TIDMTNG
RNS Number : 0663W
Tangent Communications PLC
12 November 2010
Tangent Communications PLC
Results for the half-year ended 31 August 2010
Tangent Communications plc, a leading integrator of technology and marketing
strategy, today announces interim results for the period March to August 2010.
Highlights:
· Total revenue up 39% to GBP11.82m (2009: GBP8.51m)
· Underlying operating profit up 146% to GBP0.86m (2009: GBP0.35m)
· Underlying operating margin 7.3% (2009: 4.1%)
· Adjusted basic earnings per share* up 150% to 0.35p (2009: 0.14p)
· Basic earnings per share up 300% to 0.28p (2009: 0.07p)
· Cash generated from operations GBP0.55m (2009: cash used GBP(0.30)m)
· Net funds of GBP1.45m (2009: GBP1.63m)
· Membership services and Subscription collection bureau launched
· Tangent Insight team delivers single customer (database) view
"on-boarding" process for new clients
Tangent's CEO, Timothy Green, commented:
"Our third successive 6 month period of growth across all areas reflects
Tangent's ongoing ability to generate increased revenues and profits. New
business prospects are now engaged across the broad and integrated marketing
services we have built over the past five years. Our data and technology led
approach to customer engagement and the maturing Tao Base platform are capable
of winning global accounts as demonstrated by our recent contract win
announcement with Carlsberg. The second half has begun well with the seasonally
lower revenues in the second half to be expected".
*Adjusted basic earnings per share is defined as profit attributable to
shareholders before restructuring expenses net of tax
For further information, please contact:
+------------------------+---------------+
| Tangent Communications | |
| plc | |
+------------------------+---------------+
| Timothy Green | 020 7462 6100 |
+------------------------+---------------+
| | |
+------------------------+---------------+
| Collins Stewart | |
+------------------------+---------------+
| Adrian Hadden / | 020 7523 8350 |
| Stewart Wallace | |
+------------------------+---------------+
About the Company:
Tangent is a leading integrator of technology and marketing strategy. Taobase,
our pioneering technology environment drives creativity and strategy to be
applied at scale across multiple communications channels. This platform supports
the Tangent business through e-commerce, mrm (marketing resource management),
email, mobile and print.
Tangent employs 200 people across four locations in London, Newcastle,
Cheltenham and Melbourne and is traded on AIM (AIM: TNG).
For more information please visit www.tangentplc.com
Chief Executives Review
Highlights
· Total revenue up 39% to GBP11.82m (2009: GBP8.51m)
· Underlying operating profit up 146% to GBP0.86m (2009: GBP0.35m)
· Underlying operating margin 7.3% (2009: 4.1%)
· Adjusted basic earnings per share* up 150% to 0.35p (2009: 0.14p)
· Basic earnings per share up 300% to 0.28p (2009: 0.07p)
· Cash generated from operations GBP0.55m (2009: cash used GBP(0.30)m)
· Net funds of GBP1.45m (2009: GBP1.63m)
· Membership services and Subscription collection bureau launched
· Tangent Insight team delivers single customer (database) view
"on-boarding" process for new clients
August 2010 compared to August 2009
*Adjusted basic earnings per share is defined as profit attributable to
shareholders before restructuring expenses net of tax
Overview
Tangent continues to be well positioned to benefit from its core growth markets
of technology, data and digital marketing.
Operating profits generated in the first half of the year significantly exceeded
the previous full year and at improved margins. With new projects across the
business being secured we are recruiting in order to maintain and protect the
pipeline, which has somewhat offset the full margin opportunity Tangent offers.
Period Performance
The six months to 31 August 2010 saw underlying operating profit increase by
146% to GBP0.86m, compared to the same period in 2009 and underlying operating
margin improving to 7.3% (2009 4.1%). A high proportion of postage costs
relating to direct mail campaigning for the Labour Party General Election had a
negative impact on margins in the period; excluding this effective operating
margin would have been 7.7%.
All operating divisions saw revenues rise with an overall increase of 39% to
GBP11.82m (2009 GBP8.51m) the highest recorded in any six month period to date.
Our Direct business segment saw revenues increase by 45% to GBP9.42m (2009
GBP6.50m) following growth in print, design and data services. This coupled with
an improved sales mix, as Tangent completed more high margin consultancy
projects, saw operating profit for that segment increase by 330% to GBP0.89m
(2009 GBP0.21m).
Whilst our Online business segment increased revenues by 19% to GBP2.39m (2009
GBP2.00m) operating profit was lower than the comparable six month period at
GBP0.09m (2009 GBP0.25m). This is a result of the continued investment in
staffing and infrastructure required to develop the range of services on offer
and investment in the underlying technology of that business unit. As Tangent
becomes more integrated and increasingly reliant on technology, these overheads
support the entire proposition rather than one segment.
