TCM.L Regulatory News (TCM)

14 Mar 2007 07:04

Telit Communications PLC14 March 2007 Press Release 14 March 2007 Telit Communications PLC ("Telit" or "the Company") Unaudited Preliminary Results for the Year Ended 31 December 2006 Telit Communications PLC (AIM:TCM), the global wireless communications developerand distributor, announces its unaudited preliminary results for the year ended31 December 2006. Financial Highlights • Turnover €86.8 million (2005: €85.9 million)• Gross profit €16.2 million (2005: €14.6 million)• Loss per share €0.26 (2005: €0.11 loss) due to significant investments in R&D and geographical expansion• Investments in R&D and sales and marketing in Telit Wireless Solutions, Telit's machine-to-machine ("m2m") business unit, is fuelling the Company's transition into a worldwide competitor in the m2m industry• Announcement of significant capital injection into the m2m business• Worldwide licensing agreement signed with Qualcomm in December 2006• Certification of six Telit m2m modules by a leading US mobile services provider Commenting on the results, Oozi Cats, Chief Executive Officer of Telit, said:"The investments made in R&D and sales and marketing during the year have placedthe Company in an excellent position to take advantage of the strong growth inthe global m2m industry, which is expected to continue over the foreseeablefuture. This investment is fuelling the Company's transition into a globalplayer in the m2m market, with the capability of servicing customers in Europe,the US and the Asia Pacific regions with a wide range of products over differenttechnology platforms. "On the eve of this announcement, we have secured a significant €16 millioncapital investment into Telit Wireless Solutions, coupled with an alliance witha leading global electronic service provider to increase our control over oursupply chain of this business. "With our infrastructure now in place, I believe that the Company will achievebreak-even in 2007." For further information: Telit Communications plc Oozi Cats, Chief Executive Tel: + 39 040 419 2491 www.telit.com Seymour PierceStuart Lane, Corporate Finance Tel: + 44 (0) 207 107 8000 www.seymourpierce.com Media enquiries: AbchurchChris Lane / Laura Riascos de Castro Tel: +44 (0) 20 7398 7700chris.lane@abchurch-group.com www.abchurch-group.com Notes to Editors Telit is a global leader in the field of machine-to-machine (m2m) communicationsand a prominent supplier of a range of advanced cellular phones and accessoriesworldwide. Telit has two core businesses: Telit Wireless Solutions (TWS) develops, manufactures and markets communicationmodules which enable machines, devices and vehicles to communicate via cellularwireless networks. TWS is the market leader in CDMA m2m modules in South Koreaand the third largest player in the GSM/GPRS m2m modules business in EMEA. Inaddition, Telit has recently launched its UMTS solutions during the 3GSMconvention in Barcelona. TWS represents the strategic focal point of the Companymoving forward. Telit's core strengths are innovative products, complete control over itsintellectual property and its flexible, customised solutions, which enable it tooffer customers the lowest cost of ownership and a future-proof product roadmap. Telit Wireless Products (TWP) distributes and supports cellular devices frommanufacturers worldwide. TWP is one of the largest CDMA mobile phones suppliersin Israel and one of the top GSM, GPRS, EDGE and UMTS mobile phone distributorsin Italy. CHIEF EXECUTIVE'S STATEMENT AND REVIEW Introduction We are pleased to present Telit Communications PLC's unaudited preliminaryresults for the year ended 31 December 2006. The strategy we outlined duringthe year has already made a positive impact on our m2m business and itsfinancial performance beginning in the second half of the year. We havesignificantly strengthened our capital base through an investment of €16 millionin Telit Wireless Solutions from Bartolini After Market Electronics Servicess.r.l. ("BAMES"), the former Italian subsidiary of Celestica Inc., a leadingglobal electronics service provider based in Vimercate, Milan. The investmentvalues the m2m business of Telit at €144 million pre-money. Further detailsare provided below. Telit's m2m business continued to show significant growth that was furtherboosted the acquisition of South Korean m2m leader Bellwave, (since renamedTelit Wireless Solutions APAC) in May 2006. Our Wireless Products Business Unitcontinues to produce solid revenues despite substantial competition in themobile handset market. We expect to sustain the Company's operating performancein 2007 in spite of continuing inherent volatility in the market. Financial results Following the indications we provided in our trading update on July 27 2006, theresults for the year are in line with market expectations and underline the newcourse which the Company is taking, as forecast at the time of the IPO, movingthe emphasis from the mature Wireless Products business to the fast growing m2mbusiness. Although 