‘Disappointing’ results as Expansys loses £19m

‘Disappointing’ results as Expansys loses £19m

Expansys reported pre-tax losses of £18.8m after profits were hit by a £17.4m write down in the goodwill value of its Sim distribution business Data Select Network Solutions (DSNS). This left the group with an adjusted pre-tax profit of £1.5m in the year to April 2013.

The write down comes after the subsidiary’s revenues were hit by UK mobile operators’ migration to a revenue share model which began in October 2010, three months after Expansys bought DSNS for £38m.

Reporting its preliminary results to April 2013 the company said: ‘A charge of £17.4m has been taken for the impairment of goodwill attributed to Data Select Network Solutions Limited. 

‘At the time that DSNS was acquired in July 2010 the goodwill was valued at £41.9m. Due to the change that has taken place in the business model this has been reassessed and revalued at £24.5m.’

Total revenue from DSNS for the year to April 2013 was down by 16% to £20.8m from £24.7m in the previous year. The company said this was despite a significant increase in revenue from the US operation.

 CEO Anthony Catterson said: ‘These significant shifts in the channel now leave us in a position where our core UK business has a reduced volume, but a more sustainable business model. 

‘We will continue to develop our revenues by working with the MNOs and MVNOs to further improve customer quality and develop incremental volume opportunities throughout [the financial year to April 2014].’

He added: ‘We have had a further year of significant organisational change, helping us to reposition the group appropriately for the strategic opportunities we face. We predict further short-term challenges, but remain confident that there are strong medium to long-term growth opportunities in the international Sim distribution markets, partner ecommerce services and software solutions for MNOs and MVNOs.’

Chairman Bob Wigley added: ‘DSNS, our Sim distribution and solutions business, performed above our expectations during the year despite being under pressure in the UK due to the change in our terms with the MNOs, where there has now been an almost complete shift to a revenue share model. The shift in the model is now complete for all of the major networks.’

Wigley added that the group’s overall results were ‘disappointing’ in what was ‘a difficult year.’ Underlying profit before tax was down from £4.3m in the year to April 2012 to £1.5m in the year to April 2013, whilst turnover in the same period was down from £108.5m to £93.2m.


Author: Carol Millett

Written by Mobile Today
Mobile Today


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