Tissue Regenix Group Regulatory News (TRX)

14 Aug 2006 07:01

Torex Retail PLC14 August 2006 14 August 2006 Torex Retail plc Interim Results Torex Retail plc ("Torex Retail" or "the Group"), a leading supplier of ITsolutions to retailers worldwide, today announces its interim results for thesix months ended 30 June 2006. Highlights: Financial • Sales of £131.9 million (2005: £52.5m) up 151% on 2005, with continuing operations growth of 140% and underlying organic growth of 8% • Operating profit* increased by 129% to £18.23 million (2005: £7.76 million). Underpinned by a strong 15% growth in organic profit • EPS* up 21% to 2.9p (2005: 2.4p) • Operating cash conversion rate excluding exceptional items of 119% • Group net bank borrowing of £147.9 million, well within the available facilities of £160.0 million Business • Senior management team strengthened with five operational CEOs, alongside new Group and UK finance directors • New market leading products acquired • A number of significant customer wins across the business, including contracts with United News Group, Great Northern Railways, Dutch Post Office, Nokia, The Picture People, Bed Bath and Beyond, Punch Taverns and Tesco • McDonalds gained as a worldwide client through the acquisition of Savista Inc. • Successful integration of acquisitions • Acquisition of Retail-J was completed after the period end and represents the completion of the acquisition phase of the strategy *before goodwill amortisation, cost of employee share schemes and exceptional items Commenting on the results Chris Moore, Executive Chairman of Torex said, "The Group has continued to make good progress during the period in both tradingand strategic development and we have delivered results for the period ahead ofmarket expectations. Our acquisition led growth strategy has built a tremendous platform for growthgoing forward, the Group now has a large blue-chip customer base, strong marketpositions and global reach. It is now time to renew our focus on organic growthand look to execute the substantial benefit from the business opportunities thatwe have created. Our sales pipeline is substantial with a large number of large and very excitingopportunities and the Board remains confident of the Group's prospects for 2006and beyond." Enquiries: Mark Pearman, Marcus Leek Torex Retail Plc 0870 300 6061 Ginny Pulbrook /Seb Hoyle/Lucie Holloway Citigate Dewe Rogerson 020 7638 9571 Notes to Editors: About Torex Retail Plc Torex Retail is a leading independent provider of innovative retail technologysolutions to many of the world's principal retailers. Since the company'sflotation in spring 2004 Torex Retail has achieved rapid growth across all ofits markets and has rigorously pursued its goal of becoming the provider ofchoice. As a result, the company now has a presence in all of the major marketsaround the world and has built a strong platform for future growth in line withits strategy. Torex's Retail's product and solution set spans high street andout-of-town retail as well as hospitality and the petroleum and conveniencesector. With over 6,000 customer relationships, including McDonalds, Tesco,Woolworth, Selfridges, Shell and Argos, the company has earned a leadingreputation amongst retailers. Torex Retail has more than 2,800 staff based in 17countries. www.torexretail.com Torex Retail Plc Interim Results Chairman's Statement I am pleased to present the results of the business for the six months ended 30June 2006. The Group has continued to make good progress during the period inboth trading, with results slightly ahead of market expectations, and alsostrategic development, with the significant enhancement of each area of ourbusiness during the period. The acquisition led strategy that we have pursued in 2005 and the first half of2006 has established a tremendous platform for growth. The massive customer baseand extensive geographic reach that was put in place last year has beencomplemented in 2006 with the acquisition of two leading edge products inRetail-J and NewPOS. The acquisition led phase of growth is now complete and the Group has thenecessary scale and market positions to compete on a global basis. Our focus isnow 100% on organic growth and we are very excited about the opportunitiesavailable to the Group going forward. Trading Results The reported results for the first half of 2006 show sales of £131.9 million up151% on the same period last year and an operating profit before amortization ofgoodwill and exceptional items of £18.2 million up by 129% on 2005. The table below illustrates the geographic split of the sales and operatingprofit gains headlined above. It is clear that the aggressive acquisitionstrategy has delivered the required presence in key global markets with stronggrowth across Continental Europe and the US. The Group has made two acquisitionsduring the six months ended 30 June 