TNG.L Regulatory News (TNG)

29 Nov 2005 07:00

Tangent Communications PLC29 November 2005 FINANCIAL HIGHLIGHTS In the six month period to 31 August 2005: • Ongoing turnover up 10% • Administrative expenses before amortisation of goodwill and exceptionals down 35% • EBITDA before goodwill and exceptionals up 487% to £323,000 • Operating profit before goodwill and exceptionals up £276,000 to £222,000 • Earnings per share before goodwill and exceptionals 0.40p (2004: loss 0.21p) • Net cash £224,000 (2004: net debt £512,000) • New clients won during the period include NCP, Virgin Mobile and Threshers Further enquiries: Tangent Communications plc Nicholas Green (Joint CEO) 020 7553 6600Graeme Harris (Finance director) 020 7553 6600 JOINT CHIEF EXECUTIVES' STATEMENT Overview Tangent has made significant progress in the six months to 31 August 2005. Ourcore businesses have performed well and the integration of the London Digitaland Documedia businesses has been completed successfully and ahead of schedule.The new board and senior management have focused on ensuring that during thisperiod of integration, our service levels were maintained and internal targetsmet. We would like to thank everyone for their dedication and hard work duringthis period. Tangent is now well positioned to focus on growth. We are capitalising on ourcombined group strengths and cross-selling our range of services. Operations Tangent's sales are derived from services to the marketing community. Wedeliver a service for the creation and implementation of online web-basedmarketing applications for retail, property and direct mail customers. Tangent continues to invest in our online technology which is currently used byover 1,000 customers throughout the UK to host, personalise and order marketingcollateral on a daily basis. Clients include the Greene King Group, AlphaRetail and Lane Fox. Tangent also provides a real-time communication service which allows clients tomake changes to artwork right up until the last minute. This is an area inwhich digital print is increasing its value proposition and market share. Keyclients include KPMG, Monsoon and Omnicom. Financial performance Tangent has achieved a solid financial performance in a period of substantialchange and development. Administrative expenses are 35% below the same periodlast year and cash has increased by £326,000 during the period to give net fundsof £224,000 (2004: net debt £512,000). Earnings per share excluding goodwillamortisation and exceptionals have improved significantly to 0.40p (2004: lossper share 0.21p). Outlook On the foundations of our acquisition in the summer, Tangent is now profitableand generating cash. Our technology is playing a larger role in the way inwhich we interact with our clients and how they perceive us. We are addingvalue in demonstrating new ways that clients can communicate with theircustomers and the demand for our services is increasing. Our business is growing organically and we continue to look at potentialacquisitions which fit within the group's strategy. We look forward to theremainder of the year with confidence. Nicholas Green and Timothy Green 29 November 2005 Group profit and loss account for the six months ended 31 August 2005 Unaudited Unaudited Audited Notes Six months Six months Year ended ended ended 31 Aug 2005 31 Aug 2004 28 Feb 2005 £000 £000 £000Turnover Continuing 2,617 2,648 5,317 Acquisitions 302 - - Discontinued - 1,122 1,283 2,919 3,770 6,600 Cost of sales (1,613) (2,159) (3,978) Gross profit 1,306 1,611 2,622 Administrative expenses excludinggoodwill amortisation and exceptional items (1,084) (1,665) (2,654) Operating profit/(loss) excludinggoodwill amortisation and exceptionalitems Continuing 168 (166) (83) Acquisitions 54 - - Discontinued - 112 51 222 (54) (32) Goodwill amortisation (45) (8) (16)Operating exceptional items - (69) (70) Operating profit/(loss) Continuing 160 (191) (117) Acquisitions 17 - - Discontinued - 60 (1) 177 (131) (118) Non-operating exceptional items 2 (160) - 168Net interest (7) (19) (29) Profit/(loss) before tax 10 (150) 21Taxation 3 (2) - -Profit/(loss) for the period 8 (150) 21Earnings/(loss) per shareBasic and fully diluted 4 0.02p (0.43)p 0.06pExcluding goodwill amortisation 4 0.40p (0.21)p (0.18)pand exceptional items Group balance sheet at 31 August 2005 Notes Unaudited Unaudited Audited 31 Aug 2005 31 Aug 2004 28 Feb 2005 £000 £000 £000Fixed assetsIntangible assets 5 5,187 56 48Tangible assets 641 321 277Investments - 30 - 5,828 407 325Current assetsStocks 82 288 82Debtors 1,943 1,602 1,154Cash at bank 388 47 62 2,413 1,937 1,298 Creditors:amounts