TIDMTNG
RNS Number : 3417H
Tangent Communications PLC
19 May 2014
Tangent Communications PLC ("Tangent" or the "Company)
Results for the year ended 28 February 2014
FINANCIAL HIGHLIGHTS
-- Revenues increased by 11.3% to GBP27.03m (2013: GBP24.29m)
-- Underlying operating profit increased by 53.3% to GBP2.48m
(2013: GBP1.62m) and 20.4% on a like for like basis
-- Profit before tax increased by 171.7% to GBP2.33m (2013: GBP0.86m)
-- Revenues from our retail websites increased to 34.4% of group total (2013: 21.2%)
-- Underlying earnings per share(1) increased by 10.7% to 0.62p (2013: 0.56p)
-- Net cash(2) increased by GBP0.64m to GBP2.81m (2013: GBP2.17m)
-- 20% increase in proposed final dividend to 0.24 pence per share (2013: 0.20 pence per share)
Commenting on the year, Tangent's Chief Executive, Timothy
Green, said:
"2013-14 was a strong year for Tangent, with profits beating
market expectations, our cash balance looking healthy and dividends
generated.
We have the ambition to become a major player in the online
retail print market, and this year the Company took strides towards
that goal, with the proportion of revenues generated online
increasing to 34%. This trend is expected to continue.
Our investment in a state-of-the-art print facility is allowing
us to accelerate the online side of the business; we are poised to
sell more of our existing product lines to an increasing customer
base and launch new websites; and the goodprint acquisition gives
us a foundation from which to expand into new consumer markets.
Tangent is in a solid financial position at the end of 2013/14.
As the cash generation capability of our business continues to
grow, we are proposing a 20% increase in our dividend."
For further information, please contact:
Tangent Communications PLC
Timothy Green - Chief Executive: 020 7462 6101
Seema Paterson - Corporate Development: 020 7462 6101
Canaccord Genuity Limited - Nominated adviser and broker
Bruce Garrow/Emma Gabriel: 020 7523 8350
MHP Communications
Andrew Leach / Christian Pickel: 020 3128 8208
(1) Underlying earnings per share is before non-recurring
expenses net of tax and on a fully diluted basis
(2) Net cash is cash and cash equivalents less all
borrowings
CHAIRMAN'S STATEMENT
2013 was a strong year for Tangent: our growth was impressive;
our financial performance exceeded expectations; our profits were
up by 53 per cent; our brands earned well- deserved awards; and we
are proposing a 20 per cent increase in dividends.
In a fiercely competitive field, such success is far from
guaranteed - it is won through diversity, creativity and
teamwork.
Diversity is key. We offer something for everyone - from the
one-man-band business who gets their business cards from goodprint,
to the national estate agents who go to Ravensworth for impeccable
marketing materials.
Creativity is our lifeblood. The word "Tangent" means 'a
completely different line of thought or action', and that sums up
our approach. printed.com has thought creatively with its Reward
Programme, partnering up with brands such as M&S and British
Airways to attract new customers. T/OD continues to entice new
clients by thinking beyond conventional printing. Meanwhile our
creative agency, Tangent Snowball, is broadening its services.
Above all, we rise through teamwork. From those working in our
facility in Newcastle, to our employees in London, to those on our
board, we are a team. This year we strengthened that team with a
share incentive scheme for our staff: buy one share, get one free.
The aim is to give our people a real stake in Tangent's success,
and the take-up is encouraging.
We are constantly looking to extend our reach and expand our
range. Following the acquisition of goodprint last year, we have a
presence in 17 European markets and in the coming year, we are
looking to consolidate that footprint. Our free cash flow continues
to grow and we remain agile and up for spending it wisely. At every
meeting, with every decision, in every quarter, our priority is to
remain at the leading edge of e-commerce - and to bring realistic
returns to the investors who believe in us.
I am proud of the success of Tangent in 2013 - and look forward
to seeing the story continue.
