TNG.L Regulatory News (TNG)

3 Nov 2006 07:01

Tangent Communications PLC03 November 2006 TANGENT COMMUNICATIONS PLCRESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2006 3 November 2006 Tangent announces increase in margin, profit and sales for the period ended 31August 2006. Highlights Financial: Six months Six months ended ended 31 Aug 2006 31 Aug 2005 ChangeTurnover £3,960,000 £2,919,000 +36%EBITDA* £699,000 £323,000 +116%Operating profit* £524,000 £222,000 +136%Operating profit* margin 13% 8% +5%Earnings per share* 0.47p 0.40p +18%Net profit before tax £176,000 £10,000 +1,660%Net cash £336,000 £224,000 +50%* before goodwill and exceptional items Operating: •Newly acquired Tangent Labs (formerly C360 UK) now integrated, re-branded and is already making a significant contribution to growing our business •New markets entered include data analytics •New online ToolKit system built for Wolseley Group plc and rolled out nationwide for its Build Center branches Nicholas Green, Joint Chief Executive, said:"Tangent continues to benefit from the increasing desire from leading brands tochange the way they communicate with their customers. Moving away from massmarketing to data driven targeted marketing is exactly where Tangent is playinga leading role." Further enquiries: Tangent Communications plc Nicholas Green (Joint CEO) 020 7553 6600Graeme Harris (Finance Director) 020 7553 6600 JOINT CHIEF EXECUTIVES' STATEMENT OverviewTangent has continued to make progress in increasing its margin, profit andsales in the six months to 31 August 2006. As the number of clients usingTangent's proprietary technology increases so do our margins which, at anoperating level have increased by 5 percentage points year on year to 13% from8%. In July 2006 we completed the acquisition of C360 UK Limited and in September were branded this business as Tangent Labs. The business is now integrated intothe group and has already made a positive contribution. The growing benefits ofthe acquisition will be seen through the expanded services which Tangent can nowoffer its client base, which reinforces the position of Tangent as a technologyled organisation providing customised services direct to marketing departmentsand advertising agencies. Our proprietary technologyThe media for distribution of marketing content can be offline (print) or online(web, email and mobile). Tangent's commercial strategy is to drive theconvergence of offline and online media. Our proprietary technology acts as atool to deliver targeted messaging across multiple output channels includingweb, print, e-mail and mobile. Within Tangent there are two proprietaryplatforms, Toolkit and TaoBase. Toolkit is Tangent's technology platform for delivering targeted local point ofsale material for the retail community. Multi-location retailers recognise thattheir outlets have different customer profiles, but also recognise theimportance of maintaining their brand integrity. Tangent's ToolKit system allowslocal retail managers to select appropriate marketing material from customisabletemplates which they access via a website. The template allows local flexibilitywhile the pre-determined fields ensure that marketing material complies withcentrally determined brand guidelines. On the website, digital files are proofedordered and sent directly to Tangent where printed material is produced ondigital presses and despatched, usually within 24 hours. TaoBase is a database solution developed specifically for marketers. With theability to accept data sent from a variety of sources from web to keyed-infiles, TaoBase creates rich content output in any channel, including web sites,email, print and mobile, with a single reporting engine covering allapplications. TaoBase enables easy re-purposing of assets and content as well asproviding accurate return on investment tracking at every level of a campaign. Within both our technology platforms sits a tracking and reporting tool whichallows us to optimise the variable elements of a campaign. Highly customised andrelevant marketing messages increase response rates and so increase the returnon investment for our clients. St IvesOn 17 October 2006 Tangent confirmed that it had approached the board of St Iveswith a proposal to make an offer for St Ives. Tangent released a furtherannouncement today confirming that it has now withdrawn its proposal. OutlookGrowth in digital marketing continues to outperform traditional media