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Eagle Eye Telematics plc 

('Eagle Eye' or 'the 'Company' and, together with its subsidiaries, the 'Group')

Preliminary Results for the year ended 30th November 2007

Chairman's statement

Results 

Group turnover for the year ended 30th November 2007 was £1,293,000 (2006: £1,056,000) with a loss before tax of £1,286,000 (2006: £869,000). Despite the increased loss for the year, the Board believes that the Group has made steady progress, with sales growth of 22%, an improvement in gross profit (prior to exceptional stock write-offs) from 40% to 55.5% and a significant continued investment in target sector research and product development.

Current Trading

Your Board believes from their market research and from developing relationships with key industry players that the demand for vehicle telematics solutions from the commercial motor insurance and vehicle leasing sectors has increased significantly. Your Board expects to see continued progress in the development of these sector opportunities over the next twelve months. Eagle Eye is well positioned, technically and through the in-depth sector knowledge of the Company's new management team, to take advantage of this demand. 

During the year, the Group incurred significant expenditure on research and development of £529,000 (2006: £347,000), demonstrating the Group's total commitment to accelerate the development cycle and to make available for sale, its key products - 'VCG7' and 'Monitor3'. On 12th May 2008, the Group received the prestigious Fleet World Editors Award for its innovative product Monitor3. 

Structure

Since the year end date, the Group has renegotiated the terms of its £2.4m loan facility, previously repayable in full on 31st July 2008. The new loan facility is repayable on 30th June 2009. 

In order to strengthen the Group balance sheet, which at 30th November 2007 included negative net assets of £896,000, the Board is currently in negotiations which, if successfully concluded, would result in the conversion into equity of a substantial part of the loans from certain directors and significant shareholders which amounted to £2,279,000 on 30th November 2007. Further details will be announced as and when appropriate. If successfully concluded, the Directors believe that this would significantly strengthen the Group's balance sheet. 

I would like to take this opportunity on behalf of the Board to thank Eagle Eye management and staff for their contribution and commitment during the last twelve months.

Rodney Graves

Chairman

29th May 2008

For further information, please contact:

Rodney Graves (Eagle Eye Telematics)	01928 795400
David Youngman (WH Ireland)	0161 832 2174

  Consolidated profit & loss account

for the year ended 30th November 2007

		Year ended 30th November 2007	Year ended 30th November 2006
	Notes	£'000	£'000
Group turnover	1	1,293	1,056
Cost of sales		(575)	(633)
Exceptional stock write off		(137)	-
Gross profit		581	423
Administrative expenses		(1,472)	(1,080)
Group operating loss	2	(891)	(657)
Interest receivable	5	7	6
Interest payable	5	(402)	(218)
Loss on ordinary activities before taxation		(1,286)	(869)
Tax on loss on ordinary activities	6	55	61
Loss for the financial year deducted from reserves	17,18	(1,231)	(808)
Basic and diluted loss per share	7	(0.66)p	(0.45)p

Consolidated statement of total recognised gains and losses

	2007 £'000	2006 £'000
Loss for the financial year	(1,231)	(808)
Prior year adjustment	-	(720)
Total recognised gains and losses since the last annual report	(1,231)	(1,528)

During the prior year the Company changed its accounting policy in respect of accounting for certain research and development costs and Intellectual Property Rights.

  Balance sheets at 30th November 2007

		Group		Company
	Notes	2007	2006	2007	2006
		£'000	£'000	£'000	£'000
Fixed assets
Intangible assets	8	3,336	2,967	-	-
Tangible assets	9	50	35	-	-
		3,386	3,002	-	-
Current assets
Stocks	11	78	215	-	-
Debtors	12	1,233	716	2	2
Cash at bank and in hand		39	327	1	1
		1,350	1,258	3	3
Creditors: Amounts falling due within one year	13	(3,249)	(282)	(2,706)	(55)
Net current assets/(liabilities)		(1,899)	976	(2,703)	(52)
Total assets less current liabilities		1,487	3,978	(2,703)	(52)
Creditors: Amounts falling due after more than one year	14	(2,383)	(3,923)	(2,383)	(3,923)
Net assets/(liabilities)		(896)	55	(5,086)	(3,975)
Capital and reserves
Called up share capital	16	2,762	2,762	2,762	2,762
Share premium account	17	7,540	7,540	7,540	7,540
Equity reserve	17	280	-	280	-
Merger reserve	17	17,523	17,523	-	-
Profit and loss account	17	(29,001)	(27,770)	(15,668)	(14,277)
Equity shareholders funds	18	(896)	55	(5,086)	(3,975)

