RNS Number:5203S
TripleArc PLC
17 April 2008
TripleArc Plc
Preliminary results for the year ended 31 December 2007
TripleArc Plc ("TripleArc", the "Company" or the "Group") provides technology
enhanced Business Process Outsourcing ("BPO") services to companies seeking to
reduce their printed and corporate communication costs. The Group is able to
differentiate its offering by providing its customers with consultative account
management, extended owned or outsourced services and industry leading
technology solutions, which streamline the supply chain and facilitate
sustainable cost savings within long-term contracts.
CONTINUING BUSINESS SUMMARY
Year ended 31 Year ended 31
December December
2007** 2006**
Turnover �45.1m �43.8m
Gross profit �13.7m �13.9m
EBITA* �2.6m �2.5m
Cash generated by operations �3.1m �3.2m
Net Debt �13.6m �14.9m
*EBITA - Earnings before interest, tax, amortisation, exceptional costs, share
option expense and loss on disposal of subsidiary undertaking.
**Audited figures
HIGHLIGHTS
* Offer for the entire share capital of the Company expected to be
announced imminently
* Turnover up 3% on prior year despite hardening market conditions
* EBITA and operating cash flow generation in line with prior year
* Good progress made in delivery of the Group's strategy to become a full
business communication outsource provider
* Operational improvement programme fully launched throughout the business
* Operational execution of the strategy enhanced with the appointment of
Group Operations Officer
* Net debt reduced from �14.9m at 31 December 2006 to �13.6m at 31 December
2007
Richard Atkins, Chairman commented:
"The Group continued to work hard to deliver its core strategy of providing
technologically enhanced print management and business communication solutions
and has made good progress in 2007. This has been strengthened by the launch of
the operational improvement programme throughout the business.
The Group had a solid year of new contract wins and made good progress on
further debt repayments. It now has a platform for the continued successful
development of its full BPO offering. This has been given further impetus by the
recruitment of a new business development team.
The Board has become increasingly aware, however, that the ability of the Group
to take full advantage of a growing market is hampered by the profile of its
banking commitments which mean that it is not able to invest in strategic
opportunities as they present themselves. This has already resulted in the Group
having to walk away from potential areas of growth that would have provided
secure long term profitable revenue in exchange for up front investment.
In light of this the Board has entered into negotiations regarding an offer for
the entire share capital of the Company further details of which will be the
subject of a separate announcement."
For further information please contact:
TripleArc Plc 0844 800 0567
Jason Cromack, Chief Executive Officer
Richard Hodgson, Chief Financial Officer
Altium Capital 020 7484 4040
Tim Richardson / Sam Fuller
Weber Shandwick Financial 020 7067 0700
Terry Garrett/ Nick Dibden / James White
Chairman's review
Year ended 31 December 2007
The Group has made good progress on delivering its core strategy of providing
Business Process Outsourcing ("BPO") services to companies seeking to reduce
their printed and corporate communication costs. This re-engineering process has
been strengthened by the launch, throughout the business, of the operational
improvement programme that is aimed at delivering the levels of customer service
and consultative and account management that is required to underpin the Group's
full BPO offering.
On 3rd August 2007 the Company announced the appointment of Daniel Emerson to
the TripleArc plc Board in the role of Group Operations Officer with his primary
area of focus being the operational delivery of this improvement programme.
Having previously announced that revenue from many of our core customers was
adversely affected by corporate activity within those customers and the
hardening market conditions, it is good to be reporting a modest increase in
revenue of 3%.
In 2007, six new long-term contracts were signed with new customers including
Citroen, the Royal Institution of Chartered Surveyors, The Countess of Chester
NHS Trust and Setanta. The Group has also been awarded two framework agreements,
including one with the Office of Government Commerce to provide print services.
Each of these contracts/frameworks have annualised turnover of between �0.3m and
�2.0m and we expect to see the full impact from these contracts in 2008.
In the period, the Group also extended two existing contracts with General
Healthcare Group and BOC for a further three and two years respectively. Both
these extensions will see the Group providing an increased range of products and
services.
