RNS Number:4967E
Retec Digital PLC
26 September 2007
26 September 2007
Retec Digital PLC ("Retec" or "the Company")
Preliminary results for the year ended
30 June 2007
Retec Digital PLC, the guided selling specialist, today issues its preliminary
results for the 12 months to 30 June 2007. The year has been one of significant
development for the Company following the offer for subscription which raised #1
million, the acquisition of Retec Interface Limited ("Retec Interface") in
September 2006, and the acquisition of Media 4 (UK) Limited in December 2006.
Retec provides innovative category solutions which improve both the shopping
experience and sales growth for many of the UK's leading retailers. During the
year, the Group has made significant progress in securing new contracts and
developing its business.
Highlights:
*Successful acquisition of Retec Interface, which is now the principal
operating subsidiary of the Group, and readmission to trading on AIM on 14
September 2006;
*Increase in turnover of 242% for Retec Interface for the 12 months to 30
June 2007;
*Improved gross margins up from 8% to 26% in Retec Interface;
*Operating cash inflow of #0.7 million;
*In partnership with IBM UK Limited, an order for 1,200 Alliance Boots
Advantage Card kiosks progressing through the business;
*Delivery of Entertainment Xtra product installed in 171 Sainsbury's
stores and 39 Tesco stores around the UK;
*Delivery of 450 units to Argos and Woolworths stores across the UK, and
further substantial order in hand from Argos;
*Acquisition of Media 4 (UK) Limited on 1 December 2006, strengthening
the Group's service capabilities to its customers whilst reducing costs.
Commenting on the results for the year, Sir Brian Ivory, Chairman said:
"We enter 2007/08 with a very solid platform on which to build, both organically
and by selective acquisition. We believe our unique Guided Selling solutions can
deliver significant value for our shareholders as retailers discover the merits
of our products and services.
Retec has established secure relationships with blue chip retail companies
including Sainsbury's, Tesco and in partnership with IBM UK Limited, Boots and
Argos amongst others. We aim to further expand on these opportunities in 2008/
09.
We look forward to reporting further progress in the development of Retec during
the current year and the Board remains confident of the current trading
performance and the future prospects of the Company."
For further information please contact:
Retec Digital PLC 01462 482944
John Cole, Chief Executive
Charles McKay, Finance Director
Hogarth Partnership Ltd 020 7357 9477
Fiona Noblet / Ian Payne
Charles Stanley Securities (Nominated Adviser)
Mark Taylor 020 7149 6000
Notes for Editors:
Retec Digital PLC provides retailers with Guided Selling packages designed to
increase core sales, provide additional revenue over and above this, improve
cost control and customer satisfaction.
It already has systems installed in major retail chains including Sainsbury's,
WH Smith, Tesco, Boots and Woolworths.
Flexible and versatile, Retec's solution can incorporate a mixture of advanced
products within its range. These include:
Entertainment Xtra - a communications channel incorporating the range of the
company's system aimed at promoting home entertainment products such as music,
films, games and books. Other customers include Sainsbury's, Tesco and WH Smith.
Product Finder - this is used to locate any product within a store and can be
used in conjunction with other applications within the company's portfolio.
Guided Selling - a touch screen providing audio/visual information/instruction
on products at the point of sale. This has a variety of applications including
for example, wine and electrical goods.
Self Service - a generic term for the use of a terminal for a transaction by a
customer. Retec's product suite has the ability to top up a mobile phone, sell
mobile phone content (games, logos etc), purchase of gift cards and interaction
with loyalty schemes. Customers of this product type are Boots and Woolworths.
Chairman's Statement
Last year was a period of significant progress for the business. The primary
event of the year was the takeover of Retec Interface Limited ("Retec
Interface") completed on 11 September 2006 and the associated fund raising of
#1,023,000 net of costs. We subsequently changed the name of the Company to
Retec Digital PLC, with the principal operating business being called Retec
Interface.
A further acquisition was made in December 2006 with the inclusion of a field
engineering capability via Media 4 (UK) Limited ("Media 4").
Results for the year ended 30 June 2007
The results for the year reflect the consolidated numbers of the Group
incorporating Retec Interface and Media 4 since their acquisitions in September
and December respectively. Prior to the acquisition of Retec Interface, the
Group operated as an investment holding company and therefore the results for
the prior year period do not include the operating results of Retec Interface or
Media 4.