2006 - Savista Inc and TQIPS Limited. Bothof these businesses have made positive contributions since acquisition. A thirdacquisition, Retail-J was completed after the period end. Unaudited six Unaudited six months to 30 months to 30 June 2006 June 2005 £'000 £'000 Sales United Kingdom 70,506 39,700 Continental Europe 41,862 8,700 Rest of World 19,538 4,100 131,906 52,500 Operating profit before goodwill United Kingdom 10,957 6,7000Amortisation and exceptional items Continental Europe 5,247 600 Rest of World 2,026 700 18,230 8,000Adjusted earnings per share before goodwill amortisation andexceptional items 2.9p 2.4p Included in the figures above, continuing operations have delivered sales growthof 140% during the period. Whilst much of this growth is attributable toacquisitions made during 2005, the underlying organic growth of 8% remainsencouraging. Market forecasts for revenues in the second half are consistentwith low double digit organic growth for the full year. Our UK & Irish operations have maintained a sales mix focussed on software andservices with 41% of activity being generated in these areas. Strengtheningsales in continental Europe and the Americas, both areas that traditionally havea greater hardware requirement, alongside a small number of large hardwareinclusive deals has increased the proportion of hardware sales within theoverall group sales mix to 33.7%. The weighting of software sales in the secondhalf combined with the contribution from the recent acquisitions (Savista andRetail-J) is expected to bolster software activity and related sales mix for thefull year. Whilst gross margins were affected by the sales mix detailed above gross profitremained strong in all areas of the business and the 62.0% delivered in theperiod is in line with management expectations. Restructuring activities in relation to the 2005 acquisitions have resulted in areduction in the level of administrative expenses over the period. Expenses nowrepresent 48% of turnover, a 6% reduction on the same period last year. Inaddition to this, focus on additional cost savings and efficiency across thebusiness has continued into 2006. This has resulted in an exceptionalrestructuring charge of £4.9 million primarily comprising of redundancy andrelocation costs across the UK and Continental Europe. This remains consistentwith our previous guidance that the full year exceptional restructuring chargewill not exceed £5.5 million. Operating profit before amortization of goodwill and exceptional items of £18.2million represents a 129% uplift on 2005. This reflects a strong 15% growth inunderlying organic profit and the full period impact of 2005 acquisitions. The uplift in the interest payable figure in the period reflects the increasedlevel of bank borrowings as a result of acquisitions made in the second half of2005. The effective tax rate for the period is 25%. Taxation due on ordinaryactivities has benefited from the utilisation of brought forward tax losses notpreviously recognised and a prior year adjustment relating to deferred tax, Balance Sheet & Cashflow The balance sheet as at 30 June 2006 shows net assets of £257.0 million,including goodwill of £396.7 million arising from the acquisitions during 2004,2005 and those completed in 2006 detailed above. The goodwill is being writtenoff over twenty years. Current asset levels continue to be closely managed. Stock days have improved on2005. Whilst debtor and creditors falling due within one year have been affectedby recent acquisitions, more current trends are positive. This is expected tocontinue into the second half of the year. Provisions for liabilities and charges have significantly reduced in the period.This is largely as a result of the 2005 exceptional accruals being matched tothe cash impact. An operating cash conversion rate excluding exceptional items of 119% wasdelivered in the period. Reflecting the impact of 2005 exceptional items, aseasonal peak in the working capital requirement mid-way through project rolloutand the working capital items mentioned above combine to produce a cash outflowfrom operating activities of £6.8 million. The Group net bank borrowing at the end of the period was £147.9 millioncompared to available bank facilities of £160 million. Subsequent to the periodend the group has received the proceeds of the £65 million convertible bondissue, which was primarily undertaken to fund the £40 million cashconsideration for the acquisition of Retail-J. The balance of funds have beenused to settle transaction fees and commissions and reduce bank borrowings. Thisrepayment has reduced the Group's bank facilities to £150 million. Operational Review Retail The acquisition activity in 2004 and 2005 has given Torex a unique opportunityto supply market leading applications to a large and growing customer base.During the current period to June 2006 the retail business has