TIDMTST
RNS Number : 7210L
Touchstar PLC
10 September 2019
10 September 2019
Touchstar plc
Interim results for the
Six months ended 30 June 2019
The Board of Touchstar plc ((AIM:TST) 'Touchstar', the 'Company'
or 'the Group'), suppliers of mobile data computing solutions and
managed services to a variety of industrial sectors, is pleased to
announce its interim results for the six months ended 30 June
2019.
This announcement includes inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 and is
disclosed in accordance with the Company's obligations under
Article 17 of those obligations.
Key Financials:
30 June 2019 30 June 2018
Increase of 16%
* Revenues GBP3,635,000 GBP3,244,000
Reduced by 63%
* Trading loss * GBP(215,000) GBP(590,000)
Significantly reduced by 89%
* Trading loss after tax * GBP(45,000) GBP(413,000)
* EPS - Adjusted * (0.63)p (4.90)p Improved by 89%
Reduced by 12%
* Operating loss GBP(518,000) GBP(590,000)
Reduced by 14%
* Loss after tax GBP(357,000) GBP(415,000)
* EPS - Basic loss (4.21)p (4.90)p Improved by 14%
* Refer to note 3 for definition
Commenting on the results, Ian Martin, Chairman of Touchstar,
said:
"The levels of engagement and customer interest in our new
generation of products continues to develop favorably. It is thus
pleasing to report that the confident words of the past have turned
into positive fact.
In the six months ending 30 June 2019, the Group's revenue rose
15.6% to GBP3.6m, margins improved over 7.6% and the after-tax
trading loss reduced by 89% to just GBP45,000."
For further information, please contact:
Touchstar plc Ian Martin 01274 741860
Mark Hardy 01274 741860
Mike Coe/Chris
WH Ireland - Nominated Adviser Savidge 0117 945 3472
Information on Touchstar plc can be seen at:
www.touchstarplc.com
CHAIRMAN'S INTERIM STATEMENT 2019
The last twelve months have been a critical period for Touchstar
as we have been putting in place the foundations to create a modern
business. The next year is arguably more important, it is now time
to deliver, not promise, to reward shareholders for the faith they
have invested in us.
It is thus pleasing to report significant progress.
In the six months ended 30 June 2019, the Group's revenue rose
15.6% (excluding adjustment for IFRS 15 in 2018) to GBP3.6m,
margins improved over 7.6% and the after-tax trading loss reduced
by 89% to just GBP45,000.
Are we there yet? Nowhere close, we need to continue to drive
the business forward and build upon the first half of this year,
return the Company to profitability and then establish a reliable
track record over many years. Only then can we say "that was a job
well done".
Financial Results
The statutory reporting for the period does not tell the whole
story. I would encourage shareholders to read on as potentially
lost amidst the headline numbers are positive trends. In
particular, the growth rate of the ongoing business was 18.6% in
the first six months of this financial year; whilst the growth rate
for the whole Group (including the mainly discontinued On Board
division ("On-board")) was a very credible 15% (excluding
adjustment for IFRS 15 in 2018).
We informed shareholders in the year end results of the
corrective action we were taking at our On-board division, the
objective of which was to stop the erosion to the Group's
profitability and cash resources. This restructuring has been
completed and On-board is now effectively a discontinued operation.
An impairment charge was taken last year and the restructuring
completed in this first half year, resulting in an exceptional
charge of GBP303,000 (six months ended 30 June 2018: Nil). There is
also an associated cash outflow, to cover predominately redundancy
costs, this has negatively impacted the results for this reported
period.
The Group results for the six months ended 30 June 2019 show a
healthy top line revenue growth of 15.6% to GBP3.645m (six months
ended 30 June 2018 GBP3.145m, excluding adjustment for IFRS 15). If
one excludes On-board, the revenue growth from the continuing
operations was an even more impressive 18.6%, rising to GBP3.368m
(six months ended 30 June 2018: GBP2.839m excluding adjustment for
IFRS 15). Sales growth is being driven by Touchstar's new products
and services which are becoming more established.