andTangent remains well placed to capitalise. Increased functionality within ourcore technology offerings combined with the new services available from therecently acquired Tangent Labs has resulted in great interest from our clients. Since the half year there have been two significant launches. We launched a newmenu building application for Greene King which is now generating revenue fromover 900 different outlets. Initial research has shown an increase in revenue of12% from all branches using the new Menu Builder option. For the Wolseley Groupwe have launched a new marketing system for the Build Center brand and havealready seen usage rates over 75% in the first month across the 215 branches.Shortly this is going to be rolled out across the Plumb Center brand. We would like to thank the whole Tangent team for their contribution and hardeffort and we look forward to the future with confidence. Nicholas Green and Timothy Green 3 November 2006 Consolidated profit and loss account for the six months ended 31 August 2006 Unaudited Unaudited Audited Notes Six months Six months Year ended ended ended 31 Aug 2006 31 Aug 2005 28 Feb 2006 (Restated) £000 £000 £000 ------------ ----------- ---------Turnover------------------- ------ ------------ ----------- ---------Continuing 3,801 2,919 6,608Acquisitions 159 - -------------------- ------ ------------ ----------- --------- 3,960 2,919 6,608Cost of sales (2,112) (1,613) (3,723) ------------ ----------- ---------Gross profit 1,848 1,306 2,885 Administrative expensesexcluding (1,324) (1,084) (2,259)goodwill amortisationand exceptional items Operating profit excludinggoodwill amortisation and exceptional items------------------- ------ ------------ ----------- ---------Continuing 478 222 626Acquisitions 46 - -------------------- ------ ------------ ----------- --------- 524 222 626Goodwill amortisation (159) (45) (181)Operating exceptional items 2 (196) - (161) Operating profit------------------- ------ ------------ ----------- ---------Continuing 144 177 284Acquisitions 25 - -------------------- ------ ------------ ----------- --------- 169 177 284Non-operating exceptional items - (160) (176)Net interest 7 (7) (6) ------------ ----------- ---------Profit before tax 176 10 102Taxation 3 (69) (2) (16) ------------ ----------- ---------Profit for the period 107 8 86 ------------ ----------- --------- Basic earnings per share 4Total operations 0.11p 0.02p 0.12pExcluding goodwill amortisation 0.47p 0.40p 0.82pand exceptional items Fully diluted earnings per share 4Total operations 0.10p 0.02p 0.11pExcluding goodwill amortisation 0.43p 0.38p 0.77pand exceptional items Consolidated balance sheet at 31 August 2006 Notes Unaudited Unaudited Audited 31 Aug 2006 31 Aug 2005 28 Feb 2006 £000 £000 £000 ------------ ---------- ---------Fixed assetsIntangible assets 5 7,827 5,187 5,051Tangible assets 739 641 516 ------------ ---------- --------- 8,566 5,828 5,567Current assetsStocks 90 82 98Debtors 1,948 1,943 1,656Cash at bank 695 388 922 ------------ ---------- --------- 2,733 2,413 2,676 Creditors:amounts falling due within oneyear (1,497) (1,799) (1,472) ------------ ---------- ---------Net current assets 1,236 614 1,204 ------------ ---------- ---------Total assets less currentliabilities 9,802 6,442 6,771 Creditors:amounts falling due after morethan one year (249) (47) (13) Provisions for liabilities andcharges (514) (60) (32) ------------ ---------- --------- 9,039 6,335 6,726 ------------ ---------- --------- Capital and reservesShare capital 6 1,118 951 951Reserves 7 7,921 5,384 5,775 ------------ ---------- ---------Shareholders' funds 8 9,039 6,335 6,726 ------------ ---------- --------- Consolidated cash flow statement for the six months ended 31 August 2006 Unaudited Unaudited Audited Six months Six months Year ended ended Ended 31 Aug 2006 31 Aug 2005 28 Feb 2006 £000 £000 £000 Notes Net cash inflow fromoperating activities 9 334 55 535 Returns on investmentsand servicing of financeNet interest received/(paid) 7 (7) (6) Taxation - - (15) Capital expenditurePurchase of tangible fixedassets (395) (3) (54)Receipts from sale of fixedassets 61 - 10 _________ _________ _________ Net cash outflow from capitalexpenditure (334) (3) (44) _________ _________ _________ Acquisitions and disposalsCash acquired with subsidiary 153 542 542Purchase of subsidiaryincluding costs (635) (229) (229) _________ _________ _________ Net cash (outflow)/inflow fromacquisition and