Triplearc Share Discussion Threads

[Abuse team] 03/4/2006 20:57

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[knowing] 03/4/2006 20:40

03 April 2006




TripleArc sells part of Stream
Philip Chadwick, 03/04/2006
TripleArc has sold part of its loss-making direct mail business, Stream GWC, to Formpro Mail Marketing for £1.

The high-volume production operation, based in Swindon, has been bought by Bristol-based direct mail house, Formpro.

The other half of Stream, which includes low-volume direct mail and database management, will be retained by Triplearc and become part of AccessPlus Marketing Logistics.

According to Triplearc chief executive Jason Cromack (pictured), the deal was made because of tough conditions in the direct mail market and because the firm was not prepared to invest heavily on new equipment for the high-volume division.

Triplearc bought Stream in January last year from HFS, headed up by Angus Steel and Mark Scanlon, in an £8.64m deal.

The terms of the deal included an "earn out" element of up to £8m, depending on the performance of the business to December 2006. The earn out has now been settled early.

In the year ended 31 December 2005, Stream's high-volume division had net current liabilities of around £900,000.

[Abuse team] 03/4/2006 16:29

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[clarkyboy1] 03/4/2006 16:23

I hope the profits are there, anything else would be pretty silly and short term for any group of Directors to do. The company would've had to generate £1m of profit in qtr 1 to pay the bank and the vendors, although it could be that they had some other cash reserves. However, the trading statement a few weeks ago referred to 'difficult trading conditions' and it seems unlikley that the company is capable of turning around its circumstances this quickly. I also don't think we should read too much into 'the directors are pleased with the progress in 2006', 'pleased' compared to what? I think we'll have to wait until May.

[knowing] 03/4/2006 15:25

Yes but the profit must be there for them to actually be able to make the payments or are you suggesting that they borrow from peter to pay Paul ?

[clarkyboy1] 03/4/2006 11:02

Kimboy, paying the earnout in cash could also arise if the vendors wouldn't accept any more shares in the company, having done so when Stream was acquired in 2004. According the the announcement the vendors are also directors within the Triplearc group, and would presumably have some idea about its financial performance. If this is so, I would have thought that if the business is on the up, and the there was a stable long term future, they would have accepted shares on the assumption that improved performance would equate to an increased share price

[kimboy2] 03/4/2006 10:52

A couple of other things while I'm here.

Firstly the board say they are pleased with the progress made in 2006. Is this the equivalent of saying that the company is meeting expectations? Expectations being for an EPS of 1.2p from the house broker.

Secondly the website is much improved and actually tells you something useful.

[kimboy2] 03/4/2006 10:05

At the interims to 30/6/05 they had cash of 52k and a net debt of £18.415m. From the update on 16th February we know this was reduced to £17.7m at 31/12/06.

Today they say they have further reduced the loans by £0.5m and are paying £0.5m for Stream.

That would suggest they have made at least £1.7m cash in 9months or £2.25m at an annualised rate. That doesn't seem too bad for a company valued at £7.5m.

They could have paid this earn out in shares but the fact that they didn't would suggest that cash isn't problematic at the moment.

[gerri-c] 03/4/2006 09:48

They beat me to it. Divesting themselves of a depletive element whilst retaining the good fit represented sound business management.

[knowing] 03/4/2006 09:43

TripleArc sells loss maker
Mon 03 Apr 2006

TPA - TripleArc

Latest Prices
Name Price %
TripleArc 3.75p +3.45%

FTSE AIM All-Share 1,199 +0.03%
Media 4,018 +0.42%

LONDON (SHARECAST) - Printing specialist firm TripleArc announced today that it has decided to hive off the loss-making Direct Mail business of Stream, the company it acquired nearly 18 months ago.

TripleArc said that while the Marketing Solutions Business is directly complementary to its existing business model and fits strategically into the group, the Direct Mail Business remains a less tight fit.

As has been widely reported, conditions in the direct mail market have been tough, said the group, adding that in 2005 the Direct Mail arm was loss making and had net current liabilities of around £0.9m.

"Turning around the Direct Mail Business would have required substantial investment and the Board therefore concluded that it was a logical time to dispose of it," said TripleArc.

The group added that it is pleased with the progress made so far in 2006, having brought in a new sales team to drive new business growth while the current sales team is focused on driving revenue growth from its existing customer base.

Chief executive Jason Cromack said, "At the time of the acquisition of Stream, the high volume direct mail element of the business was not regarded as central to our strategic plan. The disposal removes a significant liability on the balance sheet."

[knowing] 03/4/2006 09:32

Clarky given time yes. What I do like to see is the fact that they continue to pay down the debt which indicates that the revenue and profitability must be good.

"The Board is pleased with the progress the Company has made in 2006 and the
Group has continued to pay down its long term loan facility with HSBC. A payment
of #500,000 was made on the 31st March 2006 to reduce this facility further. A
new sales team has been brought in to drive new business growth whilst the
current sales resource will focus on driving revenue growth from our existing
customer base by selling additional services and solutions. This will be
enhanced by the integration into the Group of the Marketing Solutions Business."


This is not going to be a fast track win situation but over time hopefully holders will see a turnaround in their fortunes.

[clarkyboy1] 03/4/2006 09:19

If the trading results were going to be good this year, or at least in line with their forecast of approx £1.8m, I would have thought that they would have made some reference to it by now. As for Stream, the acquisition costs were £850k + before deferred consideration in the 2004 accounts, and they've now sold the business for £1. That's a significant write off.

Awesome business intellect in play here. Knowing, do you still believe this is going anywhere?

[gerri-c] 03/4/2006 07:37

Looks like a good deal to me, with early control of Stream.



...Pursuant to the Earn Out, the vendors of Stream (the 'Vendors') were due further
consideration up to £8.0 million dependent upon the performance of Stream for
the two year period ending 31 December 2006. In order to facilitate the
Disposal, the Company has entered into the Deed with the Vendors to terminate
the Earn Out obligations. Pursuant to the Deed, the Vendors will receive an
aggregate sum of £0.5 million in full and final settlement of their rights to an
Earn Out, effectively terminating the Stream acquisition agreement....

[hardben] 02/4/2006 23:41

this could blow tomorrow and charts never lie.

hb

[knowing] 02/4/2006 23:40

I hope that the results will be quite good as they have been able to pay off some of their exisiting debt. It's like a little clue to how things have hopefully gone !

[knowing] 01/4/2006 23:15

Should be around middle April.

[Abuse team] 26/3/2006 19:36

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[knowing] 26/3/2006 19:35

Seeing as we live in a democratic society you may say what you wish Gerri ;-)

[gerri-c] 26/3/2006 12:56

Dare I say, looking a bit stronger after last week?

[Abuse team] 24/3/2006 22:52

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[knowing] 24/3/2006 22:47

LOL must be another Haystack clone.