2006 revenues increased only slightly to €86.8 million for the fullyear, with gross profits increasing 10% to €16.2 million, revenues for ourWireless Solutions Business Unit totaled €27.7 million, an increase of 82% over2005, which is a result of our focus on this fast growing market. The dynamics of our business requires that we make significant investments inresearch & development ("R&D") in order to secure a steady pipeline for thecoming years. Our significant investment in R&D, coupled with our internationalexpansion increased our operating loss to €10.4 million and our pre-tax loss to€11.4 million. During 2006, Telit invested €3 million in the set up of its U.S. subsidiary,Telit Wireless Solutions Inc., €3 million in R&D activity in Sardinia andadditional significant sums in setting up sales offices throughout the world.All these costs were expensed and the Company believes these investments willbear fruit in the future. Investment from Electronics Service Provider BAMES Telit has entered into an agreement according to which a capital injection of€16 million into the Company's m2m subsidiary, Telit Wireless Solutions Srl,will be made by BAMES, within the structure of a business alliance between thetwo companies. This investment values Telit's m2m business at €144 million premoney. Under the terms of transaction, BAMES will provide Telit Wireless Solutions Srlwith €9 million in equity and an additional €7 million investment in December2008, providing Telit meets certain m2m module purchase milestones. BAMES willreceive up to 10% of the share capital of Telit Wireless Solutions Srl. We areconfident that, given current market conditions and the expected growth of theCompany, these milestones are attainable. In addition to the investment agreement, Telit Wireless Solutions Srl enteredinto a strategic manufacturing agreement with Services for ElectronicManufacturing s.r.l ("SEM"), BAMES' electronics manufacturing subsidiary, forall present and future production of Telit's m2m modules, with certainexceptions, at competitive market prices for a term of not less than five years. This will enable Telit to consolidate its European manufacturing into onegeographical location, and will streamline operations while keeping control ofthe Company's intellectual property and increasing its control over its supplychain. This is achieved by the Telit taking a 19.9% equity stake in SEM and theright to nominate one director to SEM's board of directors. SEM will alsoprovide Telit with a €7 million line of credit for finished goods, which willdefer payment until the second equity injection referred to above. The proceeds from the investment will enable Telit to continue execution of itsstrategy of focusing on the rapidly growing m2m market, consolidate itsinternational expansion, and develop its next generation m2m modules. Telit Wireless Solutions ("TWS") Telit Wireless Solutions is now positioned as a global leader in the field ofm2m communications. TWS develops, manufactures and markets communication moduleswhich enable machines, devices and vehicles to communicate via cellular wirelessnetworks. TWS's core strengths are innovative products, complete control overits intellectual property and its flexible, customised solutions, which enableit to offer customers the lowest cost of ownership and a future-proof productroadmap. As we stated in our 2005 annual report, the development of TWS is the key to theCompany's future value creation, and we have continued to invest heavily in it. TWS generated sales of €27.7 million, representing a growth of 82% compared to2005. Compared to the first half of 2006, in the second half of the year, TWSincreased sales by 64% and gross profits increased by 260%. This growth wasdriven by our significant investment in R&D and the international expansion ofsales and marketing operations. These investments resulted in an operating lossof €7.7 million for the year. The global m2m market is growing rapidly, with industry analysts projectinggrowth rates of 50% in volumes year over year through 2008 (Source: Gartner, m2mCellular Module Market Overview, Worldwide, 1H06). TWS ranks as the thirdlargest supplier of wireless m2m modules in the European market, doubling itsmarket share in the last 12 months. In my last statement I outlined our dual objective of expanding our global reachand accelerating our leadership in product excellence. 