  Consolidated cash flow statement

for the year ended 30th November 2007

		2007	2006
	Notes	£'000	£'000
Net cash outflow from operating activities		(537)	(827)
Returns on investment and servicing of finance
Interest received	5	7	6
Interest payable	5	(402)	(218)
		(395)	(212)
Taxation - receipt of research and development tax credit		55	61
Capital expenditure and financial investment
Payments to acquire intangible fixed assets		(529)	(347)
Payments to acquire tangible fixed assets	9	(22)	(36)
		(551)	(383)
Net cash outflow before financing		(1,428)	(1,361)
Financing:
Increase in directors' loans	22	1,140	952
Repayment of secured bank loans		-	(35)
Issue of Share Capital	18	-	770
		1,140	1,687
Increase/(decrease) in cash		(288)	326

Reconciliation of operating loss to net cash outflows from operating activities

	2007	2006
	£'000	£'000
Operating loss	(891)	(657)
Depreciation charges	7	6
Amortisation and impairment charges	160	160
Decrease in stocks	137	109
(Increase)/decrease in debtors	(517)	(389)
(Decrease)/increase in creditors	567	(56)
Net cash outflow from operating activities	(537)	(827)

  Statement of accounting policies

Accounting policies

The financial statements are prepared in accordance with the Companies Act 1985 and applicable accounting standards. The significant accounting policies adopted are described below and have been applied consistently throughout the year and the preceding period with the exceptions noted below.

The group has adopted FRS 20 - Share Based Payment in these accounts. The comparative figures for the year ended 30th November 2006 have not been restated to reflect the adoption of this standard, as the effects are not material. The charge in respect of the year to 30th November 2007 is not material and has not therefore been reflected in the financial statements.

Accounting convention

The financial statements are prepared under the historical cost convention.

Basis of preparation

This unaudited preliminary financial information has been prepared in accordance with UK Generally Accepted Accounting Principles. The accounting policies applied are consistent with those described in the Annual Report and Financial Statements for 2006 and the auditors have confirmed that they are not aware of any matter that may give rise to a modification of their audit report.

This financial information does not constitute statutory financial statements for the years ended 30th November 2007 or 30th November 2006 as defined in S.240 of the Companies Act 1985. The Annual Report and Financial Statements for 2007 will be filed with the registrar of Companies in due course.

Basis of preparation - going concern

The financial statements have been prepared on a going concern basis which assumes that the Company and group will continue in operational existence for the foreseeable future. Messrs Stross and Krell have indicated to the Board in writing that they are prepared to provide additional funds to the group to enable it to continue normal trading operations for a period of at least one year from the date the financial statements are approved.

On 30th November 2005, an independent valuation was provided by Plextek Limited in respect of the then valuation of the intellectual property, their estimate of £3.5m exceeds the valuation reflected in these accounts in respect of IPR and under Research and Development. During the year, the Group incurred significant expenditure on research and development of £529,000 (2006: £347,000), demonstrating the Group's total commitment to accelerate the development cycle and to make available for sale, its key products - 'VCG7' and 'Monitor3'. On 12th May 2008, the Group received the prestigious Fleet World Editors Award for its innovative product Monitor3. The Directors therefore believe that the current valuation is realistic. 

The Directors confirm that they are satisfied that it is appropriate for the financial statements to have been drawn up on the going concern basis. In reaching this conclusion the Directors have taken into account all relevant matters of which they are aware and have considered a future period of at least one year from the date on which the financial statements are approved. 