Operational Review
Sales
Overall sales were strong with growth in core revenues more than offsetting some
weakness from the performance of certain acquisitions. The core print and
non-print accounts performed strongly, illustrating the scale of the opportunity
the services can now deliver.
The Direct business segment includes Ravensworth Print and Design and the
Snowball business. The Online segment covers Tangent One (T/One) and Tangent
Labs (T/Labs).
Ravensworth (Print and design) - Our print services responded more positively to
market conditions in the estate agency sector with most KPI's up 30% year on
year. Direct mail revenues were up with significant contributions from the
Labour Party General Election campaigns (including a negative impact on margin
due to the high proportion of postage sales at no margin). Retail promotional
marketing has picked up for many of our leisure clients as marketing spend
continues to focus on direct and tactical campaigns.
Snowball (Customer Relationship Management - CRM) - The formation of a full
service data consultancy post the Snowball acquisition strategically broadened
our service capability with the ability to define customer contact strategy. The
Single Customer View "on boarding process" is a collaboration of our data
consultants and programming team. Our first steps incorporate formulating a
single customer view across a variety of data sources. This step involves a
significant relationship to be formed with both marketing and IT departments in
order to extract all sources of data gathered by a business in today's
broadening customer channel environment and providing back to them online access
to an integrated customer contact history. Our data strategists can then engage,
test, formulate and execute marketing strategy in order to develop new and
increased sources of revenue.
T/One and T/Labs (E-commerce, Web design and Software) - E-commerce revenues
increased through the period with the continuation of our bookstore projects in
Australia, on the provision of global SAP services and new projects expected to
be announced in the coming months. Our software revenues across e-commerce, web
design and marketing resource management have increased as customers have
broadened their engagements. Retail customers are beginning to engage more with
our marketing resource management platforms which allow them to run programmes
to their end customers both to drive footfall and sales in "branch".
New Business
External new business advisors have led to an increased response to our
Marketing Resource Management tools (Toolkit), from both direct and indirect
customers; this has led to a number of engagements which are expected to
complete in the second half and contribute to 2011-12 revenues. We will announce
significant wins as they are confirmed.
Our direct sales team still continues to secure new accounts across our services
and with the introduction of our own e-commerce print service we are using lower
cost affiliate marketing to collect immediate sales.
Overheads
The investment required to evolve in our markets continues to rise. The
competitive markets of data and consultancy drive remuneration levels which have
added to the overhead of the business, as we have built our insight service and
technology platform. With these markets still expanding and evolving the variety
of skills and services required will remain significant.
Ravensworth (Print and Design) - Overheads have remained constant over the
period.
Snowball (CRM) - Overheads have risen as the volume and complexity of services
required to support customer needs have increased. This rise will continue
somewhat in the second half but economies of scale should be quite significant
following this short period of investment.
T/One and T/Labs (E-commerce, Web design and Software) - Overheads continued to
rise significantly through this period. A reduction in senior management
overheads was taken in August which reduced the annual run rate by c:GBP350,000.
Some of these savings will be offset by continued recruitment of staff to
deliver client needs and support product development. A proportion of these
costs are to protect, maintain and deliver a platform that can be of
significantly greater value in the future and should be considered as "research
and development".
Product Development and Investment
Ravensworth (Print and design) - There has been little capital expenditure
needed over this period but software for document composition is being enhanced
all the time to increase the flexibility and creativity of the campaigns we
produce. We are currently reviewing our print production equipment and some
investment will be required shortly to maintain efficiencies and cover future
volumes and quality of our services.
Snowball (CRM) - The integration of Snowball over the last 12 months has brought
significant expertise to the approach of our data services. The Insight (data)
team is now developed and attracting talent from within the industry. Currently
the team operates a service model although the strategy and approach is forming
the basis for software design to automate processes for the future.
T/Labs (Software) - The Tao Base platform has become broader, more diversified
and complex. The key areas of e-commerce, web design, email marketing and
marketing resource management (MRM) have all been invested in as both client
needs and market forces have required. The MRM platform which services our core
client base has reached a level of development that positions us as a "market
leader" in terms of services, flexibility and scalability. The General Election
provided for a significant stress test which was passed with flying colours;
over 50 million communications were driven by 1,000's of users over a 3-4 week
period. The e-commerce platform now takes in feeds and integration from diverse
sources such as KOBO (e-books), ROVI, Nielsen and Datacash. Software Integration
represents a commercial challenge as systems are set to engage with each other
and an opportunity for our skilled development team to collaborate with in house
IT and development teams.
Software and CRM Services - The two divisions are now co-operating more closely
as we take results and turn them into insight and ideas to re-develop our
platforms. This learning cycle ensure our customers benefit from expenditure and
the platform improves across all customer activities.
