Trading Statement

16 Jan 2006 07:00

Torex Retail PLC16 January 2006 Monday 16th January 2006 Torex Retail Plc Pre-close Update & Board Change Torex Retail Plc ("Torex Retail" or "the Group"), a leading supplier of ITsolutions to retailers worldwide, is pleased to announce that it expects toreport trading for the year ended 31 December 2005 in line with marketexpectations. In addition to this, the Group are pleased to announce thefollowing:- Trading UK Torex Retail continued to experience a strong second half trading performance inthe UK, the Group's largest market, with a number of notable achievements: • A record number of LUCAS product sales, primarily to the Alphamericcustomer base, reflecting the successful integration of that business and fullyconsistent with their corporate strategy; • New business success with blue chip retailers particularly forperformance management, petrol and retail pharmacy solutions; • Development of record sales pipeline for 2006 particularly inhospitality where the level of new enquiries from major retailers is verypositive; • Building on its historical strength within the independent petroleumsector, the Group is increasingly winning business from the major oil companiesand forecourt supermarkets. This market is expected to demonstrate stronggrowth in 2006. The level of demand from UK retailers for new IT systems remains strong. TheBritish Retail Consortium reported both December 2005 total sales 6.2% ahead of2004 and sales for the whole of the last quarter up 4.1% on 2004, representingthe best December since 2001. The Board of Torex Retail are confident that thestrong Christmas trading will further encourage retailers to pursue planned ITinvestments, driven by the need to gain competitive advantage and replaceoutdated technology platforms. USA In the USA, the largest retail IT market in the world (estimated at betweenUS$4-5bn in software and services alone) Torex Retail is continuing to penetratethe market, with RSS and Systech now being fully integrated into the newlylaunched Torex Retail North America. The outlook for the market is verypositive, with the retail and hospitality systems sectors experiencing stronggrowth as retailers replace systems that were last updated pre the Millennium. Against this backdrop of buoyant market conditions there are still a number ofopportunities for further consolidation of the US retail and hospitality ITmarkets, which is fully consistent with the Group's strategy of buildingcritical mass and providing cross-selling opportunities to drive future organicgrowth. Europe The Group has continued to win a number of important new business wins for bothits LUCAS and OSCAR products. The Group is now the market leader for retail ITsolutions in Continental Europe, with a large customer base and very strongdelivery capability. This puts the Group in an excellent position to takeadvantage of the upturn in the market as the POS replacement cycle (currentlybeing actively experienced in the UK and particularly the US) increasinglyimpacts in Europe. Integration Update Good progress had been made with the integration of companies acquired duringthe year with XN Checkout, Anker and Systech having now been completely absorbedinto the Group's operating infrastructure. The restructuring of the Group's UKand European business following the acquisition of Anker continues to run aheadof initial expectations, both in terms of the quantum and timing of overheadsavings. It is now anticipated that the total annualised cost savings will be in excessof £12 million (over 2x initially reported) with related restructuring costs inthe region of £15 million in 2005 and £5 million in 2006, representing a 20month payback. These savings help to underpin the improvement in operatingprofit in 2006, and particularly 2007 and beyond. Board Change It is announced that by mutual agreement Michael Meade, who joined the Companyon 1 November 2005, is for personal reasons to step down from the Board ofdirectors. The Board has identified a replacement Group Finance Director, whois currently employed within a publicly quoted company. The new appointment isexpected to be confirmed at the time of the Group's preliminary results'announcement. In the meantime, responsibility for the finance function will bein the very capable hands of Mark Pearman, who was the Group Finance Director ofTorex PLC between 1998 and 2001. Michael will be leaving the Board withimmediate effect. Chris Moore, Chairman of Torex Retail, commented: "The Group is exceptionally well positioned for future growth in 2006 with astrong order book and good visibility of earnings, supported by a high level ofrecurrent revenues. During 2005 the Group's strategic focus was on acquisition-driven growth tobuild our customer base and critical mass in our chosen markets. In 2006, theemphasis will be to aggressively drive the benefits from our 6,000 strongcustomer base and "best of breed" product portfolio to achieve increased organicgrowth. This focus, combined with a limited number of carefully targetedstrategically important acquisitions, will continue to deliver increasedshareholder value in 2006 and beyond. On a personal note, and on behalf of the Board, I would like to wish MichaelMeade every future success in whichever field he decides to continue his career.At the same time I am delighted that we have identified a strong andexperienced replacement and I have every confidence in Mark Pearman, who willoversee our Finance function in the interim period." Torex Retail Plc expects to announce its 2005 preliminary results in early March2006. Enquiries: Chris Moore, ChairmanTorex Retail Plc0870 300 6061 Ginny Pulbrook / Seb Hoyle / Lucie HollowayCitigate Dewe Rogerson020 7638 9571 This information is provided by RNS The company news service from the London Stock Exchange