been verysuccessful in selling these applications to new customers and cross sellingadditional applications to existing customers. The recent acquisition ofRetail-J opens up further opportunities to penetrate the tier one UK retailmarketplace and offer retailers an exciting migration opportunity in the future. The first six months of the year have delivered a number of significant EPoSwins including contracts with United News Group, Great North Eastern Railwaysand Reflections, increased activity through distribution channels and roll outwork that has continued on a number of large projects including with New Look,Carphone Warehouse and Monsoon International Stores. Trading has also been strong across the other product areas with notable winsincluding Mexx for our Lucas Planning Solution (400 stores covering 125countries), a major contract with Northgate HR to deliver a manpower and labourscheduling solutions to Boots Group plc and the successful upgrade of amerchandise management solution for Matalan. The integration of the Anker business was completed in the first half with theconclusion of work to unify all our UK field services and maintenanceactivities. This has seen significant investment in equipping Field BasedTechnicians with state of the art communications and call handling technologywhich has enabled significant benefits from reduced call to fix times throughgreater geographic coverage and efficiencies. A major strategic landmark for our UK retail business was the acquisition ofRetail-J in July. Retail-J has established tremendous momentum in the UK EPoSmarket and has won a number of contracts with blue chip retailers with itsleading edge Java based integrated EPoS and Back Office solution. Thecombination of Retail-J's leading product with Torex Retail's unrivalled serviceinfrastructure and domain expertise in the UK market puts the Group in a strongposition to win significant new business going forward. The Retail-J productalso opens up tremendous opportunities for indirect sales through distributorsas the product has been specifically designed to be marketed and implemented bythird parties. The acquisition of Retail-J has been well received by Torex Retail's customersand sales prospects and we have already started to market the Retail-J productthrough our UK sales force. In the first half of 2006, the European retail business has also made goodprogress and is developing an increasing pipeline of new business, as the Groupseeks to cross-sell and penetrate the aquired Anker customer base. Key businesswins included the Dutch Post office (5 year contract for roll-out, service andmaintenance across almost 800 outlets), AVA/Edeka in Germany (400 stores) andSchlecker where Torex won an extension to its annual maintenance contract tocover the entire European estate of some 13,000 stores. In addition, majorroll-outs continue for Marktkauf, Deichmann, Bellaflora, and Cora Cafeterias. In Scandinavia, the Group has enjoyed a good first half which has included thecommencement of a major roll-out for Nordisgruppen (where we have deployed in100 of a contractual 1100 stores), as well as the successful pilot at theFinnish Post Office, where roll-out has also been commenced. In addition, wehave won a contract to supply Lucas to the new Nokia flagship stores globally,and Lucas OSM for on-train hospitality to Avecra. In addition, we have recentlywon a new 150 outlet coffee-shop chain for deployment in 2006 and 2007. Cruiseand Ferry operator ColorLine has agreed to take hand held terminals for all ofthe fleet, and to pilot the Torex self-service pay terminal on their new ship,the Colour Magic. In Germany the restructuring programme resulted in the successful consolidationof Anker Systems GmbH and Torex Retail Solutions GmbH. This was completed by theend of April 2006 with a move to new consolidated premises in Berlin. Theinherent synergies of the restructure, integration of internal IT systems andoutsourcing of field service activity is producing both an enhanced customerexperience and significant cost savings. Reflecting this, the strong first halfhardware sales are continuing whilst software license and maintenance sales arestrengthening after a slower start. Torex Retail Americas has made significant progress in retaining and growing thesolutions at the installed and existing customer base. Significant growth withexisting customers for hardware, software and services included business withAcademy Sports and Outdoors, BJ's Wholesale Club, CompUSA, IKEA, Mervyns,Sedano's Supermarkets and Stein Mart. New customer engagements included winsat Bed Bath and Beyond, Foodland Super Markets, Levi Strauss and Company andNational Wholesale Liquidators. The strategy for our US retail business is to drive increasing revenue from theGroup's existing software products and one particular highlight in the USbusiness was our first win for Lucas