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TST Touchstar Plc

90.00
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Touchstar Plc LSE:TST London Ordinary Share GB00BD9YDB55 ORD 5P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 90.00 85.00 95.00 90.00 90.00 90.00 5,000 08:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Electronic Components, Nec 6.74M 558k 0.0678 13.27 7.4M

Touchstar PLC Half-year Report (0200S)

28/09/2017 7:00am

UK Regulatory


Touchstar (LSE:TST)
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TIDMTST

RNS Number : 0200S

Touchstar PLC

28 September 2017

28 September 2017

Touchstar plc

Interim results for the

Six months ended 30 June 2017

The Board of Touchstar plc ((AIM:TST) 'Touchstar', the 'Company' or 'the Group'), suppliers of mobile data computing solutions and managed services to a variety of industrial sectors, is pleased to announce its interim results for the six months ended 30 June 2017.

This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those obligations.

 
       Key Financials: 
                                                                                30 June 
                                                            30 June 2017           2016 
 
 
        *    Revenues                                       GBP3,981,000   GBP4,146,000 
 
        *    Operating profit before exceptional costs         GBP39,000     GBP219,000 
 
        *    Profit before exceptional costs (after tax)      GBP133,000     GBP296,000 
 
        *    Adjusted EPS                                          2.11p          4.69p 
 
        *    Exceptional costs                                GBP128,000         GBPnil 
 
        *    Operating (loss)/profit                        GBP (89,000)     GBP219,000 
 
        *    Profit (after tax)                                 GBP5,000     GBP296,000 
 
        *    Basic EPS                                             0.08p          4.69p 
 
        *    Net borrowings                                 GBP(168,000)   GBP(201,000) 
 

Commenting on the results, Ian Martin, Chairman of Touchstar, said:

"The Company is now at a point to begin the most exciting, challenging and unpredictable phase of its transformation. We are actively introducing newer more relevant solutions, whilst deliberately phasing out older, less profitable products. That said, the current economic climate of uncertainty and modest growth has understandably led some customers to delay their investment decisions as long as possible, and, as such, our initial timelines have proven to be slightly optimistic, but we are firmly on our way. To get the business to a proper scale we now need a step change in the growth of sales. This will only come with investment into supporting sales, marketing and project management, and which, if targeted correctly, should ensure the opportunity that has presented itself is taken.

The short term remains difficult to predict accurately, but underneath the reporting of historical financial performance there are numerous moving parts, many of which are showing very positive signs. I remain realistic to the current challenges but optimistic to the potential I can see."

For further information, please contact:

 
 Touchstar plc             Ian Martin         01274 741860 
   Mark Hardy                                 01274 741860 
 WH Ireland - Nominated    Mike Coe/Ed            0117 945 
  Adviser                   Allsopp                   3472 
 

Information on Touchstar plc can be seen at: www.touchstarplc.com

CHAIRMAN'S INTERIM STATEMENT 2017

The Company is now at a point to begin the most exciting, challenging and unpredictable phase of its transformation. Having moved through the repair phase of our plan to restore Touchstar to is core capability of specialists in data capture and mobile computing solutions, we are now preparing to execute a more growth orientated strategy. We are actively introducing newer more relevant solutions, whilst deliberately phasing out older, less profitable products. Substantial progress has been made in this regard, with tangible signs of progress; new products have been developed, moved through concept and beta testing, and are now being successfully used by clients. An example of this would be Touchstar On Board, our new software solution. It incorporates stock and pricing management for customers, is fully integrated to mobile devices on the aircraft, and incorporates the technology necessary for payments to be taken in flight. This system is now installed on aircraft of two regional airlines, and one national flagship carrier. All three are new customers to Touchstar. These provide much-needed reference customers whom are now in place, opening the door to wider industry adoption.

That said, the current economic climate of uncertainty and modest growth has understandably led some customers to delay their investment decisions as long as possible. In my last communication, I highlighted the slippage of two large orders (both now fulfilled) that moved sales from 2016 to 2017, and we are still experiencing the lengthening lead times that make forecasting even more difficult.

I have consistently cautioned to the unpredictable nature of turning around a business - it is sometimes foolhardy to give both prediction and timing. When we started on this journey we had ambitious plans of what Touchstar could become, and that enthusiasm is still there. Our initial timelines have proven to be slightly optimistic, but we are firmly on our way.