Margins rose to 51.9% (six months ended 30 June 2018: 48.2%)
reflecting the continuation of the move to a more software and
solution orientated sale. The level of ongoing recurring licence
and support revenues also rose to GBP1.2m representing a third of
revenues for the six months.
Improved margins combined with the revenue growth resulted in
the after-tax loss before exceptional costs being reduced by 87% to
GBP54,000 (six months ended 30 June 2018: GBP415,000 reported
including adjustment for IFRS 15). Adjusted loss per share was
lower at 0.63p (six months ended 30 June 2018: loss of 4.90p per
share).
As of 30 June 2019, the Group had Net Debt of GBP204,000 (six
months ended 30 June 2018: net cash GBP180,000).
The Group's cashflow in the six months to 30 June 2019 was
adversely impacted by two factors. The first was that substantial
monies due from the HMRC for prior investment in the business were
delayed, due to a processing backlog at HMRC. These monies,
amounting to GBP456,000, were received in August. The second was
the sizeable cash outflow arising from restructuring, which was
over GBP170,000 (30 June 2018: nil). The benefits of the
restructuring are now starting to flow.
Current Trading
We remain on track to meet expectations. The levels of
engagement and customer interest in our new generation of products
continues to develop favourably. It is imperative we maintain this
energy going forward. The long-term fundamentals of organisations
having a growing appetite to capture, consume, move and use mobile
data remain in place.
Topical short-term issues such as Brexit will continue to cause
delay to our client's investment plans, bringing an unevenness to
trading on a month by month basis. This report gives evidence we
are currently overcoming that headwind, the 15% revenue growth
being testament to this.
Touchstar's progress is only happening because the whole
organisation is working hard, focusing on the things we can
control, actively getting in front of customers, delivering great
service and looking after every pound. I really appreciate this
commitment; I am really proud of the people I work alongside.
CONCLUSION
We have made good progress in the year to date, this needs to be
sustained not only over the next few months but the next few years.
This will not be easy but pleasingly we are now starting to see the
rewards of the considerable effort being applied.
I Martin
Executive Chairman
10 September 2019
Unaudited consolidated income statement for the six months ended
30 June 2019
Six months ended 30 June Year ended 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
------------------------------------- ------------------ ----------------------- -----------------------
Revenue 3,635 3,244 6,898
Operating loss before exceptional
items (215) (590) (982)
Exceptional costs (303) - (334)
-------------------------------------- ------------------ ----------------------- --------------------------
Operating loss (518) (590) (1,316)
Finance costs (9) (2) (4)
-------------------------------------- ------------------ ----------------------- --------------------------
Loss before income tax (527) (592) (1,320)
Income tax credit 170 177 404
-------------------------------------- ------------------ ----------------------- --------------------------
Loss for the period attributable to
the owners of the parent (357) (415) (916)
------------------ ----------------------- --------------------------
Loss per ordinary share (pence) attributable to owners of the parent during the
period:
Pence per share Pence per share Pence per share
Loss per share - Basic (4.21)p (4.90)p (10.94)p
Loss per share - Adjusted (note 6) (0.63)p (4.90)p (6.95)p
Unaudited consolidated statement of changes in equity for the
six months ended 30 June 2019
Retained
earnings/
Share premium (accumulated Total
Share capital account losses) equity
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------------- -------------- -------------- --------
For the six months ended 30 June 2019
-----------------------------------------------------------------------------------
Balance at 31 December
2018 424 1,119 849 2,392
Loss for the period - - (357) (357)
Balance at 30 June 2019 424 1,119 492 2,035
------------------------- -------------- -------------- -------------- --------
For the six months ended 30 June 2018
------------------------------------------------- ------
Balance at 1 January 2018 315 - 1,856 2,171
Revenue recognised under
IAS 18 adjusted for IFRS
15 - - (91) (91)
--------------------------- ---- ------ ------ ------
Revised balance 1 January
2018 315 - 1,765 2,080
Share issue 109 1,191 - 1,300
Cost of share issue - (72) - (72)
Loss for the period - - (415) (415)
Balance at 30 June 2018 424 1,119 1,350 2,893
--------------------------- ---- ------ ------ ------
For the year ended 31 December 2018
-----------------------------------------------------------