Whilst the Group experienced no significant contract losses in the period, it
has continued to experience a decline in its non-contracted revenue base where
customers are provided with ad hoc 'traditional' print brokering services. This
decline was expected and the Group remains focused on migrating these customers
onto a contracted basis for the provision of the Group's services and solutions.
This focus on delivering sustainable long-term revenues has meant that the
Group's contracted revenues accounted for 63% of revenue in 2007 (2006: 53%).
This growth in its annuity revenue base gives the Group a solid customer base
that can be targeted with additional services and products. Our new business
drive has been given further impetus by the recruitment of a new business
development director and a new business development team.
On the 23rd May 2007 the Company announced that with effect from 21st May 2007,
Peter Ryding had been appointed as an independent non-executive Director of the
TripleArc Board. Peter is also a member of the audit and remuneration committees
of the TripleArc Board. Shane Greenan resigned as a non-executive director of
the TripleArc Board in July 2007 to emigrate to Australia.
In addition to the progress achieved in delivering on the core strategy, I am
also pleased that the Group has achieved a further reduction in net debt, made
possible through sustained positive levels of operating cash generation.
The Board will continue to assess the Groups financing options to ensure that
the Group has adequate working capital resources to full take advantage of the
growing demand for business process outsourcing.
Richard Atkins
Chairman
TripleArc Plc
16th April 2008
Chief Executive's review
Year ended 31 December 2007
TripleArc Plc provides Business Process Outsourcing ("BPO") services to
companies seeking to reduce costs for printed and corporate communication.
Printed communication is a major element of many companies operating costs and
the procurement of print is complex, fragmented and costly. As a result,
customers with a large print spend will almost certainly be able to save money
from an outsourced print management solution.
Businesses are looking to reduce headcount and external spend as well as
maximising the effectiveness of their corporate messages. A corporate message
can be embodied in many forms of communication including brochures, direct mail,
point of sale materials, emails, report and accounts, and customer statements.
More channels are becoming readily available, through which a company can
maximise the efficiency of its communication. These additional channels provide
a huge opportunity for those companies to re-engineer their business processes
so that they can take full advantage of the efficiencies and the cost savings
that can be delivered.
Technology is a key component in an outsourced solution for streamlining and
removing cost from the supply chain, allowing for visible control of the process
and spend. The technology expertise within the Group provides key support in
selling and delivering customer solutions, and TripleArc's proprietary software
gives the Group a compelling proposition in this area.
The Group is already working in partnership with a number of leading businesses,
across a variety of sectors including financial services, retail, charities,
telecommunications and IT. These contract terms range from one to ten years and
will allow the Group to deliver an annuity business.
In 2006, the Group redefined its BPO service offering under five core banners;
Print Management, Data Solutions, Document Management, Logistics and Campaign
Delivery. This made communicating the service offering to customers easier,
allowing us to tender for new contracts more successfully and to cross sell more
effectively leading to enhanced account development.
It is the Group's intent to win the trust and respect of its customers and earn
the right to guide them towards getting even greater benefits from the full
portfolio of the Group's services. To do this the Group must be able to
demonstrate that it is competent and capable of delivering the benefits it
claims and has therefore embarked on an operational improvement programme to
train and educate its people in its portfolio of services and solutions.
In July 2007, as part of the operational improvement programme the Group
introduced a new Customer Service Charter which will not only deliver 'best in
class' customer service but also ensure we are constantly seeking new
opportunities that will deliver benefits to our customers and increased revenues
to the Group. To date, 80% of all customer-facing personnel have been on a
tailored training programme that is being rolled out across the Group.
Daniel Emerson was appointed to the Board in August 2007 as Group Operations
Officer to provide focus and the operational delivery of the change programme,
which includes the enhancement of our consultative account management offering,
the launch of our Skills Academy and on-going improvement of our processes and
service offering.
TripleArc is well positioned to take advantage of the growing demand for BPO
services due to the positioning and change programme it has adopted over the
past 18 months. This has been ratified by the diverse nature of the contracts
awarded to the Group in 2007 many of which are far removed from the standard
print management sector. The Citroen Fulfilment contract for example was awarded
in early 2007 and the service offered covers the fulfilment of customer data,
and the management of customer leads throughout its dealer network.
