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2009-09-30 07:08
Twenty PLC - Interim Results |
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RNS Number : 9036Z Twenty PLC 30 September 2009
30 SEPTEMBER 2009
TWENTY PLC (AIM: TWE)
INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2009 Twenty plc ('Twenty' or the 'Group'), the AIM quoted integrated marketing solutions provider, announces its interim results for the six months ended 30 June 2009. A copy of this statement is available on the Company's website at www.twentyplc.com. Enquiries:
Ian Lancaster, Chief Executive www.twentyplc.com
Graham Webster Twenty Plc Chairman's Statement Dear Shareholder Given the challenging economic climate, we are pleased to report a profitable first half of the year. The resourceful management team has done excellent work in lowering costs resulting in the return to profitability. Market conditions remain tough and the group is experiencing pricing pressure on some projects. However, the management team has responded and implemented operational efficiencies in order to reduce the impact as much as possible. Similarly, new business in the current environment takes longer to convert. Whilst 2009 has so far been a challenging year, the actions on costs taken to date and those in progress in the second half should hold the Group in good stead for the future. The board is focused on restoring shareholder value by organic developments rather than acquisitions at present. We are grateful for the support shown by our shareholders in this difficult period. I thank all our employees for their hard work. Mark Patron Non-Executive Chairman 30 September 2009 Twenty Plc Chief Executive's Statement Introduction I'm pleased to report that the group has returned an operating profit of £0.24m in the first half of 2009, representing an improvement at an operating profit level of over £1.0m on the first half of 2008 where we reported an operating loss of £0.79m, when we were hit by a significant bad debt, together with difficult trading conditions in our polywrapping and bulk printing business. The reduction in revenues from £8.5m in the same period 2008 to £6.4m in first half 2009 is largely accounted for by the disposal of the polywrapping and bulk printing business in August 2008. The improvement in our operating profit has been achieved through a tight control of operating costs, improvement in the quality of our delivery, the disposal of our polywrapping and bulk printing business and the consolidation of our properties. We have completed our strategy of repositioning the group as an integrated marketing services provider and look forward to the continuing benefits of this in the coming years. Financials The interim results for Twenty Plc reflect the six-month period to 30 June 2009. Comparatives include the direct communications division which was sold on 31 August 2008. The results have been prepared in accordance with International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS). The results for the period reflect an improved period of trading in which the Group reports a return to profit, with a pre tax profit of £0.12m achieved primarily through a review and reduction in the overhead costs within the business by £1.0m against the same period last year. Trading within both the analytical crm and data services and operational crm segments reflects a significantly better trading performance this year. Analytical crm and data services have seen revenue growth of 50% against the same period last year, delivering an 11% return on sales. Despite lower revenues in operational crm (as a result of the sales of the direct communications division in August last year) the segment delivered a profit before unallocated corporate expenses of £0.21m, an improvement of £0.73m from the same period last year. The ecommerce segment delivered a loss of £0.06m in the period as we have continued to invest time in the proposition and integrating this business over the period. The Group had net cash outflow during the period of £0.03m. Net cash generated from operating activities of £0.47m was used to fund £0.08m in capital expenditure and £0.42m in financing activities of which £0.30m related to capital repayments of borrowings. Cash and bank debt of £1.93m together with obligations under finance leases of £0.53m resulted in net debt of £2.46m. Debt repayments, as at the Balance Sheet Date, due in the next 12 months equate to £0.43m. The Group has an invoice financing facility with the Bank of Scotland, which had a drawn down balance of £1.04m at the balance sheet date. This balance has been reflected in Other Creditors. In the last 12 months net debt (including invoice finance facility drawdown balance) has decreased by £1.3m. Outlook The outlook for the business is directly related to the speed of recovery in the overall economy as our revenues are largely driven by the rate of consumer interaction our clients have with their customers. We have been under significant cost pressure as our client base has reviewed their operating costs and looked for efficiency savings to maintain margins. As a group we have responded to these challenges through improving the efficiency of our operations and reduced our overhead cost base to a level consistent with the level of our forecast current revenues. Whilst the business has returned to profit this year after the significant bad debt experienced in 2008 the trading outlook remains subdued as the level of new opportunities are more limited than in normal economic times. Ian Lancaster Chief Executive
30 September 2009
Consolidated Income Statement (Unaudited) For the period ended 30 June 2009
Continuing operations
pre-exceptional
post-exceptional
Profit/(Loss) for the period from continuing operations
Attributable to:
Earnings/(loss) per share:
There are no recognised income or expenses for the current and prior year other than as stated above. As a consequence a statement of comprehensive income is not presented. Twenty Plc Group Statement of Financial Position (Unaudited) As at 30 June 2009
Assets
Non-current assets
Current assets
Equity & liabilities
Current liabilities
Non-current liabilities
Equity
Twenty Plc Consolidated Statement of Cash Flows (Unaudited) For the period ended 30 June 2009
Cash flow from operating activities
Adjustments for:
Operating cash flows before movements in working capital
Net cash generated from operating activities
Twenty Plc Consolidated Statement of Cash Flows (Unaudited) For the period ended 30 June 2009 (Continued)
Net cash from operating activities
Investing activities
Financing activities
Net decrease in cash and cash equivalents
Twenty Plc Statement of Changes in Equity (Unaudited) For the period ended 30 June 2009
General Information Twenty Plc is a company incorporated and domiciled in the UK and is listed on the Alternative Investment Market (AIM). The addresses of its registered office and principal place of business are disclosed in the introduction to the annual report.
a) Basis of preparation The interim financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS's) adopted by the European Union, IFRIC interpretations and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS and comply with International Accounting Standard (IAS) 34 'Interim Financial Reporting'. They have been prepared on a consistent basis with the accounting policies set out in the Annual Report and Accounts for the year ended 31 December 2008. The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the year end and reported amounts of revenue and expenses during the financial year. Actual results could differ from the original estimates and assumptions. New accounting standards being applied starting on 1 January 2009 are as follows:
of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income). As a result, the Group has elected to present a consolidated income statement, a consolidated statement of comprehensive income and a consolidated statement of changes in equity.
performance. This standard replaces the previous standard IAS 14, "Segment Reporting". IFRS 8 has not resulted in a changed definition of the Group's segments. Going Concern The board has taken decisions over the last 12 months to improve the cost base of the business which has enabled the Group to return to profit. Current market conditions remain tough, but following these actions, together with renegotiated payment terms with its bank and forecasts of future financial performance and position, the board consider it appropriate to adopt the going concern basis in preparing the interim accounts. The consolidated financial information has been prepared under the historical cost convention. b) Recently issued standards and interpretations not yet applied At the date of signing of these financial statements, there were a number of International Financial Reporting Standards and interpretations in issue but not yet effective. The directors anticipate that the adoption of these standards and interpretations will have no material impact on the Group's financial statements or will not be relevant to the activities of the Group. c) Publication of non-statutory accounts The financial information contained in this document is unaudited and does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The information for the year ended 31 December 2008 is based on the company's statutory accounts for that year which received an unqualified audit report and have been filed with the Registrar of Companies. c) Basis of consolidation The consolidated financial statements comprise the financial statements of the company and its subsidiaries. The results of subsidiaries acquired or disposed of during the period are included in the consolidated income statement from the effective date of acquisition or disposals, as appropriate.
d) Revenue recognition Revenue comprises the invoiced amounts of services, excluding VAT, adjusted for amounts invoiced in advance at both the beginning and end of the year, such that revenue is recognised in line with performance under the contract. Profit on long term contracts is taken over the life of the contract when the outcome of the contract, or a separately identifiable portion of it, can be assessed with reasonable certainty. e) Goodwill Goodwill arising from the acquisition of a subsidiary represents the excess of the fair value of the cost of acquisition over the group's net interest in the fair value of the identifiable net assets acquired. In accordance with IFRS3, goodwill is not amortised. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value is impaired. An impairment loss is recognised for the amount by which the carrying net value of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and the value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). An impairment loss recognised for goodwill is not reversed in a subsequent period. Goodwill is allocated to cash generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash generating units that are expected to benefit from the business combination in which the goodwill arose identified according to the operating segment. On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. f) Property, plant and equipment Property, plant and equipment are stated at cost or valuation, net of depreciation and any provision for impairment. Depreciation has been calculated on the straight line method and aims to write down the cost, less estimated residual value, of property, plant and equipment over their expected useful lives, using the following periods:
g) Research and development Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. Costs that are directly associated with the development of identifiable and unique software products controlled by the Group, and that will probably generate economic benefits exceeding beyond one year, are recognised as intangible assets. Costs include the software development costs. Computer software development costs recognised as assets are amortised on a straight line basis over their estimated useful lives (not exceeding three years) and are included in administration expenses within the consolidated income statement. h) Deferred taxation Deferred taxation is provided in full, using the liability method, in respect of all temporary timing differences between the tax base cost of the Group's assets and liabilities, and their carrying amount in the financial statements that have originated but have not been reversed by the balance sheet date. The deferred tax is calculated using tax rates enacted or substantially enacted by the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax is not discounted.
