Tissue Regenix Group Regulatory News (TRX)

26 Sep 2005 07:02

Torex Retail PLC26 September 2005 Monday 26 September 2005 Torex Retail plc ("Torex" or "the Group") Interim Results Torex Retail plc, the market leading international provider of innovative ITretail solutions, today announces its interim results for the six months ended30 June 2005. Highlights: Financial • Sales up by 81% to £52.5 million (2004: pro forma* £28.9million); • Operating profit** increased by 95% to £8.0 million (2004: pro forma* £4.1 million); • Earnings per share** up 50% to 2.4p (2004: pro forma 1.6p); • Underlying organic sales growth of 9%; • Software and services sales revenues increased to 41% of total sales. Business • Management team restructured to provide bandwidth for global business; • Successful integration of major new businesses Alphameric and Retail Store Systems now completed; • Integration of XN Checkout and Anker well underway and will contribute positively to the second half; • Proposed acquisition of Systech Retail Systems Corp (Openfield) for up to C$38.5 million to provide further penetration of US market; • Focused product strategy continues to provide strong organic growth with LUCAS now installed in over 200 UK stores and over 11,000 lanes throughout Europe; • Strong new wins with Co-Op Home Stores, Ann Taylor, Bargain Crazy, RD Scotts and Slaters; • Acquisitions of Hoffmann Datentechnik GmbH and CTN Systems Ltd completed in June 2005 already contributing positively. Commenting on the results Chris Moore, Executive Chairman of Torex said, "These results pay tribute to our highly professional team, our focused productstrategy and infrastructure to manage the rapid changes undertaken during theGroup's exciting corporate developments. The proposed acquisition of Openfieldwill be immediately earnings enhancing, expands our US activities and takes usinto the massive market for Tier 1 grocery and supermarket systems for the firsttime with a market leading application. Torex Retail's strategy of becoming a global leader in the provision ofinnovative retail solutions is well underway: we have the management bandwidth,business model and product strategy to manage our strong growth prospects bothorganic and from the successful integration of our recently acquired businessesin the UK, Europe and the USA. " *Pro forma information reflects results for the Group as if it had been tradingin its current form for the full six month period ended 30 June 2004.** Before goodwill amortisation and exceptional items. Enquiries: Torex Retail plc +44 (0) 870 050 9900Chris Moore, Executive ChairmanRichard Thompson, Finance Director Citigate Dewe Rogerson +44 (0) 20 7638 9571Ginny Pulbrook / Seb Hoyle Notes to Editors: About Torex Retail plc Torex Retail is a leading independent provider of cutting edge 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 the petroleum and convenience sector and with over6,000 customer relationships, including Tesco, Woolworth, Selfridges, Shell andArgos, the company has earned a leading reputation amongst retailers. TorexRetail has more than 2800 staff based in 17 countries. www.torexretail.com Torex Retail plc Interim Results Chairman's Statement "I am delighted to present the results of the business for the six months ended30 June 2005. The Group has made excellent progress during the period and I ampleased to report that trading is ahead of expectations. This excellent set of result reflects strong organic growth from both our UK andEuropean Store Management Solutions ("SMS") business, coupled with theintegration synergies and benefits arising from recent acquisitions. Following the recent acquisitions of XN Checkout Plc ("XN") and Anker Plc ("Anker"), which were completed on 29 July 2005 and 23 August 2005 respectively,we are now well positioned to aggressively pursue our overall objective ofestablishing the Group as the leading independent IT solutions provider to theglobal retail market. Trading Results The reported results for the first half of 2005 show sales of £52.5 million upby 81% on the pro-forma figures for 2004 and operating profit beforeamortisation of goodwill and exceptional items of £8.0 million up by 95% on thesame period last year. As the Company was incorporated on 4 February 2004 we have reproduced belowpro-forma figures for 2004, which show the results for the Group as if the Grouphad been trading for a full six month period. We believe that this provides abetter