Year to 30 June
2007 2006
#'000 #'000
Turnover 4,069 44
Gross profit 991 44
EBITDA 124 (129)
Operating loss before amortisation of intangibles and
share based payments (424) (129)
Loss before tax (843) (202)
Earnings per share
- Basic and fully diluted (0.87)p (0.43)p
On a like for like basis the turnover of Retec Interface has grown from
#1,878,000 in 2006 to #4,543,000 in the year to 30 June 2007. This is an
increase of 242% year on year. Gross margins have equally improved increasing
from 8% to 26% and losses before taxation have reduced from #1,088,000 in the
year to 30 June 2006 to #425,000 for the year to 30 June 2007, a reduction of
60%.
Cash
At a group level we raised #1,018,000 in September 2006. Cash balances at 30
June 2007 stood at #1,044,000. This indicates a broadly breakeven trading
pattern since the acquisition last year. At December 2006 I reported to you that
the rate of "burn" is slowing in line with expectations and this has remained
true during the last 6 months.
The Company is not in a position to pay dividends at this time although it
remains the aspiration of the Directors to make dividend payments in the future.
Operational review
Retec Digital PLC provides retailers with Guided Selling solutions designed to
increase core sales, provide additional revenue over and above this, improve
cost control and customer satisfaction. Retec Interface already has a leading
position within the UK retail market and we intend to capitalise on this as
appropriate opportunities arise to enhance shareholder value.
Retec has won some important work with many of the UK's leading retailers to
deliver innovative category solutions that fall under the umbrella of "Guided
Selling". These include Sainsbury's and Tesco, and in partnership with IBM UK
Limited, Alliance Boots and Argos amongst others.
Retec Interface is providing its Entertainment Xtra product to both Sainsbury's
and Tesco. This is a solution deployed in the Home Entertainment departments of
these retailers, providing customers with the opportunity to preview music,
films and games ahead of the purchase decision.
At the outset of the contract with Sainsbury's, it was intended to deploy this
solution to 100 stores and to seek to gain revenues from advertisers from the
Entertainment suppliers to Sainsbury's. The success of this product is reflected
in an increased roll out, which now stands at 171 stores. Retec works alongside
Sainsbury's to sell space directly to entertainment suppliers. More recently, a
third party has been introduced to sell advertising space to other categories
within the store that supports the entertainment branding, such as drinks,
snacks, confectionery and loyalty card providers. This is an encouraging
development in the utilisation of this channel.
The Group has made installations in 39 of the larger stores of Tesco to date.
Tesco buys the equipment and related services directly from Retec Interface. In
partnership with IBM UK Limited, Retec has gained some valuable work from
Alliance Boots, Argos and Woolworths during the year. The work for Alliance
Boots is to replace 1,200 Advantage Card kiosks in 500 stores.
Argos and Woolworths are more bespoke in nature and provide different
functionality to the end user. The Group supplies Woolworths with an extended
range kiosk that allows customers to perform a number of functions, including
browsing the product range, as well as ordering and paying for the goods at the
kiosk. Argos is similar in that it combines the browsing, ordering and payment
function in one kiosk, negating the need to queue whilst in an Argos store.
Since the year end the Argos order has been substantially extended.
In addition, we are constantly looking at ways to enhance our revenue stream and
are exploring a number of different business sectors where our products may be
utilised. The business continues to work with other blue chip retail clients and
is engaged in a number of trials and pilots that we hope will lead to roll-outs
with new customers as well as extensions with those already working with Retec
Interface.
Outlook
We enter 2007/08 with a very solid platform on which to build, both organically
and by selective acquisition. We believe our unique Guided Selling solutions can
deliver significant value for our shareholders as retailers discover the merits
of our products and services.
Retec has established secure relationships with blue chip retail companies
including Sainsbury's, Tesco and in partnership with IBM UK Limited, Boots and
Argos amongst others. We aim to expand on these in 2008/09.
We look forward to reporting further progress in the development of Retec during
the current year and the Board remains confident of the current trading
performance and future prospects of the Company.
Sir Brian Ivory
Chairman
26 September 2007
RETEC DIGITAL PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2007
Unaudited Audited
2007 2006
Note #'000 #'000
CONTINUING
TURNOVER 4,069 44
Cost of sales (2,820) -
Amortisation of intangibles (258) -
-------- --------
(3,078) 44
GROSS PROFIT 991 44
Administrative expenses (1,673) (173)
Amortisation of intangibles (148) -
Share based payments (23) (130)
-------- --------
OPERATING LOSS 2 (853) (259)
Net Interest receivable 10 57
-------- --------
LOSS ON ORDINARY ACTIVITES
BEFORE TAXATION (843) (202)
TAXATION (153) -
-------- ---------
DEFICIT FOR THE YEAR (996) (202)
====== ======
BASIC LOSS PER SHARE 3 (0.87p) (0.43p)
====== ======
The Group has no recognised gains or losses other than the loss for the year.
