2. Design and Print - 2010-11 has seen the integration of
Tangent's print business into the trading unit of Ravensworth. The
services of on demand and electronic demand design and print
services (e-print) are driven through our market leading digital
facility in Newcastle. There remain some restructuring costs to be
endured during the coming financial year as this process is
completed. Ravensworth has over 20 years of experience in the arena
of digital print production. This experience has ensured throughout
the period of transition from on-demand to e-demand our service and
delivery has been maintained at the highest levels. The breadth of
technological engagements we now offer for consumer, B2B and
corporate engagements ensures we have a mix of cost and dependency
models which can respond to the requirements of the growing "print
on demand" marketplace both in the UK and abroad.
There still remains some cross-over between the two revenue
units whereby our Communications utilise Design and Print services
and similarly e-print is dependent on our software provision.
Delivery 2010-11 has also been a year of substantial delivery
for Tangent. The start of the year saw the culmination of a five
year engagement with the Labour Party where Tangent provided
software and services right across the range of tactics and
engagements to run a General election campaign. Whilst not
victorious in the final result, the performance exceeded
expectations and the campaigning was viewed very much as a success.
The hard work of a significant number of our staff was involved and
the Board would like to thank all our staff for their endeavours
throughout the year.
2010-11 saw the award of the Labour Party Membership contract in
a competitive pitch. This service was launched in August 2010 and
will run for a minimum three year period. A new team has been set
up in our Newcastle facility to run the financial support for the
100,000's of Labour Party members. The bespoke platform built by
our web development team on open source Web 2.0 is state of the
art. We can now provide payment processing services which we expect
to see as a growth opportunity engagement with mid-market size
membership services for unions, clubs and associations.
2010-11 saw the growth and establishment of our award winning
data insight team. Led by the Wolseley account team, our insight
and campaign services received award winning industry recognition
in the B2B marketing arena. The growth of B2B and B2C customer
behaviour management since the acquisition and integration of
Snowball with Tangent Direct continues at a great pace, and our
growing reputation can derive great benefit in future periods.
2010-11 saw the appointment of Tangent to provide services to
Carlsberg UK. More recently this appointment has been broadened to
implement their global marketing software platform initially across
four countries with 80+ potential installations. This illustrates
how far forward Tangent has moved from what traditionally had been
lengthy sales cycles with clients resistant to commit to large
programs without significant periods of testing. Now Tangent is
credible to deliver immediate systems and services to large
corporations. We look forward to a long and successful engagement
with Carlsberg UK and Global and will report further on this
progress during the year.
2010-11 saw a significant return of activity in the estate
agency sector. The number of active branches increased by 10% and
daily order values by 16%. Our market position continues to
strengthen with a number of new installations and a broader range
of services embraced by a range of customers.
People
2010-11 saw the appointment of Kevin Cameron to the board as
Finance Director and Alan Smith as non-Executive Director. Kevin
brings his experience of managing one of our operating units
Ravensworth to the Board and has provided an excellent contribution
in his first year. Tangent now employs 234 people across offices in
London, Newcastle, Cheltenham, and Melbourne all offering great
passion and creativity; I would like to thank them all for their
dedication in 2010-11.
Timothy Green Chief executive
Financial review For the year ended 28 February 2011
Tangent is pleased to report an increase in both revenues and
underlying operating profit for the year to 28 February 2011.
Revenue from our business units continued to grow and sales mix
continued to improve with both gross and net operating margin up on
the prior year.
For the year ended 28 February 2011 all central costs, with the
exception of those relating to the company's stock market listing
and non-executive directors, have been consolidated in to the
revenue generating units. This presentation differs from that
adopted in the 2010 annual report and therefore the disclosures in
respect of that year included herein have 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.
Key Performance Indicators
We manage Tangent's business using KPI's which measure
underlying performance, excluding restructuring and non-operating
expenses. The board monitor these KPI's on a continuing basis to
deliver shareholder value.