comparative to our first half trading results. The pro-forma figures havebeen extracted directly from our interim results statement for the period ended30 June 2004 and the basis of the preparation for this pro-forma information isgiven in the Notes to the Financial Statements below. Actual six months Pro forma six ended 30 June 2005 months ended 30 (unaudited) June 2004 (unaudited) £'000 £'000 Sales Store management solutions 43,712 22,088 Petroleum and convenience 8,754 6,852 52,466 28,940 Operating profit before goodwill Store management solutions 7,180 2,795amortisation and exceptional items Petroleum and convenience 779 1,278 7,959 4,073Adjusted earnings per share beforegoodwill amortisation and exceptionalitems 2.4p 1.6p The Group has achieved strong sales growth during the period with ongoing salesincreasing by 81%. Whilst much of this growth is attributed to acquisitions madesince June 2004 the underlying organic growth is an impressive 9% reflecting thestrength of our product offering, the improving market conditions and theexcellent efforts of all our staff. We are particularly pleased with the growth in sales of software and services,which have increased to 41% of total sales, up from 37% for the same period lastyear. This is in line with our stated business objective of pursuing highermargin software sales. Hardware sales have remained constant as a percentage of total sales at 27.9%.This reflects the effect of the acquisitions of the KPOS and RSS businesses,whose sales are traditionally more hardware based. Without the effect of theseacquisitions the Group's hardware sales would have fallen to 23% of total sales,which again reflects our success of increasing higher margin sales at theexpense of lower margin hardware sales. Maintenance sales have fallen to 29% of total sales, due to the different salesmix in the Group caused by the recent acquisitions. Gross margins were strong in all areas of the business, and are in line withmanagement's expectations. The Group has continued to focus on cost savings and improving efficiencies inall areas of the business with a particular emphasis on the Alphameric Retaildivision which was acquired in November 2004. This has resulted in arestructuring charge of £1.8million which primarily reflects redundancy costs. The interest payable figure in the period includes a charge of £0.6 million forthe write off of costs associated with setting up the original bank finance,which were being prepaid over the life of the loan. As described below, theGroup has recently negotiated new bank facilities The minority interest charge shown in the 2004 pro forma figures arose from the30.2% minority interest in Torex GmbH, which was acquired by the Group inSeptember 2004. The Group has made four acquisitions during the six months ended 30 June 2005and Retail Store Systems Inc ("RSS"), Flexiline Forecourt Services Ltd ("Flexiline") Hoffmann Datentechnik GmbH ("Hoffman") and CTN Systems Ltd ("CTN").All these businesses have made positive contributions since acquisition. Balance Sheet The balance sheet as at 30 June 2005 shows net assets of £79.5 million,including goodwill of £105.2 million, which is being written off over twentyyears and arises from the acquisitions made during 2004 and those made in 2005,described above. During the period the Group has negotiated a new bank facility of £150 millionwith the Royal Bank of Scotland. This will be used to finance the Group's growthplans. As at 30 June 2005 the Group had net debt of £40.2 million. Since theperiod end this has increased due mainly to the acquisitions of XN and Anker. Operational Review: Store Management Solutions The SMS business has performed extremely strongly in both the UK and Germanyachieving new wins for Lucas, the Group's market leading JAVA based electronicpoint of sale ('EPoS') solution. New customer wins include several majorcustomers in the UK, including Co-Op Home Stores and Mitsukoshi and morerecently Bargain Crazy and Slaters. Whilst overseas, new business has beensecured with Reiss, Deichmann and Esprit. Lucas is now installed in over 200 stores and 500 lanes in the UK with moreplanned over the next few months during our peak trading period. Theseinstallations show the strength of our flagship EPoS product and will also actas excellent reference sites for future sales wins. Through RSS, which was acquired for $27.9 million in May, we are already makingprogress into the US, the largest market in