Balance at 1 January 2018 315 - 1,856 2,171
Revenue recognised under
IAS 18 adjusted for IFRS
15 - - (91) (91)
--------------------------- ---- ------ ------ ------
Revised balance 1 January
2018 315 - 1,765 2,080
Share issue 109 1,191 - 1,300
Cost of share issue - (72) - (72)
Loss for the year - - (916) (916)
Balance at 31 December
2018 424 1,119 849 2,392
--------------------------- ---- ------ ------ ------
Unaudited consolidated statement of financial position at 30
June 2019
30 June 2019 30 June 31 December
2018 2018
GBP'000 GBP'000 GBP'000
------------------------------- ------------- -------- ------------
Non-current assets
Intangible assets 1,429 1,305 1,352
Property, plant and equipment 199 210 228
Right of use asset 643 - -
Deferred tax assets 157 168 157
-------------------------------- ------------- -------- ------------
2,428 1,683 1,737
------------------------------- ------------- -------- ------------
Current assets
Inventories 1,161 1,414 1,210
Trade and other receivables 1,895 1,708 1,928
Current tax recoverable 656 449 487
Cash and cash equivalents 1,839 1,788 2,112
-------------------------------- ------------- -------- ------------
5,551 5,359 5,737
------------------------------- ------------- -------- ------------
Total assets 7,979 7,042 7,474
-------------------------------- ------------- -------- ------------
Current liabilities
Trade and other payables 1,743 1,257 1,444
Lease liabilities 160 - -
Contract liabilities 1,071 957 1,365
Borrowings 2,043 1,608 1,816
-------------------------------- ------------- -------- ------------
5,017 3,822 4,625
Non-current liabilities
Deferred tax liabilities 269 179 269
Lease liabilities 519 - -
Contract liabilities 139 148 188
Total liabilities 5,944 4,149 5,082
-------------------------------- ------------- -------- ------------
Unaudited consolidated statement of financial position at 30
June 2019 (continued)
30 June 2019 30 June 31 December
2018 2018
GBP'000 GBP'000 GBP'000
Capital and reserves attributable
to owners of the parent
Share capital 424 424 424
Share premium account 1,119 1,119 1,119
Profit and loss account 492 1,350 849
------------------------------------ ------------- -------------- ------------
Total equity 2,035 2,893 2,392
------------------------------------ ------------- -------------- ------------
Total equity and liabilities 7,979 7,042 7,474
------------------------------------ ------------- -------------- ------------
Unaudited consolidated cash flow statement for the six months
ended 30 June 2019
30 June 2019 30 June 31 December
2018 2018
GBP'000 GBP'000 GBP'000
--------------------------------------------------- -------------- ------------
Cash flows from operating activities
Operating loss (518) (590) (1,316)
Depreciation 118 42 70
Amortisation 242 211 379
Development impairment - - 334
Right-of-use asset impairment 61 - -
Movement in:
Inventories 51 (27) 177
Trade and other receivables - 548 328
Trade and other payables (29) (499) 136
------------------------------------------ -------- -------------- --------------
Cash generated (used in)/from operating
activities (75) (315) 108
Interest paid (9) (2) (4)
Corporation tax received - - 290
------------------------------------------ -------- -------------- --------------
Net cash generated (used in)/from
operating activities (84) (317) 394
------------------------------------------ -------- -------------- --------------
Cash flows from investing activities
Purchase of intangible assets (319) (380) (929)
Purchase of property, plant and
equipment (14) (15) (61)
Net cash used in investing activities (333) (395) (990)
------------------------------------------ -------- -------------- --------------
Cash flows from financing activities
Lease liability payments (83) - -
Share issue - 1,300 1,300
Cost of share issue - (72) (72)
Net cash used in financing activities (83) 1,228 1,228
------------------------------------------ -------- -------------- --------------
Net increase/ (decrease) in cash
and cash equivalents (500) 516 632
Cash and cash equivalents at start
of the year 296 (336) (336)
------------------------------------------ -------- -------------- --------------
Cash and cash equivalents at end
of the year (204) 180 296
------------------------------------------ -------- -------------- --------------
Cash and cash equivalents
Cash at bank and in hand 1,839 1,788 2,112
Less: bank overdraft (included
within borrowings) (2,043) (1,608) (1,816)
Net debt/cash (204) 180 296
------------------------------------------ -------- -------------- --------------
Notes to the interim report and accounts for the six months
ended 30 June 2019
1. General information
Touchstar plc is a public company limited by share capital
incorporated and domiciled in the United Kingdom. The Company has
its listing on AIM. The address of its registered office is 1
George Square, Glasgow, G2 1AL.
