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Eagle-i Holdings Plc

Interim results for the six months ended 31 May 2008

Eagle-i Holdings Plc ('Eagle-i' or the 'Company'), the provider of integrated vehicle positioning technologies, solutions and consulting services to the fleet and risk management markets, today announces its results for the six months ended 31 May 2008.

Highlights:

• Sales up 40% to £740k (2007: £527k)

• Gross margin improves to 72% (2007:50%)

• Losses for the period after tax reduced by 17.5% to £527k (2007: £640k)

• New technologies and web services underpin major contract win from Axa Assistance

Rodney Graves, Chairman of Eagle-i commented:

'The first six months of the financial year have seen good progress with sales and margins up significantly on the same period last year. The Company has continued to make considerable investment during the period in the development of product and services for the insurance, vehicle leasing and risk management markets and it is now pleasing to note the emerging realisation of this hard work with the recent award of a pan-European telematics contract from Axa Assistance.'

For further information, please contact:

Eagle-i Holdings PLC Rodney Graves or Ian Walmsley	Tel: 01928 795 400
WH Ireland Limited David Youngman	Tel: 0161 832 2174

Chairman's Statement:

The Company has made significant progress in implementing the three year strategic plan announced a year ago. 

A cornerstone of that strategy was to develop and release a new generation of technologies that would enable the Company to engage with key strategic partners in the automotive services, leasing, insurance and risk management sector in the UK and Europe. 

The launch of VCG7, Monitor3 and our associated web services solutions early in the year have advanced our objective to develop differentiated, compelling and sustainable propositions delivering added value services to our partners and their customers. The success of this strategy is evidenced in part by the significant improvement in sales and gross margins and in recent contract wins.

The Company recently announced a major contract award from AXA Assistance to provide a range of telematics-based geo-localisation services to its operations in 13 European countries. The award followed a 12 month European tendering process, and will see the Company delivering vehicle based and call centre web services solutions across AXA Assistance roadside, home and medical assistance operations. AXA Assistance operates through its own dedicated fleet and a network of approved contractors running over 27,000 vehicles across Europe. The Company's solutions have already been rolled-out on AXA Assistance's UK fleet, with Spain, Portugal, France and Italy expected to come on stream over the next few months.

The Company remains highly focused on delivering its partnership-based growth strategy, which aims to develop differentiated and sustainable propositions in collaboration with market leading organisations that can provide significant pan-European reach. To further underpin this strategy, the Company has made several key appointments at a European sales and programme management level to exploit the increasingly European nature of its opportunity base. The Company is currently engaged in advanced discussions with several leading players within the automotive services, leasing, insurance, fixed and mobile telecoms and risk management sectors and I would expect to be able to make further announcements in this respect over the coming months. 

The Board believes the Company is now well positioned for the next phase in its growth strategy.

 

Illustrative Pro-Forma Consolidated Balance Sheet:

The following un-audited pro-forma balance sheet has been prepared for illustrative purposes only. It has been prepared to illustrate the effect on the Group balance sheet of the conversion on 25 June 2008 of £2,504,190 of existing loans from certain directors and shareholders of the Company into new equity, as if the change had taken place on 31 May 2008.

	Group - as at 31 May 2008	Adj'ments	Pro-forma as at 31 May 2008	As at 31 May 2007	As at 30 November 2007
	£'000	£'000	£'000	£'000	£'000
Assets
Tangible assets	51	-	51	128	50
Intangible assets	3,677	-	3,677	2,887	3,370
	3,728	-	3,728	3,015	3,420
Current assets
Inventories	33	-	33	215	78
Trade receivables	1,323	-	1,323	893	1,233
Cash and cash equivalents	3	-	3	485	39
	1,359	-	1,359	1,593	1,350
Total Assets	5,087	-	5,087	4,608	4,770
Equity and liabilities
Equity attributable to equity holders of the parent
Called up share capital and share premium account	10,582	2,504	13,096	10,302	10,302
Merger reserve	17,523	-	17,523	17,523	17,523
Equity reserve	0	-	0	0	280
Retained earnings	(29,517)	-	(29,517)	(28,432)	(28,990)
Total equity	(1,412)	2,504	1,092	(607)	(885)
Non-current liabilities
Deferred income	58	-	58	0	0
Borrowings	5,738	(2,504)	3,235	4,659	2,383
	5,797	(2,504)	3,293	4,659	2,383
Current liabilities
Trade and other payables	702	-	702	556	872
Current borrowings	0	-	0	0	2,400
	702	-	702	556	3,272
Total liabilities	6,499	-	3,995	5,215	5,655
Total equity and liabilities	5,087	-	5,087	4,608	4,770

Note

No adjustment has been made for any event since 31 May 2008 in respect of the group, other than disclosed above.