Group Operating Results

Revenue for the six months ended the 30 June 2017 declined by 4% to GBP3,981,000 (six months ended 30 June 2016: GBP4,146,000) as we phased out older product. It should be noted that the rate of decline in revenue has slowed which could suggest we are approaching the tipping point as we work through this transitional phase.

Operating profit before exceptional items declined to GBP39,000 (six months ended 30 June 2016: GBP216,000) reflecting the slower than expected start to the year and highlighting our current experience of order flow, which is becoming more and more weighted towards the second half of the year. Taxation continues to be a positive as a result of our continued investment in research and development. After tax profits before exceptional items reflected the trend in operating profit and declined to GBP133,000 (six months ended 30 June 2016: GBP296,000).

We continue to develop and optimise the Group's organisational structure which led to an exceptional charge of GBP128,000 being taken in the six months ending 30 June 2017 (six months ended 30 June 2016: nil). After this item, the Group produced a before tax operating loss of GBP89,000 (six months ended 30 June 2016: profit GBP219,000) and on an after-tax basis, a profit of GBP5,000 (six months ended 30 June 2016: GBP296,000).

Basic earnings per share decreased to 0.08p (six months ended 30 June 2016: 4.69p) and adjusted earnings per share before the exceptional charge were 2.11p.

On a more positive note, even allowing for the cash costs associated with the exceptional items and continued investment in new products, the company generated cash of over GBP160,000 in the six months' period ending 30 June 2017. This resulted in the Company having a smaller level of net borrowing at the period end of only GBP168,000, which compares favorably to the year-end 31 December 2016 position of GBP329,000 (30 June 2016: net borrowing GBP201,000).

Overall the Group's financial position remains robust.

Strategy

Over the last year we have invested a lot of time in meetings and discussions with our customers. We now have greater clarity on the current market dynamics, where Touchstar sits in these market segments and where the opportunities lie. We are finalising our definitive plans, the intention of which is now to drive the business forward at a more rapid pace. The foundations and structure are in place and many growth oriented strategies have already been implemented. To get the business to a proper scale we now need a step change in the growth of sales. This will only come with investment into supporting sales, marketing and project management, and which, if targeted correctly, should ensure the opportunity that has presented itself is taken.

It is likely that we will experience lower margins in the short term, compressed by the additional costs that are required to accelerate growth in the top line. If achieved this should result in long-term value being created. We now need to be brave as we have the prospect to organically grow the business considerably - such scale, if forthcoming, would bring significant benefits to Touchstar and give us a platform from which to continue to build. Even in the light of such a forward shift we will maintain our conservative appetite to leverage, retain a robust balance sheet and ensure modest levels of borrowing.

Outlook for 2017

I would expect trading conditions in the second half to remain challenging, we will fall below the expectations we had at the beginning of the year, but we continue to work hard to achieve the best and most profitable outcome we can in both the second half and for the year overall. We will see the continuation in the trend of sales of new products recording substantial growth, as they gain further adoption by our clients. The headwind in the short term will continue as older products reach the end of their life cycle and we phase them out completely. At the end of 2017 all of the company's products and services will be on an upgrade path. This is quite an achievement in itself.

People

Ultimately our people and our culture will set us apart. Two years ago, when I looked around the business it was the passion of everyone I now work with that was a deciding factor for me; they collectively give us every chance to make Touchstar the business it can be.

Conclusion.

The short term remains difficult to predict accurately, underneath the reporting of historical financial performance there are numerous moving parts, many of which are showing very positive signs. I remain realistic to the current challenges but optimistic to the potential I can see. The question is how best to take that opportunity. I cannot guarantee success, we can however commit to giving it our best shot.

I Martin

Executive Chairman

28 September 2017

Unaudited consolidated income statement for the six months ended 30 June 2017

 
                                                             Six months ended 30 June      Year ended 31 December 
                                                    2017                   2016                     2016 
                                                  GBP'000                GBP'000                  GBP'000 
--------------------------------------   -------------------  -----------------------  ----------------------- 
 Revenue                                        3,981                  4,146                      7,624 
 
 Operating profit before exceptional 
  items                                           39                    219                        223 
 Exceptional costs                              (128)                    -                          - 
--------------------------------------   -------------------  -----------------------  -------------------------- 
 Operating (loss)/profit                         (89)                   219                        223 
 Finance costs                                   (6)                    (3)                       (10) 
---------------------------------------  -------------------  -----------------------  -------------------------- 
 (Loss)/profit before income tax                 (95)                   216                        213 
 Income tax credit                               100                     80                        262 
---------------------------------------  -------------------  -----------------------  -------------------------- 
 Profit for the period attributable to 
  the owners of the parent                        5                     296                        475 
                                         -------------------  -----------------------  -------------------------- 
 
