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Eleksen Group PLC (ELG)

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Wednesday 18 April, 2007

Eleksen Group PLC

Final Results

Eleksen Group PLC
18 April 2007



                               ELEKSEN GROUP plc

                          ('Eleksen' or the 'Company')

First Year Results See Strong Sales Growth, Unit Cost Reduction, Development of
        Key Customer Relationships and Fundraising. Outlook Encouraging.



18th April 2007


Eleksen Group plc, which makes smart fabrics that can be used to control
electronic devices such as smart phones and MP3 players, today reported its
first annual results following the Company's admission to AIM in May last year.
The results show 167% sales growth over the previous year, with the number of
units delivered increasing to 368,970, over three times that achieved during the
previous year.


Financial Highlights

   •Turnover £3.5 million
   •Turnover up by 167% over same period 2005
   •Operating loss £4.2m, including reverse takeover costs, in line with
    expectations
   •Unit cost reduction programme achieved helping drive volume growth
   •Launch of Fabric Bluetooth Keyboard - 50,000 units delivered in Q4
   •Convertible Loan note raises £1.68m gross and a further £4m gross after
    the year end



Operational Highlights

   •Successful development of production capability
   •Increasing repeat business from existing customers. Development of
    customer relationships including:
      + •Belkin: a major Apple iPod accessory supplier
      + •Goodhope Bags: US distributor of Bluetooth Keyboard
      + •Microsoft: Sideshow product to run under Vista
      + •Bagir: suit provider to Marks & Spencer
      + •Zegna: fashion designer
   •Development of Ultra Mobile PC fabric keyboard prototype for Intel and
    Microsoft
   •Resource development with staff levels up from 21 to 35
   •Appointment of Chief Technical Officer to the Executive team


Commenting on the results Robin Shephard, Chief Executive, said:


'This is a good start to our life on the public markets, which fully supports
the confidence in the business we expressed when we came to AIM in May. Strong
growth in our prime market, the US, underpins the Company's ability to now enter
further markets. We have made positive progress in the Company's strategic
development. We are investing in people and product development to underpin the
Group's long term growth. In the immediate future, commercial expansion is a
priority, in order to manage the sales pipeline. We have seen good customer wins
in the year and we are encouraged by the developments with Belkin, a major Apple
iPod accessory supplier, Bagir, for its iPod enabled fashion suit and
Ermenegildo Zegna for its high end fashion brand together with other positive
market making discussions. Today's announcement from Intel about our work for
them in developing a UMPC fabric keyboard is further proof of the development of
our relationships with major global players.

' Recent important developments this month are the opening of offices in San
Francisco and in Hong Kong. San Francisco offers the ability to further
strengthen our success in the US, our principal market, while a presence in Hong
Kong will help us support our customers manufacturing needs while giving us
access to potentially attractive OEM (Original Equipment Manufacturer) and ODM
(Original Design Manufacturer) partners in the region.'


'We are very encouraged by the outlook for the business. With a strong senior
management team in place and the recent fundraising completed, Eleksen is well
placed to successfully commercialise its leadership in the smart fabrics market.
We expect to see both a significant broadening of our customer base in the
wearables market and for Eleksen to build its presence in the mobile device
market, following the strong finish for the Bluetooth keyboard in 2006



ENDS







Enquiries:


Eleksen Group plc                         08700 727 272

Robin Shephard (Chief Executive Officer)
Ted Bechman (Finance Director)

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 listing on the London Stock Exchange in May was one among many highlights
for the business during 2006, along with a 167% increase in Revenue, with
368,970 units shipped during the year. The Company also completed a (Convertible
debt) fundraising shortly after the year end, raising a total of £5.68 million
(including £1.68 million raised during the year), providing us with an excellent
platform for further growth in 2007.



Key market wins for Eleksen during the year were in the Smart Fabric Market for
iPod enabled garments, predominantly sold within the USA. We also began volume
production for a second sector of the consumer electronics market with the
launch, at the January 2006 Consumer Electronics Show, of Eleksen's Bluetooth
Keyboard, the first of a line of data-entry products that will exploit the
company's leading smart-fabric technology. The first volume shipments were
delivered in the final quarter of the year.