Michael P. Green
Chairman
STRATEGIC REPORT
Consolidated Results
Sales increased by 11.3% to GBP27.03m (2013: GBP24.29m) after
acquired revenues were added. Gross profit after direct cost of
sales rose to GBP16.29m (2013: GBP13.98m) representing a 60.3%
gross margin, up from the prior year's 57.6%. This reflects the
impact of higher margin products and services being sold following
the acquisition.
People costs increased by 5.6% to GBP10.40m (2013: GBP9.85m) and
continued to represent the largest single cost for Tangent. The
ratio of wages to sales reduced from 40.6% to 38.5% as our scalable
online print businesses required proportionately less staff to
generate additional revenues as a result of the infrastructure we
already have.
Underlying operating profits grew by 53.3% to GBP2.48m (2013:
GBP1.62m) a 20.4% increase on a like for like basis. Underlying
operating margin improved to 9.2% (2013: 6.6%).
Profit before tax was 171.7% higher at GBP2.33m (2013:
GBP0.86m). The tax charge of GBP0.63m (2013: GBP0.24m) represented
an effective rate of 27% (standard rate 23%).
Underlying earnings per share for the year were 10.7% higher at
0.62p per share (2013: 0.56p per share).
Tangent continues to be cash generative, GBP2.93m of operating
cash flow was generated during the year and net cash at 28 February
2014 was GBP2.81m (2013: GBP2.17m), an increase of GBP0.64m.
Our Businesses
printed.com, goodprint and smileprint
Tangent operates the following websites: printed.com, goodprint
and smileprint. Sales are derived from a multitude of products;
wedding invites, business cards, leaflets, brochures, stickers and
posters, all processed online and delivered directly to our
customers. We hold no finished goods stock as all products are
created on the website and personalised to each recipient.
During the year we used key performance indicators to highlight
some of the performance levels of our retail websites. Going
forward we feel it is informative to focus on the two most
significant indicators; sales and customer numbers. During the year
we achieved GBP9.3m sales from 118,804 customers. In the
forthcoming period we will report again on these two key
indicators.
printed.com
Sales grew 53.7% to GBP6.07m (2013: GBP3.95m), both through
attracting a significant number of new customers, and encouraging
existing customers to spend with greater regularity. The trend in
repeat orders was strong and well ahead of expectations.
This success is built on a great user experience, a highly
personalised service and real rewards for customers.
The unique printed.com Reward Programme, in which customers earn
points on every pound spent, has been a huge
success. High quality brands such as M&S, Amazon and BA Executive Club have joined as partners.
For small businesses and sole traders the printed.com offer is
strong, with a dedicated part of the website tailored to particular
groups, from wedding stationers to photographers.
In addition, in 2013/14 new partnerships were made with online
market places such as notonthehighstreet.com and Etsy, forging new
connections between printed.com and the small businesses that work
through these sites.
goodprint
goodprint's sales, which are generated from 17 international
markets, were GBP3.24m (2013: GBP4.05m on a pro-forma full year).
The site continued to attract a comparable number of visitors to
the prior year, but the conversion of these visits into sales
slowed.
Our primary product, the business card remains in high demand
and the range of design and price combinations varied. We must
match customers with the most appropriate offer or discount to
maximise sales. This represents a new sales model compared to that
of our printed.com brand and as such, from November we began to
recruit a new team with the ecommerce experience to improve our
proposition.
The first impact from the new team was to rationalise the
existing advertising budget. Sales from new customers have now
begun to climb as we find more effective areas to advertise.
Our proposition must also evolve. Our latest initiative launched
on March 1(st) offers online, design and delivery of business cards
in four hours. This has put goodprint ahead of all its current
competitors in the lucrative London market.
Ravensworth
Ravensworth is the number 1 provider of design and printed
materials to the estate agency market, and as such has benefitted
from the up-turn in the property market - with sales increasing to
GBP6.63m.
In a fast-moving and competitive field there can be no
complacency, so Ravensworth is continually looking to adapt and
innovate. This year a fully transactional website will be launched
with a new online photo-editing service - which we expect to
generate significant new revenue streams.
