Calnex Solutio. Regulatory News (CLX)

30 Aug 2005 07:02

Calyx Group PLC30 August 2005 For Immediate Release 30 August 2005 Calyx Group plc ("Calyx" or "the Company") Maiden interim results for the 6 months ended 30 June 2005 Calyx, one of the largest single-source providers of information andcommunication technology ("ICT") network solutions throughout Ireland, todayannounces its first set of interim results, since its successful admission toAIM in March, for the 6 months ended 30 June 2005. Key Points • Successful admission to AIM and fund raising of net €9.1m (£6.2m) on 17 March 2005 • Revenue increased by 5% to €18.2m (H1 2004: €17.4m) • Gross margins rose from 33% to 36% • EBITDA up 31% to €1.7m (H12004: €1.3m) • Profit before tax up 89% to €641,530 (H1 2004: €338,830) • Net cash balances of €5.9m (31 December 2004 €1.1m and €1.2m at 30 June 2004). • EPS (excluding goodwill amortisation and exceptional items) of 2.97cents • Completion of Network Operating Centre ("NOC") in August 2005 • Acquired Convergent Systems Ireland post period. Maurice Healy, Chief Executive of Calyx, commenting on the interim results said; "I am pleased to report a very satisfactory set of interim results, this hasbeen a period of transition for Calyx and we now find ourselves in a strongposition to capitalise on the strong demand for our existing products andservices. We believe that the new Network Operating Centre service rollout overthe coming period will further strengthen our market position and enhance ourperformance." For further details please contact: Calyx Group plc Tel: +353 1 676 3363Maurice Healy, Chief ExecutiveGer Coakley, Finance Director Buchanan Communications Tel: +44 (0) 20 7466 5000Tim Thompson / James Strong Company's Statement Introduction The Company is pleased to report its maiden set of interim results with all ofthe key metrics; revenue, gross margins operating profits and EBITDA, ahead ofthe same period last year. All growth for the period has been entirely organic. This has been a period of significant transition for the business. In March 2005we raised net €9.1 million in cash from our AIM listing. With the capital raisedit was our aim to fund further development of our ICT services portfolio and tofacilitate further strategic acquisitions. In the short period since flotationwe have made enormous progress on both of these fronts. We have developed ourNetwork Operating Centre ("NOC") and in a post period transaction, completed ourfirst acquisition as a public company. Financial Review The profit before taxation of €641,530 represents an increase of 89% on thecomparative period in 2004. Turnover growth of 5% coupled with an improved salesmix, from Hardware to Services, has lead to an improvement in gross margins from33% to 36% and a very successful trading period. At the end of the period the Company had €5.9m cash, having used some of theplacing proceeds to reduce long-term debt and invest in the infrastructurenecessary to facilitate the development of our service offering. Earnings per share before exceptional items and goodwill amortisation were2.97cents. The Directors do not recommend the payment of a dividend. Operating Review Post the flotation the Company introduced measures to integrate the Voice andData elements of the business. These measures are designed to provide a morecomprehensive range of offerings to our existing clients, many of whom currentlyonly have either Voice or Data services. Network Operating Centre ("NOC") Since flotation the Company has successfully developed the NOC and we arepleased to report that it is now fully functional and our national marketingcampaign is due to commence in September 2005. New Business The Company continues to benefit from the industries move towards greateroutsourcing of the ICT function. Significant business signed during the periodinclude contracts with Vodafone, The American Embassy, the Department ofCommunications Marine and Natural Resources, Xtravision, AIB Internet Banking,AXA Insurance and Banking 365. Acquisitions Since the period end the Company has acquired Convergent Systems for €600,000,this has been satisfied by a €300,000 upfront payment in cash and a €300,000cash payment deferred subject to achievement of certain performance criteria.The Company is pleased to announce that the integration of Convergent into Calyxhas been extremely successful and synergies have already been realised betweenthe two companies. The Company