Results


For the year to 31 December 2006, the group recorded 167% growth in revenues,
from £1,308,218 (2005) to £3,498,353 (2006). All of this growth is attributable
to Eleksen, as the AIM shell company that we acquired did not trade.


Losses grew from £2,730,136 (2005) to £4,030,107 (2006), driven in large part by
investment in personnel, whose number has increased to support this growing
business, and in part by the expense of achieving the AIM listing.


While sales growth was encouraging, the timing of future revenue development, as
we announced on March 16th, is difficult to forecast. Eleksen must cement its
leadership of the smart-fabric market by growing significantly its volume and
revenue. Only through significant growth can ElekTex permeate the consumer
market as a reliable and cost-effective choice. Through these same revenues lies
the profitability that should sustain Eleksen in the longer run. In addition we
expect further Tier-1 brands to adopt ElekTex during the current year and I look
forward to announcing such an engagement in due course.


None of this would be possible without talented staff. I am pleased to have this
opportunity publicly to thank them for their dedication throughout this
challenging period of growth.



Professor Peter Denyer
Chairman









OPERATING REVIEW


Introduction


There is a major transformation happening in the consumer electronics market and
specifically in the multi-purpose mobile device market. The iconic iPod has led
a revolution which has seen consumers demanding products that satisfy their
life-style requirements, rather than just offering functionality. We now see the
global giants fighting for a market segment in which consumers will be offered a
platform that answers their communication, gaming and entertainment needs, all
from one device.


There are challenges in achieving this. While most of the larger Original
Equipment Manufacturers (OEMs) are following a similar route in driving towards
a device that is handheld and screen based, there are a wider range of options
on the data input side. Eleksen's technology, ElekTex, uses electro-conductive,
touch sensitive textiles to enable users to control electronics devices by
pressing a fabric sensor to provide a solution which can deliver multi-purpose,
mobile and flexible input platforms.


Our market strategy therefore has been built around the ability of our
technology to meet this need. We have:

   •Created consumer awareness and demand by producing ElekTex enabled
    products and taking them directly to market
   •Developed ElekTex components which can be embedded for:
      + •Bespoke applications for customers to build and market products
      + •Standard solutions, providing customers with opportunities to enhance
        their brand through enabled apparel


The first approach is reflected in the development, production and sale of the
Eleksen Bluetooth fabric keyboard. The product is ready for customer branding,
as required, and thereafter for retail distribution.


The second approach is reflected in our partnerships with Microsoft, Intel and
Belkin. Eleksen handled all of the fabric design development and sourcing which
was then embedded as a component into partners' final products.


The third approach has seen Eleksen taking a market leading position in the
wearable electronics market, through the provision of standard component product
which can be easily integrated into apparel. Fashion leaders like Zegna, Spyder
and O'Neill have all recognised the opportunity that incorporating ElekTex will
mean in differentiating their proposition and bringing value to their customers.


Our Business


ElekTex uses electro-conductive, touch sensitive textiles to enable users to
control electronics devices by pressing a fabric sensor imbedded, for example,
in the sleeve of a jacket. Eleksen's business model sees innovative product
design and development creating strong market pull, resulting in Eleksen's
technology ElekTex becoming established at the heart of product development
roadmaps of major consumer electronic manufacturing organisations.


The Company, based at Pinewood studios in Buckinghamshire, grew to 35 full time
employees, by the year end, and expanded its operations in the US and in Asia.
The company continues to invest in research and development to develop the core
technology, which it also protects through the further enhancement of its
current portfolio of 39 patents. A further 37 patents have been applied for.


Markets


Eleksen's initial market is in consumer electronics, with specific focus on
mobile devices and on the smart fabric markets for wearable technology.


Worldwide, the mobile device market is seeing rapid expansion and development.
Devices manufacturers are increasing functionality with more applications housed
on a single device. Mass market adoption of a single device that provides all
entertainment and communication needs is closer to reality. Devices are also
becoming smaller. Eleksen's technology offers control of electronic devices from
products with fabric-like properties. This provides the customer with a platform
for providing a portable, multifunctional solution which can be branded and
produced in almost any colour or shape or size.


