of the
lease or contract in such away as to give a constant charge on the
outstanding liability.
Operating lease rentals payable or receivable are charged or credited to
the income statement over the lease term.
1.20 Loans and borrowings
All loans and borrowings are initially recognised at the fair value of the
consideration received less directly attributable transaction costs. After
initial recognition, interest-bearing loans and borrowings are subsequently
measured at amortised cost using the effective interest method. Gains and
losses are recognised in net profit or loss when the liabilities are derecognised
as well as through the amortisation process. Borrowing costs are recognised
as an expense when incurred.
1.21 Convertible loan
The component of the convertible loan that exhibits characteristics of a
liability is recognised as a liability in the balance sheet, net of
transaction costs. On issuance of the convertible loan, the fair value of
the liability component is determined using a market rate for an equivalent
non-convertible bond and this amount is carried as a long term liability on the amortised
cost basis until extinguished on conversion or redemption.
Where applicable the remainder of the proceeds is allocated either to the
conversion option that is recognised and included in shareholders' equity
or the fair value of the derivative element that is recognised as a
financial liability in the balance sheet, where it meets the definition of
a financial liability. Any movement in the derivative element is recorded
in the income statement, within finance costs.
On redemption the loan is repaid at par and any derivative element is
released through the income statement.
ELEKSEN GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD 1 JANUARY TO 30 JUNE 2007
1.22 Financial Instruments
In relation to the disclosures made in the period end accounts:
- short term receivables and payables are treated as financial assets and
liabilities; and
- the Group does not hold or issue derivative financial instruments for trading
purposes.
1.23 Foreign currencies
Transactions in foreign currencies are recorded using the rate of exchange
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated using the rate of exchange
ruling at the balance sheet date and the gains or losses on translation are
included in the income statement. Non-monetary items carried at fair value
that are denominated in foreign currencies are translated at the rates
prevailing at the date when the fair value was determined. Non-monetary items
that are measured in terms of historical cost in a foreign currency are not
retranslated but remain at the exchange rate at the date of the transaction.
For consolidation purposes, the assets and liabilities of the Group's foreign
operations are translated into sterling at the rate of exchange ruling at the
balance sheet date. Income and expenses are translated at average exchange
rates for the year, where this represents a reasonable approximation of
actual exchange rates at the date of transactions unless exchange rates
fluctuate significantly during that period, in which case the exchange rates
at the date of transactions are used. The resulting exchange differences are
taken directly to a separate component of equity. On disposal of a foreign
entity, the deferred cumulative amount recognised in equity relating to that
particular foreign operation is recognised in the income statement.
1.24 Share Warrants
The fair value of the share warrants has been calculated using the
Black-Scholes valuation model and recognised as a reserve within
shareholders' funds. As the warrants are exercised this reserve will be
transferred to the share capital and the share premium account.
1.25 Employee Benefit Trust (EBT)
The cost, to the EBT of those of the company's shares held by the EBT, is
deducted from shareholders' funds in the company and group balance sheet. Any
cash received by the EBT on disposal of the shares it holds is also
recognised directly in shareholders' funds. Other assets and liabilities of
the EBT (including borrowings) are recognised as assets and liabilities of
the company.
Any shares held by the EBT are treated as cancelled for the purposes of
calculating earnings per share.
ELEKSEN GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD 1 JANUARY TO 30 JUNE 2007
2 Accounting Convention
The interim accounts for the six months ended 30 June 2007 and the comparative
figures for the six months ended 30 June 2006 are not audited by the Company's
auditors. The comparative figures for the twelve months ended 31 December 2006 are
not the Company's statutory accounts within the meaning of Section 240 of the
Companies Act 1985 but are abridged from such accounts and then restated under IFRS.
The consolidated financial statements for the twelve months ended 31 December 2006
as previously stated under UK GAAP have been reported on by the Company's auditors
and delivered to the Registrar of Companies. The report of the auditors on such
accounts was unqualified, did not include reference to any matters to which the
auditors drew their attention by way of emphasis without qualifying their report,
and did not contain any statement under Sections 237(2) or 237(3) of the Companies
Act 1985.
