Tissue Regenix Group Regulatory News (TRX)

13 Nov 2006 07:09

Torex Retail PLC13 November 2006 Monday 13 November 2006 Torex Retail plc: CEO 1st Phase Review Feedback Torex Retail Plc ("Torex Retail" or "The Group") a leading supplier of ITsolutions to retail, hospitality and quick service restaurants worldwide todayannounces an update which is issued following the appointment of the new ChiefExecutive Officer, Neil Mitchell. Following the completion of Phase 1 of his review and early presentation ofstrategic insights, operational review and financial review, the Board ofDirectors is pleased to confirm that the Group is in robust health andcontinuing to provide a platform for sustainable organic growth. In the short term, the Board of Directors is also pleased to confirm that theGroup is performing in line with underlying trading forecasts ahead of theyear-end close at the end of December. The Board of Directors has noted recent market speculation and volatility in theshare price. Therefore, given that the CEO has overseen a diligent investigationof all aspects of the business, incorporating intensive review of managementprocesses and financial controls, it is considered to be an appropriate time toprovide updated guidance. Strategic Insights The Group's high growth strategy has built a tremendous platform for growthcapable in future of supporting a much larger scale of business development -the Group has a full technology product suite with some best of breed softwaresolutions, passionate people, large blue chip client base, strong presence inits major markets, global reach and a sales pipeline which is substantial withan increasing number of large and exciting commercial opportunities. The more recent acquisitions of Savista Inc, TQIPS Ltd and Retail-J Limited havebedded in well and are helping drive the go-forward product strategy. Upon completion of the acquisition programme Torex Retail is composed of afederation of business units which have come through early stage integration butoffer considerable scope for additional cost savings, benefits of scale andfurther business development. There is a need to move to a more clearly developed product strategy, marketsegmentation and sales pipeline execution to reflect a shift towards largerlong-term software solutions and systems integration contracts. Management Changes The Board continues its search for an independent non-Executive Chairman to leadand develop a high performing Board in future. In conjunction with thisprocess a further announcement will be made at a later date with regard Boardre-structuring. The Group headquarters are being re-modelled to be business orientated insupport of the operating divisions around the Office of the CEO. The Board ofDirectors is pleased to announce the recruitment of a Corporate Governance &Investor Relations Manager, Corporate Development Manager and interim GroupProcurement Director. These appointments bring new skills sets to assist inpreparing Torex Retail through corporate governance and management standardsetting for rapid and aggressive growth. Marcus Leek, in a wider role of Chief Financial Officer, now has responsibilityfor Group IT and Group Procurement. Financial Review As previously committed, a detailed review of financial policies, procedures andcontrols has been completed alongside a detailed examination of the Torex Retailbalance sheet and historic accounting. This activity has been completed whilst continuing and enhancing the tradingperformance and control of the Group. Policy, Procedure and Control Assessment The assessment initiated was a process co-ordinated by an independent resourcethat focused on all aspects of internal policy and controls includingtransaction processing, control and risk management and decision support. The review has confirmed the solid financial platform that the organisation hasand continues to operate upon. All key business risk areas were and are beingmanaged within the localised control requirements. This positive position has been further enhanced by a number of actionscompleted over the course of the previous four weeks. These group-wide actionsinclude: - A comprehensive group accounting policy manual including transferpricing guidance has been agreed and issued. This document includes guidance onfinance ethics and vision whilst effectively consolidating existing policies. - An accounting package dealing with all aspects of financialconsolidation has been launched. - Revised accounting and reporting control deadlines are now beingmanaged. - A detailed IFRS project scoping has been completed. Confirmation ofthe external partner that we will work with on an adoption programme will beissued shortly. - A comprehensive IT Infrastructure migration plan has been produced.This plan has been reviewed, assessed and supported by two external professionaladvisors. Activity on this area will commence through Q4 2006 without impact onoverall capital expenditure budgets. The Board of Directors regard this activity as a further co-ordination ofexisting accounting policies and approaches. This is required as the Group movesinto the next phase of growth and maturity. Accounting Review A detailed review of historic and forecast financial accounting has been managedsimultaneously and complementary to that of the policy, procedure and controlassessment. The programme involved all key management including that of thesubsidiary entities and assessed historic, current and forecast financialstatements to year end 2006. The Board of Directors is pleased to confirm that this review has not identifiedany material issues within the financial statements of the Group. There are a small number of very specific contract items that require assessmentand re-alignment. These items require adjustment in the current year. As aresult of this assessment, the Board of Directors feel that it is appropriateand prudent to offset £4.75m against the 2006 operating profit. Trading & Cashflow Update Ongoing, underlying trading in 2006 continues to be encouraging with eachoperating division having a detailed delivery plan for both profit and cashthrough to the 2006 year end. As a part of this, significant contract wins areexpected over the Q4 period. There remains, however, the potential for out-performance based on additional 2006 contract opportunities. In light of the recent review of the trading position the Board of Directorswish to revise the 2006 year end Net Debt expectation to £180m inclusive of theconvertible bond of £65M. The key factor behind this adjustment to forecast debt levels is the delay ofcash receipts associated with the end-loaded profit streams through theremainder of 2006. The revised expectation continues to maintain and enhance theGroups' position against agreed facilities. Prospects for profit and cash in 2006 and beyond remain strong. Legal Review A thorough review has been undertaken of legal services to substantiate anyclaims, liabilities, disputes, arbitration cases, contract disputes, customerissues and no significant hitherto undisclosed liabilities were found. The dispute with Alphameric is now subject to determination by an independentarbitrator but Torex Retail will retain