the world for retail IT systems.Lucas was launched at the retail systems exhibition in Chicago earlier this yearand has already generated a significant amount of interest and is included onseveral short lists with major customers. In addition, the Group's market leading merchandising product 'Smart Decision'has continued to achieve new contracts wins with Ann Taylor, Littlewoods,Oldrids and Modelo Continente in Portugal (part of the €1.6 billion Sonnaegroup). More recently there has been a further contract win with Slaters andtalks are ongoing with major US retailers, where significant benefits can beachieved from optimalising local stock and range planning to reflect thedemographic and climatic differences across North America.. On 25 August the Group completed its £98.5 million acquisition of Anker, a majorEuropean supplier of IT retail solutions. This acquisition made the Torex RetailGroup the biggest independent supplier of retail IT solutions in Europe andsignificantly increased its geographic footprint. The integration of Anker intoTorex Retail is well underway and we have already achieved a significant part ofthe £6 million savings identified at the time the acquisition was announced. Hospitality and Leisure On 29 July Torex Retail completed its acquisition of XN for a consideration of£72.2 million and as a result became the market leader in the UK hospitalitysector. The acquisition provides the Group with a profitable business with ablue chip customer list and an excellent product portfolio. Since theacquisition was announced, XN has secured new contract wins with Cafe Nero (£3million over four years) to install a web based solution into over 200 stores,the National Union of Students (£5 million over 3 years), Ladhar Leisure (£1million) and the next phase of a rollout to 500 Punch outlets (£5 million over 3years). Petroleum and Convenience ('P&C') Petroleum and convenience in the UK has made good progress in the first half of2005, where work has commenced on the recently announced £3.3 million deal withSomerfield to install our market leading EPoS solution and back office systeminto 225 stores across the UK. In addition P&C has just completed a very successful trial with a majorsupermarket group to fully support a number of their existing petrol forecourtoperations. A further announcement to expand the trial is expected in the nearfuture. The acquisition of Flexiline for £2.1 million in January has enabled thedivision to broaden its product offering in the UK and be able to fully supportretailers' petrol forecourt installation and maintenance requirements. Thismakes P&C UK particularly attractive to the supermarket chains and major oilcompanies ('MOCs'). Similarly, the recent purchase of RPS in Ireland for amaximum consideration of €9 million in August 2005, has given the Group the samecapacity in Ireland and opened up several exciting opportunities with MOCs. Sales in the P&C division in Europe have fallen back in the first half of 2005,reflecting the completion of a significant roll out programme across the Beneluxcountries for Q8 in 2004. Work is underway to develop our European operation inother geographic regions and this is expected to yield results in 2006 andbeyond. Strategy The Group's strategy is built around the development of modern and innovativeproducts that cover all of today's retailers' IT requirements. These leadingedge products can then be sold both to new customers and to the Group's existingcustomer base. In addition there is an opportunity for the Group to act as a key consolidatorwithin the fragmented global retail IT market. By identifying correctly pricedacquisition targets and using an experienced management team to integrate thebusiness into Torex Retail, the Group can acquire strong customer relationshipswhich it can nurture by selling its leading edge products. In addition,significant operational synergies can be achieved by eliminating unnecessaryduplication of ancillary central costs and services. Management Restructuring In order to provide the management bandwidth to support the Group's ambitiousgrowth plans the following executive management restructuring has been put inplace:- Chris Moore is appointed Executive Chairman. Ed Dayan (XN's former CEO) has been appointed to the main board asChief Technology Officer. Philip Cox, previously a senior director of Royal Bank of Scotland ("RBS"), is appointed Group Chief Treasury Officer and advisor to the