Rodney Graves

Chairman

29 August 2008  Consolidated income statement for the six months ending 31 May 2008

		Six months to 31 May 2008	Six months to 31 May 2007	Year to 30 November 2007
	Notes	£'000	£'000	£'000
Revenue		740	527	1,293
Cost of sales		(204)	(259)	(712)
Gross profit		536	268	581
Operating costs		(942)	(777)	(1,473)
Operating loss		(406)	(509)	(892)
Finance costs		(205)	(131)	(361)
Loss before taxation		(611)	(640)	(1,253)
Income tax credit		84	0	55
Loss for the period		(527)	(640)	(1,198)
Basic and diluted loss per share	1	(0.26)p	(0.35)p	(0.65)p

There were no recognised gains or losses in the period other than the loss for the period and thus no statement of recognised gains or losses is presented.

Consolidated balance sheet as at 31 May 2008

		As at 31 May 2008	As at 31 May 2007	As at 30 November 2007
	Notes	£'000	£'000	£'000
Assets
Non-current assets
Plant and equipment		51	128	50
Other intangible assets		3,677	2,887	3,370
		3,728	3,015	3,420
Current assets
Inventories		33	215	78
Trade receivables		1,323	893	1,233
Cash and cash equivalents		3	485	39
		1,359	1,593	1,350
Total Assets		5,087	4,608	4,770
Equity and liabilities
Equity attributable to equity holders of the parent
Ordinary shares		2,778	2,762	2,762
Share premium		7,804	7,540	7,540
Merger reserve		17,523	17,523	17,523
Equity reserve		0	0	280
Retained earnings		(29,517)	(28,432)	(28,990)
Total equity	2&4	(1,412)	(607)	(885)
Non-current liabilities
Deferred income		58	0	0
Borrowings		5,739	4,659	2,383
		5,797	4,659	2,383
Current liabilities
Trade and other payables		702	556	872
Current borrowings		0	0	2,400
		702	556	3,272
Total liabilities		6,499	5,215	5,655
Total equity and liabilities		5,087	4,608	4,770

  Consolidated cash flow statement for the six months ending 31 May 2008

		Six months to 31 May 2008	Six months to 31 May 2007	Year to 30 November 2007
	Notes	£'000	£'000	£'000
Cash flows from operating activities
Loss before taxation		(611)	(640)	(1,253)
Adjustments for:
Depreciation and amortisation		91	83	167
Finance costs		205	131	361
Capitalised borrowings		46	-	34
(Increase) in trade and other receivables		(27)	(177)	(462)
Decrease in inventories		45	0	137
Increase in trade payables		122	252	373
Cash utilised in operations		(129)	(351)	(643)
Interest paid		(90)	(132)	(207)
Income taxes received		55	0	0
Net cash used in operating activities		(164)	(483)	(850)
Cash flow from investing activities
Purchase of plant and equipment		(12)	(96)	(22)
Development costs capitalised		(387)	-	(563)
Interest received		3	1	7
Net cash used in investing activities		(396)	(95)	(578)
Cash flows from financing activities
Proceeds of issue of share capital		280	0	0
Proceeds from long term borrowings		244	736	1,140
Net cash from financing activities		524	736	1,140
Net (decrease)/increase in cash and cash equivalents		(36)	158	(288)
Cash and cash equivalents at beginning of period		39	327	327
Cash and cash equivalents at end of period		3	485	39

  Accounting policies

This interim report, for a six month period, does not comprise full accounts within the meaning of the Companies Act 1985. The interim financial information is not audited. In respect of the information for 30 November 2007 the information is from the audited accounts for that year as adjusted for the unaudited transition to IFRS.

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been applied consistently to all the periods presented and in preparing an opening IFRS balance sheet at 1 December 2006 for the purpose of transition to IFRS.

1) Basis of preparation

These financial statements have been prepared for the first time in accordance with IFRS as adopted by the European Union, and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. The disclosures required by IFRS 1 concerning the transition from UK GAAP to IFRS are given in note 3.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts in the financial statements. The areas involving a higher degree of judgement or complexity, or areas where assumptions or estimates are significant to the financial statements are given in accounting policy 15.

A separate income statement for the parent company has not been presented as permitted by section 230(4) of the Companies Act 1985.

