TNG.L Regulatory News (TNG)

Tangent Communications PLC ("Tangent" or the "Company")

Interim for the six month period ended 31 August 2015

Key highlights

· Group revenues £13.37m (2014: £13.26m)

· Underlying operating profit £0.33m (2014: £0.96m)

· Operating profit £0.33m (2014: £0.73m)

· Net cash at £1.50m (2014: £1.71m)

Consolidated

Tangent sales in the first half were £13.37m (2014: £13.26m) up 1% versus the prior year. Overall, sales growth has been muted as the areas of our business that continue to grow have been offset by those that have declined. Our new revenues are being generated in competitive but growing areas of the market. As a consequence, operating margins are lower, with operating profit in the first half of £0.33m (2014: £0.73m) down 55% versus the prior year.

Net cash as at 31 August 2015 was £1.50m (2014: £1.71m).

Print segment

Print sales were up 1% to £9.84m (2014: £9.73m) with operating profit down 95% to £0.05m (2014: £1.00m).

Sales through the printed.com website increased by 17%. The integration of goodprint customers and products into printed.com was completed and business cards are now the biggest selling product in this division. There has also been an increase in sales of products that are manufactured externally enabling us to compete with new entrants to the market.

Previously, printed.com had taken the approach of manufacturing all of its products in-house. However, we have begun to build partnerships with third party printers allowing us to expand into areas of the market in which we have previously not competed. As a consequence, we have felt some pressure on operating margins which we expect to impact performance in the second half of the year.

There is growth in online print purchasing but there is similarly a growing number of online suppliers of print. Pricing is becoming ever more visible and naturally as competition increases pressure will follow.

Ravensworth services the residential property sector with its 4,000+ estate agency branch customer base. After a strong period for residential property transactions in 2013 and early 2014, the market has slowed markedly. These muted market conditions have persisted through H1 and continue in to the second half of the year. There has been a slower than expected take-up of data, digital marketing and photo products which we aim to upsell into our customer base alongside the print and design offer.

T/OD performance has been comparable to the prior year. Advertising agencies continue to outsource their print production projects, providing a niche market that T/OD is well located to service.

Agency segment

Agency sales were flat year-on-year at £3.52m (2014: £3.52m) with operating profit of £0.46m (2014: £0.03m loss).

We downsized Tangent Snowball in the second quarter in response to the poor new business pipeline cited in our update of 23 June 2015. This pipeline has not yet improved. However sales to existing clients have been better than anticipated, with over-performance in some of our accounts and, as a result, the business remained on budget in the first half of the year. The success of some of our contracts represents an opportunity to build upon, although the second half of the year remains more challenging.

Tangent Snowball provides a diverse range of services to its clients including website design and build, data collection and analysis, and content management to engage and measure the performance of customers.

In addition to our digital services, Tangent Snowball houses our Member Centre, a full service operation managing memberships and subscriptions on behalf of our clients.

Non-recurring expenses

There have been no non-recurring expenses in the first half (2014: £0.23m)

Net cash

Net cash at 31 August 2015 was £1.50m (2014: £1.71m). Our debtor book is higher than normal after a spike in revenues during July and a poor cash collection period. As at the end of October debtor days have returned to normal. The Company expects to be cash generative in the second half of the year.

Intangible assets

During the period the group spent £13,000 (2014: £271,000) on software to support the Company's websites. It is our intention to conduct a full review of our intangible assets at the year end.

Outlook

Overall, the Company expects to end the year in line with its current expectations as set out in the Company's AGM statement in June.

Timothy GreenChief Executive

For further information, please contact:

Tangent Communications PLCTimothy Green - Chief Executive: 020 7462 6101Jamie Beaumont - Chief Financial Officer: 020 7462 6101

Canaccord Genuity Limited - Nominated adviser and broker

Bruce Garrow / Emma Gabriel: 020 7523 8350

Notes to the financial information

for the half-year ended 31 August 2015

1. Basis of preparation

This consolidated half-yearly financial information, which is condensed and unaudited for the half-year ended 31 August 2015, has been prepared in accordance with the accounting policies which the group expects to adopt in its next annual report and is consistent with those adopted in the consolidated financial statements for the year ended 28 February 2015. These accounting policies are based on the EU-adopted International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations that the group expects to be applicable at that time. This consolidated half-yearly information for the half-year ended 31 August 2015 has been prepared in accordance with IAS 34: Interim Financial Reporting, as adopted by the EU and under the historical cost convention.

The information relating to the half-years ended 31 August 2015 and 31 August 2014 is unaudited and does not constitute statutory financial statements as defined in section 434 of the Companies Act 2006. It has, however, been reviewed by the auditors and their report is set out at the end of this document. The comparative figures for the year ended 28 February 2015 have been extracted from the consolidated financial statements, on which the auditors gave an unqualified opinion and did not include a statement under section 498 (2) or (3) of the Companies Act 2006. The annual report and accounts for the year ended 28 February 2015 has been filed with the Registrar of Companies.