disposals (482) 313 313 _________ _________ _________ Net cash (outflow)/inflowbefore financing (475) 358 783 FinancingFinance leasedrawdown/(repayments) 238 (28) (66)Bank loan repaid - (4) (9)Exercise of share options 10 - 152 _________ _________ _________ Net cash inflow/(outflow) fromfinancing 248 (32) 77 _________ _________ _________ (Decrease)/increase in cash (227) 326 860 ========= ========= ========= Notes to the unaudited interim report 1. Commentary on financial information The results for the six month periods ended 31 August 2006 and 31 August 2005are unaudited. They have been prepared using accounting bases and policiesconsistent with those used in the preparation of the financial statements ofTangent Communications plc for the year ended 28 February 2006 except as statedbelow. The comparative figures for the year ended 28 February 2006 are, except asstated below, extracted from the statutory accounts for that year which havebeen delivered to the Registrar of Companies. The auditors' report on thefinancial statements for the year ended 28 February 2006 was unqualified. From 1 March 2006 the group adopted FRS 20 which deals with share basedpayments. The fair value of share options granted is spread over the period thatthe company benefits from that grant. The prior year comparative figures havebeen restated in accordance with the new standard. The effect of FRS 20 was toincrease administrative expenses for the year ended 28 February 2006 by £29,000.The group's net assets and cash flow statement were unaffected. The financial information contained in the interim report does not constitutestatutory accounts of the company within the meaning of Section 240 of theCompanies Act 1985. 2. Operating exceptional itemsThe operating exceptional item is the share option charge arising under FRS 20.There is no underlying cash flow or financial liability associated with thecharge and it does not reduce shareholders' funds. 3. Taxation The taxation charge has been calculated by applying the estimated effective taxrate for the current financial year ending 28 February 2007. 4. Earnings per share Earnings per share have been calculated by dividing the earnings available toordinary shareholders by the weighted average number of shares in issue duringthe period after excluding the shares owned by the Employee Share Trust. Dilutedearnings per share are calculated taking into account the potentially dilutiveeffect of share options. Unaudited Unaudited Audited Six months Six months Year ended ended ended 31 Aug 2006 31 Aug 2005 28 Feb 2006 (Restated) £000 £000 £000 Earnings excluding goodwillamortisation and exceptionalitems 462 200 590 Exceptional charge net of tax (196) (147) (323) Goodwill amortisation (159) (45) (181) _________ _________ _________ Basic and diluted earnings 107 8 86 ========= ========= ======== Number Number Number 000 000 000Weighted average number ofordinary shares in issue 98,297 50,484 71,561 Effect of dilutive options 9,278 1,476 5,211 _________ _________ _________Diluted weighted average numberof shares in issue 107,575 51,960 76,772 ========= ========= ======== 5. Intangible fixed assets GoodwillCost £000 At 1 March 2006 5,591Addition 2,935 ________ At 31 August 2006 8,526 ________AmortisationAt 1 March 2006 540Charge for the period 159 ________ At 31 August 2006 699 ________Net book valuesAt 31 August 2006 7,827 ======= 28 February 2006 5,051 =======31 August 2005 5,187 =======The addition to goodwill during the period arose from the acquisition of C360 UKLimited (subsequently renamed Tangent Labs Limited) as follows: £000 £000Fair value of net assets acquired 200 Cost of acquisition:Issue of shares at market value 2,000Cash paid 500Costs of acquisition 135Estimated future cash consideration 500 ________ 3,135 ________ Goodwill on acquisition 2,935 ======= Goodwill is amortised over 20 years, being the Directors' estimate of itsuseful economic life. 6. Share capital Number of Share Shares capital 000 £000 At 1 March 2006 95,113 951Shares issued on acquisition 16,667 167 _________ _________ At 31 August 2006 111,780 1,118 ======== ======== 7. Statement of movements on reserves Share Profit premium Merger ESOP Other and loss account reserve reserve reserve account Total £000 £000 £000 £000 £000 £000 At 1 March 2006 aspreviously stated 7,860 5,189 (4) 1,294 (8,564) 5,775 Prior yearadjustment (FRS 20) - - - 29 (29) - _______ _______ _______ _______ _______ _______ At 1 March 2006 asrestated 7,860 5,189 (4) 1,323 (8,593) 5,775 Premium on issueof shares - 1,833 - - - 1,833 Release of fundson distribution ofshares - - - - 10 10 Share optioncharge (FRS 20) - - - 196 - 196 Retained profit - - - - 107 107 _______ _______ _______ _______ _______ _______ At 31 August 2006 7,860 7,022 (4) 1,519 (8,476) 7,921 ======= ======= ======= ======= ======= =======The prior year adjustment arises from adoption of FRS 20 as an accounting policyon share based payments. 