Eleksen has rapidly taken a leadership position in the smart fabric market
place. 2006 saw the scaling of the Eleksen offering from market trials to full
retail consumer volumes and ElekTex technology has now been integrated in a wide
variety of apparel from ski jackets to rucksacks.

While the interactive apparel market has been driven by the iPod, there is
growing awareness that this modern icon is only part of a larger opportunity.
Other strong consumer brands like Motorola, Sony Ericsson, Nokia, LG and Samsung
are also actively involved in the emerging portable music segment, creating
equivalent interactive apparel market opportunities.


This convergence has provided the opportunity for Eleksen to grow its business
horizontally within the wearable technology market, attracting the attention of
many brand partners such as Microsoft, iPod, Bagir and Belkin looking to enter
the interactive apparel market. For these customers additional advantages exist
through co-branding opportunities offered by consumer electronic music device
manufacturers.


While the USA will continue to remain the most important market for the company,
markets in the Far East and EMEA (Europe, Middle East and Africa) are attractive
and we are actively involved in seeking to penetrate these markets.


Products


Eleksen's product strategy is focused on designing and developing solutions that
drive sales of the core Eleksen technology. In the wearables segment, the
product strategy is focused at developing a small set of standard sensors for
consumer wearables and providing a range of electronics which can control a wide
variety of portable entertainment and communications products. This means it is
simple for Eleksen's customers to meet their end consumers' requirements,
through enabled apparel. So, for example, a single set of controls installed in
a suit jacket would mean that the user could control any of a range of MP3
players.


In the portable entertainment and communications accessories market design, look
and feel are key elements of product differentiation. While functions may be
similar, design needs to be customised to meet the requirements of a particular
product. To enable this, Eleksen is developing a set of finished reference
designs that customers can license.


Mobile computing peripheral products are focused largely on solutions which
enhance and complement the functionality and style of mobile platforms. Product
development in this area is focused almost exclusively on reference design
creation with robust and innovative solutions for data input, such as fabric
keyboards, at its core. In an environment where products are becoming smaller,
portability is critical, a key feature of Eleksen's solution.


The mobile device market products in 2006 saw Eleksen's offering to the market
maturing significantly, growing from 3,000 units in the first half of the year
to over 50,000 units shipped in the second half . This growth was based around
the ElekTex Bluetooth keyboard, a finished product supplied by Eleksen into the
consumer market channels in the USA.


The Bluetooth Wireless keyboard represents Eleksen's entry into the finished
products market. Designed to be adopted by OEMs for use with their platforms the
keyboard has attracted attention from some of the most important target
customers.



Eleksen also developed a data input device for the UMPC (Ultra-Mobile Personal
Computer) platform. This product, which offers the dual functionality of a full
size Qwerty keyboard and fabric, brandable carry case, will enable the Eleksen
mobile device offerings to grow in 2007. Providing new interface solutions to
OEMs is a core goal for Eleksen.


Dividend


The directors are seeking to achieve capital growth for shareholders and
accordingly the Board does not currently envisage paying a dividend in the short
term. However, as and when sufficient distributable reserves become available,
the directors will review dividend policy.

Outlook


The opening of offices in San Francisco and in Hong Kong are important
developments for us. San Francisco offers the ability to further strengthen our
success in what is our major market while a presence in Hong Kong will help us
support our customers manufacturing needs while giving us access to potentially
attractive OEM (Original Equipment Manufacturer) and ODM (Original Design
Manufacturer) partners in the region.