Tangent Snowball
Tangent Snowball is a top 20 digital marketing agency offering a
unique blend of technology and creative insight to global brands
such as Carlsberg, PepsiCo, SAP and the Wolseley Group.
This year the team was strengthened with the appointment of a
new chief executive from Omnicom. During the year, the business
focused on a smaller number of higher value contracts resulting in
lower revenues but higher gross margins at 89.0% (2013: 77.0%).
Operating profit grew by 5.8% to GBP0.91m (2013: GBP0.86m). New
client wins included Papa Johns, Agatha Christie and Evoshave.
Tangent Snowball identified an opportunity to sell great
value-add services to its long standing client base. It has hired
new talent to enhance the range of services it can offer to its
clients, and we expect that investment to yield additional profits
in due course. There may be a deferral in profits in the short term
while new services are marketed to our customers, but we expect
that effect to be reversed once sales of the new services start to
take effect.
Non-recurring expenses associated with the disposal of Tangent
Snowball's Australian business
Following an extensive review of its operations the Board
decided to dispose of 81% of the holding in its Australian
business, Tangent Snowball PTY Limited. Non-recurring expenses of
GBP0.13m, relating to the disposal, were incurred during the year,
these costs do not form part of the normal operating expenses of
Tangent and have therefore been excluded from underlying operating
profit.
T/OD
T/OD is an innovative print supplier, based in central London,
with a focus on producing design-inspired print to fashion
retailers and advertising agencies.
Sales grew by 6.2% to GBP2.38m (2013: GBP2.24m) as T/OD
concentrated on selling displays to high-end retailers such as
Laura Ashley, Ugg and Chanel. Gross margin in the year maintained
the higher levels reached in 2013 and steadied at the 70% mark.
Investment was made for new hires to support product development
and sales growth.
Cash Flows
Tangent's cash and cash equivalents at 28 February 2014 amounted
to GBP3.09m (2013: GBP2.64m), net cash, after deducting all
outstanding debt, amounted to GBP2.81m (2013: GBP2.17m), an
increase of GBP0.64m over the year.
We continue to be cash generative with GBP2.93m of cash
generated from operations representing 118.5% of underlying
operating profit (2013: 94.2%) and 126.1% of profit before tax
(2013: 177.7%).
Capital Expenditure
Tangent invests in print and finishing equipment and software
platforms to drive revenues across the business.
During the year, we invested GBP0.53m (2013: GBP0.81m) in print
and finishing equipment and GBP0.56m (2013: GBP0.76m) in software.
This level of investment is expected to continue at similar levels
in the year to 28 February 2015 as Tangent continues to grow its
online print business and expand into new online markets.
Balance Sheet
Tangent's balance sheet remained strong, net assets increased by
GBP1.36m to GBP32.12m (2013: GBP30.76m).
Goodwill of GBP24.80m (2013: GBP24.80m) was the largest asset on
Tangent's balance sheet. The carrying value of goodwill is tested
at least annually for impairment. At 28 February 2014 there was
significant headroom and as such no impairment was present, full
details of the test undertaken are included in note 6.
Trade receivables were GBP5.31m (2013: GBP5.20m), in line with
2013 despite a significant increase in revenues reflecting the high
proportion of our online customers who pay up front with credit and
debit cards.
Trade and other payables were GBP0.42m lower at GBP3.59m (2013:
GBP4.01m), the majority of this movement related to the settlement
of closure costs in respect of the goodprint Thetford site included
at 28 February 2013.
Dividend Declaration
The Board believes that paying a dividend forms an important
part of providing returns to shareholders. To that end the Board is
proposing a 20% increase to its final dividend for the year to 28
February 2014, to 0.24p per share, at the 2014 Annual General
Meeting.
If approved, the final dividend will be paid on 4 August 2014 to
shareholders on the register on 18 July 2014, the shares will
become ex-dividend on 16 July 2014.
Share Buyback Programme
Tangent continues to be cash generative and we have a strong
balance sheet.
We have authority to buy back up to 10% of our issued share
capital. Whilst no shares have yet been purchased pursuant to this
authority the Board will continue to keep this under review as part
of our long term strategy to create value for shareholders.
