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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Triplearc | LSE:TPA | London | Ordinary Share | GB0031067340 | 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% | 5.92 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:9957R TripleArc PLC 30 September 2005 30 September 2005 TripleArc Plc Interim Results for the six months ended 30 June 2005 TripleArc Plc ("TripleArc", the "Company" or the "Group") provides technology led print procurement solutions to enterprises seeking to reduce costs and streamline business processes. The Group is able to differentiate its offering by providing its clients with industry leading technology solutions which enhance the service proposition and facilitate sustainable cost savings. SUMMARY Six months ended Six months ended 30 June 2005 30 June 2004 Turnover #30.07m #24.03m Gross profit #10.10m #6.03m Pre exceptional earnings before interest, tax and amortisation ("EBITA")* #0.69m #2.27m Adjusted earnings per share ** 0.02p 0.65p Basic (loss)/earnings per share (1.15p) 0.16p Cash inflow from operating activities #0.4m #3.33m * Earnings before amortisation of intangible assets, share option compensation expense, exceptional costs, interest and tax. ** Based on earnings before amortisation of intangible assets, deferred financing amortisation, exceptional costs and (2004 only) share option compensation expense. * Slowdown in retail sector and decline of business forms market resulted in slower than expected start to the year * Contracted revenue increased by 65% over prior period * #10m of new annualised contracted revenue signed and implemented in past 12 months * Strategic synergies attained through integration of Stream data fulfilment business * 25% increase in revenue creating scale and presence in industry sector * Investment in contract management infrastructure and business development, allowing for ramp up in revenue from signed contracts * Positive operating cash flow * #1.25m of annualised administrative savings realised to date following cost review * Identification of accounting errors post period end will require restatement of 2004 Statutory Accounts Commenting on the results, Chris Pople, Chairman stated: "We were extremely disappointed to announce the need to restate our 2004 results at a time when we can see genuine positive momentum building. This issue has been fully investigated and we are confident that the right corrective measures have been taken and that we now have the appropriate financial controls in place. "These interim results reflect a period of substantial infrastructure improvement, service integration and corporate development within the Group. We are pleased that turnover for the six months increased by 25% and gross profit rose by 68%, and continue to believe that the fundamental underlying strengths and future prospects of the Group remain solid. We are well positioned to further demonstrate our growth potential." For further information please contact: TripleArc Plc 0117 933 1006 Jason Cromack, Chief Executive Officer Richard Hodgson, Chief Financial Officer Weber Shandwick Square Mile 020 7067 0700 Terry Garrett/Nick Dibden TripleArc Plc Interim Results for the six months ended 30 June 2005 The Board announces the Group's results for the six months ended 30 June 2005. The period under review included a full six months contribution from Stream, the data management & fulfilment business that was acquired by TripleArc in December 2004, as part of the Group's ongoing strategy to provide a total communications support services solution. As has previously been highlighted, the six months ended 30 June 2005 was a challenging period for the Group. A decline in the business forms market and a slow down in demand from the retail sector resulted in a slower than expected start to 2005. Despite this, the Group is reporting growth in both turnover and gross profit over the comparable period in 2004. Operating profit for the period was also impacted by substantial investment in infrastructure. However, this has increased the Group's capability to manage the larger print management contracts which are the ongoing focus of the Board's strategy. Encouragingly, contracted revenues during the first half increased by 65% on the same period in 2004 and over the past twelve months the Company has secured in excess of #10 million of additional annual contracted revenue at encouraging margins. There is also a strong pipeline of contract sales and the Group has identified a number of opportunities to drive growth from our non contracted customers. The announcement on 26 September 2005, regarding the restatement of the Company's accounts for the year ended 31 December 2004 and the downward revision of the Board's expectations for the full year was extremely disappointing at a time when the Board can see genuine positive momentum in the business. FINANCIAL REVIEW In the six months to 30 June 2005, turnover increased by 25% to #30.1m (June 2004 - #24.0m) and gross profit improved by 68% to #10.1m (June 2004 - #6.0m). Group EBITA decreased from #2.3m in 2004 to #0.7m in 2005. In addition to the decline in the business forms market and a slow down in demand from the retail sector, the main reason for this is that in contracted