The group's financial risk management objectives and policies are consistent with those disclosed in the 2015 annual report and accounts.

The half-yearly report was approved by the board of directors on 23 November 2015. The half-yearly report is available on Tangent's website, www.tangentplc.com, and is being sent to shareholders. Further copies are available at Tangent's registered office, Threeways House, 40-44 Clipstone Street, London, W1W 5DW.

Going concern

The directors are satisfied that the group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

2. Non-recurring Expenses

In the prior year reduced budgets at two key clients and the divestment of our Australian business impacted revenues at Tangent Snowball. As a result staff levels were reduced, the total cost of which amounted to £226,000 in the prior half-year period and were included in non-recurring expenses. No non-recurring expenses have been incurred in the current year.

3. Operating segments

Management has determined the operating segments based on reports reviewed by the Board of Directors that are used to make strategic decisions. The board reviews revenues and operating profits by segment but assets at a consolidated level. On this basis the group has two reportable segments, Agency and Print. Unallocated corporate expenses are shown below under PLC.

Agency - Comprises Tangent Snowball.

Print - Comprises Ravensworth, printed.com, goodprint and T/OD (Tangent on Demand).

PLC - PLC costs relate to the cost of non-executive directors, maintenance of Tangent's stock market listing, and general professional advice together with the share-based payment charge as set out in note 4. Executive directors' costs are allocated to the Agency and Print segments.

3. Operating segments (continued)

4. Earnings per share

The calculation of the basic and diluted earnings per share is based on the following:

4. Earnings per share (continued)

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.

A calculation is performed for the share options to determine the number of shares that could have been acquired at fair value based on the monetary value of the subscription rights attached to the outstanding share options. The number of shares from this calculation is compared with the number of shares that would have been issued assuming the exercise of the options and the difference is deemed to be the number of dilutive shares attributable to share options.

5. Other intangible assets

During the period the group spent £13,000 (2014: £271,000) on software to support the growth in on line revenues by expanding the number of products available on the company's websites. During the period amortisation charges of £196,000 were recognised in respect of these assets.

It is our intention to conduct a full review of our intangible assets at the year end.

6. Property, plant and equipment

During the period the group spent £68,000 on additions to plant, equipment and computers to upgrade production facilities with a further £27,000 on improvements to leasehold property and fixtures & fittings of £52,000.

7. Share capital

Allotted and fully paid

8. Own Shares

The own shares reserve represents the cost of shares in Tangent Communications PLC purchased in the market and held by the Company. The number of shares held at 31 August 2015 was 3,945,000 (31 August 2014 and 28 February 2015 3,945,000).

9. Cash flow from operations

10. Analysis of net funds

11. Disposal of subsidiary

On 12 March 2014 Tangent completed the disposal of 81% of the issued share capital in Tangent Snowball PTY Limited. It is the group's intention to retain the remaining 19% the cost of which has been reclassified under investments and amounts to less than £1,000. The results of Tangent Snowball PTY Limited have not been included in the consolidated statement of comprehensive income for the period to 31 August 2014 or the year to 28 February 2015. The net assets of the subsidiary as at 1 March 2014, the date from which control changed were as follows:-

The loss from discontinued operations was composed as follows:-

12. Related party transactions

Balances and transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

Compensation of key management personnel

Key management personnel of the group are defined as those persons having authority and responsibility for the planning, directing and controlling the activities of the group, directly or indirectly. Key management of the group are therefore considered to be the directors of Tangent Communications PLC.

Trading Transactions

During the period the group paid £7,500 in rent to a company controlled by Michael Green, there was no outstanding balance at the balance sheet date.

During the period the group sold goods and services to Nails Inc. Limited, all transactions were considered to be on an arms-length basis. Nails Inc. Limited is deemed to be a related party by virtue of Michael Green's common interest in both entities.

The value of the transactions and balance outstanding at the period is detailed below.

Independent review report by the auditors

for the half-year ended 31 August 2015

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the half-year ended 31 August 2015 which comprises the consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated balance sheet, consolidated statement of cash flows and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules for Companies.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34: Interim Financial Reporting, as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410: Review of Interim Financial Information Performed by the Independent Auditor of the Entity, issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the half-year ended 31 August 2015 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the AIM Rules for Companies.

UHY Hacker Young

Chartered Accountants

Quadrant House

4 Thomas More Square

London E1W 1YW 

23 November 2015

Notes

1. The maintenance and integrity of the Tangent Communications PLC website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the half-yearly report or the auditors' review report since they were initially presented on the website.

2. Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.