Basis of consolidation

The group financial statements include the results of the Company and its wholly owned subsidiary, Eagle-i Telematics Limited, made up to 30th November 2007. 

Turnover

Turnover represents the amounts receivable in the ordinary course of business for goods and services sold, after the deduction of value added tax. Turnover is recognised upon despatch of goods or on provision of services.

Employee share options

The group grants share options to certain of its employees. In accordance with FRS 20 - Share Based Payment, an expense in relation to such options, based on their fair value at the date of grant, is recognised over the vesting period. The group uses the Black Scholes model for the purpose of computing fair value.

Goodwill

Goodwill comprises the difference between the fair value of consideration and fair value of identifiable assets and liabilities acquired. Goodwill is capitalised and amortised on a straight-line basis to the profit and loss account over a period of 10 years from the date of acquisition, being its assumed useful economic life. Impairment tests on the carrying value of goodwill are undertaken at the end of the first full year following acquisition and in any other periods if events or changes in circumstances indicate that the carrying value may not be ultimately recoverable.

Intellectual property rights

Intellectual property rights are included at cost to the group amortised over a period of 10 years. 

Research and development

The costs in relation to the development of specific projects which meet the conditions in SSAP 13 have been capitalised in accordance with SSAP 13. Once the development project has been commercially adopted the associated costs will be amortised over the period in which the product is expected to be used. Expenditure on non specific research and development projects is written off to the profit and loss account as incurred.

Tangible fixed assets and depreciation

Tangible fixed assets are stated at historical cost. 

Depreciation is provided on all fixed assets at rates calculated to write down their cost or valuation to their estimated residual value by equal instalments over the period of their expected useful lives, which are considered to be as follows:

Plant and machinery	5 years
Computer equipment & office furniture	3 years
Fixtures & Fittings	3-4 years

Investments

Investments are stated at cost less provisions for any impairment in value.

Financial instruments

The Group excludes all short-term debtors and creditors from its financial instrument disclosures.  

Loans are recorded at their net proceeds upon issue.

Stocks

Stocks are stated at the lower of cost and net realisable value.

Deferred taxation

Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date, i.e. where transactions or events have occurred that result in an obligation to pay more or a right to pay less tax after the balance sheet date. Deferred tax assets are regarded as recoverable and recognised in the financial statements when it is more likely than not that there will be a suitable taxable profit from which future reversal of the timing difference can be deducted. Deferred tax assets and liabilities are not discounted.

Foreign exchange

Foreign currency transactions are recorded at the rate of exchange prevailing at the date of the transaction. Gains or losses arising on transactions are reflected in the profit and loss account.

Pension costs

The Group offers all employees the opportunity to join the Group's Stakeholder Pension Scheme.

There is no cost to the Group of offering the scheme.

Operating leases

Operating lease rentals are charged to the profit and loss account in equal annual amounts over the lease term.

  Notes to the financial statements

for the year ended 30th November 2007

1.  Segmental Analysis - Turnover by destination

	2007	2006
	£'000	£'000
United Kingdom	1,174	1,001
Rest of European Union	119	55
	1,293	1,056

Turnover relates to only one class of business being the development and sale of vehicle tracking and communications systems. The results for the year and the net liabilities relate entirely to the United Kingdom.

2. Operating loss

This is stated after charging:

	2007	2006
	£'000	£'000
Amortisation of intellectual property rights	160	160
Depreciation of tangible fixed assets	7	6
Fees payable to the company's auditors, as per summary (below)	21	23
Operating leases  - other	7	2
- land and buildings	50	50

Audit - fees payable to the company's auditors: -

- for the audit of the company's accounts £5,000 (2006: £5,000); 

- the audit of the company's subsidiaries pursuant to legislation £12,000 (2006: £10,000);

- taxation services £2,500 (2006: £2,500);

- other services £1,250 (2006: £5,000) 

3. Employees

The average number of employees including Directors during the year was 23 (2006: 16). As at 30th November 2007, the Group had 25 employees (2006: 16), including Directors. There are no employees in the Company. Employee costs including Directors during the year amounted to:

	2007	2006
	£'000	£'000
Wages and salaries	807	507
Social security costs	91	55
	898	562

  

4. Directors

The emoluments of the Directors were as follows:

	2007	2006
	£'000	£'000
Emoluments	37	128
Highest paid director - emoluments	22	76

No Director received any pension contributions during the year and no share options were exercised during the year.