As is permitted for companies whose shares are traded on AIM, the directors have not adopted the requirements of IAS 34 'Interim Financial Reporting' in preparing the interim financial statements. Accordingly the interim financial statements are not in full compliance with IFRS.

2) Consolidation of subsidiaries

Subsidiaries are all entities over which the group has the power to govern the financial and operating policies so as to obtain benefit from their activities. Subsidiaries are fully consolidated from the date on which control is transferred until the date on which the control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the group. Inter-company transactions, balances and unrealised gains and losses on transactions between group companies are eliminated.

3) Goodwill

Goodwill comprises the excess of the fair value of the consideration, plus any associated costs, for investments in subsidiary undertakings over the fair value of the net identifiable assets acquired. Adjustments are made to fair values to bring the accounting policies of acquired businesses into alignment with those of the group. The costs of integrating and reorganising acquired businesses are charged to the post acquisition income statement.

In accordance with IFRS1, the group has applied the exemption from retrospectively recalculating goodwill which arose on acquisitions prior to 1 December 2006. This goodwill is included at its deemed cost, being the amount recorded under UK GAAP as at 1 December 2006.

Goodwill is carried at cost less accumulated impairment losses. Goodwill is tested for impairment annually. Gains or losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

4) Intangible assets

Intangible assets include intellectual property rights and capitalised development costs.

Intellectual property rights are amortised using the straight line method over a ten year term.

Research and Development costs are accounted for in accordance with IAS 38, Intangibles. Expenditures on research or the research phase of an internal project are recognised as an expense when incurred. The intangible assets arising from the development phase of an internal project are recognised if the conditions as outlined in IAS 38 are complied with. This includes essentially that the technical feasibility of completing the intangible asset for it to be available for sale or use can be demonstrated and that the intangible asset will generate probable future economic benefits. The intangible assets arising from development are amortised over the useful economic life of the asset.

In addition the borrowings costs in respect of the development costs have been capitalised together with the development costs in accordance with IAS 23.

At each balance sheet date the Group assesses whether there is any indication of impairment in accordance with IAS 36, Impairment of Assets. If any such indication exists the recoverable amount is calculated.

5) Property, plant and equipment

All property, plant and equipment is stated at cost less accumulated depreciation.

Depreciation of property, plant and equipment is provided to write off the cost, less residual value, on a straight line basis over the estimated useful life.

Plant and machinery Office furniture and computer equipment     Fixtures and Fittings

5 years 3 years 3 - 4 years

Residual values, remaining useful lives and depreciation methods are reviewed annually and adjusted if appropriate.

Gains or losses on disposal are included in the income statement.

6)  Impairment of assets

The group assesses at each balance sheet date whether there is any indication that any of its assets have been impaired. If such indication exists, the asset's recoverable amount is estimated and compared to its carrying value.

For goodwill the recoverable amount is estimated at each balance sheet date and whenever there is an indication of impairment.

An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Impairment losses are recognised in the income statement.

7) Financial Instruments

The group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

Financial instruments are recognised on the balance sheet at fair value when the group becomes a party to the contractual provisions of the instrument.

7a) Trade receivables

Trade receivables are stated at their amortised cost as reduced by appropriate allowances for estimated irrecoverable amounts. They are recognised on the trade date of the related transactions.

7b) Trade payables

Trade payables are stated at their amortised cost. They are recognised on the trade date of the related transactions.

7c) Interest-bearing borrowings

Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs.

Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest rate basis.

8)  Share based payments

The group has applied the exemption available under IFRS 1 and elects to apply IFRS 2 only to awards of equity instruments made after 7 November 2002 that had not vested by 1 December 2007.

Options are measured at fair value at grant date using the Black-Scholes model. The fair value is expensed on a straight line basis over the vesting period, based on an estimate of the number of options that will eventually vest.

Cash settled share based payment transactions result in the recognition of a liability at its current fair value.

9) Revenue 

Revenue represents the fair value of consideration received or receivable from customers for goods and services provided by the group, net of discounts and VAT. Where the time value of money is material, revenue is recognised as the present value of the cash inflows expected to be received from the customer in settlement.

Revenue from the sale of products with no significant service obligation is recognised 100% on delivery. Revenue from the sale of products with a significant service obligation is recognised using the percentage of completion method.

10) Inventories

Inventories are stated at cost or net realisable value, whichever is lower. Cost consists of all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

The cost of inventories is determined using the first-in first-out (FIFO) method. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated marketing, distribution and selling expenses.