2. Status of interim report and accounts
The financial information comprises the consolidated interim
balance sheet as at 30 June 2019, 30 June 2018 and the year ended
31 December 2018 along with related consolidated interim statements
of income and cash flows for the six months to 30 June 2019 and 30
June 2018 and year ended 31 December 2018 of Touchstar plc
(hereinafter referred to as 'financial information').
This financial information for the half year ended 30 June 2019
has neither been audited nor reviewed and does not comprise
statutory accounts within the meaning of the section 434 of the
Companies Act 2006. This financial information was approved by the
Board on 9 September 2019.
The figures for the year ended 31 December 2018 have been
extracted from the audited annual report and accounts that have
been delivered to the Registrar of Companies. The auditors,
PricewaterhouseCoopers LLP, reported on those accounts under
section 495 of the Companies Act 2006. Their report was unqualified
and did not contain a statement under section 498 of that Act.
3. Basis of preparation
The interim report and accounts have been prepared, in
accordance with IAS34 Interim Financial Reporting, using accounting
policies to be applied in the annual report and accounts for the
year ended 31 December 2019. These are consistent with those
included in the previously published annual report and accounts for
the year ended 31 December 2018, which have been prepared in
accordance with IFRS as adopted by the European Union except for
operating lease accounting policy where IFRS 16 Leases has been
applied from 1 January 2019.
New accounting standard
Previously operating lease costs for both properties and
vehicles were recognised on a monthly basis within operating
expenses in accordance with IAS 17. Under IFRS 16 these leases will
be bought onto the Group's balance sheet from the date of adoption.
The Group has elected to apply the modified retrospective approach
with the cumulative effect of initially applying the standard as an
adjustment to the opening balance of the retained earnings as at 1
January 2019.
The cumulative effect of the changes made to our consolidated 1
January 2019 balance sheet for the adoption of IFRS 16 Leases were
as follows:
Balance at Adjustments Balance at
31 December due to IFRS 1 January
2018 16 2019
GBP'000 GBP'000 GBP'000
----------------------------- ----------------- ----------------- -----------------
Consolidated balance sheet
Non- current assets
Right of use asset - 734 734
Current assets
Trade and other receivables 1,929 (33) 1896
Current liabilities
Trade and other payables 2,998 (17) (2,982)
Lease liabilities - (163) (163)
Non-current liabilities
Lease liabilities - (555) (555)
----------------------------- ----------------- ----------------- -----------------
There was no impact on the closing figures for the balance sheet
at 30 June 2019.
Non - GAAP financial measures
For the purposes of this interim announcement and annual report
and accounts, the Group uses alternative non-Generally Accepted
Accounting Practice ('non-GAAP') financial measures which are not
defined within IFRS. The Directors use the measures in order to
assess the underlying operational performance of the Group and as
such, these measures are important and should be considered
alongside the IFRS measures.
The following non-GAAP measure referred to in the interim
announcement relates to Trading profit.
'Trading loss' is separately disclosed, being defined as
operating profit/(loss) adjusted to exclude restructuring costs
along with other non-recurring costs such as onerous leases and
associated costs on the early vacation of a property relating to
Onboard retail. These exceptional costs related to items which the
management believe did not accurately reflect the underlying
trading performance of the business in the period. The Directors
believe that the trading profit/(loss) is an important measure of
the underlying performance of the Group.