outsourced solutions, costs come in more quickly than revenue due to implementation lead times. As the contracts mature and as the company increases its portfolio, such a ramp up in cost would not be so keenly felt. In addition, costs have been incurred in upgrading the Group's infrastructure for future growth. An operating loss on ordinary activities before interest and taxation of #1.7 million represents a decline of #3 million on the comparable period to 30 June 2004. This consists of a #0.5 million drop in gross profit in AccessPlus due to the softness in the retail sector and the business forms market; a #1.0 million increase in overhead in relation to investment in contract management, business development and infrastructure; the #0.6 million of exceptional costs necessary to realise the future cost savings; and a #0.8 million increase in amortisation following the acquisition of Stream. As announced in the AGM statement on 28 June 2005, a full review of costs has taken place and so far #1.25 million of annualised savings have been realised. Further non staff cost savings are anticipated between now and the year end but these savings will not benefit the profit and loss account until 2006. Working Capital and Debt Operating cash generation continues to be positive; however, there was a net cash outflow over the period of #0.8 million (June 2004 - net cash inflow of #0.5 million) due to loan repayments (#0.5 million), financing costs (#0.6 million) and restructuring costs (#0.6 million). Bank loans in the six months to 30 June 2005 fell by #0.5 million. Net debt at 30 June 2005 was #18.4 million, including #1.3 million in respect of the invoice discounting line acquired with the Stream business. Trade Debtors at 30 June 2005 were #11.7 million (June 2004 - #9.6 million), including the Stream invoice discounting facility, giving us adequate headroom in these key lines. The Group has just completed a full facility review with its senior lender, HSBC. It continues to enjoy an excellent relationship with them and maintains their full support. Restatement of 2004 Accounts Following his appointment as Chief Financial Officer in July 2005, Richard Hodgson was instructed by the Board to undertake a detailed review of the Group's financial systems, procedures and budgets. In completing this review it has been determined that a number of financial reporting errors arose during the integration of Access Plus and the implementation of the Group-wide financial reporting system. Approximately #1.0 million of costs were misallocated between the 2004 and the 2005 financial periods which has resulted in a material overstatement of profitability in the Company's accounts for the year ended 31 December 2004 (the "2004 Accounts"). The Board concluded that the 2004 Accounts will require restating when the statutory accounts for the year ending 31 December 2005 are filed and expects that the restated 2004 EBITA will be #3.5 million (EBITA reported in the 2004 Accounts: #4.5 million). The restatement of 2004 results is primarily due to cut-off errors resulting from the implementation of a new accounting system. The majority of these issues arose during the second half of 2004 and consequently there is no material impact on the financial position and results of the Group for the six months to 30 June 2004. The Board is confident that this issue has been fully investigated and that the Group has appropriate financial systems and controls in place. OPERATIONAL REVIEW The six months to 30 June 2005 represent a period of substantial Group-wide infrastructure improvement, service integration and corporate development. The Group is now focused on delivering IT driven managed solutions to customers looking to outsource the corporate communication supply chain. Following its acquisitions in recent years, the Group has built an integrated client offering incorporating the print management expertise of AccessPlus, the direct marketing and data management experience of Stream, and the technology proficiency of TripleArc. The Board believes that this combination presents an exciting and dynamic proposition to clients. During the period under review, important investments in new staff (in the areas of contract management, procurement, managed solutions, and legal and human resources), IT infrastructure and new property in London and Swindon were undertaken which should provide the Group with a solid foundation for future growth and development. Outsourced Solutions As previously mentioned, the Group experienced a slower than expected start in trading in the first half of the year. This was primarily due to a slow down in the retail sector and some attrition in business forms. The Board has undertaken a restructuring process to reduce the operating cost base and increase efficiencies by taking advantage of synergies across the Group. This restructuring is now substantially complete and will impact positively on the second half of 2005 and put the Company in a stronger position for 2006. Whilst some decline in ad hoc revenue from our non-contracted customers has occurred, major accounts are continuing to perform well, with revenue from the top 30 print management accounts in H1 2005 up 16% on H1 2004. The performance in non-contracted customers has now