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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Touchstone Grp | LSE:TSE | London | Ordinary Share | GB0003058137 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 28.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number : 5969J
Touchstone Group PLC
05 December 2008
Touchstone Group plc
Interim results for the six months to 30 September 2008
Touchstone Group plc, the AIM-listed provider of business software solutions and consultancy services, announces its interim results for
the six months to 30 September 2008.
Chairman's Interim statement
Results
The Group's interim results for the half-year ending September 2008 are as follows:
Turnover for the period is down by 5% to £14.76m compared with £15.54m for the same period last year. Operating loss on ordinary
activities before tax is £219k compared to £765k profit last year. Adjusted profits from operating activities before depreciation,
amortisation, share-based payments and a one-off provision for contract liabilities are £333k compared with £1.04m last year. Adjusted Basic
loss per share after amortisation are 1.75p per share compared with 4.31p earnings last year. Diluted loss per share after amortisation are
1.75p compared with 4.25p earnings last year.
Cash and Dividends
The Group generated cash flows from operating activities of £127k compared to £1m for the same period last year. Having settled all
acquisition-based deferred consideration during the period, cash balances at 30 September 2008 stood at £1m compared to £1.7m at 31 March
2008 and £2.6m at 30 September 2007.
In view of current macro economic uncertainties the Board will not be declaring an interim dividend this year (2007:1.5p).
Review of Operations
The Group has had a varied first half with a number of divisions performing well, whilst others have been impacted by the current
economic climate.
Fee-income and contracted software support revenues both grew by 6% during the period but a reduction in software sales due to extended
sales cycles has resulted in a 5% fall in overall Group turnover.
During the period, all Group-wide CRM operations have now been rolled in to one division and now trade as Touchstone iCRM. This has
already provided greater focus and maintenance of quality to Microsoft CRM based projects and the more buoyant opportunities that attach to
this technology.
A large and loyal client base provides significant on-going recurring support revenue which now accounts for over 34% of total turnover
(2007:31%). Newly introduced help desk systems continue to enhance the service provided to clients and it is pleasing to see the impact of
this on increasing customer satisfaction and improved efficiency.
The Board believes market conditions will continue to be testing and has taken actions to ensure that overheads are more sensibly
balanced. Headcount levels at the period end were 6% lower than at the beginning of the period with the associated cost reductions flowing
in to the second half.
Current sales activity in a number of divisions is encouraging. New orders continue to be signed but deal slippage remains a frustrating
feature of the present economic climate. Accordingly, and with a view to the mid-term prospects of the business as a whole, the Board will
continue to monitor cost levels and will adjust if appropriate. In the meantime, the Board believes that current order books, strong
recurring revenues and a more balanced view of Group-wide overheads will assist the Company's performance in the second half.
David RT Thompson
5 December 2008
Enquiries to:
Keith Birch, Chief Executive Officer
Touchstone Group plc 020 7121 4700
Matt Davis
Brewin Dolphin (NOMAD) 0845 270 8600
Copies of the interim report will be posted to shareholders shortly and will be available for download from the company's website at
www.touchstone.co.uk
Unaudited consolidated profit and loss account
for the period ended 30 September 2008
For six months For six months For year
ended30thSeptember20 ended30thSeptember20 ended31stMarch 2008
08 07
Note £000 £000 £000
Revenue 1 14,758 15,540 31,374
________ ________ ________
Cost of sales 1 (8,651) (8,092) (17,952)
________ ________ ________
Gross profit 6,107 7,448 13,422
________ ________ ________
Administration expenses before (5,774) (6,411) (10,948)
depreciation, amortisation,
share based payments and
provision for one-off
liabilities and costs
Depreciation (110) (85) (212)
Amortisation of intangibles (183) (172) (372)
Share based payment costs (12) (12) (24)
One-off provision for Contract 7 (250)
liabilities
One-off legal and professional (87)
Costs
________ ________ ________
Total administrative expenses (6,329) (6,680) (11,643)
Operating Profit before 333 1,037 2,474
depreciation, amortisation,
share based payments and
provision for one-off
liabilities and costs
Depreciation (110) (85) (212)
Amortisation of intangibles (183) (172) (372)
Share based payment costs (12) (12) (24)
One-off provision for Contract 7 (250)
liabilities
One-off legal and professional (87)
Costs
________ ________ ________
Operating profit (222) 768 1,779
Financial income 18 31 82
Financial expenses (15) (34) (162)
________ ________ ________
Profit before taxation (219) 765 1,699
Income tax expense - (250) (317)
_______ ________ _______
Profit for the year (219) 515 1,382
attributable to equity
shareholders of parent
______ ______ ______
(Loss) /Earnings per share
Basic 5 (1.75)p 4.31p 11.52p
Diluted 5 (1.75)p 4.25p 11.43p
All of the above results are from continuing operations.