RETEC DIGITAL PLC
CONSOLIDATED BALANCE SHEET
AT 30 JUNE 2007
Unaudited Audited
2007 2006
#'000 #'000
ASSETS
Non-current assets
Intangible assets 3,515 -
Investments - 1,659
Plant and equipment 1,963 -
-------- --------
5,478 1,659
-------- --------
Current assets
Inventories 130 -
Trade and other receivables 959 614
Current tax assets 50 -
Cash and cash equivalents 1,044 105
-------- --------
2,183 719
-------- --------
7,661 2,378
====== ======
EQUITY
Capital and reserves attributable to
the Company's Equity shareholders
Called up share capital 1,801 1,500
Share premium account 3,230 1,843
Retained earnings (1,907) (1,082)
--------- ---------
Total equity 3,124 2,261
--------- ---------
LIABILITIES
Non-current liabilities
Borrowings 1,174 -
Deferred tax 175 -
--------- ---------
1,349 -
Current liabilities
Financial liabilities 150 -
Trade and other payables 3,038 117
---------- ---------
3,188 117
---------- ---------
Total liabilities 4,537 117
---------- ---------
Total equity and 7,661 2,378
liabilities
====== ======
RETEC DIGITAL PLC
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED 30 JUNE 2007
Share Capital Share Premium Retained Earnings Total
#'000 #'000 #'000 #'000
Balance at
1 July 2005 1,320 1,365 (1,083) 1,602
Loss for
the - - (73) (73)
period
Share 180 552 - 732
issue
----------- ----------- ------------ ------------
Balance at
30 June 2006
as previously 1,500 1,917 (1,156) 2,261
stated
Prior year
adjustment
- share - (74) 74 -
options
----------- -------------- -------------- -------------
At 1 July
2006 1,500 1,843 (1,082) 2,261
as restated
Deficit
for the period - - (996) (996)
Share
based - (148) 171 23
payments
Share 301 2,002 - 2,303
issue
Issue - (467) - (467)
costs
----------- -------------- -------------- --------------
Balance at
30 1,801 3,230 (1,907) 3,124
June 2007
====== ======= ======= =======
RETEC DIGITAL PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE 2007
Unaudited Audited
2007 2006
#'000 #'000
Cash generated from operations
Loss for the period (996) (202)
Adjustments for:
Tax charge 153 -
Net interest receivable (10) (57)
Depreciation and amortisation 954 -
Share option charge 23 130
Increase in stock (32) -
Decrease/(increase) in trade and other
receivables 964 (30)
(Decrease)/increase in trade and other
payables (357) 22
-------------- --------------
Cash inflow/(outflow) from operations 699 (137)
Tax refunded 9 -
-------------- --------------
Net cash inflow/(outflow) from operating
activities 708 (137)
-------------- ---------------
Cash flows from investing activities
Acquisition of subsidiary (206) -
Net overdrafts acquired with
subsidiaries (82) -
Purchases of property, plant and - -
equipment
Sale of property, plant and equipment (48) -
Purchases of investments - (217)
Purchases of intangible assets (62) -
Interest received 15 55
Interest paid (5) -
-------------- --------------
Net cash used in investing activities (388) (162)
-------------- --------------
Cash flows from financing activities
Issue of shares (net of issue costs) 1,018 723
Commercial loans redeemed/(issued) - (486)
Finance lease repayments (399) -
--------------- --------------
Net cash used in financing activities 619 237
--------------- --------------
Net increase/ (decrease) in cash and
cash equivalents 939 (62)
Cash and cash equivalents at beginning
of year 105 167
----------------- ---------------
Cash and cash equivalents at end of year 1,044 105
====== =====
RETEC DIGITAL PLC
ABBREVIATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2007
1. ACCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in accordance with IFRS 1,
First-time Adoption of IFRS. These financial statements have been prepared in
accordance with those IFRS standards and IFRIC interpretations issued and
effective as at the time of preparing these statements. The policies set out
below have been consistently applied to all the years presented.
The Group's transition date is 1 July 2005 and it prepared its opening IFRS
balance sheet at that date. The Group's IFRS adoption date is 1 July 2006. The
financial statements have been prepared under the historical cost convention.
Inventories
Inventories are stated at the lower of cost incurred in bringing each product to
its present location and condition and net realisable value.
Net realisable value is based on estimated selling price less any further costs
expected to be incurred to completion and disposal.
Accounting convention
The financial statements have been prepared under the historical cost accounting
rules, modified to include the revaluation of certain fixed assets, and in
accordance with applicable Accounting Standards.