Since the start of 2008 we have been awarded a 3 year outsourced document
management contract with Home Learning College for the on-demand production and
fulfilment of their core product, the course material. The Group was able to
demonstrate that it could not only deliver a quality product but could also
streamline the process and reporting visibility to the customer. This work is
fulfilled within the Groups owned facility.
In addition, since the start of 2008 the Group has appointed a new Group
Business Development Director, Trevor Weldon. Trevor has joined the operational
board and has a huge amount of experience in winning and implementing large
contracts within both the public and private sectors. Trevor is responsible for
the growth of new business sales and the development of a new sales team capable
of strategic and solution selling.
Staff
The Group differentiates itself through the skills and talent of its staff and
the expertise and service that they can provide its customers; they are the
resource that underpins the Group's vision. We will continue to invest in the
development and training of our staff through the Groups dedicated Skills
Academy to ensure that the solutions and customer service that they provide are
of the highest quality.
The Board would like to take this opportunity to thank our staff for their
continued hard work and effort.
Current Trading & Outlook
The Board is pleased with the progress the Group has made in 2007 and is seeing
positive signs from the implementation of its key strategies.
The increased contracted revenue base gives the Group far greater visibility of
revenue and a solid customer platform across which it can cross sell its full
suite of products.
The conversion of ad hoc revenue to contracted revenue may in the short term
partially offset the growth in gross profit achieved through account development
of contracted customers and further contract wins, as higher legacy gross margin
is exchanged for longer-term relationships.
The Board remains mindful of its working capital resources given its current
banking commitments. It will therefore continue to assess re-financing
opportunities to increase its ability to invest in and take full advantage of
the growth in the BPO market in the short term.
The Board therefore believes that 2008 will be a year of further improvement in
the security of its earnings and further modest growth.
J Cromack
Chief Executive Officer
16th April 2008
Financial review
Year ended 31 December 2007
Financial Highlights
In the twelve months to 31 December 2007, Group revenues and operating profit
before exceptional items, share option expense and the amortisation of
intangible assets ("EBITA") from continuing operations increased by 2.8%, from
�43.8m in 2006 to �45.1m in 2007, and 2.3%, from �2.5m in 2006 to �2.6m in 2007,
respectively. Although the increase in revenue is modest, its underlying
sustainability is more secure than ever with the increase in the percentage of
the Group's revenue that is now under contract.
EBITA from continuing operations was �2.6m (2006: �2.5m). Adding back
depreciation of �0.4m the Group's continuing operations produced EBITDA of �3.0m
(2006: �2.9m).
Finance charges increased in the year by �0.7m. �0.3m of this increase is due to
increased cash costs following the signing of an amended facility with the
Group's senior lender HSBC in February 2007 and �0.1m is due to the effect of
three interest rate rises in the year. Non-cash interest costs increased by
�0.2m due to an increase in deferred financing costs as part of the above
facility and the fair value costs, following the adoption of IFRS, of an
interest rate swap that the Group entered into in April 2007.
Working Capital and Debt
Cash generated by operations was �3.1m in 2007 (2006 �3.2m), allowing for cash
interest and other bank charges of �1.6m and further debt repayments of �1.9m to
be made.
Working capital management remains a strong area of focus for the group. This is
evidenced in the reduction in debtors days to 55 (2006: 58). The sustained
operating cash generation of the business also allowed for creditor days to be
reduced to 78 (2006: 83).
Significant inroads continue to be made into our level of gearing and net debt
at 31 December 2007 was reduced to �13.6m from �14.9m as at 31 December 2006.
IFRS
The Group has adopted IFRS for the year ending 31 December 2007 and has prepared
this report in accordance with the accounting policies adopted at that date. As
a result, comparative data for previous periods have been restated.
The most significant impact of IFRS will be on the treatment of amortisation of
intangible assets. Existing goodwill will no longer be amortised through the
consolidated income statement but will rather be subject to an annual impairment
review. The 2006 amortisation charge for goodwill was �2.0m.
A reconciliation between the comparative figures and those previously reported
is set out in the notes to this statement.
