RNS Number:8663C
TripleArc PLC
13 September 2004
13 September 2004
TripleArc Plc
Interim Results for the Six months Ended 30 June 2004
Interim results from TripleArc Plc, the UK based provider of technology led
print procurement solutions.
The TripleArc Group provides print procurement solutions to enterprises that are
looking to reduce costs and streamline business processes. The Group is able to
differentiate its offering by providing its client with industry leading
technology solutions which enhance the service proposition and facilitate
sustainable cost savings.
HIGHLIGHTS
Six months Six months
ended ended
30 June 30 June
2004 2003
Turnover #24.03m #7.15m
Gross profit #6.03m #1.08m
Earnings before interest, tax and amortisation #2.27m #0.02m
Profit before tax #0.67m loss (#0.25m)
Earnings per share * 0.65p 0.03p
Basic earnings per share 0.16p loss (0.39p)
Cash generation #3.33m #0.05m
* Before amortisation of intangible assets and share option compensation expense
* Significant increase in performance following the successful integration
of Access Plus, acquired November 2003
* Gross profits increase more than five fold to over #6m
* Pre-tax profits of #0.67m compared to loss of #0.25m
* Cash generation cuts net debt to #15.39m (December 2003 - #17.49m) and
gearing to 62% (December 2003 - 72%)
* Rapidly growing strength in Print Management Outsourcing ("PMO") market
* Approximately #20m of PMO contracts won in last six months - full impact
to come in 2005
Commenting on the results, Jason Cromack, Chief Executive Officer stated:
"We are pleased with the Group's first half performance. The strategy of setting
up a dedicated contracts team has already borne fruit, with several major
contract wins in the first half. We expect to see the full impact of these wins
in 2005.
The integration of Access Plus has gone well with the half year results
reflecting the performance of the enlarged group. The Group is now firmly a
leading player in the print management sector. Furthermore with a healthy
pipeline of potential contracts, we believe that we will deliver increased
shareholder value over the coming months."
For further information please contact:
TripleArc Plc 020 7258 6290
Jason Cromack, Chief Executive Officer
Weber Shandwick Square Mile 020 7067 0700
Terry Garrett/ Nick Dibden
TripleArc Plc
Interim Results ended 30 June 2003
I am pleased to announce good results for the six months ended 30 June 2004, a
period that included a full six months contribution from Access Plus Plc, the
print management business that was acquired by TripleArc in November 2003. The
board is pleased with the successful integration of the Access Plus business
within the TripleArc Group.
FINANCIAL RESULTS
Revenues increased by 236% to #24.03m (June 2003 - #7.15m) reflecting the
Group's entry into the top tier of UK print management companies. Gross profit
during the period increased more than five fold to #6.03m (June 2003 - #1.08m).
The increase in turnover and gross profit were mainly attributable to the Access
Plus group, which was acquired in November 2003.
Group EBITA increased substantially from, in effect, a break even position in
the first half of 2003 to #2.27m in the period under review. Pre-tax profits of
#0.67m compare to a loss of #0.25m in the first half of 2003. Adjusted earnings
per share have increased to 0.65p (June 2003 - 0.03p). Basic earnings per share
were 0.16p (June 2003 - loss per share 0.39p).
Cash generation continues to be one of the Group's key strengths. Net cash
inflow from operating activities for the six months ended 30 June 2004 was
#3.33m (2003 - #0.05m). Net debt reduced from #17.49m, at December 2003, to
#15.39m at June 2004, reducing the Group's gearing from 72% to 62%,
respectively. During, the half year the Group repaid #1m of acquisition finance
on schedule and also took the opportunity to make accelerated payments of a
further #0.60m.
TRADING REVIEW
Print Management Division
The acquisition of Access Plus Plc has enabled the TripleArc Group to provide
one of the most complete print management solutions in the UK.
The Group is therefore exceptionally well positioned to capitalise on the
increasing number of print management outsourcing ("PMO") contracts that are
being put out to tender by companies wanting attractive, cost effective
solutions to non-core activities. In the last six months, I am delighted to
report that the Group has secured PMO contracts with an aggregated value of
approximately #20m. These significant contracts are for companies such as BAA,
Matalan and BMI Healthcare, and range from one year rolling contracts to five
year fixed term agreements. It is in the nature of these contracts that they
require significant management time to win and implement and can involve
financial investment to set up. Typically there can be up to a six-month delay
before they contribute to Group profitability. We therefore expect to see the
full impact from these exciting contract wins during 2005.