continues to look at suitable, synergistic and earnings enhancingacquisitions in Ireland and the UK. Outlook Calyx continues to experience strong demands for its existing products andservices and believes that the new Network Operating Centre service rollout overthe coming period will further strengthen the Company's market position andenhance the Company's performance. The Company looks forward to the comingperiod with confidence. MAURICE HEALYCHAIRMAN & CHIEF EXECUTIVE 29 August 2005 Consolidated profit and loss account for the six months ended 30 June 2005 Six months Six months Year to ended ended ended 30 June 30 June 31 December 2005 2004 2004 (unaudited) (unaudited) (audited) • • • TurnoverContinuing operations 18,249,637 17,364,955 33,971,489Acquisitions - - 264,717 18,249,637 17,364,955 34,236,206 Cost of sales (11,717,058) (11,646,551) (21,628,842) Gross profit 6,532,579 5,718,404 12,607,364Operating expenses (5,205,662) (4,821,539) (9,778,912) Operating profit before goodwill amortisationContinuing operations 1,326,917 896,865 2,774,741Acquisitions - - 53,711 1,326,917 896,865 2,828,452Goodwill amortisation (297,696) (282,936) (595,918)Share option charges (18,251) - - Operating profit 1,010,970 613,929 2,232,534Profit on disposal of fixed assets 1,141 26,491 34,213Exceptional reorganisation costs (26,185) - - Profit on ordinary activities before interest 985,926 640,420 2,266,747Interest receivable 41,679 10,561 21,829Interest payable (386,075) (312,151) (698,392) Profit on ordinary activities before taxation 641,530 338,830 1,590,184Taxation on profit on ordinary activities - - (1,138) Retained profit for the period 641,530 338,830 1,589,046 Consolidated balance sheet at 30 June 2005 As at As at As at 30 June 30 June 31 December 2005 2004 2004 (unaudited) (unaudited) (audited) • • •Fixed assetsIntangible assets 10,692,468 11,164,381 10,832,414Tangible assets 2,432,530 2,056,499 2,061,464 13,124,998 13,220,880 12,893,878 Current assetsStocks 1,694,691 1,645,159 1,568,799Debtors 7,158,035 7,620,058 6,672,076Cash at bank and in hand 5,926,589 1,219,694 1,115,505 14,779,315 10,484,911 9,356,380Creditors (amounts falling due within one year) (12,596,607) (14,799,634) (14,154,711) Net current assets / (liabilities) 2,182,708 (4,314,723) (4,798,331) Total assets less current liabilities 15,307,706 8,906,157 8,095,547 Creditors (amounts falling due after more than one year) (4,671,364) (9,411,215) (7,398,215) Provisions for liabilities and charges 47,826 - 47,826 Net assets/(liabilities) 10,684,168 (505,058) 745,158 Capital and reservesCalled up share capital 3,818,181 413 413Share premium 7,818,191 - -Other capital reserves (604,152) - -Share option reserve 18,251 - -Profit and loss account (366,303) (505,471) 744,745 Equity shareholders' funds/(deficit) 10,684,168 (505,058) 745,158 Consolidated cash flow statement for the six months ended 30 June 2005 Six months Six months For the year ended ended ended 30 June 30 June 31 December (unaudited) (unaudited) (audited) 2005 2004 2004 • • •Reconciliation of operating profit to netcash (outflow)/inflow from operating activitiesOperating profit 985,926 640,419 2,266,747Depreciation of tangible fixed assets 375,539 338,757 666,646Profit on disposal of tangible fixed assets (1,141) (26,491) (34,213)Amortisation of goodwill 297,696 272,190 595,918Amortisation of licenses 6,840 10,746 21,493Share option charges 18,251 - -Foreign exchange gain on UK loan notes - - (13,019)(Increase) in stocks (125,892) (168,177) (91,817)(Increase)/decrease in operating debtors (485,959) (896,211) 63,386(Decrease)/increase in operating creditors (1,132,860) 815,682 (454,138)(Decrease) in director's loan (818,784) - (388,012) Net cash (outflow) /inflow from operating activities (880,384) 986,915 2,632,991 Cash flow statementNet cash (outflow)/inflow from operating activities (880,384) 986,915 2,632,991Servicing of finance and returns on investments (344,396) (301,587) (676,563)Taxation 23,096 (1,841) -Capital expenditure and financial investment (767,197) (474,366) (797,629)Acquisitions and disposals - (51,629) (51,629) Net cash (outflow)/inflow before financing (1,968,881) 157,492 1,107,170 Financing 6,962,565 (1,092,395) (2,255,845) Increase/(decrease) in cash 4,993,684 (934,903) (1,148,675) Reconciliation of net cash flow tomovement in net debtIncrease/(decrease) in cash in the period 4,993,684 (934,903) (1,148,675)Cash inflow/(outflow) from lease financing 154,999 (89,323) (19,384)Cash outflow for debt financing 2,018,808 1,181,718 2,275,229 Movement in net debt 7,167,491 157,492 1,107,170 Non cash movements:Foreign exchange gain on UK loan notes - - 13,019Net debt at beginning of year (10,876,388) (11,996,577) (11,996,577) Net debt at year end (3,708,897) (11,839,085) (10,876,388) Notes to the Interim Report for the six months ended 30 June 2005 1. Accounting policies Basis of preparation The Company was incorporated on 1 February 2005 and became the holding companyof Calyx Limited and Calyx Computers Limited on 4 March 2005. The interim reporthas been prepared in accordance with generally accepted accounting principlesunder the historical cost convention and modified by the revaluation of certainfixed assets and comply with financial reporting standards of the AccountingStandards Board, as promulgated by The Institute of Chartered Accountants inIreland. The financial information contained in this report does not constitute statutoryaccounts as defined in Section 19 of the Irish Companies (Amendment) Act 1986.The figures for the year ended 31 December 2004, are extracted from thestatutory accounts of Calyx Limited and its subsidiaries for that year. Thestatutory accounts for that year, upon which the auditors, BDO Simpson Xavierissued an unqualified audit opinion, have been delivered to the Irish CompaniesRegistration Office. The interim figures for 2004 and 2005 are unaudited. Basis of consolidation The Group financial statements consolidate the financial statements of the CalyxGroup plc and all of its subsidiary undertakings made up to 30 June, 2005. The results of subsidiary undertakings acquired or disposed of in the year areincluded in the consolidated profit and loss account from the date ofacquisition or up to the date of disposal. Upon the acquisition of a business,fair values are attributed to the identifiable net assets acquired. Goodwillarising on acquisitions is dealt with as set out below. The combination of the businesses, Calyx Group plc, Calyx Limited and CalyxComputers Limited, under the criteria of Financial Reporting Standard No. 6"Acquisitions and Mergers", has been included in the consolidated financialstatements using merger accounting rules. The results and assets and liabilitiesof companies accounted for under these provisions are incorporated in thefinancial statements for the whole of the current and prior periods as if theseentities had been combined throughout these periods. The merger adjustment,which is the difference between the fair value of the shares issued to effectthe merger and the nominal value of the shares acquired, is dealt with onconsolidation through reserves. All inter-group transactions and balances areeliminated on consolidation. Turnover Turnover represents net sales to customers and excludes value added tax. Tangible fixed assets and depreciation Tangible fixed assets are stated at cost, less accumulated depreciation. The charge for depreciation is calculated to write off the original cost offixed assets from date of purchase over their estimated useful lives at thefollowing annual rates: Computer and office equipment - rates between 15% and 33.3% straight linePlant and maintenance equipment - rates between 10% and 33.3% straight lineEquipment, fixtures and fittings - rates between 15% and 20% straight lineMotor vehicles - rates between 20% and 33% straight line and reducing balanceLeasehold improvements - rates between 2.857% and 33.3% straight line 1. Accounting policies (continued) Intangible fixed assets Goodwill Purchased goodwill arising on the acquisition of a business represents theexcess of the fair value of the acquisition cost over the fair value of theidentifiable net assets when they were acquired. Any excess of the aggregate ofthe fair value of the identifiable net assets acquired over the fair value ofthe acquisition cost is negative goodwill. Purchased goodwill arising on acquisitions is capitalised in the balance sheetand amortised over the estimated economic life of the goodwill, currently 20years. Goodwill is reviewed on a regular basis for possible impairment. Any impairmentin value is written off to the profit and loss account in the year in which theimpairment is discovered. Negative goodwill arising on such acquisitions is also capitalised and shownseparately in the balance sheet and credited to the profit and loss account tomatch the periods in which the acquired non-monetary assets are recovered,currently 20 years. Any excess over the non-monetary assets acquired iscredited to the profit and loss account in the periods benefited. Customer lists Customer lists are included at cost and are being amortised over their usefuleconomic life of 20 years. Website development Website development is included at cost and is being amortised over its usefuleconomic life of 3.5 years. Licenses Training licenses are included at cost and are being amortised in equal annualamounts over 20 years. Financial fixed assets Financial fixed assets are shown at cost less provision for permanentdiminutions in value. 