Outlook
Revenue outlook is positive across the business. Areas that had been depressed
during the recessionary period have rebounded early which is encouraging,
although we cannot be sure that this will continue. The increased margin
performance is encouraging; we aim to improve this further as the sales mix of
print to consultancy services continues to shift and the new print services
coming in are from small volume higher margin activities. The first two trading
months of the second half of the year have been strong, with the seasonally
lower revenues of the rest of the second half expected to follow.
Timothy Green
Chief executive
11 November 2010
Consolidated statements of comprehensive income
for the half-year ended 31 August 2010
+------------------------------------------+-------+-------------+-------------+-----------+
| | | Half-year | Half-year | Year |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | ended | ended | ended |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | 31 | 31 | 28 |
| | | August | August | February |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | 2010 | 2009 | 2010 |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | (unaudited) | (unaudited) | (audited) |
+------------------------------------------+-------+-------------+-------------+-----------+
| | Notes | GBP000 | GBP000 | GBP000 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Revenue | | 11,816 | 8,509 | 18,185 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Cost of sales | | (5,759) | (4,442) | (9,620) |
+------------------------------------------+-------+-------------+-------------+-----------+
| Gross profit | | 6,057 | 4,067 | 8,565 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Operating expenses | | (5,199) | (3,722) | (7,745) |
+------------------------------------------+-------+-------------+-------------+-----------+
| Underlying operating profit | | 858 | 345 | 820 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Non operating expenses | 4 | (154) | (161) | (542) |
+------------------------------------------+-------+-------------+-------------+-----------+
| Operating profit | | 704 | 184 | 278 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Finance income | | (2) | 5 | 4 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Profit before tax | | 702 | 189 | 282 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Tax | | (228) | (70) | - |
+------------------------------------------+-------+-------------+-------------+-----------+
| Profit for the period | | 474 | 119 | 282 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Other comprehensive income | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Exchange differences on translating | | (1) | - | 2 |
| foreign operations | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Total comprehensive income for the | | 473 | 119 | 284 |
| period | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Earnings per share (pence) | 5 | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
| Basic | | 0.28 | 0.07 | 0.17 |
+------------------------------------------+-------+-------------+-------------+-----------+
| Diluted | | 0.27 | 0.07 | 0.16 |
+------------------------------------------+-------+-------------+-------------+-----------+
| | | | | |
+------------------------------------------+-------+-------------+-------------+-----------+
The results shown above relate to continuing operations and are attributable to
equity shareholders of the company.
Consolidated statements of changes in equity
for the half-year ended 31 August 2010
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| | | | | | | Retained | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| | | Share | Share | Merger | Other | earnings/ | Total |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| | | capital | premium | reserve | reserves | (losses) | equity |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| | Notes | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Half year ended 31 August | | | | | | | |
| 2009 | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| At 1 March 2009 | | 1,702 | - | 917 | 2,837 | 14,132 | 19,588 |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Comprehensive income | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Retained profit for the | | - | - | - | - | 119 | 119 |
| period | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Total comprehensive | | - | - | - | - | 119 | 119 |
| income | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Transactions with owners | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Equity dividend | 6 | - | - | - | - | (338) | (338) |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Share-based payment | 3 | - | - | - | 11 | - | 11 |
| charge | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Issue of shares | 8 | 3 | 9 | - | - | - | 12 |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Total transactions with | | 3 | 9 | - | 11 | (338) | (315) |
| owners | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| At 31 August 2009 | | 1,705 | 9 | 917 | 2,848 | 13,913 | 19,392 |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Half-year ended 31 August | | | | | | | |
| 2010 | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| At 1 March 2010 | | 1,706 | 12 | 917 | 2,856 | 14,078 | 19,569 |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Comprehensive income | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Retained profit for the | | - | - | - | - | 473 | 473 |
| period | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Total comprehensive | | - | - | - | - | 473 | 473 |
| income | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Transactions with owners | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Equity dividend | 6 | - | - | - | - | (347) | (347) |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Share-based payment | 3 | - | - | - | 6 | - | 6 |
| charge | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Issue of shares | 8 | 42 | - | 457 | (499) | - | - |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Total transactions with | | 42 | - | 457 | (493) | (347) | (341) |