Directors' emoluments comprised:

	2007 Salary/ Fees	2006 Salary/ Fees
	£'000	£'000
Non-executive Chairman
Rodney Graves	15	20
Executive Directors
Brian Egerton	22	76
Non-executive Directors
Terry Krell	-	-
Ralph Stross	-	-
	37	96

 No bonuses were paid or payable in either 2007 or 2006.

5.  Interest

	2007	2006
	£'000	£'000
Interest receivable	7	6
Interest payable
Bank loans and overdraft	(259)	(132)
Interest on Directors' loan accounts	(143)	(86)
	(402)	(218)

  6.  Taxation

	2007	2006
	£'000	£'000
Loss on ordinary activities before tax	(1,286)	(869)
Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 30% (2006: 30%)	(386)	(261)
Effects of:
Expenses not deductible for tax purposes	85	105
Losses carried forward	301	156
Adjustments to tax charge in respect of previous period	(55)	(61)
Current tax credit for period	(55)	(61)

The future effective tax rate is expected to be lower than the standard tax rate until the available trading losses have been fully utilised.

7.  Loss per share

The basic loss per share calculation has been based on the loss attributable to ordinary shareholders of £1,231,000 (2006: £808,000) divided by the number of ordinary shares in issue during the period 185,367,111 (2006: 179,780,466). 

The share options issued and the convertible debt could potentially dilute earnings in the future but have not been included in the calculation of diluted earnings per share as they are considered anti-dilutive for the periods presented as the Group incurred losses.

  

 8.  Intangible Fixed Assets - Group  

Goodwill

	£'000
Cost
At 1st December 2006 and 30th November 2007	19,976
Amortisation
At 1st December 2006 and 30th November 2007	19,976
Net Book Value
At 30th November 2007 and 30th November 2006	-

Intellectual Property Rights

	£'000
Cost /Valuation
At 1st December 2006 as previously reported	1,600
Amortisation
At 1st December 2006 as previously reported	960
Charge for the year	160
At 30th November 2007	1,120
Net Book Value as at 30th November 2007	480

Research and development

	£'000
Cost
At 1st December 2006 as previously reported	2,327
Additions in the year	529
At 30th November 2007	2,856

Total

At 30th November 2007	3,336
At 30th November 2006	2,967

  9.  Tangible Fixed Assets - Group

	Plant and Machinery	Computer Equipment & Office Furniture	Fixtures & Fittings	Total
	£'000	£'000	£'000	£'000
Cost
At 1st December 2006	28	105	17	150
Additions	-	22	-	22
Disposals	-	-	-	-
At 30th November 2007	28	127	17	172
Depreciation
At 1st December 2006	28	70	17	115
Provision for the year	-	7	-	7
Disposals	-	-	-	-
At 30th November 2007	28	77	17	122
Net Book Value
At 30th November 2007	-	50	-	50
At 30th November 2006	-	35	-	35

10.  Investments - Company

	2007	2006
	£'000	£'000
Cost
At 1st December 2006 and 30th November 2007	1,713	1,713
Impairment
At 1st December 2006 and 30th November 2007	1,713	1,713
At 30th November 2007 and 30th November 2006	1,713	1,713
Net Book Value
At 30th November 2007 and 30th November 2006	-	-

	Country of Registration and Operation	Class of Shares	Proportion Held	Nature of Business
Eagle-i Telematics Limited	England and  Wales	Ordinary	100%	Vehicle satellite tracking systems

  11.  Stocks - Group

	2007	2006
	£'000	£'000
Raw materials	31	141
Work-in-progress	25	39
Finished goods	22	35
	78	215

12.  Debtors

	Group		Company
	2007	2006	2007	2006
	£'000	£'000	£'000	£'000
Trade debtors	305	121	-	-
VAT recoverable	7	48	-	-
Prepayments and accrued income (see note below)	921	547	2	2
	1,233	716	2	2

Prepayments and accrued income include an amount of £448,000 (2006: £352,000) due after 1 year.