falling due within one year -1,799 (1,808) (906) Net current assets 614 129 392 Total assets less current liabilities 6,442 536 717 Creditors:amounts falling due after more than one -47 (32) (35)year Provisions for liabilities and charges -60 (87) (94) 6,335 417 588 Capital and reservesShare capital 6 951 401 401Reserves 7 5,384 16 187 Shareholders' funds 8 6,335 417 588 Group cash flow statement for the six months ended 31 August 2005 Unaudited Unaudited Audited Six months ended Six months ended Year ended 31 Aug 2005 31 Aug 2004 28 Feb 2005 £000 £000 £000 Notes Net cash inflow fromoperating activities 9 55 39 215 Returns on investmentsand servicing of financeNet interest paid (7) (19) (29) Capital expenditurePurchase of tangible fixed assets (3) (78) (163)Receipts from sale of fixed assets - - 35Receipts from sale of investments - - 37 _________ _________ _________ Net cash outflow from capital expenditure (3) (78) (91) _________ _________ _________ Acquisitions and disposalsCash acquired on acquisition ofsubsidiary undertaking 542 - -Costs of acquisition (229) - -Proceeds from sale of trading division - - 367 _________ _________ _________ Net cash inflow from acquisition and 313 - 367disposals _________ _________ _________ Net cash inflow/(outflow) before financing 358 (58) 462 FinancingFinance lease capital repayments (28) - (10)Bank loan (repaid) (4) (4) (8)Net advance/(repayment) on invoicediscounting facility - 71 (421) _________ _________ _________ Net cash (outflow)/inflow from financing (32) 67 -439 _________ _________ _________ Increase in cash 326 9 23 ========= ========= ========= Notes to the Unaudited Interim Report 1. Commentary on financial information The results for the six month periods ended 31 August 2005 and 31 August 2004 are unaudited. They have been prepared using accounting bases and policies consistent with those used in the preparation of the financial statements of Tangent Communications plc for the year ended 28 February 2005. The comparative figures for the year ended 28 February 2005 are extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors' report on the financial statements for the year ended 28 February 2005 was qualified in respect of the corresponding amount on administrative expenses for the preceding year ended 29 February 2004. Accordingly, the financial information in respect of the year ended 28 February 2005 which formed an integral part of the financial statements for that year and which included the financial information for the six months ended 31 August 2004 was not qualified. The financial information contained in the interim report does not constitute statutory accounts of the company within the meaning of Section 240 of the Companies Act 1985. 2. Non-operating exceptional items Non-operating exceptional items relate to restructuring and integration costs in respect of the six months ended 31 August 2005 and profit on disposal of a trading division in respect of the year ended 28 February 2005. 3. Taxation The taxation charge has been calculated by applying the estimated effective tax rate for the current financial year ending 28 February 2006. 4. Earnings/(loss) per share Earnings/(loss) per share have been calculated by dividing the earnings/(loss) available to ordinary shareholders by the weighted average number of shares in issue during the period after excluding the shares owned by the Employee Share Trust. Diluted earnings/(loss) per share are calculated taking into account the potentially dilutive effect of share options. Unaudited Unaudited Audited Six months ended Six months ended Year ended 31 Aug 2005 31 Aug 2004 28 Feb 2005 £000 £000 £000 Earnings/(loss) excluding armortisation of goodwill and exceptional items 200 (73) (61) Exceptional charge net of tax (147) (69) 98 Goodwill armortisatiion (45) (8) (16) _________ _________ _________ Basic and diluted earnings/(loss) 8 (150) 21 ========= ========= ======== Number Number Number Weighted average number of ordinary shares in issue 50,484,459 34,660,000 34,660,000 Effect of dilutive options 1,475,635 - 140,758 _________ _________ _________ Diluted weighted average number of shares in issue 51,960,094 34,660,000 34,800,758 ========= ========= ======== 5. Earnings/(loss) per share GoodwillCost £000 At 1 March 2005 407Addition 5,184 ________ At 31 August 2005 5,591 ________AmortisationAt 1 March 2005 359Charge for the period 45 ________ At 31 August 2005 404 ________Net book valuesAt 31 August 2005 5,187 ======= 28 February 2005 48 =======31 August 2004 56 ======= The addition to goodwill during the period arose from the acquisition of TangentCommunications