11) Leases

Payments made under operating leases are recognised in the income statement on a straight line basis over the term of the lease. Benefits received as an incentive to sign a lease, whatever form they may take, are credited to the income statement on a straight line basis over the lease term.

12) Deferred taxation

Deferred tax is provided in full using the balance sheet liability method. Deferred tax is the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities shown on the balance sheet. Deferred tax assets and liabilities are not recognised if they arise on the following situations: the initial recognition of goodwill; or the initial recognition of assets and liabilities that affect neither accounting nor taxable profit. The amount of deferred tax provided is based on the expected manner of recovery or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date.

The group does not recognise deferred tax liabilities, or deferred tax assets, on temporary differences associated with investments in subsidiaries, joint ventures and associates as it is not considered probable that the temporary differences will reverse in the foreseeable future. It is the group's policy to reinvest undistributed profits arising in group companies.

The group only recognises a deferred tax asset to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. The carrying amount of the deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.

13) Taxation

Research and development tax credits are recognised when, in the director's opinion, there is a strong likelihood of the company receiving them consistent with the receipt of previous tax credits.

14) Provisions

Provisions are recognised in the balance sheet when there is a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to discharge the obligation.

15) Accounting estimates and judgements

There are no estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of the assets and liabilities within the next financial year.

  Notes to the accounts

1. Loss per share

	Six months to 31 May 2008	Six months to 31 May 2007	Year to  30 November 2007
	£'000	£'000	£'000
Retained loss for the period	(527)	(640)	(1,198)
Weighted average number of shares	200,842	185,367	185,367
	(0.26)p	(0.35)p	(0.65)p

On 25 June 2008 a debt for equity transaction took place, whereby £2,504,190 of existing loans from certain directors and shareholders of the Company were converted into 125,209,500 ordinary shares. 

2. Consolidated statement of changes in equity

	Share Capital	Share Premium	Merger Reserve	Equity Reserve	Retained Earnings	Total Equity
	£'000	£'000	£'000	£'000	£'000	£'000
At 1 December 2006	2,762	7,540	17,523	-	(27,792)	33
Result for Period	-	-	-	-	(640)	(640)
At 31 May 2007	2,762	7,540	17,523	-	(28,432)	(607)
Result for Period	-	-	-	-	(558)	(558)
Reserve for proposed share issue	-	-	-	280	-	280
At 30 November 2007	2,762	7,540	17,523	280	(28,990)	(885)
Result for period	-	-	-	-	(527)	(527)
Share issue	16	264	-	(280)	-	-
At 31 May 2008	2,778	7,804	17,523	-	(29,517)	(1,412)

3. Copies of the interim results

The interim results will also be available on our web-site www.eagle-i-telematics.com

4. Transition to IFRS

This is the first period that the group has presented its consolidated financial statements under IFRS.

The accounting policies set out in these financial statements have been applied in preparing the financial statements for the period ended 31 May 2008, the period ended 31 May 2007, the year ended 30 November 2007 and in the preparation of the opening IFRS balance sheet at 1 December 2006 (transition date).

In preparing the opening IFRS balance sheet, the group has adjusted amounts previously reported in financial statements prepared in accordance UK GAAP. An explanation of how the transition from UK GAAP to IFRS has affected the group's financial position, financial performance and cash flows is set out in the following tables and notes.

  Reconciliation of income

	Six months to 31 May 2007
	2007 under UK GAAP	IAS 19 Employee benefits	IAS 23 Borrowing costs	2007 under IFRS
	£'000	£'000	£'000	£'000
Revenue	527	-	-	527
Cost of sales	(259)	-	-	(259)
Gross profit	268	-	-	268
Operating costs	(777)	-	-	(777)
Operating loss	(509)	-	-	(509)
Finance costs	(131)	-	-	(131)
Loss before taxation	(640)	-	-	(640)
Income tax credit	-	-	-	-
Loss for the period	(640)	-	-	(640)

	Year to 30 November 2007
	2007 under UK GAAP	IAS 19 Employee benefits	IAS 23 Borrowing costs	2007 under IFRS
	£'000	£'000	£'000	£'000
Revenue	1,293	-	-	1,293
Cost of sales	(712)	-	-	(712)
Gross profit	581	-	-	581
Operating costs	(1,472)	(1)	-	(1,473)
Operating loss	(891)	(1)	-	(892)
Finance costs	(395)	-	34	(361)
Loss before taxation	(1,286)	(1)	34	(1,253)
Income tax credit	55	-	-	55
Loss for the period	(1,231)	(1)	34	(1,198)