board. Philheld an Executive Management position at RBS, and more recently undertook threeManaging Director level roles within its corporate Banking division. He bringswith him a wealth of experience in the world of corporate finance, riskmanagement and broader business management skills. His appointment strengthensthe finance, operations and strategic elements of the business. Further senior executive appointments announced today are: o Mark Sprigg, Chief Commercial Officer, encompassing global sales; o Martin Hogarty, Chief Operating Officer UK; o Steve Tilley, President USA; o Jeroen Boon, CEO Central Europe; o Chris D'hondt as CEO Western Europe. Rob Loosemore steps down from the board but will continue in astrategic executive role for the next 2 years. He has undertaken not to disposeof any significant proportion of his shareholding in the short to medium term. Expansion into US market with proposed acquisition of Systech Retail Systems forup to C$38.5M Torex Retail also announces that it has today made a recommended offer for thewhole of the issued and to be issued share capital of Systech Retail SystemsCorp ( " Systech" ), a Canadian company listed on the Toronto Stock Exchange(TSX: "SYS") but based in North Carolina in the United States. The offer valuesSystech in the range of approximately C$29.5 million to C$38.5 million,dependent on the performance of certain Systech assets post-closing. Systech which carries on business as OPENFIELD Solutions ("Openfield") is aleading software solution provider to the US supermarket and grocery sector withtheir ISIS and Store Central applications. With a very strong track record inretail and grocery solutions, Openfield will significantly strengthen TorexRetail's presence in the US point-of-sale marketplace. Openfield has aninstalled base of over 3,000 ISIS user licences and also provides bespokesoftware development services with a particular expertise in IBM's 4690 retailoperating system and both SA and GSA point of sale software. Openfield's bluechip customer base includes Safeway, Food Lion, BJ's Wholesale Club, AcademySports & Outdoors, Sedano's and Magruders . The Openfield customer base in general retail provides cross sellingopportunities for LUCAS, and the Group's other best of breed solutions whilstOpenfield's leading grocery and supermarket solutions provides immediate entryinto the grocery segment in both North America and Europe with a provensolution, tremendous skills and strong Tier 1 references sites. The proposedacquisition will also give rise to economies of scale from integrating Openfieldinto the Group's existing US activities. The US is a key part of Torex Retail's strategic growth plans and providesaccess for its solutions to the world's largest single market for retailmanagement systems with annual estimated software sales alone of some $1.2billion. The US retail systems market is currently experiencing strong growthwith analysts predicting that some 76 % of US retailers will replace their pointof sale systems over the next five years. In the year ended 31 January 2005 Openfield achieved revenues of C$20.2 millionwith a loss before profit and discontinued activities of C$9.1 million.Openfield had net assets of $14.8 million at 31 January 2005. Trading hasimproved during the current financial year as evidenced by the unaudited interimannouncement on 14 September 2005 which reported Operating Profits ofC$0.7million for the six months ended 31 July 2005 on revenues on c$10.3million. The holders of Systech common equity will receive cash consideration ofapproximately C$9.5 million before transaction expenses expected to beapproximately C$3.2 million. Holders of preferred equity have agreed to forgotheir preference and will instead convert their shares into common shares. TorexRetail will also assume debt and other non-working capital liabilities ofapproximately C$29.0 million, of which C$5.0 million will be satisfied by theissue of Torex Retail ordinary shares and approximately $9.0 million is onlyrepayable contingent upon the performance of certain Systech assets. The transaction is structured as a court controlled Plan Of Arrangement and isexpected to complete on 1 November 2005. Under support agreements in respect ofthe transaction, holders of least 71% of Systech's share capital have agreed tovote in favour of the transaction at the general meeting of Systech to beconvened to consider the transaction. Notwithstanding, the transaction