 Earnings per ordinary share (pence) attributable to owners of the parent during the 
 period: 
                                             Pence per share          Pence per share          Pence per share 
 
 Adjusted                                       2.11p                           4.69p           7.53p 
 Basic                                          0.08p                           4.69p           7.53p 
 
 
 

Unaudited consolidated statement of changes in equity

for the six months ended 30 June 2017

 
                                                            Retained 
                                 Share       Capital       earnings/ 
                      Share    premium    redemption    (accumulated     Total 
                    capital    account       reserve         losses)    equity 
                    GBP'000    GBP'000       GBP'000         GBP'000   GBP'000 
----------------  ---------  ---------  ------------  --------------  -------- 
 For the six months ended 30 June 2017 
------------------------------------------------------------------------------ 
 Balance at 1 
  January 2017          315          -             -           5,441     5,756 
 Profit for the 
  period                  -          -             -               5         5 
 Balance at 30 
  June 2017             315          -             -           5,446     5,761 
----------------  ---------  ---------  ------------  --------------  -------- 
 
 
 For the six months ended 30 June 2016 
---------------------------------------------------------- 
 Balance at 1 
  January 2016     5,047   2,932   2,100   (4,761)   5,318 
 Profit for the 
  period               -       -       -       296     296 
 Balance at 30 
  June 2016        5,047   2,932   2,100   (4,465)   5,614 
----------------  ------  ------  ------  --------  ------ 
 
 
 For the year ended 31 December 2016 
------------------------------------------------------------------- 
 Balance at 1 
  January 2016          5,047     2,932     2,100   (4,761)   5,318 
 Capital reduction    (4,732)   (2,932)   (2,100)     9,764       - 
 Cost of capital 
  reduction                 -         -         -      (37)    (37) 
 Profit for the 
  year                      -         -         -       475     475 
 Balance at 31 
  December 2016           315         -         -     5,441   5,756 
-------------------  --------  --------  --------  --------  ------ 
 

Unaudited consolidated statement of financial position

at 30 June 2017

 
                                            30 June       30 June   31 December 
                                               2017          2016          2016 
                                                       * Restated 
                                            GBP'000       GBP'000       GBP'000 
----------------------------------------   --------  ------------  ------------ 
 Non-current assets 
----------------------------------------   --------  ------------  ------------ 
 Goodwill                                    3,824       3,824         3,824 
 Development expenditure                     1,042        872           989 
-----------------------------------------  --------  ------------  ------------ 
 Total intangible assets                     4,866       4,696         4,813 
 Property, plant and 
  equipment EQUIPMENTEQUIPMENTEQUIPMENT 
  EQUIPMENTequipment                          224         192           236 
 Deferred tax assets                          67          67            67 
-----------------------------------------  --------  ------------  ------------ 
                                             5,157       4,955         5,116 
 ----------------------------------------  --------  ------------  ------------ 
 Current assets 
 Inventories                                 1,265       1,211         1,259 
 Trade and other receivables                 1,950       2,192         2,026 
 Current tax recoverable                      72          257           203 
 Cash and cash equivalents                   2,398       1,925         2,206 
-----------------------------------------  --------  ------------  ------------ 
                                             5,685       5,585         5,694 
 ----------------------------------------  --------  ------------  ------------ 
 Total assets                               10,842      10,540        10,810 
-----------------------------------------  --------  ------------  ------------ 
 Current liabilities 
 Trade and other payables                    2,309       2,649         2,295 
 Borrowings                                  2,566       2,126         2,535 
-----------------------------------------  --------  ------------  ------------ 
                                             4,875       4,775         4,830 
 Non-current liabilities 
 Deferred tax liabilities                     75          75            75 
 Deferred income                              131         76            149 
 Total liabilities                           5,081       4,926         5,054 
-----------------------------------------  --------  ------------  ------------ 
 
 

* Please see note 3.

Unaudited consolidated statement of financial position

at 30 June 2017 (continued)

 
                                  30 June         30 June   31 December 
                                     2017            2016          2016 
                                               * Restated 
                                  GBP'000         GBP'000       GBP'000 
 Capital and reserves 
  attributable 
  to owners of the parent 
 Share capital                      315         5,047           315 
 Share premium account               -          2,932            - 
 Capital redemption                  -          2,100            - 
  reserve 
 Profit and loss account           5,446       (4,465)         5,441 
-------------------------------  --------  --------------  ------------ 
 Total equity                      5,761        5,614          5,756 
-------------------------------  --------  --------------  ------------ 
 Total equity and liabilities     10,842       10,540         10,810 
-------------------------------  --------  --------------  ------------ 
 

* Please see note 3.