| owners | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| At 31 August 2010 | | 1,748 | 12 | 1,374 | 2,363 | 14,204 | 19,701 |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Year ended 28 February | | | | | | | |
| 2010 | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| At 1 March 2009 | | 1,702 | - | 917 | 2,837 | 14,132 | 19,588 |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Comprehensive income | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Retained profit for the | | - | - | - | - | 284 | 284 |
| period | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Total comprehensive | | - | - | - | - | 284 | 284 |
| income | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Transactions with owners | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Equity dividend | 6 | - | - | - | - | (338) | (338) |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Share-based payment | 3 | - | - | - | 19 | - | 19 |
| charge | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Issue of shares | 8 | 4 | 12 | - | - | - | 16 |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| Total transactions with | | 4 | 12 | - | 19 | (338) | (303) |
| owners | | | | | | | |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
| At 28 February 2010 | | 1,706 | 12 | 917 | 2,856 | 14,078 | 19,569 |
+---------------------------+-------+---------+---------+---------+----------+-----------+--------+
Consolidated statements of financial position
at 31 August 2010
+-------------------------------------+-------+-------------+-------------+-----------+
| | | 31 | 31 | 28 |
| | | August | August | February |
+-------------------------------------+-------+-------------+-------------+-----------+
| | | 2010 | 2009 | 2010 |
+-------------------------------------+-------+-------------+-------------+-----------+
| | | (unaudited) | (unaudited) | (audited) |
+-------------------------------------+-------+-------------+-------------+-----------+
| | Notes | GBP000 | GBP000 | GBP000 |
+-------------------------------------+-------+-------------+-------------+-----------+
| Assets | | | | |
+-------------------------------------+-------+-------------+-------------+-----------+
| Non-current assets | | | | |
+-------------------------------------+-------+-------------+-------------+-----------+
| Intangible assets - goodwill | | 15,932 | 14,961 | 15,932 |
+-------------------------------------+-------+-------------+-------------+-----------+
| Other intangible assets | | 49 | 64 | 72 |
+-------------------------------------+-------+-------------+-------------+-----------+
| Property, plant and equipment | 7 | 1,427 | 1,643 | 1,582 |
+-------------------------------------+-------+-------------+-------------+-----------+
| | | 17,408 | 16,668 | 17,586 |
+-------------------------------------+-------+-------------+-------------+-----------+
| Current assets | | | | |
+-------------------------------------+-------+-------------+-------------+-----------+
| Inventories | | 98 | 107 | 106 |
+-------------------------------------+-------+-------------+-------------+-----------+
| Trade and other receivables | | 5,784 | 3,827 | 5,286 |
+-------------------------------------+-------+-------------+-------------+-----------+
| Cash and cash equivalents | | 1,505 | 1,751 | 1,145 |
+-------------------------------------+-------+-------------+-------------+-----------+
| | | 7,387 | 5,685 | 6,537 |
+-------------------------------------+-------+-------------+-------------+-----------+
| Total assets | | 24,795 | 22,353 | 24,123 |
+-------------------------------------+-------+-------------+-------------+-----------+
| Liabilities | | | | |
+-------------------------------------+-------+-------------+-------------+-----------+
| Current liabilities | | | | |
+-------------------------------------+-------+-------------+-------------+-----------+
| Borrowings | | (56) | (62) | (62) |
+-------------------------------------+-------+-------------+-------------+-----------+
| Trade and other payables | | (4,313) | (2,523) | (4,326) |
+-------------------------------------+-------+-------------+-------------+-----------+
| Dividend payable | | (347) | - | - |
+-------------------------------------+-------+-------------+-------------+-----------+
| Current tax liabilities | | (378) | (309) | (141) |
+-------------------------------------+-------+-------------+-------------+-----------+
| | | (5,094) | (2,894) | (4,529) |
+-------------------------------------+-------+-------------+-------------+-----------+
| Non-current liabilities | | | | |
+-------------------------------------+-------+-------------+-------------+-----------+
| Borrowings | | - | (56) | (25) |
+-------------------------------------+-------+-------------+-------------+-----------+
| Deferred tax | | - | (11) | - |
+-------------------------------------+-------+-------------+-------------+-----------+
| | | - | (67) | (25) |
+-------------------------------------+-------+-------------+-------------+-----------+
| Total liabilities | | (5,094) | (2,961) | (4,554) |
+-------------------------------------+-------+-------------+-------------+-----------+
| Net assets | | 19,701 | 19,392 | 19,569 |
+-------------------------------------+-------+-------------+-------------+-----------+
| | | | | |
+-------------------------------------+-------+-------------+-------------+-----------+
| Equity | | | | |
+-------------------------------------+-------+-------------+-------------+-----------+
| Share capital | 8 | 1,748 | 1,705 | 1,706 |
+-------------------------------------+-------+-------------+-------------+-----------+
| Share premium | | 12 | 9 | 12 |
+-------------------------------------+-------+-------------+-------------+-----------+
| Merger reserve | | 1,374 | 917 | 917 |
+-------------------------------------+-------+-------------+-------------+-----------+
| Other reserves | | 2,363 | 2,848 | 2,856 |
+-------------------------------------+-------+-------------+-------------+-----------+