from a US headquartered retailer. Thecontract with the Picture People, a nationwide chain with over 300 outlets, wassecured within a year of the launch of Lucas in the US, which is an impressiveachievement. Roll-out is now underway and this will act as a valuable referencesite for future Lucas sales. The success of our market leading food and groceryproduct, ISIS, continued with two further wins at Marukai Corporation andParamount Foods. The integration of the Retail Store Systems and Systech businesses is nowcomplete. An integrated and comprehensive management team has been put in placefor the entire Americas organization covering all aspects of the operatingbusiness. Hospitality The Hospitality division has enjoyed a good first half with over £7m of newbusiness wins including contracts with Punch Taverns, Mitchells and Butlers,French contract caterer Elior and a number of casinos throughout Europe andAfrica. The main highlight was our entry into the Quick Service Restaurant ("QSR")market and gaining McDonalds as a worldwide client through the acquisition ofSavista in April 2006. The key short term QSR opportunity relates to the global rollout of NewPOSacross the McDonald's Corporation. This will include deployments to new sites,both owned and franchised, throughout Asia, Europe and North America. NewPOS isnow installed in over 6,000 of McDonalds 30,000 plus restaurants worldwide hencethe future revenue opportunity is substantial. We have also completed severalsignificant development projects for McDonalds and initiated a new ongoingservices contract to support software in all restaurants in their Asia PacificMiddle East Africa region. The broader launch of the NewPOS product to the QSR market outside of McDonaldshas continued to receive a strong reception from the marketplace. This hasresulted in significant increased sales opportunities and the first sale wassecured in July. This includes a pilot POS system and continued support serviceto a multinational cafe operator. The QSR market is currently experiencing ahigh level of activity with a number of international QSR companies looking forreplacement systems. As a proven international product with leadingfunctionality and architecture NewPOS is very well placed to compete for thisbusiness. The successful integration of Savista with Torex Retail is leading to expandedopportunities to increase scope of offering and size of potential new contracts. In the Hotels market we have successfully launched XN GlobalRES, an electronicreservations service, directly linking the travel industry's Global DistributionSystems to hotel management system users. With some 50 sites now connected tothe service in the United Kingdom, Australia and Denmark, sales channels forthis transaction-based service are now being developed through an establishedcommercial partner, Protel ,a leading hotel systems software vendor, and theirinternational dealer network. In addition we have made our first sales of ourinnovative Microsoft based Inroom Entertainment System to three hotels owned byQueensgate Holdings in South Africa. Petrol and Convenience (P&C) We are now in a strong position to capitalise on our unique offer and during thesecond half of 2006 take advantage of the obvious synergies with other Torexdivisions throughout the world. The Petroleum and Convenience division of Torex Retail has made rapid progressin the first half of 2006, with full year revenues expected to be double thoseof 2005. In the first half of 2006, the P&C division has made good progress in developingnew business and cross-selling the group's existing services. The division'srestructuring of the five businesses into one body is proceeding well. Benefitsare already visible with the enhanced Torex brand allowing easier access topotential key new accounts. The successful integration of TQIPS into the group is proceeding according toplan. Major new contract wins through TQIPS include projects with BT, Asda andTesco stores. An important part of our P&C strategy is to increasingly target the majorsupermarkets, oil companies and large convenience chains. It was thereforepleasing to secure a major EPoS contract with Budgens for 60 sites amounting to300 systems with an additional 40 sites (200 systems) expected to becontractually signed within the second half of this year. Key wins in the service environment include the award of a three year maincontract of 214 UK forecourt sites for Tesco in addition to 24 sites on theTesco distribution network. Our Irish business has re-signed Tesco Ireland onservice and support and won an additional contract with Stat Oil. The portfolio of future projects is strong with advanced discussions on majorcontracts with customers based in China, Jordan and Romania. Board and Management As I announced in my Chairman's Statement to the 2005 results, we are planningto split the role of Chairman and Chief