Consolidated accounts
The consolidated accounts of the Group incorporate the assets and liabilities of
the Company and its subsidiary undertakings (all of whose financial statements
have been made up to 30 June 2007) and the results for the period when they were
part of the Group. Results of the subsidiary companies acquired during the year
are included from the date of acquisition. Results of the subsidiary companies
disposed of during the year are excluded from the date of disposal.
Revenue recognition
Revenue comprises the fair value of the sale of goods and services, net of
value-added tax, rebates and discounts.
Segmental reporting
Segmental information is not presented within these financial statements as the
Directors consider the Group to be operating in one sector and in the United
Kingdom only.
Deferred taxation
Deferred tax is provided in respect of all timing differences that have
originated but not reversed at the balance sheet date where an event has
occurred that results in an obligation to pay more or less tax in the future,
except that deferred tax assets are recognised only to the extent that it is
more likely than not that there will be suitable taxable profits from which the
future reversal of the relevant timing differences can be deleted.
Deferred tax is measured at the tax rates which apply at the balance sheet date.
Depreciation
Depreciation is provided on all tangible fixed assets at rates calculated to
write off the cost or valuation, less estimated residual value, of each asset
evenly over its expected useful life, as follows:
Leasehold improvements - over the lease term
Furniture and office equipment - over 2 to 3 years
Kiosks - over 3 years
Computer equipment - over 2 to 3 years
Motor vehicles - over 3 years
Research and development
Research expenditure is recognised as an expense as incurred. Costs incurred on
development projects (relating to the design and testing of new or improved
products) are recognised as intangible assets when it is probable that the
project will be a success, considering its commercial and technological
feasibility, and costs can be measured reliably. Other development expenditures
are recognised as an expense as incurred. Development costs previously
recognised as an expense are not recognised as an asset in a subsequent period.
Development costs that have a finite useful life and that have been capitalised
are amortised from the commencement of the commercial production of the product
on a straight line basis over a period of 36 months.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks
and short-term deposits with an original maturity of three months or less.
Operating leases
Rentals applicable to operating leases where substantially all of the benefits
and risks of ownership remain with the lessor are charged to profit and loss
account as incurred.
Current tax
Current tax assets and liabilities are measured at the amount expected to be
recovered from, or paid to, the taxation authorities, based on tax rates and
laws that are enacted or substantively enacted by the balance sheet date.
Employee share options
The Company awards senior employees bonuses in the form of share options, from
time to time, on a discretionary basis. The options are normally subject to
vesting conditions and, where it is considered likely that the conditions will
be met, their fair value is recognised as an employee benefits expense with a
corresponding increase in other reserve equity over the vesting period. The
proceeds received net of any directly attributable transaction costs are
credited to share capital (nominal value) and share premium when the options are
exercised.
Leasing and hire purchase commitments
Assets held under finance leases and hire purchase contracts are capitalised in
the balance sheet and are depreciated over their useful lives.
The corresponding lease or hire purchase obligation is capitalised in the
balance sheet as a liability.
The interest element of the rental obligations is charged to the profit and loss
account over the period of the lease and represents a constant proportion of the
balance of capital repayments outstanding.
Rentals paid under operating leases are charged to the income statement on a
straight line basis over the lease term.
Business combinations
The acquisition of subsidiaries is accounted for using the purchase method. The
cost of the acquisition is measured at the aggregate of the fair values, at the
date of exchange, of assets given, liabilities incurred or assumed, and equity
instruments issued by the Group in exchange for control of the acquiree, plus
any costs directly attributable to the business combination, such as
professional fees paid to accountants, legal advisers, valuers and other
consultants to effect the combination. General administrative costs and other
costs that cannot be directly attributed to the particular combination being
accounted for are not included in the cost of the combination and are recognised
as an expense when incurred.
The acquiree's identifiable assets, liabilities and contingent liabilities that
meet the conditions for recognition under IFRS 3 'Business Combinations' are
recognised at their fair values at the acquisition dates.
Goodwill arising on acquisition is recognised as an asset and initially measured
at cost, being the excess of the costs of the business combination over the
Group's interest in the net fair value of the identifiable assets, liabilities
and contingent liabilities. Any Goodwill arising is reviewed annually for
impairment and if such an impairment has occurred then this is recognised
immediately in the year that it occurs.
Intangible assets
Intangible assets are carried at cost less accumulated amortisation and
accumulated impairment losses. An intangible asset acquired as part of a
business combination is recognised outside goodwill if the asset is separable or
arises from contractual or other legal rights and its fair value can be reliably
measured.