3 Loss per share
Losses per ordinary share have been calculated using the weighted average number of
shares in issue during the relevant financial periods.
Unaudited Unaudited Unaudited
Period Period Year
1 January to 1 January to ended
to 30 June to 30 June 31 December
2007 2006 2006
#'000 #'000 #'000
Reconciliation of losses:
---------------------------
Losses used for calculation of basic and (3,209) (2,271) (4,019)
diluted loss per share
============ ============ ============
30 June 30 June 31 December
2007 2006 2006
Number Number Number
Reconciliation of denominator:
--------------------------------
Weighted average number of shares used for 40,948,170 40,948,170 40,948,170
calculation of basic and diluted loss per
share
============ ============ ============
Loss per share - basic and diluted (pence) (7.84) (5.55) (9.81)
============ ============ ============
ELEKSEN GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD 1 JANUARY TO 30 JUNE 2007
Unaudited Unaudited Unaudited
At At At
30 June 30 June 31 December
4 Share capital 2007 2006 2006
# # #
Authorised
120,000,000 Ordinary shares of 5p each 6,000,000 6,000,000 6,000,000
========== ============ ===========
Allotted, called up and fully paid
40,948,170 Ordinary shares of 5p each 2,047,409 2,047,409 2,047,409
========== ============ ===========
5 Statement of movements on reserves
Unaudited Unaudited Unaudited Unaudited
Share premium Reverse Other reserves Retained
account acquisition (see below) earnings
reserve
#'000 #'000 #'000 #'000
Group
Balance at 1 January 2007 494 15,381 77 (18,114)
Loss for the period - - - (3,209)
Share based payment - - 60 -
Convertible loan and - - 158 -
warrants issued
__________ __________ __________ __________
Balance at 30 June 2007 494 15,381 295 (21,323)
========== ========== ========== ==========
Other reserves
Equity based payment reserve 62
ESOP reserve (6)
Convertible loan equity reserve 76
Warrant equity element reserve 151
Foreign exchange reserve 12
__________
295
==========
ELEKSEN GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD 1 JANUARY TO 30 JUNE 2007
Unaudited Unaudited Unaudited
Period Period Year
1 January to 1 January to ended
to 30 June to 30 June 31 December
6 Reconciliation of movements in 2007 2006 2006
shareholders' funds #'000 #'000 #'000
Loss for the financial period (3,209) (2,271) (4,019)
Proceeds from issue of shares - - -
Capital adjustments for reverse - 767 839
acquisition accounting
Convertible loan and share warrants 158 - 71
issued
Movement on equity based payment reserve 60 3 (8)
Foreign exchange currency translation - - 10
reserve
__________ __________ __________
Net decrease in shareholders' funds (2,991) (1,501) (3,107)
Opening shareholders' funds (115) 2,992 2,992
__________ __________ __________
Closing shareholders' funds (3,106) 1,491 (115)
========== ========== ==========
7 Analysis of net debt
Unaudited Unaudited Unaudited Unaudited
At 1 January Cash flow Non-cash At 30 June
2007 movements 2007
#'000 #'000 #'000 #'000
Cash at bank and in hand 1,148 725 - 1,873
Debt due after one year (1,471) (3,488) (280) (5,239)
__________ __________ __________ __________
(323) (2,763) (280) (3,366)
========== ========== ========== ==========
8 Reconciliation of comparative information to previously reported information
A reconciliation between results previously published under UK GAAP and the
results presented above under IFRS was provided in the IFRS Conversion Statement
released by the Group on 21 September 2007. Please refer to that document for a
full reconciliation. A copy of the document can be found on the Group's website,
www.eleksen.com.
9 Interim statements
Copies of these financial statements are available from the Company at its
registered office at Pinewood Studios, Pinewood Road, Iver Heath, Bucks, SL0 0NH
and on the Company's website at www.eleksen.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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