The levels of new business activity within the PMO sector remain high. As was
recently announced, the Group has been awarded preferred bidder status for
another multi-million pound PMO contract and we expect to conclude final
negotiations in this regard shortly. Our breadth and quality of services coupled
with the Group's proprietary technology have played a key role in enabling
TripleArc to compete at the highest level and we expect to be in a position to
announce further contract wins in the future, which will enhance our position as
a market leader in the PMO sector.
In addition to its PMO activities, Access Plus brought with it a team of highly
motivated sales staff focused on delivering print buying services to their
clients for specific products and solutions, such as direct mail and security
products. Although these activities are less structured than PMO contracts and
more susceptible to the competitive pressures that are prevalent throughout the
print industry, we believe that many of these customers will be receptive to a
full PMO solution once they are introduced to the diversity of our service
offering and the Group's enhanced scale of operations. In the meantime, this
business is performing well in very tough market conditions, albeit that there
is some decline in the forms business.
The first half of 2004 has seen the deployment of the Group's proprietary
technology, CWS (Collaborative Workflow System) across our print management
division and its suppliers, and the roll-out of a new enterprise accountancy
solution. The technology will create additional capacity within our existing
overhead and we expect to see the full benefits of this during the first half of
2005.
Technology Division
The Group's technology products, namely CWS and edit2print, place TripleArc at
the leading edge of print procurement technology in the UK.
Our partnership with Hewlett-Packard continues to deliver new opportunities.
Following our attendance at DRUPA, the world's largest print trade fair, in May
this year in conjunction with HP, we are in the final stages of discussions with
a number of major print service providers to licence the edit2print software.
Our agreement with Four51, Inc to distribute CWS in the US is a key part of the
future growth strategy of our technology in the vast US market. It is already
showing early signs of success with contracts having recently been signed with
two print management companies, including PathForward, a business unit of
Standard Register, one of the largest print groups in the US.
In the UK and Europe, our CWS network now has over 225 suppliers connected to
it, with more being connected on a continuing basis. As CWS gains further
momentum we expect to deliver a recurring technology revenue stream from the
system. The technology division is also exploring some exciting opportunities to
expand the solution as part of an 'insource' print management offering, thereby
expanding the revenue growth from this product.
STAFF
The Board would again like to thank all our staff, for the commitment,
professionalism and loyalty that they have shown during six-months of tremendous
change.
OUTLOOK
The Group has shown a significant improvement in the quantity and quality of its
earnings stream. We expect this trend to continue as we progressively move away
from ad hoc print supply towards longer term print management contracts and
substantial contract wins provide the foundation of long-term sustainable
revenues. The investment and roll-out of an improved infrastructure throughout
the Group will provide the basis for maintaining continued growth in the future.
The Board will continue to seek further consolidation opportunities in the print
management sector in addition to 'bolting-on' businesses which will expand our
service offering.
Group Profit and Loss Account
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
(unaudited) (unaudited) (audited)
Notes #000 #000 #000
Turnover 2 24,034 7,150 20,860
Cost of sales (18,009) (6,069) (17,434)
________ _________ __________
Gross profit 6,025 1,081 3,426
Research and development (32) (46) (79)
Selling and distribution costs (653) (178) (537)
Administrative expenses (3,073) (837) (1,888)
Exceptional costs - - (184)
________ _________ __________
Profit before amortisation of intangible assets
and share option compensation expense 2,267 20 738
Amortisation of intangible assets (942) (178) (563)
Non cash share option compensation expense (50) (93) (99)
________ _________ __________
Operating profit/(loss) on ordinary
activities before interest 1,275 (251) 76
Bank interest receivable 34 2 13
Interest payable (635) (5) (124)
________ _________ __________
Profit/(loss) on ordinary activities
before taxation 674 (254) (35)
Taxation on profit/(loss) on ordinary
activities 3 (350) - (196)
________ _________ __________
Retained profit/(loss) for the period 324 (254) (231)
________ _________ __________
Earnings/(loss) per share
Basic and diluted (pence) 4 0.16p (0.39p) (0.29p)
Adjusted earnings per share before amortisation of intangible assets and share option compensation expense
Earnings and diluted earnings
per share (pence) 4 0.65p 0.03p 0.71p
The Group has no recognised gains or losses in any of the above financial
periods other than those dealt with in the Group profit and loss account.