| Retained earnings | | 14,204 | 13,913 | 14,078 |
+-------------------------------------+-------+-------------+-------------+-----------+
| Total equity - attributable to | | 19,701 | 19,392 | 19,569 |
| equity shareholders of the company | | | | |
+-------------------------------------+-------+-------------+-------------+-----------+
Consolidated statements of cash flow
for the half-year ended 31 August 2010
+--------------------------------------+-------+-------------+-------------+-----------+
| | | Half-year | Half-year | Year |
| | | | | |
+--------------------------------------+-------+-------------+-------------+-----------+
| | | ended | ended | Ended |
+--------------------------------------+-------+-------------+-------------+-----------+
| | | 31 | 31 | 28 |
| | | August | August | February |
+--------------------------------------+-------+-------------+-------------+-----------+
| | | 2010 | 2009 | 2010 |
+--------------------------------------+-------+-------------+-------------+-----------+
| | | (unaudited) | (unaudited) | (audited) |
+--------------------------------------+-------+-------------+-------------+-----------+
| | Notes | GBP000 | GBP000 | GBP000 |
+--------------------------------------+-------+-------------+-------------+-----------+
| Operating activities | | | | |
+--------------------------------------+-------+-------------+-------------+-----------+
| Cash flow from operations | 9 | 549 | (296) | 636 |
+--------------------------------------+-------+-------------+-------------+-----------+
| Interest paid | | (2) | (3) | (5) |
+--------------------------------------+-------+-------------+-------------+-----------+
| Tax received/(paid) | | 9 | 73 | (190) |
+--------------------------------------+-------+-------------+-------------+-----------+
| Net cash inflow/(outflow) from | | 556 | (226) | 441 |
| operating activities | | | | |
+--------------------------------------+-------+-------------+-------------+-----------+
| Investing activities | | | | |
+--------------------------------------+-------+-------------+-------------+-----------+
| Acquisition of subsidiary, net of | | - | - | (990) |
| cash acquired | | | | |
+--------------------------------------+-------+-------------+-------------+-----------+
| Payment of contingent consideration | | - | (166) | (166) |
+--------------------------------------+-------+-------------+-------------+-----------+
| Purchase of property, plant and | | (171) | (244) | (468) |
| equipment | | | | |
+--------------------------------------+-------+-------------+-------------+-----------+
| Purchase of intangible assets | | - | (75) | (114) |
+--------------------------------------+-------+-------------+-------------+-----------+
| Sale of property, plant and | | 6 | 11 | 17 |
| equipment | | | | |
+--------------------------------------+-------+-------------+-------------+-----------+
| Interest received | | - | 8 | 9 |
+--------------------------------------+-------+-------------+-------------+-----------+
| Net cash used in investing | | (165) | (466) | (1,712) |
| activities | | | | |
+--------------------------------------+-------+-------------+-------------+-----------+
| Financing activities | | | | |
+--------------------------------------+-------+-------------+-------------+-----------+
| Dividends paid | 6 | - | (338) | (338) |
+--------------------------------------+-------+-------------+-------------+-----------+
| Repayment of borrowings | | (31) | (32) | (63) |
+--------------------------------------+-------+-------------+-------------+-----------+
| Proceeds from issue of shares, net | | - | 12 | 16 |
| of costs | | | | |
+--------------------------------------+-------+-------------+-------------+-----------+
| Net cash used in financing | | (31) | (358) | (385) |
| activities | | | | |
+--------------------------------------+-------+-------------+-------------+-----------+
| Net increase/(decrease) in cash and | | 360 | (1,050) | (1,656) |
| cash equivalents | | | | |
+--------------------------------------+-------+-------------+-------------+-----------+
| Cash and cash equivalents at | | 1,145 | 2,801 | 2,801 |
| beginning of period | | | | |
+--------------------------------------+-------+-------------+-------------+-----------+
| Cash and cash equivalents at end of | | 1,505 | 1,751 | 1,145 |
| period | | | | |
+--------------------------------------+-------+-------------+-------------+-----------+
Notes to the financial information
for the half-year ended 31 August 2010
1. Basis of preparation
This consolidated half-yearly financial information, which is condensed and
unaudited for the half-year ended 31 August 2010, has been prepared in
accordance with the accounting policies which the group expects to adopt in its
next annual report and is consistent with those adopted in the consolidated
financial statements for the year ended 28 February 2010. These accounting
policies are based on the EU-adopted International Financial Reporting Standards
("IFRS") and International Financial Reporting Interpretations Committee
("IFRIC") interpretations that the group expects to be applicable at that time.
This consolidated half-yearly information for the half-year ended 31 August 2010
has been prepared in accordance with IAS 34: Interim Financial Reporting, as
adopted by the EU and under the historical cost convention.
The information relating to the half-years ended 31 August 2010 and 31 August
2009 is unaudited and does not constitute statutory financial statements as
defined in section 434 of the Companies Act 2006. It has, however, been reviewed
by the auditors and their report is set out at the end of this document. The
comparative figures for the year ended 28 February 2010 have been extracted from
the consolidated financial statements, on which the auditors gave an unqualified
opinion and did not include a statement under section 498 (2) or (3) of the
Companies Act 2006. The annual report and accounts for the year ended 28
February 2010 has been filed with the Registrar of Companies.