Executive currently held by myself. Wehave been undertaking an extensive search process and we are committed toannounce an appointment in the second half. Mark Pearman continues as acting Finance Director, on the PLC Board, but asannounced on 27 July 2006, we have appointed Marcus Leek to the role of GroupFinance Director. Marcus, who has a strong retail finance background joins fromthe Caudwell Group where he was a divisional Finance Director. Marcus hasalready effectively taken on full responsibility for all aspects of GroupFinancial Management and reporting. As recently announced, the Group has also made a number of new senior managementappointments as follows: • CEO of UK General Retail: Doug Hargrove (age 39) (Previously Chief Operating Officer, UK & Ireland) • CEO of Overseas Business: Phil Cox (age 40) (Previously Group Treasury Officer) • CEO of Hospitality & QSR: Keith Pascal (age 41) (Previously VP Sales & Marketing, Savista Inc.) • CEO of P&C :Brendan Kavanagh (age 41) (Previously Head of P&C Division Worldwide) • CEO of Americas General Retail: Mike Hess (age 43) (Previously President and COO of Torex North America) This structure has been put in place to improve the Group's focus on its majormarkets so that product strategy can be refined and targeted to better meetcustomers requirements. This new structure reflects the completion of theacquisition and integration phase of the Groups strategy which required strongcentral control and leadership. A more decentralised management style and culture is required to drive the totalfocus on organic growth going forward. Outlook The Group's acquisition led growth strategy has built a tremendous platform forgrowth going forward - the Group has a large blue chip customer based, strongmarket positions and global reach. The full benefits of this investment willaccrue in 2007 and beyond. Nearer term we have a challenging and exciting second half ahead of us. We havea substantial sales pipeline including a number of very large opportunitieswhich gives the Board confidence for the Group's prospects for the remainder of2006. Dividends It is the Board's intention that shareholders benefit from the continuedprogress of the Group through a progressive dividend policy, which at the sametime balances the need to retain funds within the Group for investmentopportunities. Consequently an interim dividend of 0.137p (2005 - 0.125p) isbeing declared today. The dividend will be paid on 22 September 2006 toshareholders on the register at the close of business on 25 August 2006. Chris Moore Chairman & Chief Executive 14 August 2006 Consolidated Profit and Loss Account Unaudited six Unaudited six Audited twelve months to 30 months months to 31 June 2006 to 30 June 2005 December 2005 (Restated) Note £'000 £'000 £'000 Turnover 6 Continuing operations 126,099 52,466 167,366Acquisitions 5,807 - -Total turnover 131,906 52,466 167,366 Cost of sales (50,083) (16,156) (62,200) Gross profit 81,823 36,310 105,166 Total administrative expenses (80,541) (32,513) (113,001) Operating (loss)/profitContinuing operations before goodwill amortisation,employee share schemes and exceptional items 17,069 7,959 27,854Acquisitions before goodwill amortisation, employee share schemes and exceptional items 1,161 - - 18,230 7,959 27,854 Exceptional items 5 (4,870) (1,807) (19,995)Charges in respect of employee share schemes (2,640) - (5,663)Goodwill amortisation (9,438) (2,355) (10,031) Operating profit/(loss) 6Continuing operations 852 3,797 (7,835)Acquisitions 430 - -Total operating profit 1,282 3,797 (7,835) Net interest payable (4,968) (1,711) (5,785) (Loss)/Profit on ordinary activities before taxation (3,686) 2,087 (13,620) Taxation on ordinary activities (1,438) (1,332) 1,272 (Loss)/Profit on ordinary activities after taxation (5,124) 754 (12,348) Minority interest 100 - (184) (Loss)/Profit for the financial period (5,024) 754 (12,532) Basic earnings per share 4 (1.5)p 0.4p (5.4)pDiluted earnings per share 4 (1.5)p 0.4p (5.4)p Consolidated Balance Sheet Unaudited six Unaudited six Audited twelve months to 30 months months to 31 June 2006 to 30 June 2005 December 2005 (Restated) (Restated) Note £'000 £'000 £'000 Fixed assetsIntangible assets 396,686 105,202 361,814Tangible assets 9,872 3,425 9,385Investments 140 - 140 406,698 108,627 371,199Current assetsStocks 26,691 11,913 23,974Debtors 7 89,157 38,536 76,517Cash at bank and in hand 8,126 3,321 13,442 123,974 53,770 113,933 Creditors: amounts falling due within one year 8 (119,769) (50,061) (102,494) Net current assets 4,205 3,709 11,439 Total assets less current liabilities 410,903 112,336 382,638 Creditors: amounts falling due after more than one year 9 (142,387) (33,860) (134,432) Provision for liabilities and charges (8,261) - (21,302) Net assets excluding pension liabilities 260,255 78,476 227,044 Pension liabilities (3,244) - (3,556) Net assets 257,011 