-- Revenue increased by 23.1% to GBP22.39m (2009-10:
GBP18.19m)
-- Underlying operating profit, increased by 64.6% to GBP1.35m
(2009-10: GBP0.82m)
-- Underlying operating margin increased to 6.0% (2009-10:
4.5%)
-- Diluted basic earnings per share were 0.43p (2009-10:
0.16p)
-- Cash generated from operations GBP1.83m (2009-10: GBP0.64m)
representing 135% of underlying operating profit (2009-10: 78%)
Trading Performance
Revenues increased by 23.1% to GBP22.39m, (2009-10: GBP18.19m)
with increased contributions coming from across the business.
Tangent's changing sales mix together with operational gearing,
following growth across our business units, lead to an increase in
gross margin of 1.9% to 49.0% (2009-10: 47.1%). Gross profits were
28% higher at GBP10.97m (2009-10: GBP8.57m). These more than
covered the increase in operating expenses resulting in underlying
operating profits rising by 64.6% to GBP1.35m (2009-10: GBP0.82m).
Adjusted EPS, calculated after share-based payments and before
restructuring expenses net of tax, provides a consistent measure of
performance that excludes non-operating expenses. Adjusted EPS
increased by 45% to 0.55p per share (2009-10: 0.38p, during this
year Tangent had no tax charge).
Direct During the year revenues from Direct increased by 26.8%
to GBP17.59m (2009-10: GBP13.87m). The organic growth was driven by
an increase in the range of services and projects undertaken.
Underlying operating profit increased by 134%, with an underlying
operating margin of 8.6%. The increase in margin was a result of an
improved sales mix generated on a growth in higher margin
consultancy projects together with operational gearing as Tangent
revenues continue to grow.
Online As Tangent's business develops, client requirements are
becoming increasingly reliant on technology. Our business segments
are therefore becoming ever more integrated and the overhead in our
online division increasingly supports the entire proposition rather
than this one business segment. Revenue from Online increased by
11%. However the continued investment in staffing and
infrastructure required to continue the development of Tangent's
underlying technology lead to an increase in operating overheads
resulting in operating profits of GBP0.10m (2009-10: GBP0.41m).
Operating expenses During the year operating expenses increased
by GBP1.87m from GBP7.73 in 2010 to GBP9.60m as Tangent continued
to expand its activities and revenues;
-- GBP1.4m of the increase related to staff costs as average
head count increased by 43 over the period, including a full year
of the Snowball staff acquired in 2009 and investment in our
software development, client and service support teams.
-- The charge in respect of bad debts increased by GBP0.17m,
mainly as a result of the administration of Red Group Retail in
Australia
During the year Tangent increased spend on new business and
marketing activities by GBP0.1m.
Business Segments
Tangent's business is developing continually. The Board reviews
the make-up of the business segments to ensure they accurately
reflect the operational reality of the business. During 2010-11 we
reported on three segments:
-- Direct: this segment included the digital printing units and
Snowball, our direct marketing business.
-- Online: this segment included online marketing and
software.
-- Central: this segment included the costs of non-executive
directors, maintenance of Tangent's stock market listing, general
professional advice and share-based payment charges
Over the year the sales mix in direct marketing has continued to
develop, with an increasing level of higher margin consultancy
revenues reliant upon the technology being developed within
Tangent. This sales line is increasingly supported by the resources
within the Online business segment and, from September 2010, the
direct and online marketing arms have been operating as one.
In order to more accurately reflect the operational reality and
provide greater clarity, as from 1 March 2011 the reporting
segments have been amended as follows:
-- Software and Communications, combining Tangent One, Tangent
Labs and Snowball
-- Design and print, combining the Ravensworth, On demand and
e-print businesses
-- PLC; this segment includes the costs of non-executive
directors, maintenance of Tangent's stock market listing, general
professional advice and share-based payment charges
Presenting the segments as above will ensure that the revenues
generated are matched more closely with the resources required for
delivery.
Group restructuring and non-operating expenses
Tangent Communications (LSE:TNG)
Historical Stock Chart
From Jun 2024 to Jul 2024
Tangent Communications (LSE:TNG)
Historical Stock Chart
From Jul 2023 to Jul 2024