We are very encouraged by the outlook for the business. With a strong senior
management team in place and the fundraising completed, Eleksen is well placed
to successfully commercialise its leadership in the smart fabrics market. We
expect to see both a significant broadening of our customer base in the
wearables market and for Eleksen to build its presence in the mobile device
market, following the strong finish for the Bluetooth keyboard in 2006



Robin Shephard
Chief Executive Officer


Ted Bechman
Chief Financial Officer




ELEKSEN GROUP PLC

CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2006

                                                                      As restated
                                                                Year         Year
                                                               ended        ended
                                                         31 December  31 December
                                                                2006         2005
                                                               £'000        £'000

Turnover                                                       3,498        1,308

Cost of sales                                                 (2,607)        (967)
                                                          __________   __________
Gross profit                                                     891          341

Administrative expenses                                       (5,115)      (3,166)
Other operating income                                             -           75
                                                          __________   __________
Operating loss                                                (4,224)      (2,750)

Operating loss before exceptional items                       (3,481)      (2,750)
Exceptional goodwill impairment                                 (743)           -


Other interest receivable and similar income                      32           25
Interest payable and similar charges                             (26)          (5)
                                                          __________   __________
Loss on ordinary activities before taxation                   (4,218)      (2,730)

Tax on loss on ordinary activities                               188            -
                                                          __________   __________
Loss for the year                                             (4,030)      (2,730)
                                                          __________   __________


Loss per share
Basic and diluted                        Note 3                (9.84)p      (7.21)p

All amounts relate to continuing activities.





ELEKSEN GROUP PLC

CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 31 DECEMBER 2006

                                                                              As restated
                                                                        2006         2005
                                                                       £'000        £'000

Loss for the financial year                                           (4,030)      (2,730)

Foreign exchange differences on consolidation                             10            -
                                                                    __________ __________
Total recognised gains and losses for the financial year              (4,020)      (2,730)
                                                                               __________

Prior year adjustment
       - Share-based payment                                              10
       - Consolidation of losses from Eleksen Inc (note 2.1)              67
                                                                    __________
Total gains and losses recognised since last financial statements     (3,943)
                                                                    __________




ELEKSEN GROUP PLC

CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2006

                                                                      As restated
                                            31 December               31 December
                                                   2006                      2005
                                     £'000        £'000        £'000        £'000
Fixed assets
Intangible assets                                   169                       140
Tangible assets                                      65                        48
                                             __________                __________
                                                    234                       188
Current assets
Stocks                                 510                       126
Debtors                              1,607                     1,164
Cash at bank and in hand             1,148                     2,721
                                 __________               __________
                                     3,265                     4,011
Creditors: amounts falling due
within one year                     (2,143)                   (1,196)
                                 __________               __________
Net current assets                                1,122                     2,815

Creditors: amounts falling due
after one year                      (1,471)                        -
                                             __________                __________
Net (liabilities)/assets                           (115)                    3,003
                                             __________                __________


Called up share capital                           2,047                     1,894
Share premium account                               494                         -
Reverse acquisition reserve                      15,381                    15,189
Other reserves                                       77                         4
Profit and loss account                         (18,114)                  (14,084)
                                             __________                __________
Shareholders' funds                                (115)                    3,003
                                             __________                __________


The financial statements were approved by the Board and, authorised for issue, on
17 April 2007.











ELEKSEN GROUP PLC

CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD 1 JANUARY TO 31 DECEMBER 2006

                                                     Year                    Year
                                                    ended                   ended
                                              31 December             31 December
                                                     2006                    2005
                                                    £'000                   £'000

Net cash outflow from operating activities         (3,086)                 (3,026)

Returns on investments and servicing of finance        30                      20

Taxation                                              188                       -

Capital expenditure and servicing of finance         (185)                   (170)

Acquisitions and disposals                           (408)                      -
                                               __________              __________
Net cash outflow before management of liquid
resources and financing                            (3,461)                 (3,176)

Financing                                           1,888                   5,688
                                               __________              __________
(Decrease)/increase in cash in the year            (1,573)                  2,512
                                               __________              __________



ELEKSEN GROUP PLC

NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD 1 JANUARY TO 31 DECEMBER 2006

    Reconciliation of operating loss to net cash outflow       2006         2005
    from operating activities
                                                              £'000        £'000