been improved with an increased focus on print management solutions and added value services. The sales teams are increasingly taking advantage of cross-selling opportunities. The addition of Stream into the Group has enabled them to market a more complete solution to customers and this has already yielded some positive results with several customers having been won through the increased offering. In the past 12 months, the Group has signed and implemented #10 million of contracted annualised revenue and has increased its contracted revenue base by 65%. The Board believes that the indicators validate its strategy of growing long term contracted revenue across a range of vertical markets with the obvious positive impact on stability and quality of earnings. TripleArc Technology For an outsource solution to be successful, IT is a key component in streamlining and removing cost from the supply chain. The technology expertise within the Group provides key support in selling and delivering customer solutions, and TripleArc's proprietary software gives the Group a competitive advantage in this area. Our suppliers are now connected to the Group via TripleArc's Collaborative Workflow System and we continue to work with our supplier base to ensure best procurement practice and benefits to the Group and our customers. As well as seeing technology as key to the overall customer offering, we are also exploring ways in which the Group can enhance technology revenue streams, including through strategic partnerships. BOARD CHANGES On 5 July, Richard Hodgson joined the Board as Chief Financial Officer. Richard joined the Group from Iron Mountain Europe where he was Finance Director. Richard replaced Peter Houston, who was previously Group Finance Director. David Wong retired from the Board as a non-executive director on 25 July in order to spend more time on his other business interests. David was a founding director of TripleArc and was previously Chairman of the Group. The Board would like to thank him for his guidance and support to the Group since its foundation. As previously stated, the Board is actively seeking to appoint an additional independent non-executive director and hopes to make an announcement to this effect in due course. STAFF Our people are the resource that underpins the Group's strategy and the Board would like to thank all our staff for the commitment, professionalism and loyalty that they have shown during six months of tremendous change. CURRENT TRADING AND OUTLOOK As a consequence of the overstatement of the 2004 Accounts, current year budgets were inflated as they were based on inaccurate base data. As a result of this and difficult summer trading within the data fulfillment division, the Board adjusted its expectations for 2005 downwards. Pre exceptional EBITA for the full year is expected to be approximately 50 per cent of the restated 2004 comparable. The Board believes the foundation for its business strategy remains sound. Although the Group is currently operating in tough markets, the Board believes that the provision of contracted outsourced print management solutions offers considerable potential for growth and it remains the focal point of our business. The Board anticipates that this strategy will develop organically by making use of existing resources and opportunities as well as through strategic partnerships. With a healthy pipeline of contract sales, the Board believes the Company's underlying strengths and future growth prospects, built around an integrated product offering, remain positive. GROUP PROFIT AND LOSS ACCOUNT Notes Six Months ended Six Months ended 30 June 2005 30 June 2004 #'000 #'000 (unaudited) (unaudited) Turnover - continuing operations 2 30,066 24,034 Cost of sales (19,967) (18,009) ----------------------------------- Gross profit 10,099 6,025 Research and development - (32) Administrative expenses (9,406) (3,726) Profit before amortisation of intangible assets, share option compensation expense and exceptional costs 693 2,267 Exceptional costs (612) - Amortisation of intangible assets (1,766) (942) Non cash share option compensation expense - (50) Operating (loss)/profit on ordinary activities - continuing operations (1,685) 1,275 Bank interest receivable 53 34 Interest payable (750) (635) ----------------------------------- (Loss)/profit on ordinary activities before taxation (2,382) 674 Taxation on profit/(loss) on ordinary activities 3 - (350) ----------------------------------- Retained (loss)/profit for the period (2,382) 324 ----------------------------------- (Loss)/earnings per share Basic and diluted (pence) 4 (1.15p) 0.16p Adjusted basic and diluted earnings per share (pence) before amortisation of intangible assets, deferred financing amortisation, exceptional costs and share option compensation expense 4 0.02p 0.65p 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 2005 At 30 June 2004 #'000 #'000 (unaudited) (unaudited) Fixed Assets Intangible assets and goodwill 41,960 36,750 Tangible assets 2,514 1,607 ----------------------------------- 44,474 38,357 Current Assets Stock 1,087 1,352 Trade Debtors 11,679 7,244 Other Debtors 1,556 1,797 Cash 52 2,000 ----------------------------------- 14,374 12,393 Creditors: amounts falling due within one year Bank Loans < 1 year