remainssubject to shareholder (including, if required, minority shareholder),regulatory and court approvals. Outlook The second half of 2005 has started strongly with the announcement of newcontract wins for our Lucas product with Bargain Crazy, AJT and Slaters. Therecently acquired XN business is continuing to experience strong demand for itsproducts in the hospitality and leisure sectors and also has some very excitingopportunities in the gaming market. The integration of Anker in both the UK andEurope is well underway and is ahead of expectations. The acquisition ofSystech with its blue chip customer base combined with RSS will provide theGroup with improved access to the US retail systems market. In addition, thesales pipeline is also continuing to build in all areas of the Group. As a result, the Board remains confident about the Group's future prospects for2005 and beyond. Dividends It is the Board's intention to ensure that shareholders benefit from theperformance of the Group by adopting a progressive divided policy, whilstbalancing this with the continuing investment needed to increase earnings.Consequently an interim dividend of 0.125p per share is being declared today.This dividend will be paid on 4 November 2005 to shareholders on the register atthe close of business on 5 October 2005. Chris MooreExecutive Chairman26 September 2005 TOREX RETAIL PLC - FINANCIAL STATEMENTSINTERIM RESULTS 2005 Group profit and loss account Unaudited six Unaudited five months to 30 months to 30 June 2005 June 2004 (Restated) Note £'000 £'000 Turnover 9Continuing operations 47,069 25,118Acquisitions 5,397 -Total turnover 52,466 25,118 Cost of Sales (16,156) (7,416) Gross profit 36,310 17,702 Administrative expenses (28,351) (13,447) Operating profit before goodwill amortisation and exceptional itemsContinuing operations 7,272 4,255Acquisitions 687 -Total operating profit before goodwill amortisation and exceptional 7,959 4,255items Exceptional items 5 (1,807) -Goodwill amortisation (2,355) (1,294) Operating profit 9Continuing operations 3,297 2,961Acquisitions 500 -Total operating profit 3,797 2,961 Net interest payable (1,711) (465) Profit on ordinary activities before taxation 2,086 2,496 Taxation on ordinary activities (1,332) (1,088) Profit on ordinary activities after taxation 754 1,408 Minority interests - (171)Dividend (1,058) - Retained (loss)/profit (304) 1,237 Earnings per share before exceptional items and goodwill 4 2.4p 1.6pamortisationBasic earnings per share 4 0.4p 0.8pDiluted earnings per share 4 0.4p 0.7p Group balance sheet Unaudited Unaudited 30 June 30 June 2005 2004 (Restated) Note £'000 £'000 Fixed assetsIntangible assets 105,202 60,154Tangible assets 3,425 1,333 108,627 61,487Current assetsStocks 11,913 6,157Debtors 6 38,536 16,368Cash at bank and in hand 3,321 5,965 53,770 28,490 Creditors: amounts falling due within one year 7 (49,061) (21,339) Net current assets 4,709 7,151 Total assets less current liabilities 113,336 68,638 Creditors: amounts falling due after one year 8 (33,860) (17,020)Minority interest - (125) Net assets 79,476 51,493 Capital and reservesCalled up share capital 1,886 1,535Shares to be issued 1,000 4,181Share premium account 71,714 44,712Other reserve 545 -Profit and loss account 4,331 1,065Shareholders' funds - equity 79,476 51,493 Group cashflow statement Unaudited Unaudited six months five months to 30 June to 30 June 2005 2004 £'000 £'000 Net cash inflow from operating activities 2,424 4,202 Return on investments and servicing of financeInterest paid (3,241) (503)Interest receivable 26 38Net cash outflow from returns on investments and servicing of finance (3,215) (465) Taxation (352) (357) Capital expenditurePayments to acquire tangible fixed assets (262) (173) Acquisitions and disposalsPurchase of subsidiary undertakings (17,887) (66,282)Net cash acquired with subsidiary undertakings (743) -Net cash outflow from acquisition of businesses (18,630) (66,282) Equity dividends paid (1,058) - Net cash flow before financing (21,093) (63,075) FinancingIssue of ordinary share capital 47 47,820Net loan advances 13,236 21,220 (Decrease)/Increase in cash (7,810) 5,965 Reconciliation of net cash flow to movement in net debt (Decrease)/Increase in cash in the period (7,810) 5,965Cash inflow from increase in debt (13,236) (21,220) (21,046) (15,255)Debt acquired with acquisitions (825) -New finance leases incepted in the period (157) -Issue costs of new financing 1,528 -Exchange movement (309) -Net debt at 31 December 2004 (19,356) - Net debt at 30 June 2005 (40,165) (15,255) Analysis of net debt At 1 January Cashflow On Non cash Exchange At 30 June 2005 acquisition movements movement 2005 £'000 £'000 £'000 £'000 £'000 £'000Cash at bank and in hand 9,235 (5,914) - - - 3,321Bank overdraft - (1,896) - - - (1,896) Debt due within one year (3,600) (2,900) (825) - - (7,325)Debt due after one year (24,400) (10,393) - 1,528 (309) (33,574)Finance Leases (591) 57 - (157) - (691) (19,356) (21,046) (825) 1,371 (309) (40,165) Net cash inflow from operating activities Unaudited six Unaudited five months ended 30 months ended 30 June 2005 June 2004 £'000 £'000Operating profit 3,797 2,961Depreciation charges 500 340Amortisation charges 2,355 1,294Increase in stocks (1,529) (734)Increase in debtors (1,116) (1,034)(Decrease)/Increase in creditors (1,583) 1,375 2,424 4,202 Statement of total recognised gains and losses Unaudited six Unaudited five months ended 30 months ended 30 June 2005 June 2004 (Restated) £'000 £'000(Loss)/Profit for the financial period (304) 1,237Exchange diff. on translation of net assets of subsidiary (85) (172)undertakings Total gains and losses for the financial period (389) 1,065 TOREX RETAIL PLC INTERIM REPORT AND ACCOUNTS Notes to the financial statements 1 The interim results for the six month period ended 30 June 2005 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 December2004 apart from the adoption of FRS 21 which is effective for accounting periodscommencing on or after 1 January 2005, where dividends proposed by the Companyare recognised in the period in which they are declared. 2 During the period the Group acquired Flexiline Forecourt Services Limited,Retail Store Systems Inc, Hoffmann Datentechnik GmbH and CTN Systems 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 2005, Torex Retail plc has also acquired the RetailPetroleum Systems, XN Checkout plc and Anker plc groups. 3 The proposed interim dividend of 0.125p (2004: 0.1p) per ordinary share willbe paid on 4 November 2005 to shareholders on the register at the close ofbusiness on 5 October 2005. 4 Earnings per share for the six month period ended 30 June 2005 is based onthe profit after taxation and minority interests of £754,000 divided by theweighted average number of shares during the period, 182,650,590 (basic) and188,660,664 (diluted) 1p ordinary shares. A reconciliation of the basic and diluted number of shares used in the six monthperiod ended 30 June 2005 is: Weighted average number of shares 182,650,590 Dilutive share options 6,010,074 Diluted 188,660,664 Any potential dilution from the possible issue of shares to senior managementdescribed in the admission document and the 2004 Report and Accounts have notbeen included in the above figures. 5 Exceptional items The exceptional items represent restructuring costs arising from rationalisingand reorganising companies acquired. 6 Analysis of debtors Unaudited Unaudited 30 June 2005 30 June 2004 £'000 £'000Trade debtors 17,807 10,944Prepayments and other debtors 20,729 5,424 38,536 16,368 7 Analysis of creditors: amounts falling due within one year Unaudited Unaudited 30 June 2005 30 June 2004 (Restated) £'000 £'000Bank loans and overdrafts 9,221 4,200Finance leases 405 748Trade creditors 13,472 3,525Corporation tax 1,348 257Other 13,159 7,251Deferred income 11,456 5,358 49,061 21,339 8 Analysis of creditors: amounts falling due after more than one year Unaudited Unaudited 30 June 2005 30 June 2004 £'000 £'000Bank loans 33,574 17,020Finance Leases 286 - 33,860 17,020 9 Segmental analysis Unaudited six Unaudited five months ended 30 months ended 30 June 2005 June 2004 Turnover Operating Turnover Operating profit profit £'000 £'000 £'000 £'000By class of business Store management solutions 43,712 7,180 19,168 2,987Petroleum and convenience 8,754 779 5,950 1,268 52,466 7,959 25,118 4,255 Goodwill amortisation (2,355) (1,294)Exceptional items (1,807) - Operating profit 3,797 2,961 10 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 Notes to the pro forma (unaudited) results 1. The pro forma results for the six months ended 30 June 2004, as disclosed inthe Chairman's statement, comprise the actual results of the Torex Retail Groupfor the period on the basis of current accounting policies and include theJanuary 2004 loss for the month. This information is provided by RNS The company news service from the London Stock Exchange