Preliminary results for the year ended 31 January 2007

eg solutions plc (AIM: EGS), the IT software and services company, announces preliminary results for the year ended 31 January 2007.

Despite a strong first half, in which turnover increased 36.5% to £3.43m, the full-year performance was disappointing. Momentum slowed in the second half so that sales declined to £5.47m and gross margins eased from 73.3% in 2006 to 68.8% in 2007.

Following an operating profit of £738,000 in 2006, eg reported an operating loss of £402,000, due to a decline in revenues, investment in increased capacity and an accounting error which occurred in the last quarter. This represents a loss per share of 1.3p (2006: earnings of 4.4p). Although no final dividend is recommended, the Company paid an interim dividend of 0.6p. Despite the loss, year-end cash increased from £2.04m to £2.43m.

Highlights

• Continued expansion beyond core UK markets of Mortgages and Life & Pensions
  - Legal & General signed as second major client in General Insurance
  - Contract with Computer Patents Annuities demonstrates another successful application of eg’s Operations Management solutions outside financial services
• Sales infrastructures established in Nordic region and South Africa
• Continued investment in product development to offer a hosted solution, an image-enabled version of eg work manager® and new functionality for new markets
• Strategic review undertaken; cost base reduced by £0.9m.

Elizabeth Gooch, Chief Executive Officer, said:

“Following the disappointments of 2007 the current financial year will be one of operational transition and margin recovery. As a result of a strategic review undertaken at the start of the new financial year, our cost base has already been brought into line with our 2007/8 revenue ambitions.

“The actions we have taken will take several months to deliver visible results and we are very aware that we have much to do, both to improve performance and to rebuild the confidence of our shareholders.

“Despite the decline in sales in 2007, eg has increased its revenues by more than 20% every year since 2002 and this growth was delivered by a core management team that has been with the company for many years. This team is committed to driving the company back to higher levels of growth and profitability.”

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Enquiries

eg solutions plc
Elizabeth Gooch, Chief Executive Officer
+44 (0)1785 715772

College Hill
Carl Franklin/Ben Way
+44 (0) 20 7457 2020

Brewin Dolphin Securities (Nominated Adviser)
Richard Evans
+44 (0) 845 270 8602