2. Reserves Share Profit option and loss reserve account Total • • • At beginning of period - 744,745 744,745Retained profit for the period - 641,530 641,530Redemption premium (i) - (1,752,578) (1,752,578)Share option charges (18,251) - (18,251) At end of period (18,251) (366,303) (384,554) (i) Redemption premium On 4 March 2005, in consideration of a redemption premium payable to the LoanNote Holders, Calyx Limited issued 255 ordinary shares of €0.10 each having anaggregate fair value of €1,752,578 to the Loan Note holders. In order to morefairly present the results of the Group for the six months ended 30 June 2005,the directors have charged the redemption premium directly to revenue reservesrather than to the profit and loss account. 3. Merger Accounting On 4 March 2005, the business combination of Calyx Group plc, Calyx Limited andCalyx Computers Limited was declared unconditional. The combination, which was effected by way of an offer of shares made by CalyxGroup plc for all of the shares of Calyx Limited and Calyx Computers Limited,has been accounted for as a merger as set out in Financial Reporting Standard 6"Acquisitions and Mergers". Consequently, these financial statements have beenprepared on the basis of the merger method of accounting. In order to effect the merger, 99,999,997 shares in Calyx Group plc with amarket value of €6,374,278 were issued to Calyx Limited shareholders and14,999,998 shares in Calyx Group plc with a market value of €9,561,419 wereissued to Calyx Computers Limited shareholders. This represented 68,728 CalyxGroup plc shares for every 1 Calyx Limited share and 5084 Calyx Group plc sharesfor every 1 Calyx Computers Limited share. The merger reserve represents the difference between the nominal value andrelated share premium of the new shares issued in Calyx Group plc to effect themerger and the nominal value of the issued share capital of Calyx Limited andCalyx Computers Limited. In accordance with Section 62 of the Companies Act 1963, the premium arising onthe issue of new shares in Calyx Group plc to the shareholders of Calyx Limitedand Calyx Computers Limited as part of the combination has been recorded in thecompany balance sheet as share premium. On consolidation, this share premiumamount has been classified with the merger reserve. In accordance with the provisions of Section 149 (5) of the Companies Act 1963,the directors, being satisfied that it would be fair and reasonable and wouldnot prejudice the rights or interests of any person, have determined that thepreacquisition reserves of Calyx Limited and Calyx Computers Limited should betreated as distributable by the company to the extent that they weredistributable by Calyx Limited and Calyx Computers Limited. There were no other changes to the accounting policies. 4. Reconciliation of movement in equity shareholders' funds Six months Six months For the year ended ended ended 30 June 30 June 31 December 2005 2004 2004 (unaudited) (unaudited) (audited) • • • Total recognised gains and losses for the period 641,530 338,830 1,589,046 Transactions with shareholders Nominal value of shares issued - Calyx Limited 28 - - Nominal value of shares issued - Calyx Group plc 3,818,181 - - Merger reserve on issuance of shares relating to merger (2,499,559) - - Replacement of shares in Calyx Limited and Calyx Computers Limited (441) - - Premium on shares issued 11,080,301 - - Redemption premium (1,752,578) - - Other movements Share issue costs (1,366,703) - - Share option reserve 18,251 - - Net increase in shareholders' funds/(deficit) 9,939,010 338,830 1,589,046 Opening equity shareholders' funds/(deficit) 745,158 (843,888) (843,888) Closing shareholders' funds/(deficit) 10,684,168 (505,058) 745,158 Shareholders' funds/(deficit) fully comprise equity interest. 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