Unaudited consolidated balance sheet
at 30 September 2008
30 September 2008 30 September 2007 31 March 2008
Note £000 £000 £000
Assets
Non- Current
Property, plant and equipment 293 378 342
Goodwill 6,368 5,961 6,368
Other intangible assets 2,633 2,338 2,539
Investments 53 145 53
______ ______
9,347 8,822 9,302
Current assets
Stocks 96 57 26
Trade and Other Debtors 9,835 10,617 12,742
Cash and cash equivalents 952 2,618 1,723
______ _______
10,883 13,292 14,491
______ _______
Total Assets 20,230 22,114 23,793
______ ______
EQUITY AND LIABILITIES
Equity attributable to the
equity holders of the parent
Share Capital 6 (1,287) (1,235) (1,249)
Share premium reserve (3,829) (3,225) (3,440)
Capital and other reserves (19) (249) (19)
Retained earnings (4,984) (4,399) (5,121)
_______ _______ _______
(10,119) (9,108) (9,829)
Non- current Liabilities
Long-term borrowings (108) (325) (217)
Deferred tax (311) (267) (311)
Trade and other payables (217) (208) (219)
_______ _______ _______
(636) (800) (747)
Current Liabilities
Current portion of long-term (217) (217) (217)
borrowings
Trade and other payables (8,687) (11,276) (12,479)
Current tax liabilities (261) (713) (461)
Provisions for liabilities 7 (310) - (60)
_______ _______ _______
(9,475) (12,206) (13,217)
_______ _______ _______
Total Equity and Liabilities (20,230) (22,114) (23,793)
_______ _______ _______
TOUCHSTONE GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
for the six month period ended 30 September 2008
_________________________________________________________________________ _________________
ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE PARENT
Share capital£*000 Share premium Other Retained TOTAL EQUITY£*000
reserve£*000 reserves*£*000 earning£*000
BALANCE AT1 April 2008
BROUGHT FORWARD 1,249 3,440 19 5,121 9,829
Changes in Equity for the six
monthsended 30thSeptember 2008
_______ _______ _______ _______ _______
(Loss) for the period - - - (219) (219
_______ _______ _______ _______ _______
TOTAL RECOGNISEDINCOME AND - - - (219) (219)
(EXPENSE)FOR THE PERIOD
Sale of Treasury shares 277 277
Dividends - - - (207) (207)
Issue of share capital 38 389 - - 427
Grant of options - - 12 12
_______ _______ _______ _______ _______
Balance Carried Forward 1,287 3,829 19 4,984 10,119
At 30thSeptember 2008 ====== ====== ====== ====== ======
* At 30 September 2008, other reserves includes a capital redemption reserve of £19,000.