Capital Reduction
On 14 March 2007, the capital reduction proposal, approved at the Extraordinary
General Meeting on 31 January 2007, was confirmed by the courts. The Board
expect that the Capital Reduction will enable TripleArc to regain a positive
balance on its distributable reserves more quickly and, ultimately, to pay a
dividend to shareholders at an appropriate time in the future. In addition, the
Board feels that the restructured balance sheet more truly reflects the
underlying commercial position of the Group and believes that this will have a
positive impact on its future contract tendering activity.
R Hodgson
Chief Financial Officer
16th April 2008
Consolidated Income Statement
For the year ended 31 December 2007
Note 2007 2006
�'000 �'000
Continuing operations
Revenue 2 45,056 43,836
Cost of sales (31,314) (29,925)
_______ _______
Gross profit 13,742 13,911
Administrative expenses:
Excluding exceptional items, share option expense and
amortisation of intangible assets (11,172) (11,400)
Exceptional items (766) (386)
Share option expense (54) (19)
Amortisation of intangible assets (23) (7)
_______ _______
Total administrative expenses (12,015) (11,812)
_______ _______
Operating profit:
Continuing operations excluding exceptional items,
share 2,570 2,511
option expense and amortisation of intangible assets
Exceptional items (766) (386)
Share option expense (54) (19)
Amortisation of intangible assets (23) (7)
_______ _______
1,727 2,099
Finance costs (1,966) (1,313)
_______ _______
(Loss)/profit before taxation (239) 786
Taxation 3 540 6
Profit for the financial period from continuing
operations 301 792
======= =======
Discontinued operations
(Loss) for the period from discontinued operations - (1,091)
_______ _______
Profit/(loss) for the period attributable to equity
holders of the parent 301 (299)
======= =======
Earnings per share
From continuing operations 4
Basic 0.15p 0.38p
Diluted 0.15p 0.38p
From continuing and discontinued operations
Basic 0.15p (0.14)p
Diluted 0.15p (0.14)p
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
Retained
Share Own earnings
Share Share option Merger shares (as
capital premium reserve reserve held restated)
�'000 �'000 �'000 �'000 �'000 �'000
At 1 January
2006 10,353 20,175 849 (621) (150) (9,559)
Loss for the
year - - - - - (299)
Deferred tax - - - - - -
Share option
adjustment - - 20 - - -
_______ _______ _______ _______ _______ _______
At 1 January
2007 10,353 20,175 869 (621) (150) (9,858)
Capital
reduction - (20,175) - - - 20,150
Profit for the
year - - - - - 301
Share option
adjustment - - 53 - - -
_______ _______ _______ _______ _______ _______
At 31 December
2007 10,353 - 922 (621) (150) 10,593
_______ _______ _______ _______ _______ _______
During the year, in order to eliminate the deficit on the Group's profit and
loss account, the Group has undergone a Capital Reduction pursuant to which the
Group's share premium account was reduced to zero and this balance was credited
to retained earnings. �25,000 of expenses were incurred in this transaction,
resulting in an overall transfer to retained earnings of �20,150,000.
Consolidated Balance Sheet
at 31 December 2007
Note 2007 2006
�'000 �'000
Non current assets
Goodwill 34,522 34,522
Other intangible assets 106 56
Property, plant and equipment 1,593 1,863
Deferred tax asset 107 -
______ ______
36,328 36,441
______ ______
Current assets
Inventories 753 922
Trade and other receivables 9,873 10,094
______ ______
10,626 11,016
______ ______
Total assets 46,954 47,457
______ ______
Current liabilities
Trade and other payables (11,647) (11,078)
Current tax liabilities 3 (117) (378)
Bank overdrafts and loans (3,798) (2,996)
Obligations under finance leases (233) (50)
Derivative financial instruments (132) -
______ ______
(15,927) (14,502)
______ ______
Non current liabilities
Deferred tax liabilities - (154)
Bank loans (9,561) (11,645)
Obligations under finance leases - (233)
Other long term payables (369) (155)
______ ______
(9,930) (12,187)
______ ______
Total liabilities (25,857) (26,689)
______ ______
Net assets 21,097 20,768
====== ======
Note 2007 2006
�'000 �'000
Equity
Share capital 10,353 10,353
Share premium account - 20,175
Share option reserve 922 869
Merger reserve (621) (621)
Own shares held (150) (150)
Retained earnings/ (deficit) 10,593 (9,858)
______ ______
Equity shareholders' funds 21,097 20,768
______ ______
Consolidated Cash Flow Statement
for the year ended 31 December 2007
Note 2007 2006
�'000 (as restated)
�'000
Profit after tax from continuing operations 301 792
Loss after tax from discontinued operations - (1,091)
Loss/(profit) on disposal of property, plant and