Group Balance Sheet
At 30 June At 30 June At 31 December
2004 2003 2003
(unaudited) (unaudited) (audited)
Notes #000 #000 #000
Fixed assets
Intangible assets and goodwill 5 36,750 3,612 37,692
Tangible assets 1,607 116 1,755
________ _________ __________
38,357 3,728 39,447
Current assets
Stocks 1,352 43 1,223
Debtors 9,041 2,176 11,136
Cash 6 2,000 704 2,188
________ _________ __________
12,393 2,923 14,547
Creditors:
amounts falling due within one year (10,400) (3,007) (12,921)
________ _________ __________
Net current
assets/(liabilities) 1,993 (84) 1,626
________ _________ __________
Total assets less current liabilities 40,350 3,644 41,073
Creditors: amounts falling due
after more than one year (15,515) (110) (16,612)
Provision for liabilities and charges
Deferred taxation (68) - (68)
________ _________ __________
Net assets 24,767 3,534 24,393
________ _________ __________
Capital and reserves
Called up share capital 10,050 3,275 10,050
Share premium account 19,533 5,478 19,533
Stock option reserve 1,073 1,017 1,023
Merger reserve (621) (621) (621)
Group interest in shares of TripleArc plc (150) (150) (150)
Profit and loss account (5,118) (5,465) (5,442)
________ _________ __________
Equity shareholders' funds 24,767 3,534 24,393
________ _________ __________
Group Statement of Cash Flows
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
(unaudited) (unaudited) (audited)
Notes #000 #000 #000
Net cash inflow from operating
activities 7(a) 3,331 53 1,621
________ _________ __________
Returns on investments and servicing of finance
Interest paid (635) (4) (124)
Interest received 34 2 13
________ _________ __________
(601) (2) (111)
Taxation (547) (11) (43)
Capital expenditure and financial investment
Purchase of tangible fixed assets (33) (2) (8)
Disposal of tangible fixed assets 7 2 -
________ _________ __________
(26) - (8)
Acquisitions and disposals
Acquisition of subsidiary undertaking - (6) (27,943)
Costs incurred in connection with acquisition - - (1,177)
Cash acquired on acquisition - - 673
Overdraft acquired on acquisition - - (1,512)
________ _________ __________
- (6) (29,959)
Net cash inflow/(outflow) before use
of liquid resources and financing 2,157 34 (28,500)
Financing
Issue of share capital - - 11,200
Expenses paid in connection with share issue - - (850)
Drawdown of bank loan 200 - 18,450
Repayments of bank loan (1,797) - -
Repayments of Loan Notes (65) - -
Capital element of finance lease payments - (10) (15)
________ _________ __________
(1,662) (10) 28,785
________ _________ __________
Movement in cash in the period 495 24 285
________ _________ __________
Reconciliation of net cash flow to movement in net funds
Movement in cash 495 24 285
Drawdown of bank loan (200) - (18,450)
Repayments of bank loan 1,797 - -
________ _________ __________
Movement in net funds 2,092 24 (18,165)
Net cash/(debt) at 1 January (17,485) 680 680
________ _________ __________
Net cash/(debt) at period end 7(b) (15,393) 704 (17,485)
________ _________ __________
NOTES
1. ACCOUNTING POLICIES
The financial information contained in this interim report does not constitute
statutory accounts. The interim results which have not been audited, have been
prepared using accounting policies and practices consistent with those used in
the preparation of the Annual Report and Accounts for the year ended 31 December
2003.
2. TURNOVER
Turnover represents amounts derived from the provision of goods and services
during the period stated net of value added tax. The turnover and pre-tax profit
is attributable to one continuing activity, the provision of print related
marketing services substantially within the United Kingdom.
3. TAXATION
a) The tax charge is made up as follows: Six months Six months Year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
#000 #000 #000
Current tax
UK Corporation tax 350 - 185
Deferred tax - - 11
________ _________ _________
350 - 196
________ _________ _________
b) Factors affecting the current tax charge
The tax assessed on the profit on ordinary activities for the six months ended
June 2004 is higher than the standard rate of corporation tax in the UK of 30%.
The differences are reconciled as below:
Profit/(loss) on ordinary activities
before taxation 674 (254) (35)
________ _________ _________
Profit/(loss) on ordinary activities at
the standard UK corporation tax rate
of 30% (2003 - 30%) 202 (76) (10)
Goodwill amortisation 283 53 169
Expenses not deductible 15 23 23
Accelerated capital allowances - - 37
Other timing differences (150) - (34)
________ _________ _________
Total current tax 350 - 185
________ _________ _________
4. EARNINGS PER SHARE
a) Basic earnings/(loss) per share At 30 June At 30 June At 31 December
2004 2003 2003
Profit/(loss) attributable to
ordinary shareholders (#'000) 324 (254) (231)
___________ ____________ ___________
Basic weighted average number
of shares 201,020,671 65,505,161 79,017,127
Dilutive potential shares from
share options 2,272,911 - -
___________ ____________ ___________
203,293,582 65,505,161 79,017,127
___________ ____________ ___________
Basic earnings/(loss) per share
(pence) 0.16p (0.39p) (0.29p)
___________ ____________ ___________
Basic earnings/(loss) per share has been calculated by dividing the profit/
(loss) for each financial period by the weighted average number of ordinary
shares in issue in each year. There is no difference for 2003 between the basic
net loss per share and the diluted net loss per share as the effect of all share
options is anti-dilutive. There is also no difference for the six months to 30
June 2004 between the basic earnings per share and the diluted earnings per
share as the effect of the dilutive share options is immaterial.