The group's financial risk management objectives and policies are consistent
with those disclosed in the 2010 annual report and accounts.
The half-yearly report was approved by the board of directors on 11 November
2010.
The half-yearly report is available on Tangent's website, www.tangentplc.com,
and is being sent to shareholders. Further copies are available at the Tangent's
registered office,84-86 Great Portland Street, LondonW1W 7NR.
Going concern
The directors are satisfied that the group has sufficient resources to continue
in operation for the foreseeable future, a period of not less than 12 months
from the date of this report. Accordingly, they continue to adopt the going
concern basis in preparing the financial statements.
2. Operating segments
The group has two reportable segments: Online and Direct. This disclosure
correlates with the information that is presented to the group's chief decision
maker, the board of directors, which reviews revenues and operating profits by
segment but assets at a consolidated level.
Online comprises the Tangent One and Tangent Labs businesses and Direct
comprises Snowball, Ravensworth and Tangent On Demand. As noted in the 2010
annual report and accounts all central costs, with the exception of those
related to the company's market quotation and non-executive directors, have been
consolidated into the revenue generating units for the period ended 31 August
2010. This presentation differs from that adopted in the 2010 annual report and
accounts and therefore the disclosure below in respect of the period to 31
August 2009 and full year to 28 February 2010 has been amended to reflect the
change in central cost consolidation. The change does not have any impact on
previously reported consolidated profits, net assets or earnings per share of
the group.
+-------------------------------------------------+---------+---------+---------+---------+
| | Online | Direct | Central | Total |
| | | | | |
+-------------------------------------------------+---------+---------+---------+---------+
| | GBP000 | GBP000 | GBP000 | GBP000 |
| | | | | |
+-------------------------------------------------+---------+---------+---------+---------+
| Half-year ended 31 August 2010 | | | | |
+-------------------------------------------------+---------+---------+---------+---------+
| Revenue | 2,394 | 9,422 | - | 11,816 |
+-------------------------------------------------+---------+---------+---------+---------+
| Underlying operating profit | 88 | 890 | (120) | 858 |
+-------------------------------------------------+---------+---------+---------+---------+
| | | | | |
+-------------------------------------------------+---------+---------+---------+---------+
| Half-year ended 31 August 2009 | | | | |
+-------------------------------------------------+---------+---------+---------+---------+
| Revenue | 2,008 | 6,501 | - | 8,509 |
+-------------------------------------------------+---------+---------+---------+---------+
| Underlying operating profit | 253 | 207 | (115) | 345 |
+-------------------------------------------------+---------+---------+---------+---------+
| | | | | |
+-------------------------------------------------+---------+---------+---------+---------+
| Year ended 28 February 2010 | | | | |
+-------------------------------------------------+---------+---------+---------+---------+
| Revenue | 4,312 | 13,873 | - | 18,185 |
+-------------------------------------------------+---------+---------+---------+---------+
| Underlying operating profit | 413 | 647 | (240) | 820 |
+-------------------------------------------------+---------+---------+---------+---------+
Seasonality of sales
Direct revenues are more heavily weighted towards the first half of the
financial year which includes the spring and summer months with sales in the
second half including the winter months when activity is generally lower.
3. Share options and share-based payment charge
The total share-based payment charge for the period was GBP6,000 (half-year
ended 31 August 2009: GBP11,000 and year ended 28 February 2010: GBP19,000) and
has been included with operating expenses.
The movements in share options and the corresponding weighted average exercise
prices ("WAEP") are summarised below:
+--------------------------------------------------------+---------+--------+
| | Number | WAEP |
+--------------------------------------------------------+---------+--------+
| | 000 | Pence |
+--------------------------------------------------------+---------+--------+
| At 1 March 2010 | 15,091 | 4.24 |
+--------------------------------------------------------+---------+--------+
| Share options lapsed | (1,779) | (0.13) |
+--------------------------------------------------------+---------+--------+
| At 31 August 2010 | 13,312 | 4.67 |
+--------------------------------------------------------+---------+--------+
For the share options outstanding at 31 August 2010 exercise prices ranged
between 1p and 13.25p per share and the weighted average remaining contractual
life was 5.20 years.
There were no share options granted or exercised during the period.
4. Non operating expenses
During the period the board began the process of combining the management
infrastructure of Snowball and Tangent ONE to provide a unified, efficient and
cohesive team. In addition to this the board engaged professional advisors to
prepare a circular to shareholders requesting their consent for Tangent to
purchase its own shares. As neither of these costs form part of the normal
operating expenses of Tangent they have been separately identified in the
statement of comprehensive income and excluded from underlying operating profit.