equipment 44 (6)
Loss on disposal of subsidiary undertaking - 700
Depreciation and amortisation 477 462
Finance cost 1,966 1,313
Share option expense 54 19
Share premium expense (25) -
Income tax credit (540) (6)
______ ______
Operating cash flow before working capital
movements 2,277 2,183
______ ______
Decrease in trade and other receivables 219 173
Decrease in inventories 169 262
Increase in trade and other payables 396 547
______ ______
Cash generated by operations 3,061 3,165
Income taxes received 17 253
Interest paid (1,631) (1,194)
______ ______
Net cash from operating activities 1,447 2,224
Investing activities
Net disposal of bank borrowings upon disposal of
subsidiary 5 - 808
Costs associated with disposal of subsidiary 5 - (453)
Proceeds on disposal of property, plant & - 12
equipment
Purchases of property, plant & equipment (227) (180)
Purchases of intangible assets (73) (62)
Repayment of deferred consideration 5 - (535)
______ ______
Net cash used in investing activities (300) (410)
Financing activities
Repayment of borrowings (1,887) (2,046)
______ ______
Net cash used in financing activities (1,887) (2,046)
______ ______
Decrease in cash and cash equivalents (740) (232)
______ ______
Cash and cash equivalents at the beginning
of the year (665) (433)
Cash and cash equivalents at the end of the year (1,405) (665)
====== ======
1. PRELIMINARY STATEMENT
This preliminary statement was approved by the Board on 16th April 2008.
The financial information in this preliminary statement does not constitute the
company's statutory accounts for the year ended 31 December 2007 within the
meaning of Section 240 of the Companies Act 1985.
The figures for the year to 31 December 2007 were derived from the statutory
accounts for that year. The statutory accounts for the year ended 31 December
2006 have been delivered to the Registrar of Companies and received an audit
report which was unqualified and did not contain statements under s237(2) or (3)
of the Companies Act 1985.
The statutory accounts for the year ended 31 December 2007 have not yet been
approved, audited or filed and will be sent to shareholders in due course.
For the first time the Group financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs) adopted for
use in the European Union. The group has applied all accounting standards and
interpretations by the International Accounting Standards Board and
International Accounting Standards Interpretation Committee effective at the
time of preparing the financial statements. As a result, the comparative amounts
included in this preliminary statement have been restated under IFRS from the UK
Financial Reporting Standard ("UK GAAP") values originally published by the
Group.
2. SEGMENTAL ANALYSIS
During 2006 the business was rebranded under one banner, 'accessplus'.
Accessplus provides technology led print management and business communications
solutions. Although the group considers itself one brand this can be split into
three primary business segments.
Most of the major customer contracts are serviced through the print management
segment which is the largest of the three segments. The main service provided
by this business is the management of companies' print and related product
spend. This is performed using supply chain management & consolidation, account
management expertise and technology that removes cost and inefficiencies from
the process. Many of these customers are also serviced through the fulfillment
division that offers bespoke campaign management and logistics. This is enabled
through customer database management and manipulation. It is distinct from
print management as it offers a stand alone production environment. The
technology that is used by both of the other divisions is housed within the
Technology segment. This provides proprietary and licensed technology to the
other two divisions but also sells these offerings to its own distinct customers
and hence is analysed separately.
Business segments
Revenue 2007 2006
�'000 �'000
Technology 1,189 642
Fulfilment 2,770 3,774
Print management 41,097 39,420
______ ______
Continuing operations 45,056 43,836
====== ======
2007 2006
�'000 �'000
Result
Technology 338 (293)
Fulfilment 807 702
Print management 3,198 4,056
Central and unallocated costs (2,616) (2,366)
______ ______
Operating profit - continuing operations 1,727 2,099
Finance costs (1,966) (1,313)
Taxation 540 6
Discontinued operation - (1,091)
______ ______
Profit/(loss) for the period 301 (299)
====== ======
The full 12 months performance of the Marketing Solutions Business has been
disclosed as part of continuing operations within the Print Management segment
in 2006.