the right of legal recourse on certainissues. This is the position despite recent efforts by the Torex Retail CEO toresolve the dispute amicably without further financial consequences for eitherparty. At this stage in proceedings the Board of Directors foresee nosignificant reduction in earnings per share arising from this matter. A further update will be provided on this legal matter immediately upon thedetermination of the independent arbitrator, which is expected within Q4 2006. Operational Review Some summary action points from the Phase 1 Operations Review are highlightedbelow: 1. Very encouraging progress in the new Divisional organisation but furtherdevelopment still required in some areas 2. Significant opportunity for internal best practice programmes to driveperformance and for group purchase agreements to drive costs and cash 3. Market segment analysis is now critical for - Resource allocation - Company decision making/investment priority - Growth 4. Group marketing framework and talent needed to support marketpenetration 5. Group product strategy is fundamental to a re-allocation of costs tomost productive use - Develop product operations and capacity models versus divisional/market 'pull' and a sales-led cost and organisational model - Consider developing the organisational model for 'core' productdevelopment, wider implications and assessing implementation timescales - Need for standardising software development processes and measures;best use of agreed software development budget in delivering product strategy 6. Assessing sales models, sales processes and organisations for efficiencyand capability 7. Plan for organisation transformation in UK Retail Division, drivingprofitable growth and developing good practice process templates and processmeasurement systems. Enabling UK operations consolidation and economies ofscale 8. Group wide operations strategy and templates needed for customer-ledinternational expansion; maximising the profit opportunity of the 'follow me'strategy of customers in Retail, P&C, QSR 9. Internal Group IT must focus on business infrastructure support Renewed Customer Focus We can increase focus on organic growth in all markets through: - Migrating massive installed base to own PoS products - Cross selling - Developing indirect channels - Leveraging market leadership position and developing own brand - Strategic partnerships and joint bidding on larger client contracts To achieve high levels of organic growth as a technology company we mustre-orientate ourselves through all aspects of our commercial sales approach tothe business needs of our customers to ensure that we keep enhancing: - Blue chip customer base - Multi-national customers - Long term customer relationships - Customer satisfaction - Cross selling opportunities • Additional solutions to existing customers • Additional business growth with existing customers • Next generation solutions for many existing customers Special Initiatives Following the CEO's early visits to major UK and USA shareholders, completelynew processes for professionally handling all aspects of Investor Relations arebeing put into practice. A new Accelerator Bonus scheme has been introduced in targeting andincentivising key employees to deliver superior revenue, profit and cashenhancement by the financial year end. Administrative and management tasks and non-core activities are currently beingidentified and considered for potential out-sourcing contracts. Discussions have commenced with targeted global IT corporations to enter intoStrategic Vendor Relationships to provide more channels to market and enable there-negotiation of supplier agreements. Special cost savings and efficiency improvement initiatives have been started inall areas of Procurement, supply chain, inventory and warehousing to ensure thatwe take full advantage of the total group purchasing volumes with our supplypartners. New finance initiatives driven by new business demands have led to theintroduction of an International Cash Management System, and the development ofan IT/MIS Strategy, IT asset security programme, IFRS project and foreigncurrency exchange system. A review of small business units and product lines inherited as part of pastacquisitions and identified as non-core is ongoing. An announcement will be madein financial year 2006 regarding the prospect of any disposals of non-coreassets. In addition to providing the focus and leadership for the Management Informationand Process Management needed, the CEO's team will provide a platform for aformalised risk assessment and ongoing risk management process within Torex. The Group is beginning to secure a more corporate management style via severaldifferent methods 1. Corporate Governance 2. Organisational structure 3. Management focus 4. Business Processes (financial, commercial and personnel) Commenting on the update, Neil Mitchell, Chief Executive stated: "With thesupport of my internal senior management team and external professional advisorsI have worked tirelessly to completely review the financial and commercialtrading activities of Torex Retail Plc and to my delight I have found a solidbusiness platform. As I perceived prior to my appointment, this is a classicequity play, does everything it says on the box, and has a business model todrive explosive growth from the existing infrastructure and sales pipeline. I am therefore driving the business to execute more of the commercialopportunities to provide for accelerated future growth. I have launched Phase 2 of the Operational Review and at this stage willparticularly focus on management processes and corporate controls in astandardised approach across the Group. It is my intention that by the yearend at December 2006 we will have a Corporate Development Plan clearly outliningour intentions to focus and re-shape all business around execution of salesopportunities and delivery of higher customer service levels. In the meantime the management team is delivery focussed and the respectiveOperating divisions are absolutely attuned to delivery of the 2006 targets. As the largest European player in an industry that is consolidating around us Iam very excited that my team will have the opportunity to take Torex Retailthrough the next stage of its evolutionary development with a target to be theglobal industry leader with a turnover in excess of £1billion". A conference call for UK & US institutional investors will be held today at 15:00 GMT. Participant dial in number: +1 718 354 1172 USA +44 (0)20 7138 0836 UK A replay will be available until Wednesday 15 November. Replay Telephone Number: +1 718 354 1112 USA +44 (0)20 7806 1970 UK Replay Passcode: 5681408# - ends - Enquiries: Torex Retail Plc R Neil W Mitchell Chief Executive OfficerMarcus Leek Chief Financial Officer Gavin Palmer Corporate Governance & Investor Relations Manager0870 300 6061 Gavin Palmer can be contacted directly on 0795 1040558 with Neil Mitchell andMarcus Leek contactable on the day via Citigate Dewe Rogerson Citigate Dewe Rogerson Ginny Pulbrook/Sebastian Hoyle/Freida Moore/Lucie Holloway 020 7638 9571 This information is provided by RNS The company news service from the London Stock Exchange