+--------------------------------------------------------+--------+--------+
| | | GBP000 |
+--------------------------------------------------------+--------+--------+
| Redundancy and employee termination costs | | 96 |
+--------------------------------------------------------+--------+--------+
| Circular fees and costs | | 58 |
+--------------------------------------------------------+--------+--------+
| | | 154 |
+--------------------------------------------------------+--------+--------+
5. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following:
+---------------------------------------------+-----------+-----------+----------+
| | Half-year | Half-year | Year |
| | | | |
+---------------------------------------------+-----------+-----------+----------+
| | ended | ended | ended |
+---------------------------------------------+-----------+-----------+----------+
| | 31 | 31 | 28 |
| | August | August | February |
+---------------------------------------------+-----------+-----------+----------+
| | 2010 | 2009 | 2010 |
+---------------------------------------------+-----------+-----------+----------+
| | GBP000 | GBP000 | GBP000 |
+---------------------------------------------+-----------+-----------+----------+
| Profit attributable to shareholders | 474 | 119 | 282 |
+---------------------------------------------+-----------+-----------+----------+
+---------------------------------------------+---------+---------+---------+
| | Number | Number | Number |
| | | | |
+---------------------------------------------+---------+---------+---------+
| | 000 | 000 | 000 |
+---------------------------------------------+---------+---------+---------+
| Weighted average number of shares: | | | |
+---------------------------------------------+---------+---------+---------+
| For basic earnings per share | 169,467 | 168,761 | 168,903 |
+---------------------------------------------+---------+---------+---------+
| Adjustment for options outstanding | 3,652 | 5,739 | 4,083 |
+---------------------------------------------+---------+---------+---------+
| Adjustment for contingent shares | - | 4,158 | 4,158 |
+---------------------------------------------+---------+---------+---------+
| For diluted earnings per share | 173,119 | 178,658 | 177,144 |
+---------------------------------------------+---------+---------+---------+
+------------------+-----------------------------------+--------+--------+
| | Pence | Pence | Pence |
+------------------+-----------------------------------+--------+--------+
| | per share | per | per |
| | | share | share |
+------------------+-----------------------------------+--------+--------+
| Earnings per | | | |
| share: | | | |
+------------------+-----------------------------------+--------+--------+
| Basic | 0.28 | 0.07 | 0.17 |
+------------------+-----------------------------------+--------+--------+
| Diluted | 0.27 | 0.07 | 0.16 |
+------------------+-----------------------------------+--------+--------+
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. Tangent has two categories of dilutive potential
ordinary shares: share options and shares contingently issuable as consideration
for an acquisition.
A calculation is performed for the share options to determine the number of
shares that could have been acquired at fair value based on the monetary value
of the subscription rights attached to the outstanding share options. The number
of shares from this calculation is compared with the number of shares that would
have been issued assuming the exercise of the options and the difference is
deemed to be the number of dilutive shares attributable to share options.
5. Earnings per share (continued)
The estimated number of shares that will be issued in the future as purchase
consideration for current subsidiaries is deemed to be the number of dilutive
shares issuable as consideration for acquisitions.
6. Dividends
Amounts recognised as distributions to equity holders in the period:
+--------------------------------------------+-----------+-----------+----------+
| | Half-year | Half-year | Year |
| | | | |
+--------------------------------------------+-----------+-----------+----------+
| | ended | ended | Ended |
+--------------------------------------------+-----------+-----------+----------+
| | 31 | 31 | 28 |
| | August | August | February |
+--------------------------------------------+-----------+-----------+----------+
| | 2010 | 2009 | 2010 |
+--------------------------------------------+-----------+-----------+----------+
| | GBP000 | GBP000 | GBP000 |
+--------------------------------------------+-----------+-----------+----------+
| Dividend for the year ended 28 February | 347 | 338 | 338 |
| 2010 of 0.2p per share | | | |
+--------------------------------------------+-----------+-----------+----------+
The Tangent employee share ownership trust holds 1,428,340 shares and it has
waived its right to receive dividends.
The dividend for the year ended 28 February 2010 was approved by shareholders at
the annual general meeting on 31 August 2010 and paid on 27 September 2010 it
has therefore been accrued at 31August 2010.
7. Property, plant and equipment
During the period the group spent GBP171,000 on additions to plant, equipment
and computers to upgrade production facilities and enhance client services.