Predominantly all of the Group's turnover and operating result originates from
within the UK and the vast majority of the Group's net assets are located within
the UK.
Analysis of segment assets and liabilities by business segment
Segment assets Segment liabilities
2007 2006 2007 2006
�'000 �'000 �'000 �'000
Technology 1,236 1,237 3,319 3,878
Fulfilment 3,250 5,766 2,200 5,188
Print management 32,995 28,831 21,447 19,306
______ ______ ______ ______
Operational assets 37,481 35,834 26,966 28,372
Unallocated assets/
(liabilities) 9,473 11,623 (1,109) (1,683)
______ ______ ______ ______
Total assets/(liabilities) 46,954 47,457 25,857 26,689
====== ====== ====== ======
The unallocated assets and liabilities mainly include goodwill and bank loans.
Other segmental information
Capital Depreciation and
additions amortisation
2007 2006 2007 2006
�'000 �'000 �'000 �'000
Technology 216 158 139 114
Fulfilment 44 374 211 124
Print management 40 12 127 224
______ ______ ______ ______
300 544 477 462
====== ====== ====== ======
Analysis of revenue by geographical market (by location of customer)
2007 2006
�'000 �'000
United Kingdom 44,610 44,473
Rest of Europe 238 287
Far East & Asia 100 18
Rest of World 108 173
______ ______
45,056 44,951
====== ======
Analysis of segment assets and capital additions by geographical location (by
geographical location of assets)
Segment assets Capital additions
2007 2006 2007 2006
�'000 �'000 �'000 �'000
United Kingdom 45,718 46,220 84 386
Rest of Europe 1,236 1,237 216 158
Far East & Asia - - - -
______ ______ ______ ______
46,954 47,457 300 544
====== ====== ====== ======
3. TAXATION
Taxation credit for the year
a) The taxation credit for the year is analysed below:
Continuing Discontinued Total
operations operations
2007 2006 2007 2006 2007 2006
�'000 �'000 �'000 �'000 �'000 �'000
Current taxation
UK corporation tax - 117 - - - 117
Over provision
in prior years (279) (190) - - (279) (190)
_____ _____ _____ _____ _____ _____
(279) (73) - - (279) (73)
_____ _____ _____ _____ _____ _____
Deferred tax
Prior year (175) 3 - - (175) 3
Deferred tax for
the current year (86) 64 - - (86) 64
_____ _____ _____ _____ _____ _____
Taxation credit
for the year (540) (6) - - (540) (6)
_____ _____ _____ _____ _____ _____
b) Factors affecting the current tax charge
The effective rate of tax for the period differs from the standard rate of tax
in the United Kingdom. The differences are set out in the tax reconciliation
below:
2007 2006
�'000 �'000
(Loss)/Profit on ordinary activities before taxation
- continuing operations (239) 786
- discontinued operations - (1,091)
_____ _____
(239) (305)
===== =====
Loss on ordinary activities multiplied by the standard rate of
corporation tax in the UK of 30% (2006: 30%) (72) (92)
Effects of:
Expenses not deductible for tax purposes 167 319
Amortisation of intangible assets 7 2
Deferred tax rate change 38 -
Change in temporary differences (205) (48)
Prior year adjustment (280) (190)
- corporation tax
- deferred tax (195) 3
_____ _____
(540) (6)
_____ _____
The Group has recognised a deferred tax asset of �150,000 at 31 December 2007
(2006:nil) in respect of losses carried forward and expected to be utilised in
the foreseeable future. The Group has further losses carried forward of
approximately �2.6m (2006: �2.3m), which have not been recognised as the
ultimate utilisation of these losses is uncertain.