The significant intangible assets acquired as part of the acquisition of Retec
Interface and Media 4 are the brand of "Retec", the customer contracts and
relationships, and technology related assets for software and databases. These
assets are amortised over their useful economic lives. Amortisation is
recognised in cost of sales and overheads in the income statement.
The carrying value of intangible assets is reviewed for impairment whenever
events or changes in circumstance indicate that the carrying value may not be
recoverable.
2. OPERATING LOSS
2007 2006
#'000 #'000
This is stated after charging/(crediting):
Depreciation of tangible fixed assets 548 -
Amortisation of intangibles arising from business combinations 406 -
Operating lease rentals 72 -
Employee share option charge 28 -
Auditors' remuneration
- audit fees 16 5
- auditing of accounts of associates of the company pursuant to
to legislation 5 5
3. EARNINGS PER SHARE
Basic earnings per share is calculated by reference to the loss on ordinary
activities after taxation of #996,000 (2006: #202,000).
IAS 33 requires presentation of diluted EPS when a company could be called upon
to issue shares that would decrease net profit or increase net loss per share.
For a loss making company with outstanding share options, net loss per share
would only be increased by the exercise of out-of-the-money options. Since it is
inappropriate to assume that option holders would act irrationally, no
adjustment is made to diluted EPS for out-of-the-money share options.
-----------------------------------------------
2007 2006
Number Number
Basic weighted average number of shares 114,824,974 47,054,984
Basic earnings per share (0.87p) (0.43p)
Diluted earnings per share (0.87p) (0.43p)
4. BUSINESS COMBINATIONS
a) In September 2006, the Company increased its holding in the Ordinary share
capital of Retec Interface Limited to 100%, for a total consideration of
#2,379,000, satisfied by the issue of 17,997,250 Ordinary shares, the
conversion of loan stock in issue, totaling #1,500,000, and costs of
#159,000.
Analysis of the acquisition of Retec Interface Limited:
Net assets at date of acquisition
Book Fair value Fair value to
value adjustments Group
#'000 #'000 #'000
---------- ---------- ----------
Tangible assets 1,126 - 1,126
Receivables 1,333 - 1,333
Inventories 98 98
Cash at bank 4 - 4
Liabilities (3,828) - (3,828)
---------- ---------- ----------
Net assets on
acquisition (1,267) - (1,267)
======= =======
Goodwill arising
on acquisition 3,646
----------
2,379
========
Discharged by:
Conversion of loan 1,500
Issue of shares 720
Deal costs 159
----------
2,379
=======
a) In the year Retec Interface Limited contributed a loss of #516,000 to the
Group after amortisation of intangible assets.
Included in the #3,646,000 of goodwill recognised above are certain intangible
assets that cannot be individually separated and reliably measured at the date
of acquisition as they relate to the future trading performance of the business
which is dependent on a large number of factors.
#1,006,000 of intangible assets were separated from goodwill as part of this
business combination and relate to brands, customer contracts and relationships,
and software and database assets. The fair value of these intangible were
calculated by an external consultant by calculating the net present value of
future cash flows using a discount rate of 20.32%.
b) On 1 December 2006, the Company purchase 100% of the issued Ordinary shares
capital of Media 4 (UK) Limited for a total consideration of #206,000
satisfied by cash.
Analysis of the acquisition of Media 4 (UK) Limited:
Net assets at the date of acquisition
Book Fair value Fair value to
value adjustments Group
#'000 #'000 #'000
Tangible assets 51 - 51
Receivables 28 - 28
Cash at bank 3 - 3
Liabilities (89) - (89)
-------- ---------- ---------
Net assets on acquisition (7) - (7)
======= =======
Goodwill arising on
acquisition 213
---------
206
=======
Discharged by:
Cash 193
Costs associated with
the acquisition 13
---------
206
=======
b) In the year Media 4 (UK) Limited contributed a profit of #50,000 to the Group
after amortisation of intangible assets.
Included in the #213,000 of goodwill recognised above are certain intangible
assets that cannot be individually separated and reliably measured at the date
of acquisition as they relate to the future trading performance of the business
which is dependent on a large number of factors.
#161,000 of intangible assets were separated from goodwill as part of this
business combination and relate customer contracts and relationships. The fair
value of these intangible were calculated by an external consultant by
calculating the net present value of future cash flows using a discount rate of
23.67%.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LAMBTMMBTTMR
Retec (LSE:RET)
Historical Stock Chart
From May 2024 to Jun 2024
Retec (LSE:RET)
Historical Stock Chart
From Jun 2023 to Jun 2024