(b) Adjusted earnings per share
Profit attributable to ordinary
shareholders (#'000) 1,316 17 559
___________ ____________ ___________
Basic weighted average number
of shares 201,020,671 65,505,161 79,017,127
Dilutive potential shares from
share options 2,272,911 - 142,395
___________ ____________ ___________
203,293,582 65,505,161 79,159,522
___________ ____________ ___________
Basic earnings per share (pence) 0.65p 0.03p 0.71p
___________ ____________ ___________
Profit/(loss) on ordinary activities after taxation of #0.324m (six months to
June 2003 - loss #0.254m; year ended December 2003 - loss #0.231m) are shown
after deducting #Nil (six months to June 2003 - #Nil; year ended December 2003 -
#0.184m) in respect of exceptional recruitment and integration costs, #0.942m
(six months to June 2003 - #0.178m; year ended December 2003 - #0.563m) in
respect of goodwill amortisation, and #0.050m (six months to June 2003 -
#0.093m; year ended December 2003 - #0.099m) in respect of share option
compensation expense. Adjusted earnings per share have been calculated by
dividing the adjusted profit of #1.316m (six months to June 2003 - #0.017m; year
ended December 2003 - #0.559m (after allowing for the potential tax credit on
exceptional costs)), by the weighted average number of shares in issue at the
respective period ends.
5. INTANGIBLE ASSETS AND GOODWILL
At 30 June At 30 June At 31 December
2004 2003 2003
Cost: #000 #000 #000
At 1 January 38,602 4,137 4,137
Arising on acquisition during the year - - 34,465
___________ ____________ ___________
At period end 38,602 4,137 38,602
___________ ____________ ___________
Amortisation:
At 1 January 910 347 347
Charge for the period 942 178 563
___________ ____________ ___________
At period end 1,852 525 910
___________ ____________ ___________
Net book value at 1 January 37,692 3,790 3,790
___________ ____________ ___________
Net book value at period end 36,750 3,612 37,692
___________ ____________ ___________
The Directors consider each acquisition separately for the purpose of
determining the amortisation period of any goodwill or other acquired intangible
asset that arises. There has been no change to the basis of amortisation of
goodwill on any previous acquisitions since 31 December 2003.
6. CASH
Cash balances include #0.033m held as collateral for the guarantee of the
Group's Loan Notes.
7. CASH FLOW STATEMENT
a) Reconciliation of operating profit to net cash inflow from operating activities
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2004 2003 2003
#000 #000 #000
Operating profit/(loss) 1,275 (251) 76
Depreciation 126 41 108
Profit on disposal of tangible
fixed assets (1) - -
Amortisation of intangible fixed
assets 942 178 563
Non cash share option compensation
expense 50 93 99
Decrease/(increase) in stocks (129) 1 454
Decrease/(increase) in debtors 2,095 (303) (2,407)
(Decrease)/increase in creditors (1,027) 294 2,728
___________ ____________ ___________
Net cash inflow from
operating activities 3,331 53 1,621
___________ ____________ ___________
b) Analysis of changes in net funds
30 June Cash 31 December
2004 flows 2003
#000 #000 #000
Cash at bank 2,000 (188) 2,188
Bank overdrafts - 1,223 (1,223)
Bank loan (17,393) 1,057 (18,450)
___________ ____________ ___________
Total (15,393) 2,092 (17,485)
___________ ____________ ___________
8. APPROVAL
This report was approved by the Board of Directors on 13 September 2004.
9. DISTRIBUTION
This statement is being sent to all shareholders. In addition, copies are
available from the Company Secretary at the Registered Office.
10.PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information contained in this interim statement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. The financial information for the full preceding year is based on the
statutory accounts for the financial year ended 31 December 2003. Those
accounts, upon which the auditors issued an unqualified opinion, have been
delivered to the Registrar of Companies.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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