2006 was dedicated toexecuting this strategy and during the year we increased the number of ourcustomers to over 1,500 communications solution providers and systemsintegrators in 52 countries around the world. We began 2006 as a technological leader in Europe and ended it as a globalplayer. With our headquarters in Rome, Italy, we maintain regional headquartersin Raleigh NC, USA and Seoul, South Korea. Telit's R&D centres are based inTrieste and Cagliari, Italy and in Seoul, South Korea. With sales offices inDenmark, the UK, France, Germany, Italy, Spain, Israel, South Korea, China,Taiwan and the US, Telit has now evolved into a company with global operations,employing over 300 professionals worldwide. Telit Wireless Products ("TWP") Telit Wireless Products continues to remain Telit's main revenue generator. TWPdevelops software and hardware in its laboratories located in Trieste, Italy andTel Aviv, Israel for integration into cellular phones as well as othercellular-communication based devices. Telit offers a comprehensive product portfolio that includes several differenttypes of mobile handsets, including CDMA, GSM, Smart phones and UMTS end userequipment. Telit incorporates its own comprehensive design and then distributesthe products to mobile operators and independent resellers under the brandTelit. During 2006 TWP sales were €59.1 million, compared with €70.7 million in2005. Our objective for TWP moving forward is to protect our investment in thebusiness by maintaining the excellent relationships we have built with ourcustomers, without making any additional significant investments. Operational Results As we continue to execute the strategy we outlined in previous years, thefollowing critical milestones have so far been achieved: Opening of a new R&D centre in Sardinia: In April 2006, Telit was awarded an€11.4 million grant and a €14.1 million loan from the Italian Ministry ofIndustry to open a new R&D centre in Cagliari, Sardinia. As of December 31,2006, Telit had already invested €2.5 million in this centre, which currentlyemploys 25 engineers, whose focus is on extending Telit's product portfolio tocover the complete array of wireless technologies, including Bluetooth, Zigbee,WiFi and FM. Acquisition of Bellwave m2m and formation of Telit Wireless Solutions - APAC: InMay 2006 Telit strengthened its presence in the Asian market by acquiringBellwave m2m, the market leader in South Korea, since renamed TWS APAC. Thisacquisition added CDMA-UMTS technologies to our product portfolio andestablished our position in the APAC market. With an R&D team of over 40engineers, TWS APAC is spearheading the development of new CDMA, UMTS and HSDPAproducts for the global markets according to our Telit "unified form factor"which makes these technologies compatible with our GSM/GPRS product line. As ofDecember 31, 2006, Telit's investment in the company and the company's resultsfor 2006 were in line with our expectations. Opening of Telit Wireless Solutions Americas: In July 2006 the Company expandedits operations into North America by establishing Telit Wireless Solutions,Inc., headed by a senior team of executives formerly from Sony Ericsson's m2mdivision. In addition to serving as our regional headquarters, TWS Americas isresponsible for the approval process of GSM/GPRS products for the US market(PTCRB, IOT and carrier approval), and has already obtained certification fromleading US mobile services provider for several of Telit's products, as detailedbelow. Technology licensing agreement with QUALCOMM: In December 2006, Telit enteredinto a worldwide licensing agreement with QUALCOMM, a leading developer ofdigital wireless communications products and services. Under the terms of theagreement, QUALCOMM has granted Telit a worldwide license under its CDMA patentportfolio to develop, manufacture and sell 3G WCDMA modem cards. This agreementenables Telit to offer high speed m2m wireless broadband data services to itscustomers. Renewal of ISO9001-2000 certification: In December 2006, Telit renewed its ISO9001-2000 certification for the fourth consecutive year. This certificationcovers Telit's business operations related to development, sales and delivery ofwireless solutions m2m applications and EVAR activities. To ensure that overallquality standards are met and maintained, Telit uses ISO-certified componentsuppliers and works with Celestica, in Rajecko, Czech Republic for all of itsproduction. The Celestica facility is ISO-certified. Certification by a leading US mobile services provider Wireless: In March 2007,Telit received product certification from a leading US mobile services provider,the largest wireless carrier in North America. This cellular services providerapproved six of Telit's m2m modules simultaneously, each passing a rigoroustesting process. Telit's modules are now approved for activation in a range ofapplications that run on the cellular services provider's GSM network, such asautomatic meter reading, fleet management, security and surveillance, assettracking, and remote device management and maintenance. This is the first timethis cellular service provider has certified such a large number of wirelesscommunications modules from one company. This certification enables TWS to beginselling in to the North American market, effective immediately. Strategy Our strategy for 2007 is to continue to leverage our position as a leadingplayer in the m2m market, offering customers a competitive edge by reducingtheir total cost of ownership and optimising the performance of their products.We plan on doing this through continued investment in R&D and building on thefoundations laid by our