Limited and its subsidiaries as follows: £000 £000Fair value of net assets acquired 784 Cost of acquisition:- Issue of shares at market value 5,739 Costs of acquisition 229 ________ 5,968 ________ Goodwill on acquisition 5,184 ======= Goodwill is amortised over 20 years, being the Directors' estimate of itsuseful economic life. 6. Share capital Number of Share Shares capital £000 At 1 March 2005 40,113,300 401Shares issued on acquisition 55,000,000 550 _________ _________ At 31 August 2005 95,113,300 951 ======== ======== 7. Statement of movements on reserves Share Profit premium Merger and loss account reserve account Total £000 £000 £000 £000 At 1 March 2005 7,860 1,162 (8,835) 187 Issue of shares on acquisition - 5,189 - 5,189 Retained profit - - 8 8 ________ ________ ________ ________ At 31 August 2005 7,860 6,351 (8,827) 5,384 ======= ======= ======== ======= 8. Reconciliation of movements in shareholders' funds Unaudited Unaudited Audited Six months ended Six months ended Year ended 31 Aug 2005 31 Aug 2004 28 Feb 2005 £000 £000 £000 Profit/(loss) for the period 8 (150) 21 Shares issued for acquisition 550 - -Merger reserve arising from share issue 5,189 - - _________ ________ _________ Net increase/(decrease) in shareholders' funds 5,747 (150) 21Opening shareholders' funds 588 567 567 _________ ________ _________ Closing shareholders' funds 6,335 417 588 ========= ======== ======== 9. Reconciliation of operating profit/(loss) to net cash inflow from operating activities Unaudited Unaudited Audited Six months ended Six months ended Year ended 31 Aug 2005 31 Aug 2004 28 Feb 2005 £000 £000 £000 Operating profit/(loss) 177 (131) (118)Non-operating exceptional items (160) - -Depreciation charge 101 109 215Amortisation of goodwill 45 8 16Profit on disposal of fixed assets - - (5)Profit on disposal of investments - - (7)Decrease/(increase) in stocks 23 (11) 20Decrease in debtors 95 201 669(Decrease) in creditors andprovisions (226) (137) (575) ________ ________ ________Net cash inflow fromoperating activities 55 39 215 ======== ======== ======= 10. Reconciliation of net cash flow to movement in net (debt)/funds Unaudited Unaudited Audited Six months ended Six months ended Year ended 31 Aug 2005 31 Aug 2004 28 Feb 2005 £000 £000 £000 Increase in cash 326 9 23Cash outflow/(inflow) fromdecrease/(increase) in debt 32 (67) 439 ________ _________ ________Movement in net debt resultingfrom cash flows 358 (58) 462New finance leases - (55) (87)Finance leases acquired withsubsidiary (110) - - ________ _________ ________Movement in net debt in the period 248 (113) 375Opening net debt (24) (399) (399) ________ _________ ________ Closing net funds/(debt) 224 (512) (24) ======== ========= ======== 11. Analysis of changes in net (debt)/funds 1 March Cash flows Net funds 31August 2005 excluding acquired with 2005 acquisition subsidiary £000 £000 £000 £000 Cash at bank 62 (216) 542 388 _________ _________ _________ _________ Bank loan (9) 4 - (5)Finance leases (77) 28 (110) (159) _________ _________ _________ _________ (86) 32 (110) (164) Net (debt)/funds (24) (184) 432 224 ========= ========= ========= ======== 12. Further copies The interim report is being sent to shareholders and further copies are available at the Tangent Communications plc registered office, Truscott House, 32-42 East Road, London N1 6AD INDEPENDENT REVIEW REPORT BY THE AUDITORS TO TANGENT COMMUNICATIONS PLC Introduction We have been instructed by the company to review the financial information forthe six months ended 31 August 2005, which comprises the group profit and lossaccount, the group balance sheet, the group cash flow statement and the relatednotes. We have read the other information contained in the interim report andconsidered whether it contains any apparent misstatements or materialinconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been prepared and approved by, the directors.The interim report should be prepared on the basis that the accounting policiesand presentation applied to the interim figures are consistent with thoseapplied in preparing the preceding annual accounts except where there are anychanges, and the reasons for them, are disclosed. Review of work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with United Kingdom Auditing Standards and thereforeprovides a lower level of assurance than an audit. Accordingly, we do notexpress an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 August 2005. UHY Hacker YoungChartered AccountantsRegistered auditorsLondon 29 November 2005 This information is provided by RNS The company news service from the London Stock Exchange