78,476 223,488 Capital and reserves Called up share capital 3,706 1,886 3,265Share premium account 62,188 71,714 61,733Merger reserve 202,410 - 164,357Other reserve 8,244 545 5,603Profit and loss account 14 (19,790) 4,331 (11,823)Employee benefit trust (39) - (39)Equity shareholder's funds 256,719 78,476 223,096 Equity minority interests 292 - 392 257,011 78,476 223,488 Consolidated Cashflow Statement Unaudited Unaudited Audited twelve six months six months months to 31 to 30 June to 30 June December 2005 2006 2005 £'000 £'000 £'000 Net cash (outflow)/inflow from operating activities 12 (6,792) 2,424 12,192 Return on investments and servicing of finance Interest paid (5,213) (3,241) (4,570)Issue costs of new bank loan - - (1,608)Interest paid on finance leases (162) - (577)Interest received - 26 111Net cash outflow from returns on investments and (5,375) (3,215) (6,644)servicing of finance Taxation (1,435) (352) (619) Capital expenditure Purchase of tangible fixed assets (1,697) (262) (1,943)Proceeds from sale of tangible fixed assets - - 78Net cash outflow from capital expenditure and financial investment (1,697) (262) (1,865) Acquisitions and disposals Purchase of subsidiary undertakings (2,150) (17,887) (60,835)Disposal of investments - - 92(Overdraft) included within acquisitions (140) (743) (4,737)Deferred consideration payments (858) - (3,200)Net cash outflow from acquisitions and disposal of businesses (3,148) (18,630) (68,680) Equity dividends paid (2,311) (1,058) (1,474) Net cash flow before financing (20,758) (21,093) (67,168) Financing Issue of ordinary share capital - 47 -Exercise of share options 447 - 151Loan advances 15,778 13,236 111,312Loan repayments - - (39,499)Finance lease inception - - -Capital element of finance lease payments (783) - (612) (Decrease)/increase in cash (5,316) (7,810) 4,184 Reconciliation of net cashflow to movement in net debt Unaudited Unaudited Audited twelve six months six months months to 31 to 30 June to 30 June December 2005 2006 2005 £'000 £'000 £'000 Increase /(Decrease) in cash in the period (5,316) (7,810) 4,262Cash inflow from increase in debt (14,995) (13,236) (71,201) Changes in net debt resulting from cash flow (20,311) (21,046) (66,939) Debt acquired on acquisitions (270) (825) (41,930)New finance leases incepted in the period (490) (157) (1,981)Issue costs of new financing - 1,528 1,354Exchange movement 78 (309) (1,206)Movement in net debt in the period (20,993) (20,809) (110,702) Net debt at beginning of the period 11 (130,058) (19,356) (19,356) Net debt at end of the period 11 (151,051) (40,165) (130,058) Consolidated Statement of Total Recognised Losses for the financial period Unaudited six Unaudited six Audited twelve months ended 30 months ended 30 months to 31 June 2006 June 2005 December 2005 £'000 £'000 £'000 Loss for the financial period (5,024) (304) (12,532)Actuarial adjustments to defined benefit pension liability - - (406)Exchange differences on translation of net assets of subsidiary undertakings (632) (85) (2,132) Total losses for the financial period (5,656) (389) (15,070) TOREX RETAIL PLC INTERIM REPORT AND ACCOUNTS Notes to the financial statements 1 The interim results for the six month period ended 30 June 2006 areunaudited and do not constitute statutory accounts within the meaning of s.240of the Companies Act 1985. They have been prepared in accordance with accountingpolicies adopted in the Torex Retail Group statutory accounts for 31 December2005. Charges in respect of employee share schemes will be completed inaccordance with FRS 20 as part of the full year audited accounts. The effect ofthe change of accounting policy is expected to significantly accelerate thetiming of the schemes' cost. Goodwill arising from the acquisition of subsidiary undertakings, representingthe difference between the purchase consideration and the fair value of the netassets acquired, has been capitalised and is amortised on a straight line basisover its estimated useful economic life. No fair value adjustments have been made in respect of any of the acquisitionsmade in the period. 2 During the period the Torex Retail acquired Savista Inc and TQIPS Limited.The goodwill on these acquisitions and those made last year is being written offon a straight line basis over a period of twenty years. Subsequent to the 30 June 2006, Torex Retail plc has also acquired Retail-JLimited and issued £65 million convertible bonds ( "the Bonds" ) in a privateplacement. The Bonds are issued by Torex Retail (Jersey) Limited and guaranteed by TorexRetail. The proceeds of the issue have been used for the acquisition of Retail-JLimited, repayment of senior debt facilities and for general corporate purposes. The Bonds have a maturity of 5 years and are convertible into ordinary shares ofTorex Retail and have a coupon of 5.5% and a conversion price of 86 pence. TheBonds are listed on the Channel Islands Stock Exchange. 