regional operations to date. This strategy takes advantage of two key trends in the m2m market: • the performance trajectory offered by many of the m2m module manufacturers overshoots the needs of the average customer, resulting in feature-rich, expensive products that deliver inferior returns on investment; and • the inability of many module manufacturers to meet the demands of early adopters due to the fact that they do not control the protocol stack required for customised product modifications. To execute our strategy, Telit relies on three core competencies thatdifferentiate it from the competition: • Complete Control of the Protocol Stack: Unlike its competitors, Telit owns and develops the Protocol Stack in its modules. The Protocol Stack controls all connectivity and communication with the GSM network and is a critical success factor in being able to offer customers the flexibility required for rolling out cost-effective m2m solutions. • Commitment to Customer-Driven Innovation: Telit's comprehensive expertise in R&D enables it to help its customers win new business by working with them to develop the most innovative, cost-effective m2m applications. • Multinational Organisation Staffed with Industry Experts: Telit's R&D and Sales and Marketing units are comprised of a team of dynamic experts with proven industry experience in the m2m and semiconductor industry. Board changes In July 2006, Mr. Maurizio Gasparri was appointed to the Board of Telit as aNon-Executive Director. Mr. Gasparri, aged 49, is currently a member of theItalian Parliament, having been elected to office in 1992. From 2001 to 2005Mr. Gasparri held the position of Minister of Communications for Italy. Also in July 2006, Mrs. Pnina Bitterman-Cohen was appointed to the Board ofTelit as a Non-Executive Director. Mrs. Bitterman-Cohen has been Vice Presidentof Polar Investments Ltd since 1996, where she is also serving as the GeneralCounsel and Secretary. In addition to this appointment, Mr. Avi Israel, who was appointed as aNon-Executive Director in 2005, was appointed in July 2006 as a Deputy CEO andreplaced Inbal Barak-Etzion in the position of Finance Director of the Company. Polar Investments Ltd ("Polar") Polar has informed the Company that is has begun negotiations with a group ofinvestors, including certain of the Company's management, to sell approximately50% of its shareholding in the Company at 43p per share. Polar currently holdsapproximately 53% of the Company's ordinary issued share capital. Outlook 2006 has been a year of investing heavily for the future. I believe that 2007will prove to be a turning point for Telit as we build upon the substantialinvestments in R&D and in global expansion in the previous two years. We expect our Wireless Products Business Unit to continue its current positionin the market over the next financial year. As for our Wireless SolutionsBusiness Unit - we are extremely confident in our ability to cement our positionin EMEA and extend it to APAC and the Americas, generating double-digit growthand achieving break-even by the end of 2007. Oozi CatsChief Executive Officer13 March 2007 CONSOLIDATED INCOME STATEMENT (UNAUDITED) 2006 2005 (restated) •'000 •'000 Revenue 86,780 85,914Cost of sales (70,574) (71,331) Gross profit 16,206 14,583 Other income 1,438 1,134Research and development expenses (8,149) (3,914)Selling and marketing expenses (9,317) (5,293)General and administrative expenses (9,968) (7,372)Other expenses (563) (215) Operating loss (10,353) (1,077) Investment income 190 656Finance costs (1,169) (938)Share of results in associated undertakings (41) (164) Loss before income taxes (11,373) (1,523) Income taxes (11) (1,338) Loss for the year from continuing operations (11,384) (2,861) Loss for the year from discontinued operations - (1,306) Loss for the year (11,384) (4,167) Attributable to:Equity shareholders of the parent (11,319) (4,167)Minority interests (65) - (11,384) (4,167) Basic loss per share (in euro cents)From continued operations (26.2) (7.8)From discontinued operation - (3.5) (26.2) (11.3) Diluted loss per share (in euro cents)From continued operations (26.2) (7.8)From discontinued operations - (3.5) (26.2) (11.3) CONSOLIDATED BALANCE SHEET (UNAUDITED) 2006 2005 •'000 •'000 ASSETS Non-current assetsIntangible assets 7,710 616Property, plant and equipment 3,019 1,414Investments 579 649Other long term assets 591 73Deferred tax asset 3,696 3,696 15,595 6,448 Current assetsInventory 10,284 12,030Trade receivables 17,452 33,286Other current assets 7,050 4,357Deposits - restricted cash 7,115 4,000Cash and cash equivalents 3,926 13,207 45,827 66,880Total assets 61,422 73,328 LIABILITIES AND SHAREHOLDERS' EQUITY Shareholders' equityShare capital 627 627Other reserve (260) (260)Share premium 29,593 29,651Translation reserve (584) (284)Retained earnings (6,669) 3,432Total shareholders' equity 22,707 33,166 Minority interests 1,248 - Total equity 23,955 33,166 Non-current liabilitiesLoan from parent company 2,035 3,054Post-employment benefits 