Consolidated cash flow statement for the six months ended 30 June 2017

 
 
                                   30 June         30 June   31 December 
                                      2017            2016          2016 
                                   GBP'000         GBP'000       GBP'000 
 -----------------------------------------  --------------  ------------ 
 Cash flows from operating 
  activities 
 Operating (loss)/profit              (89)             219           223 
 Depreciation                           41              44           100 
 Amortisation                          196             181           370 
 Movement in: 
 Inventories                           (6)             278           231 
 Trade and other receivables            76             174           341 
 Trade and other payables              (4)         (1,041)       (1,322) 
----------------------------------  ------  --------------  ------------ 
 Cash generated from/ (used 
  in) operating activities             214           (145)          (57) 
 Interest paid                         (6)             (3)          (10) 
 Corporation tax received              231               -           234 
----------------------------------  ------  --------------  ------------ 
 Net cash generated from/ 
 (used in) operating activities        439           (148)           167 
----------------------------------  ------  --------------  ------------ 
 Cash flows from investing 
  activities 
 Purchase of intangible 
  assets                             (249)           (233)         (539) 
 Purchase of property, plant 
  and equipment                       (29)            (54)         (154) 
----------------------------------  ------  --------------  ------------ 
 Net cash used in investing 
  activities                         (278)           (287)         (693) 
----------------------------------  ------  --------------  ------------ 
 Cash flows from financing 
  activities 
 Repayments of finance lease 
  contracts                              -             (8)           (8) 
 Cost of capital restructure             -               -          (37) 
 Net cash used in financing 
  activities                             -             (8)          (45) 
----------------------------------  ------  --------------  ------------ 
 Net increase/ (decrease) 
  in cash and cash equivalents         161           (443)         (571) 
 Cash and cash equivalents 
  at start of the year               (329)             242           242 
----------------------------------  ------  --------------  ------------ 
 Cash and cash equivalents 
  at end of the year                 (168)           (201)         (329) 
----------------------------------  ------  --------------  ------------ 
 

Notes to the interim report and accounts

for the six months ended 30 June 2017

   1.    General information 

Touchstar plc is a public company limited by share capital incorporated and domiciled in the United Kingdom. The Company has its listing on AIM. The address of its registered office is 1 George Square, Glasgow, G2 1AL.

   2.     Status of interim report and accounts 

The financial information comprises the condensed consolidated interim balance sheet as at 30 June 2017, 30 June 2016 and the year ended 31 December 2016 along with related consolidated interim statements of income and cash flows for the six months to 30 June 2017 and 30 June 2016 and year ended 31 December 2016 of Touchstar plc (hereinafter referred to as 'financial information').

This financial information for the half year ended 30 June 2017 has neither been audited nor reviewed and does not comprise statutory accounts within the meaning of the section 434 of the Companies Act 2006. This financial information was approved by the Board on 27 September 2017.

The figures for the year ended 31 December 2016 have been extracted from the audited annual report and accounts that have been delivered to the Registrar of Companies. The auditors, PricewaterhouseCoopers LLP, reported on those accounts under section 495 of the Companies Act 2006. Their report was unqualified and did not contain a statement under section 498 of that Act.

   3.     Basis of preparation 

The interim report and accounts have been prepared using accounting policies to be applied in the annual report and accounts for the year ended 31 December 2017. These are consistent with those included in the previously published annual report and accounts for the year ended 31 December 2016, which have been prepared in accordance with IFRS as adopted by the European Union.

The directors have a reasonable expectation that the Group has adequate resources to continue operating for the foreseeable future, and for this reason they have adopted the going concern basis of preparation in the consolidated interim financial statements. The financial statements may be obtained from Touchstar plc, 7 Commerce Way, Trafford Park, Manchester, M17 1HW or online at www.touchstarplc.com.

Non - GAAP financial measures

For the purposes of this interim announcement and annual report and accounts, the Group uses alternative non-Generally Accepted Accounting Practice ('non-GAAP') financial measures which are not defined within IFRS. The Directors use the measures in order to assess the underlying operational performance of the Group and as such, these measures are important and should be considered alongside the IFRS measures.

The following non-GAAP measure referred to in the interim announcement relates to Trading profit.