13.  Creditors: Amounts falling due within one year

	Group		Company
	2007	2006	2007	2006
	£'000	£'000	£'000	£'000
Bank overdrafts (see note 14 i & ii)	2,400	-	2,400	-
Trade creditors	328	146	-	-
Taxation and social security	36	15	-	-
Accruals	485	121	306	55
	3,249	282	2,706	55

  14.  Creditors: Amounts falling due after more than one year

	Group		Company
	2007	2006	2007	2006
	£'000	£'000	£'000	£'000
Bank Loan (see note 14 i & ii)	-	2,400	-	2,400
Other loans (see note 14 iii, iv, v)	2,383	1,523	2,383	1,523
	2,383	3,923	2,383	3,923

i. On 19th February 2002 the Company executed a debenture over all its assets in favour of The Royal Bank of Scotland to secure all the Company's liabilities to The Royal Bank of Scotland.

ii. On 21st April 2005 the bank overdraft was converted to a loan of £2.4 million with interest payable of 1.5% per annum above The Royal Bank of Scotland base rate. The loan, which was repayable in full on 31st July 2008, has, since the year end date, been renegotiated and is now not repayable until 30th June 2009.

iii. On 30th April 2002 the Company executed a secondary debenture over all its assets in favour of Messrs Stross and Krell to secure the loans that they have made to the Company. These loans, which are made in equal amounts by Messrs Stross and Krell, and total £894,000, are not repayable prior to 31st July 2009. Interest is accruing at an average rate of 1.5% above The Royal Bank of Scotland's base rate.

iv. On 31st May 2007 the directors of the Company announced that the Company has agreed to enter into a loan agreement with Belgravia Homes Limited, Ralph Michael Stross and Stuart Gary Krell, a significant shareholder of the Company, each of whom will provide the Company with additional working capital facilities. The Company will have access to a loan facility of up to £1,000,000. The loan is not repayable prior to 30th November 2009 and will bear interest at a fixed rate of 12% per annum. 

v. On 25th October 2007 the Company announced that it had entered into a loan agreement with Belgravia Homes Limited. Pursuant to the Loan Agreement, the Company has access to a loan facility of up to £720,000. The loan is not repayable prior to 30th November 2009 and will bear interest at a fixed rate of 12% per annum. This loan is an extension to the loan agreement announced to the market on 31st May 2007, which was subsequently executed on 24th July 2007. Additionally, Belgravia Homes Limited has been granted an option to acquire 16,000,000 ordinary shares of 0.1p each in the capital of the Company on or before 30th November 2007 at an exercise price of 1.75p per share. The Company received a notice on 30th November 2007 from Belgravia Homes Limited of their intention to exercise the option in relation to 16,000,000 ordinary shares.

  

  

15. Deferred taxation 

There is no deferred tax liability at the year end. At the year end there was a potential deferred tax asset of:

	Group Un-provided		Company Un-provided
	2007	2006	2007	2006
	£'000	£'000	£'000	£'000
Depreciation in advance of capital allowances	(43)	(43)	-	-
Losses	(3,719)	(3,418)	(690)	(326)
Total	(3,762)	(3,461)	(690)	(326)

Deferred tax assets have not been recognised, as it is uncertain as to when such amounts will be realised.