Share Incentive Plan ("SIP")
We launched an all employee share incentive plan during the year
to encourage employees to buy shares in Tangent. The SIP is an
all-employee trust arrangement approved by HM Revenue and Customs
under which employees are able to buy ordinary shares in Tangent
("Partnership Shares") using monthly deductions from salary and to
receive allocations of free matching Tangent shares on a
one-for-one basis ("Matching Shares"). Further shares may be
awarded to qualifying employees under the SIP conditional upon
performance targets being met (in accordance with Part 5 of
Schedule 5 of ITEPA 2003).
The uptake has been very positive with approximately 15% of
employees signing up since the launch.
Key performance indicators
Financial KPI's
The key financial performance indicators that are noted and
commented upon individually in the strategic report are as
follows:-
KPIs 2014 2013
------------------------------- ----------- -----------
Revenue GBP27.03m GBP24.29m
------------------------------- ----------- -----------
Revenue growth 11.3% 11.8%
------------------------------- ----------- -----------
Improvement in gross
margin 2.7% 3.1%
------------------------------- ----------- -----------
Employment costs as a
percentage of sales 38.5% 40.6%
------------------------------- ----------- -----------
Underlying operating
margin 9.2% 6.6%
------------------------------- ----------- -----------
Fully diluted underlying 0.62 pence 0.56 pence
earnings per share
------------------------------- ----------- -----------
Cash conversion - % of
underlying operating
profit turned into operating
cash flow 118.5% 94.2%
------------------------------- ----------- -----------
Non-financial KPIs
Waste management and recycling
Tangent is committed to mitigating the impact on the environment
of its operations and to measuring the amount of waste sent to
landfill. Our aim at the start of this year was to ensure that no
waste created in our print facility would be sent to land fill and
to take measures to reduce carbon emissions related to waste
recycling.
We have continued with our commitment to the Forestry
Stewardship Council by maintaining our FSC registration and thereby
ensuring that all paper stocks used conform to FSC's chain of
custody requirements.
Tangent is accredited under ISO 14001, Environmental Management,
and that continues to form the key part of our recycling and waste
management policy. We actively manage our waste and during the year
invested in increased bailing capacity resulting in fewer waste
collections from our print site and thereby reducing directly
related carbon emissions.
We are pleased to report that again this year no waste produced
in our print facility was sent to landfill (2013: none).
Staff retention
Tangent recognises that staff retention is an important issue
for both profitability and business continuity.
To help retain and develop staff Tangent offers competitive
salary and benefit packages and deploys staff appraisal systems to
identify training needs.
Tangent reviews staff turnover on a monthly basis with a view to
assessing trends in staff retention and develop corrective plans
should any adverse trend be seen.
During the year to 28 February 2014 average monthly staff
turnover was 2.1% (2013: 1.1%). The focus of Tangent Snowball has
developed and changed over the last twelve months and especially
since the appointment of its new chief executive. As a result
higher than average staff turnover was seen in the first 9 months
of this financial year, this has however now reduced and is now in
line with that seen across 2013.
Operational risks and uncertainties
The principal risks and uncertainties faced by Tangent are
detailed below. Some risks remain beyond the control of Tangent and
we cannot therefore provide absolute assurance that all risks are
managed to an acceptable level.
Risk area Impact on Tangent Mitigation of risk
--------------------------- ----------------------------- ---------------------------
Loss or a significant Whilst no client Tangent has a proven
reduction in revenue represents more track record of
from a major client than 10% of group both winning new
revenue, Tangent business and organically
Snowball has some growing long term
significant client client relationships.
relationships. Loss Strategic account
or a significant managers are appointed
reduction from one to preserve these
or more of these relationships, monitor
clients may impact service levels and
on Tangent's operating expand services
profit and financial to clients.
performance.