'Trading profit' is separately disclosed, being defined as operating profit adjusted to exclude restructuring costs and compensation for loss of office along with other non-recurring costs such as onerous leases and associated costs on the early vacation of two properties. These exceptional costs related to items which the management believe did not accurately reflect the underlying trading performance of the business in the period. The Directors believe that the trading profit is an important measure of the underlying performance of the Group.

Restatement

The Group operates a composite banking arrangement, under which the Group and its bankers have a legal right to offset certain balances which may be in a cash or overdraft position. Previously, the Group offset these cash and overdraft balances in determining cash and short-term deposits as presented on the Group Balance Sheet.

In March 2016, the IFRS Interpretations Committee (IFRS IC) issued an agenda decision regarding the treatment of offsetting and cash-pooling arrangements in accordance with IAS 32: 'Financial instruments: Presentation'. This provided additional guidance on when bank overdrafts in cash-pooling arrangements would meet the requirements for offsetting in accordance with IAS 32. Following this additional guidance, the Group has reviewed its cash-pooling arrangements and has revised its presentation of bank overdrafts resulting in GBP2,566,000 of bank overdrafts being reported in borrowings, with a corresponding increase in cash and short-term deposits. Comparatives at 30 June 2016 have also been restated with an additional GBP2,126,000 of bank overdrafts being reported in borrowings with a corresponding increase in cash and short-term deposits.

   4.     Critical accounting estimates and assumptions 

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Impairment of goodwill

The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates, both in arriving at the expected future cash flows and the application of a suitable discount rate in order to calculate the present value of these flows.

A detailed impairment review will be carried out at the year end.

(b) Development expenditure

The Group recognises costs incurred on development projects as an intangible asset which satisfy the requirements of IAS 38. The calculation of the costs incurred includes the percentage of time spent by certain employees on the development project. The decision whether to capitalise and how to determine the period of economic benefit of a development project requires an assessment of the commercial viability of the project and the prospect of selling the project to new or existing customers.

   5.     Income tax credit 
 
  Six months ended                                   Year ended 
   30June                                           31 December 
                                  2017      2016           2016 
                               GBP'000   GBP'000 
----------------------------  --------  --------  ------------- 
 Corporation Tax 
 Current tax                      (70)      (80)          (201) 
 Adjustments in respect of 
 prior years                      (30)         -           (61) 
----------------------------  --------  --------  ------------- 
 Total current tax               (100)      (80)          (262) 
----------------------------  --------  --------  ------------- 
 
   6.     Earnings per share 
 
 Earnings per ordinary share (pence) attributable to owners of the parent during the 
 period: 
                                                                                            Year ended 31 December 
                                                 Six months ended 30 June 
                                                       2017                          2016                     2016 
----------------------------   ----------------------------  ----------------------------  ----------------------- 
 Basic                                               0.08 p                        4.69 p                   7.53 p 
 Adjusted                                            2.11 p                        4.69 p                   7.53 p 
 
 

Reconciliations of the earnings and weighted average number of shares used in the calculation are set out below:

 
 
   For six-month period                           30 June 2016                               30 June 2016 
--------------------------------  -----------------------------------------  ----------------------------------------- 
                                                                                            Weighted average number of 
                                   Earnings      Weighted average number of   Earnings           shares (in thousands) 
                                    GBP'000           shares (in thousands)    GBP'000                        Restated 
--------------------------------  ---------  ------------------------------  ---------  ------------------------------ 
 Basic EPS 
 Earnings attributable to owners 
  of the parent                           5                           6,309        296                           6,309 
 Exceptional items comprising of the 
  following: 
 Restructuring costs and onerous        128                                          - 
  leases 
--------------------------------  ---------  ------------------------------  ---------  ------------------------------ 
 
 

Exceptional costs relate to extra costs incurred on onerous lease contracts and further restructuring costs.

 
 
   For year ended                                                       31 December 2016 
-----------------------------------------------  ------------------------------------------------------------ 
                                                  Earnings 
                                                   GBP'000   Weighted average number of shares (in thousands) 
-----------------------------------------------  ---------  ------------------------------------------------- 
 Basic EPS 
 Earnings attributable to owners of the parent         475                                              6,309 
-----------------------------------------------  ---------  ------------------------------------------------- 
 

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year. The calculation of adjusted earnings per share excludes exceptional costs of GBP128,000 (2016: GBPnil)

This information is provided by RNS

The company news service from the London Stock Exchange

END

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