1,226 856Deferred tax liabilities 1,193 -Provisions and other long-term liabilities 834 106 5,288 4,016 Current liabilitiesShort-term borrowings from banks and other lenders 17,375 22,823Trade payables 10,584 8,955Other current liabilities 4,220 4,368 32,179 36,146Total equity and liabilities 61,422 73,328 CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED) 2006 2005 (restated) •'000 •'000 CASH FLOWS - OPERATING ACTIVITIES Net cash from / (used in) operating activities 8,636 (5,025) CASH FLOWS - INVESTING ACTIVITIESPurchase of property, plant and equipment (2,074) (431)Proceeds from disposal of property, plant and equipment 25 41Purchase of intangible assets (513) (622)Loan to minority interest (646) -Acquisition of subsidiaries (nil cash acquired) (5,396) -Additions to financial assets - (190)Proceeds from disposal of financial assets - 211Increase in restricted cash deposits (3,000) (4,000)Other - (27) Net cash used in investing activities (11,604) (5,018) CASH FLOWS - FINANCING ACTIVITIESDecrease in short-term borrowings from banks and others (5,224) (7,772)Repayment of loan from parent company (1,019) -Proceeds from issuance of share capital - 30,019 Net cash (used in) / from financing activities (6,243) 22,247 (Decrease)/ increase in cash and cash equivalents (9,211) 12,204 Cash and cash equivalents-balance at beginning of year 13,207 582Effect of exchange rate differences (70) 421 Cash and cash equivalents-balance at end of year 3,926 13,207 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) Year ended 31 December 2006 Share Share Other Translation Retained Total Minority Total capital premium reserve adjustment earnings interest •'000 •'000 •'000 •'000 •'000 •'000 •'000 •'000 1 January 2006 627 29,651 (260) (284) 3,432 33,166 - 33,166 Arising on 1,317 1,317acquisition Debtors in respect of (58) (58) (58)issuance of shares Translation (300) (300) (4) (304)adjustments Share-based payment 1,218 1,216 1,216charge Loss for the year (11,319) (11,319) (65) (11,384) 31 December 2006 627 29,593 (260) (584) (6,669) 22,707 1,248 23,955 NOTES TO THE UNAUDITED PRELIMINARY ANNOUNCEMENT 1. While the financial information included in this preliminary announcement has been computed in accordance with International Financial Reporting Standards (IFRSs), and as set out in the Group's published financial statements for the year ended 31 December 2005, this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRSs by April 2007. 2. The financial information set out in the announcement does not constitute the company's statutory accounts for the years ended 31 December 2006 or 2005. The financial information for the year ended 31 December 2005 is derived from the statutory accounts for that year, as restated as set out in notes 3 and 4, which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under s. 237(2) or (3) Companies Act 1985. The auditors have not reported on the financial information as at and for the year ended 31 December 2006 and as such the information set out herein is unaudited. The auditors have indicated that, without qualifying their opinion, their report will include an emphasis of matter paragraph referring to the uncertainty over the recoverability of the deferred tax asset of €3,696,000. This is discussed further in note 6 below. 3. In accordance with IAS 20 "Accounting for Government Grants and Disclosure of Government Assistance", the Group has reclassified grant income of €530,000, previously reported within revenue in 2005, to other income. This presentational change has no impact on the prior year reported net loss. 4. Restricted cash of €4.0 million, previously reported within cash and cash equivalents in the cash flow statement for the year ended 31 December 2005, has been excluded as it does not meet the definition set out in IAS 7 "Cash flow statements". The increase in the year has been shown as an investing cash outflow and the cash flow statement restated accordingly. 5. Segmental analysis For management purposes, the Group is currently organised into two operatingdivisions, Wireless Solutions and Wireless Products. These divisions are thebasis on which the Group reports its primary segment information. Segmentalinformation for these businesses is presented below. 2006 2005 (restated) •'000 •'000 (unaudited)REVENUEWireless Products 59,086 70,677Wireless Solutions 27,694 15,237Total revenue 86,780 85,914 OPERATING PROFIT (LOSS)Wireless Products (1,540) 4,318Wireless Solutions (7,680) (4,530) (9,220) (212) Unallocated corporate expenses (1,133) (865)Operating loss (10,353) (1,077) Investment income 190 656Finance costs (1,169) (938)Share of results in associated undertakings (41) (164)Loss before income taxes (11,373) (1,523) 6. The Group has previously recorded a deferred tax asset of €3.7 million relating to losses incurred in its Italian subsidiary, Telit Communications SpA. The directors consider that under existant Italian tax law, the time period over which these losses are available for relieving future profits is unlimited. Telit