4. EARNINGS/(LOSS) PER SHARE
Total Total
2007 2006
a) Basic earnings/(loss) per share
Profit/(loss) attributable to ordinary shareholders (�'000)
- continuing 301 792
- total 301 (299)
======= =======
Weighted average number of shares during year ('000)
- for basic earnings per share 207,062 207,062
- for diluted earnings per share 207,062 207,062
======= =======
Earnings/(loss) per share (pence)
Continuing - basic 0.15p 0.38p
Continuing - diluted 0.15p 0.38p
Total - basic 0.15p (0.14p)
Total - diluted 0.15p (0.14p)
======= =======
b) Discontinued operations
Loss attributable to ordinary shareholders (�'000) - (1,091)
======= =======
Weighted average number of shares during year ('000)
- for basic earnings per share 207,062 207,062
- for diluted earnings per share 207,062 207,062
======= =======
Loss per share (pence)
Basic - (0.53)p
======= =======
Diluted - (0.53)p
_______ _______
In 2007 and 2006 the diluted EPS is considered to be the same as the basic EPS
as any shares to be issued under the option arrangements will be anti dilutive.
5. PRIOR YEAR ADJUSTMENT RELATING TO PREVIOUS GAAP
Disposal of Subsidiary
On 31 March 2006, TripleArc plc disposed of its 100% shareholding in the share
capital of the Stream Group of companies (comprising Stream GWC Limited, Mash
Solutions Limited and Stream Direct Communications Limited) to FormPro Mail
Marketing Limited for a total consideration of �1. The Group retained the
Marketing Solutions part of the business.
The UK GAAP financial statements for the year ended 31 December 2006 treated
this transaction as a complete disposal of the Stream Group and an acquisition
of the Marketing Solutions business. On further review, the Directors believe
that the substance of the transaction was that the Group part disposed of the
Stream Group and retained the Marketing Solutions business. This change has had
no impact on the reported loss or net assets as reported in the 2006 UK GAAP
financial statements, although it has required the analysis within the
consolidated cash flow statement to be amended. The total UK GAAP cash flows for
the year ended 31 December 2006 have not changed.
On conversion to IFRS as at 31 December 2006, this adjustment has also had no
impact other than the additional disclosure given on the face of the
consolidated cash flow statement.
Cash flow reclassification
In the 2006 UK GAAP financial statements �535,000 of deferred consideration paid
to the vendors of HFS was classified as a financing activity. This cash flow has
been reallocated to investing activities within the consolidated cash flow
statement.
6. TRANSITION TO IFRS
The reconciliation of equity at 1 January 2006 (date of transition to IFRS) and
at 31 December 2006 (date of last UK GAAP financial statements), together with a
reconciliation of the UK GAAP profit for the year ended 31 December 2006, are
included below.
IFRS 1 permits companies adopting IFRS for the first time to take certain
exemptions from the full requirements of IFRS in the transition period. These
financial statements have been prepared taking the business combination
exemptions. Business combinations prior to 1 January 2006, the Group's date of
transition to IFRS, have not been restated to comply with IFRS 3 "Business
Combinations". Goodwill arising from these business combinations has not been
restated other than as set out in note B below. The changes as a result of the
transition to IFRS are described below.
(A) Intangible Assets
Certain software costs have been transferred from property, plant and equipment
to intangible assets.
(B) Goodwill
IFRS3 prohibits the amortisation of goodwill, which is instead subject to annual
impairment reviews. Goodwill is stated in the opening balance sheet at 1 January
2006 at its UK GAAP carrying value of �34.9m with subsequent amortisation
reversed. The impact on operating profit is a credit of �2.0m for the year ended
31 December 2006. An impairment review was performed at the date of transition
and no impairment was identified.
(C) Deferred tax
The adjustment relates to the treatment of buildings partly qualifying for
industrial buildings allowances (IBAs). Under UK GAAP, the future allowances
available are compared to the book value of the qualifying element of the
building only. Under IFRS, the book value of the entire building is taken into
account, resulting in a one off deferred tax charge on the introduction of IFRS
of �167k.
(D) Holiday pay accrual
Per IAS 19 the company must accrue for holiday not taken by employees at the end
of each period. The effect on the net assets of this accrual is �48k at 1
January 2006 and �62k at 31 December 2006 with the corresponding movements being
taken to the income statement.
(E) Discontinued operations
Under IAS the balances relating to discontinued operations have been aggregated
and included in one line at the end of the income statement.
The impact of IAS 7 'Cashflow statements' merely has a presentational effect on
the financial statement of cashflows, and there have been no material
presentational adjustments to the cashflow.