    Operating loss                                           (4,224)      (2,750)
    Depreciation of tangible assets                              61           22
    Amortisation of intangible assets                            78          110
    Impairment of goodwill                                      743            -
    Loss on disposal of fixed assets                             14            -
    Introduction of Bora Communications plc's debtors           581            -
    Introduction of Bora Communications plc's creditors        (474)           -
    (Increase)/decrease in stocks                              (384)         (62)
    (Increase)/decrease in debtors                             (443)        (885)
    (Decrease)/increase in creditors within one year            947          529
    Loss on foreign exchange translation                         10            -
    Share based payment charge                                    5           10
                                                         __________   __________
    Net cash outflow from operating activities               (3,086)      (3,026)
                                                         __________   __________


    Returns on investment and servicing of finance
    Interest received                                            32           25
    Interest paid                                                (2)          (5)
                                                         __________   __________
                                                                 30           20
                                                         __________   __________


    Taxation
    Refund of R&D tax credit                                    188            -
                                                         __________   __________
                                                                188            -
                                                         __________   __________


    Capital expenditure and financial investment
    Payments to acquire intangible assets                      (120)        (100)
    Payments to acquire tangible assets                         (65)         (70)
                                                         __________   __________
                                                               (185)        (170)
                                                         __________   __________


    Acquisitions and disposals
    Reverse acquisition of legal parent undertaking            (865)           -
    Cash acquired with acquisition                              457            -
                                                         __________   __________
                                                               (408)           -
                                                         __________   __________




ELEKSEN GROUP PLC

NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
FOR THE PERIOD 1 JANUARY TO 31 DECEMBER 2006

                                                              2006         2005
                                                             £'000        £'000
    Financing
    Issue of ordinary share capital Eleksen Ltd                359        5,688
    Expenses paid in connection with share issue               (19)           -
    Exercise of share options                                   45            -
    Issue of convertible loan notes                          1,682            -
    Expenses paid in connection with loan notes               (179)           -
                                                        __________   __________
                                                             1,888        5,688
                                                        __________   __________




ELEKSEN GROUP PLC

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006

1 Extracts from Annual Report & Accounts

The financial information shown for the years ended 31 December 2006 and 2005
set out above does not constitute  statutory accounts but is derived from those
accounts. The results have been prepared using accounting policies  consistent
with those used in the preparation of the statutory accounts.  The financial
information contained in this  announcement does not constitute statutory
accounts within the meaning of Section 240 of the Companies Act 1985.

The financial information for the year ended 31 December 2005 has been extracted
from the statutory accounts for that  year. These accounts have been filed with
the Registrar of Companies and  contain an unqualified audit report. The 
financial information for the year ended 31 December 2006 has been extracted
from the  statutory accounts for that year  which contain an unqualified auditor
report but have not yet been filed at Companies House. Copies of this
announcement  are available at the registered offices of the Company (Pinewood
Studios, Pinewood Road, Iver Heath, Bucks, SL0 0NH,  United Kingdom) and at the
offices of the Company's nominated advisors, Panmure Gordon. (Moorgate Hall, 155
Moorgate,  London, EC2M 6XB) for a period of 14 days from the date hereof.

Further copies of this announcement can be downloaded from the website
www.eleksen.com or by applications to The  Company Secretary, Eleksen Group plc,
Pinewood Studios, Pinewood Road, Iver Heath, Bucks, SL0 0NH, United Kingdom.

2   Accounting policies

2.1   Accounting convention

The financial statements have been prepared under the historic cost convention
and are in accordance with applicable  accounting standards, with the exception
of accounting for the reverse take over of Bora Communications plc details of 
which are set out below.

The figures for the year ended 31 December 2005 are based on the statutory
accounts of Eleksen Limited, which have been  filed with the Registrar of
Companies but have been restated to take into account the changes required under
FRS 20  'Share based payments' and also to include the Company's US based
subsidiary Eleksen Inc. which had been excluded from  2005 as the Company and
its subsidiary comprised a small sized group and took the available exemption
provided by  section 248 of the Companies Act 1985.

The restatement to include Eleksen Inc impacted the comparatives for 2005 by
reducing debtors by £67,000, turnover by  £1,000 and increasing administrative
expenses by £66,000.

