Interim Results

Infoserve Group PLC 06 December 2006 FOR RELEASE 7.00AM 6 DECEMBER 2006 Infoserve Group plc ('Infoserve' or 'the Company') Unaudited Interim Financial Statements for the Six Months Ended 30 September 2006 Highlights * Substantial increase in new customers with renewal rates at 65.4% * Turnover £1.76 million for the period * Loss before tax and amortisation of goodwill £1,212,000, in line with expectations. * Loss per share before goodwill amortisation 8.04p * Launch of new products and services For further information, please contact: Infoserve Group Plc 0870 556 1001 Steve Barnes W H Ireland Limited 0161 832 2174 David Youngman Source Marketing Communications 0113 380 1644 Peter Downey Commenting on the results, James Newman, Chairman, said: 'The higher profile and additional funding as a result of the AIM flotation has provided the stability which has enabled the Company to steadily expand its customer base and improve its product offering and technology. The Board has confidence that further progress will be made in the second half of the year.' Steve Barnes, Chief Executive, added 'The second half of the financial year has started well, with continued sales revenue growth, accelerated keyword data collection and a planned further growth in our telesales team.' Infoserve Group plc Unaudited Interim Financial Statements for the Six Months Ended 30 September 2006 Chairman's Statement I am delighted to report a period of change and progress for the Company in this, my first statement as Chairman. AIM flotation The Company successfully floated on AIM in late June, raising £2 million. Thanks must go to all my colleagues on the Board and the Company's advisers for achieving this milestone without too much disruption to the day-to-day business operations. The primary reason for obtaining a quotation on AIM was to give the Company a higher public profile and a stronger financial base from which to significantly expand its sales activities and its local search technology. Results Turnover for the six months period at £1.76 million was higher than that of the business for the whole of the year ended 31 December 2005, which was £1.47 million. This growth has been fuelled by the expansion of sales personnel at a controlled rate in line with the funds available from the flotation. Gross margins have improved from (38.6)% in the year to 31 December 2005 to 23.2% as sales productivity increased during the period. Overheads have been controlled within budgeted levels. Operating losses before goodwill were £1.14 million for the period. After goodwill of £78,000 and net interest payable of £70,000, losses before tax were £1.29 million. Overall, the trading and financial performance was in line with the Board's expectations at the time of the flotation. Dividend In line with the statement made at the time of the flotation, the Board is not recommending a dividend as all funds are needed to be invested in the development of the business. Infoserve Group plc Unaudited Interim Financial Statements for the Six Months Ended 30 September 2006 Chairman's Statement Board In March, as part of the flotation process, I was appointed to the Board as Non-executive Chairman of the Group. David Hood, formerly Non-executive Chairman of Infoserve Limited, became the senior Non-executive Director. The Board also appointed Andrew Thirkill, an experienced businessman with a marketing background, as a Non-executive Director to the plc Board in April. Outlook The higher profile and additional funding as a result of the flotation has provided the stability which has enabled the Company to steadily expand its customer base and improve its product offering and technology. The Board has confidence that further progress will be made in the second half of the year. James Newman Chairman 6 December 2006 Infoserve Group plc Unaudited Interim Financial Statements for the Six Months Ended 30 September 2006 Chief Executive's Review • Growth in sales force numbers controlled to use cash resources intelligently during growth and investment phase. • Productivity levels per person increased by 9.1%. • Tight control of overheads. • Growth in Stockton office with a move to new premises in Darlington in early 2007. • Further investment in keyword collection and new site construction - anticipated launch in the first quarter of 2007. • Continued investment in Oracle based software to allow seamless information flow, regarding customers' key goods and services and location, to partner network. Our first half-year as an AIM quoted company has seen us continue to establish ourselves in the local search market. Customer numbers have grown by 70%, with renewal levels reaching an impressive 65.4%. We continually strive to give our SME customers exposure for their business across our Partner Network. Our business model has proved robust and the second half of the financial year will see us increasing sales force numbers as we move to our new Darlington premises, and thus scaling up the model further. The new website launch in 2007 will broaden the appeal of our product offering to new categories of businesses, as our keyword-driven software will enhance our ability to match consumer searches