Reconciliation of UK GAAP loss to IFRS loss
Year to 31 December 2006
UK Goodwill Holiday Deferred
pay tax IFRS
GAAP
�'000 �'000 �'000 �'000 �'000
Continuing operations
Sales 43,836 - - - 43,836
Cost of sales (29,925) - - - (29,925)
Gross profit 13,911 - - - 13,911
Other operating
expenses (13,440) 2,028 (14) - (11,426)
Exceptional items (386) - - - (386)
Operating profit 85 2,028 (14) - 2,099
Finance costs (1,313) - - - (1,313)
(Loss)/ profit
before tax (1,228) 2,028 (14) - 786
Tax 3 - - 3 6
(Loss)/ profit for
the period from
continuing
operations (1,225) 2,028 (14) 3 792
Discontinued operations
(Loss)/ profit for
the period from
discontinued
operations (1,108) 17 - - (1,091)
(Loss)/ profit for
the period (2,333) 2,045 (14) 3 (299)
Reconciliation of equity
At 1 January 2006
UK GAAP Goodwill Holiday Deferred IFRS
pay tax
�'000 �'000
Non-current assets
Goodwill 34,974 - - - 34,974
Intangible assets - - - - -
Property, plant &
equipment 2,206 - - - 2,206
Current assets
Inventories 1,281 - - - 1,281
Trade and other
receivables 11,370 - - - 11,370
Cash and cash
equivalents 994 - - - 994
Total assets 50,825 - - - 50,825
Current liabilities
Trade and other
payables (12,220) - (48) - (12,268)
Current tax
liabilities (105) - - - (105)
Bank overdraft and
loans (3,308) - - - (3,308)
Non current
liabilities
Deferred tax
liabilities 80 (167) (87)
Bank loans (13,976) - - - (13,976)
Hire purchase - - - - -
obligations
Other long term
liabilities (34) - - - (34)
Total liabilities (29,563) - (48) (167) (29,778)
Net assets 21,262 - (48) (167) 21,047
Equity
Called-up share
capital 10,353 - - - 10,353
Share premium 20,175 - - - 20,175
Share option reserve 849 - - - 849
Merger reserve (621) - - - (621)
Group interest in
shares of TripleArc
plc (150) - - - (150)
Retained earnings (9,344) - (48) (167) (9,559)
Total equity 21,262 - (48) (167) 21,047
Reconciliation of equity
At 31 December 2006
UK GAAP Goodwill Holiday pay Deferred tax Software IFRS
�'000 �'000
Non-current
assets
Goodwill 32,477 2,045 - - - 34,522
Intangible
assets - - - - 56 56
Property,
plant &
equipment 1,919 - - - (56) 1,863
Current
assets
Inventories 922 - - - - 922
Trade and
other
receivables 10,094 - - - - 10,094
Total
assets 45,412 2,045 - - - 47,457
Current
liabilities
Trade and
other
payables (11,016) - (62) - - (11,078)
Current tax
liabilities (378) - - - - (378)
Bank
overdraft
and loans (2,996) - - - - (2,996)
Hire purchase
obligations (50) - - - - (50)
Non Current
liabilities
Deferred tax
liabilities 10 - - (164) - (154)
Bank loans (11,645) - - - - (11,645)
Hire purchase
obligations (233) - - - - (233)
Other long
term
liabilities (155) - - - - (155)
Total
liabilities (26,463) - (62) (164) - (26,689)
Net assets 18,949 2,045 (62) (164) - 20,768
Equity
Called-up
share capital 10,353 - - - - 10,353
Share
premium 20,175 - - - - 20,175
Share option
reserve 869 - - - - 869
Merger
reserve (621) - - - - (621)
Group
interest
in shares of (150) - - - - (150)
TripleArc plc
Retained
earnings (11,677) 2,045 (62) (164) - (9,858)
Total
equity 18,949 2,045 (62) (164) - 20,768
7. Copies of this statement will be available on line at www.triplearc.com or
from the company's registered office: Dorcan 300, Murdock Road, Dorcan, Swindon,
Wiltshire SN3 5HY
This information is provided by RNS
The company news service from the London Stock Exchange
END
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