2.2   Changes to accounting policies

FRS 20 'Share based payment'

The Group has adopted FRS 20 which is obligatory for periods commencing on or
after 1 January 2006.

In order to conform to the requirements of FRS 20 'Share based payment', share
options that have been granted to  employees have been recognised as an expense
as part of employee remuneration. The cost is spread over the vesting  period
and has been calculated using the Monte-Carlo valuation model.

In accordance with the transitional provisions of FRS 20, the standard was
applied retrospectively to all grants of  equity instruments after 7 November
2002 that were unvested as of 1 January 2005 and to liabilities for share-based 
transactions existing at 1 January 2006.

The effect on the comparatives of this change in accounting policy is that
administrative expenses have increased by  £9,187 for the year ended 31 December
2005, the comparatives have been restated for this reduction in net assets. A 
charge for the year ended 31 December 2006 of £5,096 has been recognised.

FRS 25 'Financial instruments: disclosure and presentation'

The Group has adopted FRS 25 which is obligatory for periods commencing on or
after 1 January 2006.

In accordance with FRS 25, debt convertible into a fixed number ofordinary
shares is a compound financial instrument. The instrument comprises a liability
and equity component and must be presented separately on the balance sheet.

The adoption of FRS 25 has had no effect on the comparatives.

2.3   Basis of consolidation and presentation of financial information

On 3 May 2006 the Company, then named Bora Communications Plc, became the legal
parent of Eleksen Limited. Due to the  relative values of the companies, the
former Eleksen Limited shareholders became the majority shareholders with 93% of
the enlarged share capital. Further, the Company's continuing operations and
executive management were those of Eleksen Limited. Accordingly, the substance
of the combination was that Eleksen Limited acquired Bora Communications  Plc in
a reverse acquisition. As part of the business combination Bora Communications
Plc changed its name to Eleksen  Group Plc on 2 May 2006.

Under the requirements of the Companies Act 1985 it would normally be necessary
for the Company's consolidated accounts  to follow the legal form of the
business combination. In that case the pre-combination results would be those of
Bora  Communications Plc. The results of Eleksen Limited would then be brought
into the Group from 3 May 2006. However, this would portray the combination as
an acquisition of Eleksen Limited by Bora Communications Plc and would, in the 
opinion of the Directors, fail to give a true and fair view of the substance of
the business combination. Accordingly,  the Directors have adopted reverse
acquisition accounting as the basis of consolidation in order to give a true and
fair view.

In invoking the true and fair override, the Directors note that reverse
acquisition accounting is allowed under  International Financial Reporting
Standard 3 and that the Urgent Issues Task Force of the UK's Accounting
Standards  Board considered the subject under UK GAAP and concluded that there
are instances where it is right and proper to  invoke the true and fair override
in such a way.

As a consequence of applying reverse acquisition accounting, the results for the
year ended 31 December 2006 comprise  the results of Eleksen Limited for the
year ended 31 December 2006 plus those of Bora Communications plc from 3 May 
2006, the date of the reverse acquisition, to 31 December 2006. The comparative
figures are those of Eleksen Limited for the year ended 31 December 2005
adjusted to reflect the consolidation of Eleksen Inc. and a FRS 20 share based 
payment charge.

Goodwill amounting to £743,000 arose on the difference between the fair value of
Bora Communications Plc and the fair  value of its net assets at the date of
reverse acquisition. Full provision for impairment against the goodwill  arising
has been made in the year ended 31 December 2006 because Bora Communications Plc
had no continuing business and  therefore the goodwill had no intrinsic value.

Goodwill of £6,237,000, as calculated below, would have arisen if the takeover
was accounted for under a normal  acquisition instead of a reverse acquisition.

                                                                  £'000
       Consideration paid                                        18,941
       Acquisition costs                                            556
       Fair value of net assets acquired                        (13,260)
                                                             __________
       Goodwill under normal acquisition                          6,237
                                                             __________




ELEKSEN GROUP PLC

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2006

   The effect on the consolidated financial statements of adopting reverse
   acquisition accounting, rather than following the legal form, are widespread.
   However the principal effects on the composition of the reserves at 31
   December 2006.