8. Share Capital
Allotted and fully paid
+-------------------------------------------+---------+---------+----------+
| | Number of ordinary 1p |
| | shares |
+-------------------------------------------+------------------------------+
| | 31 | 31 | 28 |
| | August | August | February |
+-------------------------------------------+---------+---------+----------+
| | 2010 | 2009 | 2010 |
+-------------------------------------------+---------+---------+----------+
| | 000 | 000 | 000 |
+-------------------------------------------+---------+---------+----------+
| At 1 March 2010 | 170,534 | 170,134 | 170,134 |
+-------------------------------------------+---------+---------+----------+
| Issued in the period | 4,158 | 300 | 400 |
+-------------------------------------------+---------+---------+----------+
| At 31 August 2010 | 174,692 | 170,434 | 170,534 |
+-------------------------------------------+---------+---------+----------+
+--------------------------------------------+--------+--------+----------+
| | Nominal value |
+--------------------------------------------+----------------------------+
| | 31 | 31 | 28 |
| | August | August | February |
+--------------------------------------------+--------+--------+----------+
| | 2010 | 2009 | 2010 |
+--------------------------------------------+--------+--------+----------+
| | GBP000 | GBP000 | GBP000 |
+--------------------------------------------+--------+--------+----------+
| At 1 March 2010 | 1,706 | 1,702 | 1,702 |
+--------------------------------------------+--------+--------+----------+
| Issued in the period | 42 | 3 | 4 |
+--------------------------------------------+--------+--------+----------+
| At 31 August 2010 | 1,748 | 1,705 | 1,706 |
+--------------------------------------------+--------+--------+----------+
During the period the group issued 4,158,333 ordinary shares of 1p each allotted
at 12p per share in respect of the final part of the consideration due for the
acquisition of C360 UK Limited.
9. Cash flow from operations
+--------------------------------------------+-----------+-----------+----------+
| | Half-year | Half-year | Year |
+--------------------------------------------+-----------+-----------+----------+
| | Ended | ended | Ended |
+--------------------------------------------+-----------+-----------+----------+
| | 31 | 31 | 28 |
| | August | August | February |
+--------------------------------------------+-----------+-----------+----------+
| | 2010 | 2009 | 2010 |
+--------------------------------------------+-----------+-----------+----------+
| | GBP000 | GBP000 | GBP000 |
+--------------------------------------------+-----------+-----------+----------+
| Profit before tax for the period | 702 | 189 | 282 |
+--------------------------------------------+-----------+-----------+----------+
| Depreciation and amortisation of | 348 | 289 | 621 |
| non-current assets | | | |
+--------------------------------------------+-----------+-----------+----------+
| Profit on sale of plant and equipment | (5) | (3) | (9) |
+--------------------------------------------+-----------+-----------+----------+
| Net interest charge/(income) | 2 | (5) | (4) |
+--------------------------------------------+-----------+-----------+----------+
| Net foreign exchange gain | (1) | - | 2 |
+--------------------------------------------+-----------+-----------+----------+
| Share-based payment charge | 6 | 11 | 19 |
+--------------------------------------------+-----------+-----------+----------+
| | 1,052 | 481 | 911 |
+--------------------------------------------+-----------+-----------+----------+
| Movements in Working Capital | | | |
+--------------------------------------------+-----------+-----------+----------+
| Decrease/(increase) in inventories | 8 | (1) | - |
+--------------------------------------------+-----------+-----------+----------+
| Increase in trade and other receivables | (498) | (666) | (1,675) |
+--------------------------------------------+-----------+-----------+----------+
| (Decrease)/increase in trade and other | (360) | (110) | 1,400 |
| payables | | | |
+--------------------------------------------+-----------+-----------+----------+
| Increase in dividend payable | 347 | - | - |
+--------------------------------------------+-----------+-----------+----------+
| Cash generated from/(used in) operations | 549 | (296) | 636 |
+--------------------------------------------+-----------+-----------+----------+
10. Analysis of net funds
+------------------+-------------------------------------+--------+--------+
| | 1 March | Cash | 31 |
| | | | August |
+------------------+-------------------------------------+--------+--------+
| | 2010 | flows | 2010 |
+------------------+-------------------------------------+--------+--------+
| | GBP000 | GBP000 | GBP000 |
+------------------+-------------------------------------+--------+--------+
| Cash | 1,145 | 360 | 1,505 |
+------------------+-------------------------------------+--------+--------+
| Finance leases | (87) | 31 | (56) |
+------------------+-------------------------------------+--------+--------+
| Net funds | 1,058 | 391 | 1,449 |
+------------------+-------------------------------------+--------+--------+
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the half-year ended 31 August
2010 which comprises the consolidated statements of comprehensive income,
consolidated statements of changes in equity, consolidated statements of
financial position, consolidated statements of cash flows 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.
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 AIM Rules for Companies.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRSs 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 financial 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 half-year ended 31 August 2010 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union and the AIM Rules for Companies.
UHY Hacker Young LLP
Chartered Accountants
London
11 November 2010
Notes
1. The maintenance and integrity of the Tangent Communications plc website
is the responsibility of the directors; the work carried out by the auditors
does not involve consideration of these matters and, accordingly, the auditors
accept no responsibility for any changes that may have occurred to the
half-yearly report or the auditors' review report since they were initially
presented on the website.
2. Legislation in the United Kingdom governing the preparation and
dissemination of financial information may differ from legislation in other
jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR KKDDQOBDDDDD
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