with relevant local suppliers. Infoserve Group plc The market continues to evolve and grow. We are constantly innovating and adapting and our development team is keeping us at the forefront of our sector. As predictions for growth in local search revenues remain substantial - 849 million local searches in the US in July, with UK the second most developed market (Source: Comscore Networks Study) - future industry growth will continue to drive revenues forward. Kelsey Group predicts online advertising revenues will double to $31 billion by 2010 (from $15.7 billion in 2005) with local search advertising revenues growing from $3.4 billion in 2005 (21.6% of the total) to $13 billion in 2010 (41.9%). So far, the second half of the financial year has started well, with continued sales revenue growth, accelerated keyword data collection and a planned further growth in our telesales team in the North East once our move to Darlington is completed in the New Year. Stephen Barnes Chief Executive 6 December 2006 Infoserve Group plc Unaudited Interim Financial Statements for the Six Months Ended 30 September 2006 Unaudited Pro Forma Profit and Loss Account In order to highlight Infoserve's progress, we set out below the proforma results for the six months ended 30 September 2006 together with the audited results for the year ended 31 December 2005. This comparison, although not direct, shows clearly the substantial sales growth and improvement in gross margin. The increase in overheads is primarily due to the cost of recruiting additional sales staff. Unaudited Audited Six months to 30 12 months to 31 September 2006 December 2005 £000 £000 Turnover 1,756 1,471 Cost of sales (1,348) (2,039) Gross Profit/(Loss) 408 (568) Administrative expenses (1,550) (886) Amortisation of goodwill (78) - Operating loss (1,220) (1,454) Interest receivable 24 4 Interest payable (94) (39) Loss on ordinary activities before taxation (1,290) (1,489) Infoserve Group plc Unaudited Group Profit and Loss Account for the period from 1 April 2006 to 30 September 2006 -------------------------------------------------------------------------------- 6 months to Notes 30 September 2006 £ 000 Turnover 1,756 Cost of sales (1,348) Gross profit 408 Administrative expenses (1,550) Amortisation of goodwill (78) Operating loss (1,220) Interest receivable 24 Interest payable (94) Loss on ordinary activities before taxation (1,290) Tax on profit on ordinary activities 350 Loss sustained for the period (940) Loss per share (pence) 2 (8.77) Loss per share before amortisation of goodwill (pence) 2 (8.04) Infoserve Group plc Unaudited Group Balance Sheet as at 30 September 2006 30 September 2006 £ 000 Fixed assets Intangible assets 3,758 Tangible assets 416 4,174 Current assets Stocks - Debtors 493 Cash at bank and in hand 1,709 2,202 Creditors: amounts falling due within one year (1,810) Net current assets 392 Total assets less current liabilities 4,566 Creditors: amounts falling due after more than (2,566) one year 2,000 Capital and reserves Called up share capital 730 Share premium 2,210 Profit and loss account (940) 2,000 Infoserve Group plc Unaudited Group Cash Flow Statement for the period from 1 April 2006 to 30 September 2006 -------------------------------------------------------------------------------- 2006 £ 000 Reconciliation of operating loss to net cash inflow from operating activities Operating loss (1,220) Depreciation charges 124 Amortisation of goodwill 78 Decrease in stocks - Increase in debtors 161 Increase in creditors 490 Net cash inflow from operating activities (367) CASH FLOW STATEMENT Net cash inflow from operating activities (367) Returns on investments and servicing of finance (70) Purchase of subsidiary net of cash acquired (386) Capital expenditure (748) (1,571) Financing 2,940 Increase in cash 1,369 Reconciliation of net cash flow to movement in net debt Increase in cash in the period 1,369 Increase in debt and lease financing (100) Change in net debt 1,269 Infoserve Group plc Notes to the Unaudited Interim Financial Statements For the Six Months Ended 30 September 2006 -------------------------------------------------------------------------------- 1. The unaudited results for the six month period have been prepared on a basis consistent with the accounting policies of the group and do not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. 2. The calculation of the basic earnings per share for the period is based on the profit after taxation divided by the average number of shares in issue, being 10,717,617. 3. Infoserve Group Plc acquired Infoserve Limited on 11 April 2006 and therefore no comparative figures exist for the corresponding period in the preceding financial period. 4. Expenses of the flotation on AIM amounting to £350,000 have been written off against the Share Premium Account. 5. A copy of this interim statement is being sent to shareholders and copies are available from the Company's Registered Office at Infoserve Group plc, South Side Aviation, Leeds Bradford Airport, Leeds, West Yorkshire, LS19 7UG. This information is provided by RNS The company news service from the London Stock Exchange

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