  Reconciliation of equity

	1 December 2006
	2006 under UK GAAP	IAS 19 Employee benefits	IAS 23 Borrowing costs	2006 under IFRS
	£'000	£'000	£'000	£'000
Assets
Non-current assets
Goodwill	0	-	-	0
Other intangible assets	2,967	-	-	2,967
Plant and equipment	35	-	-	35
	3,002	-	-	3,002
Current assets
Inventories	215	-	-	215
Trade receivables	716	-	-	716
Cash and cash equivalents	327	-	-	327
	1,258	-	-	1,258
Total Assets	4,260	-	-	4,260
Equity and liabilities
Equity attributable to equity holders of the parent
Ordinary shares	2,762	-	-	2,762
Share premium	7,540	-	-	7,540
Merger reserve	17,523	-	-	17,523
Equity reserve	0	-	-	-
Retained earnings	(27,770)	(22)	-	(27,792)
Total equity	55	(22)	-	33
Non-current liabilities
Borrowings	3,923	-	-	3,923
Current liabilities
Trade and other payables	282	22	-	304
Total liabilities	4,205	22	-	4,227
Total equity and liabilities	4,260	-	-	4,260

	31 May 2007
		2007 under UK GAAP	IAS 19 Employee benefits	IAS 23 Borrowing costs	2007 under IFRS
		£'000	£'000	£'000	£'000
Assets
Non-current assets
Goodwill		0	-	-	0
Other intangible assets		2,887	-	-	2,887
Plant and equipment		128	-	-	128
		3,015	-	-	3,015
Current assets
Inventories		215	-	-	215
Trade receivables		893	-	-	893
Cash and cash equivalents		485	-	-	485
		1,593	-	-	1,593
Total Assets		4,608	-	-	4,608
Equity and liabilities
Equity attributable to equity holders of the parent
Ordinary shares		2,762	-	-	2,762
Share premium		7,540	-	-	7,540
Merger reserve		17,523	-	-	17,523
Equity reserve		0	-	-	-
Retained earnings		(28,410)	(22)	-	(28,432)
Total equity		(585)	(22)	-	(607)
Non-current liabilities
Borrowings		4,659	-	-	4,659
Current liabilities
Trade and other payables		534	22	-	556
Total liabilities		5,193	22	-	5,215
Total equity and liabilities		4,608	-	-	4,608

	30 November 2007
	2007 under UK GAAP	IAS 19 Employee benefits	IAS 23 Borrowing costs	2007 under IFRS
	£'000	£'000	£'000	£'000
Assets
Non-current assets
Goodwill	0	-	-	0
Other intangible assets	3,336	-	34	3,370
Plant and equipment	50	-	-	50
	3,386	-	34	3,420
Current assets
Inventories	78	-	-	78
Trade receivables	1,233	-	-	1,233
Cash and cash equivalents	39	-	-	39
	1,350	-	-	1,350
Total Assets	4,736	-	34	4,770
Equity and liabilities
Equity attributable to equity holders of the parent
Ordinary shares	2,762	-	-	2,762
Share premium	7,540	-	-	7,540
Merger reserve	17,523	-	-	17,523
Equity reserve	280	-	-	-
Retained earnings	(29,001)	(23)	34	(28,990)
Total equity	(896)	(23)	34	(885)
Non-current liabilities
Borrowings	2,383	-	-	2,383
Current liabilities
Trade and other payables	849	23	-	872
Current borrowings	2,400	-	-	2,400
	3,249	23	-	3,272
Total liabilities	5,632	23	-	5,655
Total equity and liabilities	4,736	-	34	4,770

  Notes to the reconciliation of income and equity

IAS 19 Employee benefits

IAS 19 requires the recording of a holiday pay accrual. This has been included in the opening IFRS balance sheet at 1 December 2006. Although it is expected that this adjustment will be relatively stable in magnitude from one year to another, when comparing the year end and interim periods there could be a balance sheet movement and income statement impact. The balance in the relevant income statement reflects the movement on this accrual.

IAS 23 Borrowing costs

IAS 23 was amended in March 2007 requiring all borrowing costs on qualifying assets to be capitalised. Although this requirement is only mandatory for periods commencing after 1 January 2009, the original IAS 23 did allow this treatment. The group has decided that to remain consistent when this requirement comes into force, the option allowing capitalisation of borrowing costs on qualifying assets be adopted from the date of IFRS transition i.e. 1 December 2006. The inherent interest rate used in capitalising the borrowing costs is 12%.

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