Going Concern
The directors have a reasonable expectation that the Group has
adequate resources to continue operating for the foreseeable
future, and for this reason they have adopted the going concern
basis of preparation in the consolidated interim financial
statements. The financial statements may be obtained from Touchstar
plc, 7 Commerce Way, Trafford Park, Manchester, M17 1HW or online
at www.touchstarplc.com.
4. Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year are discussed below.
Development expenditure
The Group recognises costs incurred on development projects as
an intangible asset which satisfies the requirements of IAS 38. The
calculation of the costs incurred includes the percentage of time
spent by certain employees on the development project. The decision
whether to capitalise and how to determine the period of economic
benefit of a development project requires an assessment of the
commercial viability of the project and the prospect of selling the
project to new or existing customers.
5. Income tax credit
Six months ended Year ended
30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
---------------------------------- ----------------- ----------------- --------------
Corporation Tax
Current tax (170) (140) (468)
Adjustments in respect of prior
years - (37) (37)
Deferred tax - - 101
---------------------------------- ----------------- ----------------- --------------
Total current tax (170) (177) (404)
---------------------------------- ----------------- ----------------- --------------
6. Earnings per share
Earnings per ordinary share (pence) attributable to owners of the parent during the
period:
Year ended 31 December
Six months ended 30 June
Loss per share 2019 2018 2018
------------------------------ --------------------------- --------------------------- -----------------------
Basic (4.21)p (4.90)p (10.94)p
Adjusted (0.63)p (4.90)p (6.95)p
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the year. The calculation
of adjusted earnings per share excludes exceptional costs of
GBP303,000 (31 December 2018 GBP334,000) (note 7).
Reconciliations of the earnings and weighted average number of
shares used in the calculation are set out below:
For six-month period 30 June 2019 30 June 2018
------------------------------- ----------------------------------------- ------------------------------------------
Loss Weighted average number of Loss Weighted average number of
GBP'000 shares (in thousands) GBP'000 shares (in thousands)
------------------------------- --------- ------------------------------ --------- -------------------------------
Basic EPS
Shares in issue 1 January 8,475 6,309
Share issue - 2,166
------------------------------- --------- ------------------------------ --------- -------------------------------
Loss attributable to owners of
the parent (518) 8,475 (415) 8,475
Exceptional costs (note 7) 303 -
Adjusted EPS
Loss attributable to owners of
the parent before exceptional
items (215) 8,475 (415) 8,475
------------------------------- --------- ------------------------------ --------- -------------------------------
For year ended 31 December 2018
-------------------------------------------- ----------------------------------------------------------------
Loss Weighted average number of shares (in
GBP'000 thousands)
Basic EPS
Shares in issue 1 January 6,309
Share issue 2,166
-------------------------------------------- ------------------- -------------------------------------------
Loss attributable to owners of the parent (916) 8,475
Exceptional costs (note 7) 334
-------------------------------------------- ------------------- -------------------------------------------
Adjusted EPS
Loss attributable to owners of the parent
before exceptional items (582) 8,475
-------------------------------------------- ------------------- -------------------------------------------
7. Exceptional costs
30 June 2019 30 June 31 December
2018 2018
GBP'000 GBP'000 GBP'000
------------------------------------------ -------------- ------------
Restructuring expenses:
Redundancy costs 166 - -
Onerous lease associated future 76 - -
costs
Onerous lease impairment 61
Development expenditure impairment - - 334
------------------------------------- ---- -------------- --------------
303 - 334
------------------------------------- ---- -------------- --------------
The exceptional costs incurred early 2019 relate to management's
decision to significantly reduce running costs for the Onboard
product with support for the existing clients moved to the main
offices in Manchester. The Kenilworth office where Onboard was
situated has now been closed.
The development expenditure impairment for 31 December 2018
relates to the write off of the carrying value for NOVOStar
development; the Onboard Retail product.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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