Reverse acquisition accounting       Reverse          Normal       Impact of
                                  Accounting     Acquisition         Reverse
                                  Accounting      Accounting     Acquisition
                              (as disclosed)                      Accounting
                                     £'000           £'000           £'000
Called up share capital              2,047           2,047               -
Share premium account                  494             494               -
Reverse acquisition reserve         15,381               -          15,381
Merger reserve                           -          17,047         (17,047)
Other reserves                          77              77               -
Profit and loss reserve            (18,114)        (17,669)           (445)
                                __________      __________      __________
                                      (115)          1,996          (2,111)
                                __________      __________      __________



 3   Earnings per share

     Earnings per ordinary share have been calculated using the weighted average
     number of shares in issue during the relevant financial periods.

                                                                      As restated
                                                               2006          2005
                                                              £'000         £'000
     Reconciliation of earnings:
     -----------------------------
     Earnings used for calculation of basic                  (4,030)       (2,730)
     and diluted EPS
                                                         __________     __________


                                                                        As restated
                                                                 2006          2005
                                                               Number        Number
     Reconciliation of denominator:
     --------------------------------
     Shares used for calculation of basic EPS              40,948,170    37,881,113
     Convertible loan                                       4,205,000             -

     Warrants                                                 983,500       142,500

     Exercise of options                                    5,353,915     5,022,041

                                                          __________    __________

     Shares used for calculation of diluted EPS            51,490,585    43,045,654
                                                          __________    __________




ELEKSEN GROUP PLC

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2006

 4   Share capital                    2006          2005          2006          2005
                                      Number        Number           £             £
     Authorised
     Ordinary shares of 5p      57,150,000             -     2,857,500             -
     each
                                __________    __________    __________    __________
                                57,150,000             -     2,857,500             -
                                __________    __________    __________    __________


                                      2006          2005          2006          2005
                                      Number        Number           £             £
     Allotted, called up and
     fully paid
     Ordinary shares of 5p      40,948,170             -     2,047,409             -
     each
                                __________    __________    __________    __________
                                40,948,170             -     2,047,409             -
                                __________    __________    __________    __________


     Prior to the acquisition of Eleksen Limited, Bora Communications plc had an
     issued share capital of 2,850,000 ordinary 5p shares.
     
     On 3rd May 2006, Bora Communications Plc (the Company) acquired the entire share
     capital of Eleksen Limited by way of issuing 37,881,113 new ordinary shares and a
     share consolidation of one new ordinary share of 5p each for every five ordinary
     shares of 1p each.
     
     The consolidated shares represented approximately 93 per cent of the enlarged
     share capital and, in view of the size of Eleksen Limited relative to the
     Company, the acquisition constituted a reverse takeover of Bora Communications
     Plc under the AIM rules.
     
     As a consequence of applying reverse acquisition accounting (see note 1.3) the
     Group share capital for the comparative periods has been presented as £1,894,056
     to reflect the shares issued in exchange for the share capital of Eleksen
     Limited.
     
     On 11th June 2006, the Company issued 217,057 new ordinary 5p shares in respect
     of the exercise of share options.



  ELEKSEN GROUP PLC
  NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
  FOR THE YEAR ENDED 31 DECEMBER 2006

   5   Statement of movements on reserves

                                  Share premium      Reverse
                                        account  acquisition
                                                     reserve  Other reserves  Profit and loss
                                                                 (see below)          account
                                          £'000        £'000           £'000            £'000
       Group
       Balance at 1 January 2006              -       15,189            (6)         (14,074)
       Prior period FRS 20                    -            -            10              (10)
       adjustment
                                     __________    __________   __________       __________
       As at 1 January 2006 restated          -       15,189             4          (14,084)
       Loss for the period                    -            -             -           (4,030)
       Reverse acquisition capital          494          192             -                -
       adjustment
       FRS 20 share based payment             -            -            (8)               -
       Foreign exchange currency              -            -            10                -
       translation reserve
       Convertible loan and warrants          -            -            71                -
       issued
                                     __________    __________   __________       __________
       Balance at 31 December 2006          494       15,381            77          (18,114)
                                     __________    __________   __________       __________