  16. Share Capital 

	2007	2006
Authorised
3,423,269,679 Ordinary Shares of 0.1p each (2006: 3,423,269,679 Ordinary Shares of 0.1p each)	3,423,270	3,423,270
26,027,579 Deferred shares at 9.9p each	2,576,730	2,576,730
	6,000,000	6,000,000
Allotted, Called-up and Fully Paid
At 30th November 2006 Ordinary Shares of 0.1p each 185,367,111	185,368	141,368
At 30th November 2006 Deferred Shares of 9.9p each 26,027,579	2,576,730	2,576,730
	2,762,098	2,718,098
Shares issues in the year(s).
31st May 2006 25,000,000 Ordinary Shares of 0.1p each	-	25,000
06th November 2006 12,000,000 Ordinary Shares of 0.1p each	-	12,000
23rd November 2006 7,000,000 Ordinary Shares of 0.1p each	-	7,000
	2,762,098	2,762,098
At 30th November 2007
Ordinary Shares of 0.1p each 185,367,111	185,368	185,368
Deferred Shares of 9.9p each 26,027,579	2,576,730	2,576,730
	2,762,098	2,762,098

Deferred Ordinary Shareholders are not entitled to receive notice of any general meeting of Company and shall have no right to vote. The deferred shares do not rank for dividends.  

  

The Remuneration Committee makes share option awards and options are available to all employees of the Group. The exercise price of the options and the associated vesting criteria are also determined by the Remuneration Committee.

Share options	No. of options as at 30th  November 2006	Granted in Period	Lapsed in Period	No. of options as at 30th November 2007	Exercise price per share	Exercisable from	Exercisable to
Unapproved Plan 2001	160,000	-	160,000	-	75p	12.03.04	12.03.08
Unapproved Plan 2003	8,412,164	-	708,000	7,704,164	10p	25.06.03	25.06.13
Unapproved Plan 2007	-	52,717,774	-	52,717,774	1.75p	03.09.07	01.03.14
Unapproved Plan 2007	-	11,930,286	-	11,930,286	1.75p	12.11.07	01.03.14
EMI 2001	210,000	-	-	210,000	13p	12.03.04	12.03.08
EMI 2002	230,000	-	160,000	70,000	13p	12.03.04	12.09.12
EMI 2003	792,000	-	792,000	-	10p	25.06.03	25.06.13
EMI 2007	-	6,388,862	-	6,388,862	1.75p	12.11.07	01.03.17

In accordance with FRS 20 - Share Based Payment, an expense in relation to share options granted, based on their fair value at the date of grant, is recognised over the vesting period. The group uses the Black Scholes model for the purpose of computing fair value. The Black Scholes model takes into account the volatility of the share price and the associated vesting criteria associated with the options.

The directors consider the fair value of the options based on the Black Scholes model to be minimal and therefore any charge arising would be immaterial.  

17. Reserves 

	Share premium account	Merger reserve	Equity reserve	Profit and loss account	Total
	£'000	£'000	£'000	£'000	£'000
Group
At 1st December 2006	7,540	17,523	-	(27,770)	(2,707)
Equity reserve created during the year	-	-	280	-	280
Loss for the year	-	-	-	(1,231)	(1,231)
At 30th November 2007	7,540	17,523	280	(29,001)	(3,658)

As required by FRS 25 an Equity reserve of £280,000 has been created in respect of the compound loan instrument granted to Belgravia Homes Limited. 

As permitted by Section 230 of the Companies Act 1985, the profit and loss account of the parent company is not presented as part of these financial statements.

The merger reserve arose in November 2000 on the issue of shares to acquire Eagle-i Telematics Limited (formerly known as 'Eagle Eye Tracking Systems (UK) Limited').

  

	Share premium account	Equity reserve	Profit and loss account	Total
	£'000	£'000	£'000	£'000
Company
At 1st December 2006	7,540	-	(14,277)	(6,737)
Equity reserve created during the year	-	280	-	280
Loss for the year	-	-	(1,391)	(1,391)
At 30th November 2007	7,540	280	(15,668)	(7,848)

18. Reconciliation of movements in equity shareholders' funds - Group

	2007	2006
	£'000	£'000
Loss for the year	(1,231)	(808)
Other recognised gains and losses relating to the year
New Share Capital subscribed	-	770
Equity Reserve	280	-
Net (deduction)/addition to shareholders funds	(951)	(38)
Opening equity shareholders funds	55	93
Closing equity shareholders funds	(896)	55

19. Other financial commitments - Group

At 30th November 2007, the Group had the following annual commitments under non-cancellable operating leases:

	2007	2007	2006	2006
	Land and Buildings	Other	Land and buildings	Other
	£'000	£'000	£'000	£'000
Operating leases which expire:
Within one year	-	12	-	2
Between two and five years	-	11	-	16
Over five years	50	-	50	-
	50	23	50	18

  20. Capital commitments - Group

The Group had no capital commitments at the end of either period.