Unaudited consolidated cash flow statement
for the period ended 30 September 2008
Note 6 monthsended30 6 monthsended30 YearEnded31
September2008 September2007 March2008
Note £000 £000 £000
Cash flow from operating
activities
Cash generated from operations 2 127 1,036 1,633
Interest paid (15) (34) (70)
Income taxes paid (200) (465) (778)
Net cash (used in) / (88) 537 785
generated from operating
activities
Cashflows from investing
activities
Acquisitions of subsidiaries (744) - (453)
Purchase of property, plant (61) (46) (137)
and equipment
Proceeds from sale of - - -
property, plant and equipment
Interest received 18 31 82
Development costs (285) - (370)
Net cash used in investing (1,072) (15) (878)
activities
Cashflows from financing
activities
Proceeds from the issue of 427 - -
share capital
Proceeds of sale of treasury 277 - -
shares
Proceeds from the exercise of - 15 20
share options
(Repayments) / proceeds from (108) (108) (217)
long term borrowings
Dividends paid (207) (333) (509)
Net cash (used in) / generated 389 (426) (706)
from financing activities
Net cash increase / (decrease) (771) 96 (799)
in cash and cash equivalents
Cash and cash equivalents at 3 1,723 2,522 2,522
the beginning of the period
Cash and cash equivalents at 3 952 2,618 1,723
the end of the period
Notes
1. Basis of preparation of the interim financial statements
The financial information contained in this interim report does not constitute statutory accounts within the meaning of Section 240 of the
Companies Act 1985.
The consolidated financial statements of Touchstone Group Plc have been prepared in accordance with International Financial reporting
standards as adopted by the EU (*adopted IFRS*)
Measurement convention
The financial statements areprepared on the historical cost basis except that the following assets and liabilities are stated at their fair
value: financial instruments classified as fair value through the profit or loss or as available-for-sale. Non-current assets and disposal
groups held for sale are stated at the lower of previous carrying amount and fair value less costs to sell.
Basis of Consolidation
The purchase method of accounting is used to account for the acquisition of subsidiaries by the group. The costs of an acquisition is
measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus
costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are initially measured at fair value at the acquisition date irrespective of the extent of any minority interest.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those
used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation.
Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment losses.
Depreciation is charged so as to write off the cost of assets, other than land, to their estimated residual values over their estimated
useful lives on the following bases:
Leasehold improvements 20% straight line
Fixtures and fittings 20% reducing balance
Computer equipment over 3 years straight line
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in income.
GOODWILL
Goodwill arising on consolidation represents the excess of the cost of acquisition over the group*s interest in the fair value of the
identifiable assets, liabilities and contingent liabilities of a subsidiary, associate or jointly controlled entity at the date of
acquisition.
Goodwill on acquisition of subsidiaries is separately disclosed.
Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in the income
statement and is not subsequently reversed. Goodwill is allocated to cash generating units for the purpose of impairment testing.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the amount previously calculated under UK GAAP
subject to being tested for impairment at that date. Goodwill written off to reserves under UK GAAP prior to 1998 has not been reinstated
and is not included in determining any subsequent profit or loss on disposal.
OTHER INTANGIBLE ASSETS
Research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from the group*s software product development is recognised only if all of the following
conditions are met:
· an asset is created that can be identified;
· it is probable that the asset created will generate future economic benefits;
· the development cost of the asset can be measured reliably;
· the product or process is technically and commercially feasible; and
· sufficient resources are available to complete the development and to either sell or use the asset.
Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which
it is incurred.
The Group has been incurring increasing levels of software development expenditure which meets the capitalisation criteria above, and has
accordingly been capitalised.
Intellectual property rights
Intangible assets such as intellectual property rights are measured initially at their purchase cost and amortised on a straight-line basis
over their estimated useful lives, on the following bases:
· Intellectual property rights over ten years
· Intangible assets acquired as part of an acquisition are capitalised at their fair value where this can be reliably
measured.
IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS EXCLUDING GOODWILL
At each balance sheet date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are
independent from other assets, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An
intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be
impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the estimates of future cash flows have been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the
asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the
relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate
of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had
no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as
income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated
as a revaluation increase.
REVENUE RECOGNITION
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services
provided in the normal course of business, net of discounts, Value Added Tax and other sales related taxes. Sales of goods are recognised
when goods are delivered and title has passed.