8. Reconciliation of movements in shareholders' funds Unaudited Unaudited Audited Six months Six months Year ended ended ended 31 Aug 2006 31 Aug 2005 28 Feb 2006 (Restated) £000 £000 £000 Profit for the period 107 8 86Shares issued for acquisition 167 550 550Merger reserve arising from shareissue 1,833 5,189 5,189Release of funds on distributionof shares 10 - 152Share option charge (FRS 20) 196 - 161 _________ _________ _________ Net increase/(decrease) inshareholders' funds 2,313 5,747 6,138Opening shareholders' funds 6,726 588 588 _________ _________ _________ Closing shareholders' funds 9,039 6,335 6,726 ========= ======== ======== 9. Reconciliation of operating profit to net cash inflowfrom operating activities Unaudited Unaudited Audited Six months Six months Year ended ended ended 31 Aug 2006 31 Aug 2005 28 Feb 2006 (Restated) £000 £000 £000Operating profit 169 177 284Share option charge 196 - 161Non-operating exceptional items - (160) (176)Amortisation of goodwill 159 45 181Depreciation charge 175 101 270Profit on disposal of fixed assets (56) - (3)Decrease in stocks 8 23 7(Increase)/decrease in debtors (157) 95 383Decrease in creditors andprovisions (160) (226) (572) ________ ________ ________Net cash inflow fromoperating activities 334 55 535 ======== ======== ======= 10. Reconciliation of net cash flow to movement in net funds Unaudited Unaudited Audited Six months Six months Year ended ended ended 31 Aug 2006 31 Aug 2005 28 Feb 2006 £000 £000 £000 (Decrease)/increase in cash (227) 326 860Cash (inflow)/outflow from(increase)/decrease in debt (238) 32 95 ________ ________ ________Movement in net debt resultingfrom cash flows (465) 358 955 Non-cash movements:New finance leases - - (20)Finance leases acquired withsubsidiary - (110) (110) ________ ________ ________Movement in net debt in theperiod (465) 248 825Opening net funds/(debt) 801 (24) (24) ________ ________ ________ Closing net funds 336 224 801 ======== ========= ======== 11. Analysis of changes in net funds 1 March Cash flows Net funds 31 August 2006 acquired with 2006 subsidiary £000 £000 £000 £000 Cash at bank 922 (380) 153 695Finance leases (121) (238) - (359) _________ _________ _________ _________Net funds 801 (618) 153 336 ========= ========= ========= ======== 12. Further copies The interim report is being sent to shareholders and further copies areavailable at the Tangent Communications plc registered office, Truscott House,32-42 East Road, London N1 6AD. INDEPENDENT REVIEW REPORT BY THE AUDITORS OF TANGENT COMMUNICATIONS PLC We have been instructed by the company to review the financial information ofthe company and its subsidiaries ("the group") for the six months ended 31August 2006, which comprises profit and loss account, balance sheet, cash flowstatement, comparative figures and associated notes. 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 approved by the directors. The directors areresponsible for preparing the interim report in accordance with the AIM ruleswhich require that the half-yearly report must be presented and prepared in aform consistent with that which will be adopted in the AIM company's annualaccounts having regard to the accounting standards applicable to such annualaccounts. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board. A review consists principally of makingenquiries of group management and applying analytical procedures to thefinancial information and underlying financial data and based thereon, assessingwhether the accounting policies and presentation have been consistently appliedunless otherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with AuditingStandards and therefore provides a lower level of assurance than an audit.Accordingly we do not express 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 2006. UHY Hacker Young Chartered Accountants Registered auditorsLondon 3 November 2006 This information is provided by RNS The company news service from the London Stock Exchange