3 The proposed interim dividend of 0.137p (2005: 0.125p) per ordinary sharewill be paid on 22 September 2006 to shareholders on the register at the closeof business on 25 August 2006. 4 Earnings per share for the six month period ended 30 June 2006 is based onthe profit after taxation and minority interests of £5,124,000 divided by theweighted average number of shares during the period, 340,513,562 (basic) and375,366,394 (diluted) 1p ordinary shares. Adjusted earnings per share (excluding goodwill amortisation, share schemecharges and exceptional items) for the period is 2.9p (2005: 2.4p). A reconciliation of the basic and diluted number of shares used in the six monthperiod ended 30 June 2006 is: Weighted average number of shares 340,513,562 Dilutive share options 17,469,478 Dilutive deferred consideration 17,383,394 Diluted 375,366,394 5 Exceptional items The exceptional items represent restructuring costs arising from rationalisingand reorganising companies acquired. 6 Segmental analysis Unaudited six months Unaudited six months to 30 June 2006 to 30 June 2005 Turnover Operating profit Turnover Operating profit before goodwill before goodwill amortisation, share amortisation, share schemes and schemes and exceptional items exceptional items £'000 £'000 £'000 £'000 Geographical split United Kingdom 61,915 9,505 39,931 6,672Continental Europe 46,936 6,689 8,467 618Rest of World 23,055 2,036 4,068 669 131,906 18,230 52,466 7,959Goodwill amortisation (9,438) (2,355)Exceptional items (4,870) (1,807)Charges in respect of employee share schemes (2,640) - Operating profit 1,282 3,797 7 Analysis of debtors Unaudited six Unaudited six Audited twelve months to 30 June months to 30 June months to 31 2006 2005 December 2005 £'000 £'000 £'000 Trade debtors 55,997 17,807 54,781Prepayments and other debtors 33,161 20,729 21,736 89,157 38,536 76,517 8 Analysis of creditors: amounts falling due within one year Unaudited six Unaudited six Audited twelve months to 30 June months to 30 June months to 31 2006 2005 December 2005 £'000 £'000 £'000 Bank loans and overdrafts 17,068 9,221 9,022Finance leases 2,343 405 1,345Trade creditors 24,086 13,472 23,853Corporation tax 3,519 1,348 3,131Deferred income 20,298 11,456 26,030Other creditors 52,454 14,159 39,113 119,769 50,061 102,494 9 Analysis of creditors: amounts falling due after more than one year Unaudited six Unaudited six Audited twelve months to 30 June months to 30 June months to 31 2006 2005 December 2005 £'000 £'000 £'000 Bank loans 137,927 33,574 131,309Finance leases 1,839 286 1,824Other creditors 2,621 - 1,299 142,387 33,860 134,432 10 Deferred consideration Other creditors contains a total of £13,538,000 in relation to deferredconsideration. This amount, which represents the current estimate of the amountdue, is wholly payable in shares, with £12,038,000 falling due within one yearand £1,500,000 falling due after more than one year. 11 Analysis of Net Debt At 1 January Cash flows On Non cash Exchange At 30 June 2006 acquisition movements movement 2006 £'000 £'000 £'000 £'000 £'000 £'000 Cash at bank and in hand 13,442 (5,316) - - - 8,126Short term loans (9,022) (8,058) - - 12 (17,068)Long term loans (131,309) (6,677) - - 59 (137,927)Finance leases (3,169) (260) (270) (490) 7 (4,182) (130,058) (20,311) (270) (490) 78 (151,051) 12 Net Cashflow from Operating Activities Unaudited six Unaudited six Audited twelve months ended months ended months to 31 30 June 2006 30 June 2005 December 2005 £'000 £'000 £'000 Operating profit 1,282 3,797 (7,835)Depreciation charges 1,834 500 2,249Goodwill amortisation 9,438 2,355 10,031Exchange differences (115) - 210Loss on sale of tangible fixed assets - - 64Non cash exceptional share schemes 2,642 - 5,058(Increase) in stocks (2,362) (1,529) (2,661)(Increase) in debtors (6,427) (1,116) (7,882)Increase/(Decrease) in creditors 939 (1,583) 4,869(Decrease)/Increase in provisions (14,023) - 8,089 (6,792) 2,424 12,192 13 Contingent liability During the period Torex Retail have received a claim for additionalconsideration from Alphameric Plc of up to £13 million, in relation to theacquisition of Alphameric Retail Limited by Torex Retail. Based on advicereceived from our legal and financial advisors, Torex Retail is of the opinionthat no additional payments are due to Alphameric Plc in respect of theacquisition and will resist strongly the claim being made. 14 The Profit and Loss account is stated after the payment of the final 2005dividend of £2,311,000. 15 A copy of this interim statement is being sent to all shareholders andfurther copies are available from the Company's Registered Office at the addressbelow as well as on the Company's website: www.torexretail.com Torex Retail Plc, Telfer House, Range Road, Witney, Oxfordshire OX29 0YN This information is provided by RNS The company news service from the London Stock Exchange