i) Share-based payments The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight line basis over the vesting period, based on the group's estimate of the shares that will eventually vest and adjusted for the effect of non market-based vesting conditions. Fair value is measured using a modified Black-Scholes pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. j) Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Assets held under finance leases, are recognised as tangible fixed assets at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments, and are depreciated over the shorter of the lease terms and their useful lives. The capital elements of future lease obligations are recorded as liabilities, while the interest elements are charged to the income statement over the period of the lease to produce a constant rate of charge on the balance of capital repayments outstanding. Rentals under operating leases are charged on a straight line basis over the lease term, even if the payments are not made on such a basis. Benefits received and receivable as an incentive to sign an operating lease are similarly spread on a straight line basis over the lease term, except where the period to the review date on which the rent is first expected to be adjusted to the prevailing market rate is shorter than the full lease term, in which case the shorter period is used. k) Retirement benefits Pension payments are made in respect of defined contribution schemes. The annual payments are charged to the income statement. The company has no potential further liability in respect of pensions. l) Financial instruments Trade and other receivables Trade receivables are stated at original invoice amount less any allowances for uncollectable amounts. Bad debts are written off when identified. Other receivables are stated at cost. Trade and other payables Trade and other payables are initially measured at fair value. Interest income Interest income is recognised as interest accrues. Cash and cash equivalents Cash and short term deposits at the balance sheet date comprise cash at bank and in hand and short term deposits with a maturity of one month or less. Financial liabilities and equity Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.
Bank borrowings Interest-bearing bank loans and overdrafts are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement redemption of borrowings is recognised over the term of the borrowings in the Income Statement in the period in which they are incurred. Equity instruments Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. m) Provisions Provisions are recognised when a present obligation has arisen as a result of a past event, and it is probable that the Company will be required to settle that obligation. Provisions are measured at the directors' best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material.
Operational CRM Delivery of interaction with our client's customers. This includes contact centre services, fulfillment services and campaign services Analytical CRM Provision of marketing platform design, development and support and customer data analytical services. E-Commerce Design, development and support of client's e-commerce platforms. Administrative costs are allocated to segments where they are directly attributable. All revenue and profit has been generated solely within the United Kingdom. The group reports assets and liabilities internally on a statutory entity basis and therefore has not reported on assets and liabilities by segment.
The taxation charge has been estimated by the group based on previous taxation adjustments and future rates.
The directors do not recommend the payment of an interim dividend.
The calculation of the basic and diluted earnings per share attributable to the ordinary equity holders of the company is based on the following data:
Earnings
Number of shares
Effect of dilutive potential ordinary shares:
Share options and warrants do not have a dilutive effect because the exercise price was above the average share price during the period.
On 16 February 2009 the Company issued 6,800,000 ordinary 0.1p shares for £85,000 to the vendors of Emaginating Limited in settlement of the deferred consideration following the acquisition by Twenty Plc in December 2006. Of the new shares issued, 3,400,000 were issued to Professor Martin Clarke who is a non executive director of Twenty Plc. Independent review report to Twenty Plc Introduction We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 which comprises the consolidated income statement, group statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Rules of the Alternative Investment Market. As disclosed in note 1(a), the annual financial statements of the group and company are prepared in accordance with IFRS as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting' as adopted by the European Union. Our responsibility Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly report based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Rules of the Alternative Investment Market. Kingston Smith LLP 30 September 2009 Devonshire House 60 Goswell Road London
EC1M 7AD This information is provided by RNS The company news service from the London Stock Exchange END
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