The group*s main revenue categories are as follows:
Software sales
Revenue from direct software sales to end-users is recognised once a non-cancellable purchase order or contract has been received, the
product has been delivered and the customer has been invoiced.
Maintenance revenues
Maintenance revenues are recognised over the period of the contract on a pro-rata basis.
Professional services
Revenue from professional services is recognised following provision of those services on an hours completed basis.
Cost of sales
Cost of sales consists of supplier costs, payroll and direct costs associated with the provision of IT services to the customers.
In the financial statements to the year ended 31 March 2008, following a review of the different businesses, the Directors were of the view
that all consulting salary costs should be included within cost of sales, rather than split between cost of sales and administrative
expenses as in the prior year. If this practice had been applied in the prior period to 30 September 2007, cost of sales would have been
£8,895k resulting in a gross margin of £6,648k.
2. Reconciliation of the operating profit to net cash inflow from operating activities
6 months ended30 6 months ended30 Year ended31 March2008
September2008 September2007
£000 £000 £000
Operating profit (222) 768 1,779
Depreciation of tangible 110 85 212
assets
Amortisation of intangible 183 172 372
assets
Share option charge 12 12 24
Increase / (Decrease) in (206) (1) (906)
working capital
Impairment provision - - 92
Provision for liabilities 250 - 60
Net cash flow from operating 127 1,036 1,633
activities
3. Analysis of changes in net funds
At 1 April2008 Cashflow At 30 September2008
£000 £000 £000
Cash at bank and in hand 223 (29) 252
Short term bank deposits 1,500 800 700
1,723 771 952
4. Dividends
The directors have declared no interim dividend (2007: 1.5 pence) on the ordinary shares. There is therefore no planned cost of an interim
dividend this year (2007: £182,000).
5. Earnings per share
30 September 2008 30 September 2007 31 March 2008
£000 £000 £000
Profit for the period / (219) 515 1,382
financial year attributable to
shareholders
Amortisation of intangibles 183 172 372
Profit for the financial year (36) 687 1,754
before amortisation (adjusted
profit)
30 September 2008 30 September 2007 31 March
2008
No No No
Weighted average number of 12,495,916 11,948,358 11,999,500
shares in issue
Dilution effect of option - 177,614 93,575
schemes:
12,495,916 12,125,972 12,093,075
30 September 2008 30 September 2007 31 March 2008
(Loss) / Earnings per ordinary (0.29)p 5.75p 14.62p
share before amortisation
Loss per ordinary share on (1.46)p (1.44)p (3.10)p
amortisation
Basic (Loss) / earnings per (1.75)p 4.31p 11.52p
ordinary share
Diluted (Loss) / earnings per (1.75)p 4.25p 11.43p
ordinary share
As at 30 September 2008 there were 214,347 (2007: 214,347) share options in issue under an approved employee share option scheme and 485,217
(2007: 485,217) share options in an unapproved scheme. The options first became exercisable in 2001 dependant on the achievement of certain
performance targets. At 30th September 2008 non of the share options would have been dilutive, given the share price performance in the
period. In the same period for 2007 there were 177, 614 options that were dilutive.
6. Called up share capital
30 September2008 30 September2007
£000 £000
Authorised
Number of ordinary shares, 14.210,000 1,421 1,421
of 10p each
Allotted, called up and fully paid
Issued and fully paid up 12,871,686 1,287 1,235
shares (12.33m * 2007)
7. Provisions for liabilities and charges
30 September 2008
£000
Balance at 1 April 2008 60
Provision against loss making contracts 250
_______
Balance at 31 March 2008 310
_______
The provision brought forward related to a projected over-run on a loss making project as at 31st March 2008.
Shortly after the six month period ended 30 September 2008 this same contract, which in the boards view was substantially complete, was
terminated by the customers new owners.
Subsequently the directors have taken a prudent view against the recoverability of all sums against this contract which has resulted in the
decision to make this exceptional provision.
However, the Group Board is making all efforts to recover a substantial amount under the terms of the contract termination conditions.
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
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