and overdrafts (3,017) (1,899) Trade Creditors (8,257) (5,244) Other Creditors & Deferred Revenue (3,000) (3,257) ----------------------------------- (14,274) (10,400) ----------------------------------- Net Current Assets 100 1,993 ----------------------------------- Total Assets less Current Liabilities 44,574 40,350 Creditors: amounts falling due after more than one year (22,421) (15,515) Provision for liabilities and charges Deferred taxation - (68) ----------------------------------- Net Assets 22,153 24,767 ----------------------------------- Capital and Reserves Called up share capital 10,350 10,050 Share premium account 20,175 19,533 Stock option reserve 1,029 1,073 Merger reserve (621) (621) Group interest in shares of TripleArc Plc (150) (150) Profit and loss account (8,630) (5,118) ----------------------------------- Equity shareholder funds 22,153 24,767 ----------------------------------- GROUP CASH FLOW STATEMENT Notes Six Months ended Six Months ended 30 June 2005 30 June 2004 #'000 #'000 (unaudited) (unaudited) Net cash inflow from operating activities 5 402 3,331 ----------------------------------- Returns on investment and servicing of finance Interest paid (695) (635) Interest received 53 34 ----------------------------------- (642) (601) Taxation - (547) Capital expenditure and financial investment Purchase of tangible fixed assets (333) (33) Disposal of tangible fixed assets 38 7 ----------------------------------- (295) (26) Net cash (outflow)/inflow before use of liquid resources and financing (535) 2,157 Financing Drawdown of bank loan - 200 Repayments of bank loan (500) (1,797) Repayment of loan notes (32) (65) Proceeds from issue of share capital 305 - ----------------------------------- (227) (1,662) ----------------------------------- Movement in cash in the period (762) 495 ----------------------------------- Reconciliation of net cash flow to movement in net debt Movement in cash (762) 495 Drawdown of bank loan - (200) Repayment of bank loan 500 1,797 ----------------------------------- Movement in net debt (262) 2,092 ----------------------------------- ----------------------------------- Net debt at 1 January (18,153) (17,485) ----------------------------------- ----------------------------------- Net debt at period end 5 (18,415) (15,393) ----------------------------------- 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 2004. 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 The tax charge is made up as follows: Six months ending Six months ending 30 June 2005 30 June 2004 #'000 #'000 (unaudited) (unaudited) Current tax: UK Corporation tax - 350 Deferred tax - - ----------------------------------- - 350 ----------------------------------- 4. EARNINGS PER SHARE a) Basic (loss)/earnings per share At 30 June 2005 At 30 June 2004 #'000 #'000 (unaudited) (unaudited) (Loss)/profit attributable to ordinary shareholders (2,382) 324 Basic weighted average number of shares 206,088,880 201,020,671 Dilutive potential shares from share option 1,102,540 2,272,911 ----------------------------------- 207,191,420 203,293,582 ----------------------------------- Basic (loss)/earnings per share (pence) (1.15p) 0.16p (b) Adjusted earnings per share At 30 June 2005 At 30 June 2004 #'000 #'000 (unaudited) (unaudited) Profit attributable to ordinary shareholders 51 1,316 Basic weighted average number of shares 206,088,880 201,020,671 Dilutive potential shares from share option 1,102,540 2,272,911 ----------------------------------- 207,191,420 203,293,582 ----------------------------------- Basic earnings per share (pence) 0.02p 0.65p 5. CASH FLOW STATEMENT a) Reconciliation of operating profit to net cash inflow from operating activities Six months ended Six months ended 30 June 2005 30 June 2004 #'000 #'000 (unaudited) (unaudited) Operating (loss)/profit (1,685) 1,275 Depreciation 284 126 Profit on disposal of tangible assets 17 (1) Amortisation of tangible fixed assets 1,766 942 Non cash share option compensation expense - 50 Decrease/(Increase) in stocks 51 (129) Decrease in debtors 2,851 2,095 (Decrease) in creditors (2,882) (1,027) ----------------------------------- Net cash inflow from operating activities 402 3,331 ----------------------------------- b) Analysis of net debt 30 June 2005 30 June 2004 #'000 #'000 Cash at bank 52 2,000 Bank overdraft (1,267) - Bank loans (17,200) (18,200) Deferred financing charges - 807 ----------------------------------- (18,415) (15,393) ----------------------------------- In June 2004 deferred finance costs were netted against debt compared to June 2005 where the balance of #710k is shown in prepayments. Bank overdraft includes advances in respect of the debtors ledger relating to an invoice discounting facility in Stream which was acquired in December 2004. 6. APPROVAL This report was approved by the Board of Directors on 29 September 2005. 7. 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. 8. FRS 20 The directors have reviewed the impact of FRS 20 'share based payments' and consider the effect of this new standard on the consolidated profit and loss account and balance sheet to be immaterial. This information is provided by RNS The company news service from the London Stock Exchange END IR IFFIIAEIAFIE
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