       Other reserves
       Equity based payment reserve                                      2
       ESOP reserve                                                     (6)
       Convertible loan equity                                          18
       Warrant reserve                                                  53
       Foreign currency translation reserve                             10
                                                                __________
                                                                        77
                                                                __________


    6   Reconciliation of movements in shareholders' funds

                                             Group        Group         Company        Company
                                              2006         2005            2006           2005
                                             £'000        £'000           £'000          £'000

        Loss for the financial period       (4,030)      (2,730)            (17)           (57)
        Proceeds from issue of shares            -        5,687           1,904            637
        Capital adjustments for reverse        839            -               -              -
        acquisition accounting
        Movement on equity based                (8)          10               -              -
        payment reserve
        Convertible loan and warrants           71            -              71              -
        issued
        Foreign exchange currency               10            -               -              -
        translation reserve
        ESOP reserve rolled over                 -            -              (6)             -
                                        __________   __________      __________      __________
        Net (decrease)/increase in          (3,118)       2,967           1,952            580
        shareholders' funds
        Opening shareholders' funds          3,003           36             580              -
        restated
                                        __________   __________      __________      __________
        Closing shareholders' funds           (115)       3,003           2,532            580
                                        __________   __________      __________      __________


  ELEKSEN GROUP PLC
  NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
  FOR THE YEAR ENDED 31 DECEMBER 2006

 7   Share options
     Certain employees held options to subscribe for shares in the Company at prices ranging
     from £0.15 to £10.00. The number of share options, the periods in which they were
     granted and the periods in which they may be exercised are set out below. These schemes
     are all equity-settled based share remuneration schemes for employees.

     Eleksen Group plc EMI Share Option Scheme
     -------------------------------------------
        Date of   Exercise  Exercise     2005    Exercised   (Lapsed)/    Converted     2006
         grant    price (£)  period     number    number      Granted        (1)       number
                                                              number
                                          '000      '000          '000         '000      '000

     22 January 01   2.21   2001-2011        3         3             -            -         -
     
     25 May 01       2.21   2001-2011        1         1             -            -         -

     15 April 02    10.00   2002-2012        3         -            (3)           -         -
     
     14 January 04   0.15   2004-2014       58        58             -            -         -
     
     19 March 04     0.15   2004-2014       28        28             -            -         -
     
     31 January 05   0.15   2005-2015      158       158             -            -         -
     
     9 December 05   0.78   2005-2015      108         -             -          534       642
     
     9 December 05   0.78        (2)       272         -             -        1,354     1,626
     
     28 December 06  0.40        (3)         -         -           822            -       822
     
     

     Unapproved option scheme
     --------------------------
        Date of   Exercise Exercise  2005 number  Exercised   Granted     Converted     2006
         grant     price    period                 number      number        (1)       Number
                    (£)
                                           '000      '000         '000        '000       '000

     31 January 05  0.15   2005-2015         40         -            -         199        239
     
     1 March 05     0.15   2005-2015         40         -            -         199        239

     3 May 05       0.15   2005-2015         40         -            -         199        239

     9 December 05  0.78   2005-2015         10         -            -          50         60
     
     9 December 05  0.78        (2)          56         -            -         279        335
     
     28 December 06 0.40        (3)           -         -        1,152           -      1,152
     
     

     (1) Options As part of the Reverse Take Over of Eleksen Group plc, share options in
     Eleksen Limited were rolled over into the new parent company. Each £0.01 Ordinary
     Eleksen Limited share became 5.971 £0.05 Ordinary Eleksen Group plc shares.
     (2) Options can be exercised at any date when a number of performance criteria have been
     met.
     (3) Options vest in equal instalments over a 3 year period




Financial 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 will be posted to shareholders on May 4, 2007.

Annual General Meeting

The AGM will be held on June 7, 2007 at the registered office of the company (
Pinewood Studios, Pinewood Road, Iver Heath, Bucks, SL0 0NH ).



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