Communications SpA has incurred losses to date since formation in 2003, and has incurred further losses in 2006. The Group has approved a four year business plan for Telit Communications SpA. The four year business plan assumes substantial growth in revenues over this period relating to m2m modules sales. The assumed growth in revenue is based on management's best estimates, having had regard to the revenue growth experienced during 2006 in this division, which is expected to continue at a similar rate in 2007, together with independent industry analysts' market projections, and forecasts of growth in the M2M marketplace for years beyond 2007. The business plan is also showing forecast gross margins that are substantially in line with the subsidiary's current financial performance in 2007, with some further improvement due to increasing sales volumes and purchasing benefits. Operating expenses have been forecast based on the current and expected future infrastructure required to execute the assumed revenues. Additionally, Telit Communications SPA is the Group's principal supplier of m2m modules to other group companies, predominantly in the United States, which is expected to generate additional sales for the Group. Based on the business plan prepared, management expects to begin to recover the deferred tax asset during the year ending 31 December 2008, and full recovery is forecast in the year ending 31 December 2010. As this assessment is a judgment about future events, there is no certainty as to this matter. 7. Borrowings 2006 2005 •'000 •'000 Short-term bank loans and other financing 15,429 19,534Advances under factoring facilities 927 2,270Current maturities of long term loans 1,019 1,019Total short-term borrowing from banks and other lenders 17,375 22,823 Long-term loan to parent company 2,035 3,054 Total borrowings 19,410 25,877 Included within short-term bank loans and other financing are: - A drawn amount of €8.0 million on a loan with a maturity date of 6July 2007. A further €3.0 million is available to the Group under this facilityup to this date, subject to satisfaction of the lending bank that the Group hasmet certain qualifying expenditure targets with regard to its research anddevelopment project in Sardinia. The interest rate on this short-term bank loanis Euribor plus 1.7% per annum. The short-term bank loan is a bridging loan inadvance of funds to be received from a grant from the Italian government to theGroup's Italian subsidiary, which has been declared eligible to receive from thegovernment a €11.4 million grant, and a €14.1 million loan facility to support adevelopment project in Sardinia. The Company has provided a letter of guaranteeof €11.0 million against this facility. - A bank overdraft of €2,634,000. The overdraft facility, which isavailable up to €3.0 million, is cancellable on demand but is without a fixedrenewal date. - Drawn letters of credit and borrowings arising from invoicediscounting totalling €3,701,000 in the Group's Italian subsidiary. Theseborrowings, including the bank overdraft, are secured against purchasedinventory or receivables, plus cash deposits made of €7 million and a letter ofguarantee issued by the Company of €3 million. The total available lines ofcredit and invoice discounting at 31 December 2006 was €16.0 million, of which€5.0 million has a maturity date of 30 April 2007, with the remaindercancellable on demand, but without a fixed maturity date. - Drawn lines of credit against invoices totalling €3,040,000 which arecancellable on demand but without a fixed maturity date. These borrowings aredenominated in New Israeli shekels and secured against purchased inventory andreceivables from customers. - Factoring facilities against qualifying receivables totalling€927,000. These borrowings are secured against the factored receivables and arewith recourse. The total available factoring facilities in the Group's Italiansubsidiary are €4.5 million which are cancellable on demand but are without afixed maturity date. The Group's long-term loan to its parent company does not attract interest. 8. Loss per share 2006 2005 •'000 •'000 The calculations of basic and diluted earnings per ordinary share arebased on the following results and numbers of shares: Loss for the year attributable to equity shareholders (11,391) (4,167) Weighted average number of shares: No. of Shares No. of Shares For basic and diluted earnings per share 43,214,281 36,886,157 Loss per share from continuing operations (euro cents) (26.2) (7.8)Loss per share from discontinued operations (euro cents) - (3.5)Loss per share (euro cents) (26.2) (11.3) Approval This statement was approved by the Board of Directors on 13 March 2007. Copies of Annual Report and Accounts will be sent to all shareholders. Furthercopies will be obtainable from the Company's Nominated Advisor and Broker,Seymour Pierce at Bucklersbury House, 3 Queen Victoria Street, London EC4N 8EL This information is provided by RNS The company news service from the London Stock Exchange