21.  Reconciliation of net cash flow to movement in net debt

	2007	2006
	£'000	£'000
Increase/(Decrease) in cash in period	(288)	326
Cash inflow from increase in debt financing	(1,140)	(917)
Change in net debt resulting from cash flows	(1,428)	(591)
Other non cash movements	280	-
Net debt brought forward	(3,596)	(3,005)
Net debt carried forward (Note 22)	(4,744)	(3,596)

22. Analysis of changes in net debt

	At 30th November 2006	Cash flows	Non cash movement	At 30th November 2007
	£'000	£'000	£'000	£'000
Cash at bank and in hand	327	(288)	-	39
Overdrafts and loans	-	-	(2,400)	(2,400)
	327	(288)	(2,400)	(2,361)
Bank loans due after one year	(2,400)	-	2,400	-
Other loans due after one year	(1,523)	(1,140)	280	(2,383)
Net debt	(3,596)	(1,428)	280	(4,744)

  23.  Financial instruments

The Group's financial instruments comprise borrowings, cash, trade debtors and trade creditors that arise directly from its operations. The Group's policy has been, and continues to be, that no speculative trading in financial derivatives shall be undertaken.

As allowed by FRS 13, short-term debtors and creditors have been excluded from the following analyses.

Borrowing facilities

At the year end the Group has a long term loan facility of £2,400,000 with The Royal Bank of Scotland. The facility was used to fund the working capital requirements of the Group. The facility is personally guaranteed by Messrs Stross and Krell and a debenture has been provided over all the Company's assets in favour of The Royal Bank of Scotland as security. On 21st April 2005 the bank overdraft was converted to a loan of £2.4 million with interest payable of 1.5% per annum above The Royal Bank of Scotland base rate. Since the balance sheet date, the loan has been renegotiated and is now repayable in full on the 30th June 2009.

Fair value of financial assets and liabilities

The fair value of financial assets and liabilities has been calculated by discounting expected future cash flows at prevailing interest rates and is not materially different from their book value.

Hedging

The Group makes no use of forward currency contracts, other financial derivatives or hedging.

Interest rate risk

The Group finances its operations through a combination of equity and borrowings.

The current borrowings facility is guaranteed by two directors as further detailed in note 14.

The Group does not have an interest rate policy in isolation but regularly reviews the interest rates being charged on borrowings and assesses alternative sources of borrowings and other methods of finance.

Liquidity risk

The principal policy of the Group in managing liquidity risk is to align the anticipated sales revenue with the cash flows of its financial assets and liabilities.

24.  Post balance sheet events

On 7th December 2007 the Company announced the issue of 16 million new Ordinary 0.1p shares to Belgravia Homes Limited at a price of 1.75 pence per share. 

Since the year end the company has assigned the benefit of the contracts existing as at 6th February 2008 to Ei Leasing Limited, a fellow subsidiary for £893,000 of which £600,000 has been received at the date of signing the accounts.

Since the year end the Company's bankers have renewed the £2.4m bank loan facility, which is now not repayable prior to 30th June 2009.

Annual Report

The Annual Report and Accounts for the year ended 30th November 2007 will be despatched to shareholders on 30th May 2008 and will also be available on the Company's website (www.eagle-i-telematics.com).

AGM

The Annual General Meeting of the Company will be held at Apollo House, 41 Halton Station Road, Sutton Weaver, Runcorn, Cheshire, WA7 3DN on Wednesday, 25th June 2008 at 10.00am.

ENDFR SELFDUSASEDI