--------------------------- ----------------------------- ---------------------------
Shortage or loss The inability to Tangent seeks to
of key personnel attract or retain engage, motivate
and skills key staff with the and retain staff
required level of by offering remuneration
competency and technical packages that include
knowledge may impact competitive basic
our ability to maximise salaries, annual
opportunity, deliver bonus awards and
our business strategy benefits packages.
and objectives. Comprehensive annual
staff reviews are
undertaken to identify
skills gaps.
--------------------------- ----------------------------- ---------------------------
Deterioration in Tangent is a provider Trends, both general
the general economic of marketing services and market specific,
environment and print to businesses are monitored and
and consumers. There factored into business
is a risk that general planning and forecasting.
economic issues In addition Tangent
may impact Tangent's builds strong working
clients and reduce relationships with
their spending power. its significant
This may impact clients maintaining
on revenue and the an on-going dialogue
profitability of to provide visibility
Tangent. on potential future
revenue.
--------------------------- ----------------------------- ---------------------------
Loss of service Tangent will not Tangent invests
in both website be able to fulfil in significant IT
and print/delivery client orders and hosting infrastructure
infrastructure. as such financial to ensure that up
performance may time is maximised
be impacted in both and disaster recovery
the short and longer procedures are resilient
term as customers and robust.
may move to alternative Tangent has service
suppliers. contracts in respect
of all its key items
of plant with contracted
service levels to
mitigate downtime.
In addition Tangent
invests in vendor
lead training programmes
to further reduce
machinery failure.
--------------------------- ----------------------------- ---------------------------
Technological obsolescence Tangent's equipment/products Tangent continues
may become obsolete to invest in digital
potentially impacting platforms to improve
productivity and our competitive
margin. edge and broaden
the product offering.
Development of strong
relationships with
suppliers and dedicated
procurement resources
within the group
ensures that Tangent
is able to react
quickly to changes
in technology.
--------------------------- ----------------------------- ---------------------------
Consolidated statement of comprehensive income
for the year ended 28 February 2014
2014 2013
Notes GBP000 GBP000
---------------------------- ------ --------- ---------
Revenue 27,032 24,289
Cost of sales (10,738) (10,306)
---------------------------- ------ --------- ---------
Gross profit 16,294 13,983
Operating expenses (13,636) (12,258)
Share-based payment
charge (183) (110)
---------------------------- ------ --------- ---------
Underlying operating
profit 2,475 1,615
Non-recurring expenses 2 (131) (734)
Operating profit 2,344 881
Finance costs (18) (25)
---------------------------- ------ --------- ---------
Profit before tax 2,326 856
Tax (628) (236)
---------------------------- ------ --------- ---------
Profit for the year 1,698 620
---------------------------- ------ --------- ---------
Other comprehensive
income
Exchange differences on (42) _
translating foreign operations
------------------------------------ --------- ---------
Total comprehensive
income for the year 1,656 620
---------------------------- ------ --------- ---------
Earnings per share (pence) 4
Basic 0.61 0.30
Diluted 0.59 0.29
---------------------------- ------ --------- ---------
The results shown above relate entirely to continuing operations
and are attributable to equity shareholders of the company.
Consolidated statement of changes in equity
for the year ended 28 February 2014
Share Share Other Retained Total
capital premium reserves earnings equity
Notes GBP000 GBP000 GBP000 GBP000 GBP000
---------------------- ------ -------- -------- --------- --------- -------
At 29 February
2012 1,766 101 3,895 15,214 20,976
Comprehensive
income:
Profit for the
year - - - 620 620
Total comprehensive
income - - - 620 620
---------------------- ------ -------- -------- --------- --------- -------
Transactions with
owners:
Dividend 5 - - - (350) (350)
Credit to equity
for equity-settled
share-based payments - - 110 -- 110
Issue of shares 1,024 9,121 (107) - 10,038
Expenses of issue
of equity - (638) - - (638)
---------------------- ------ -------- -------- --------- --------- -------
Total transactions
with owners 1,024 8,483 3 (350) 9,160
---------------------- ------ -------- -------- --------- --------- -------
At 28 February
2013 2,790 8,584 3,898 15,484 30,756
---------------------- ------ -------- -------- --------- --------- -------
Comprehensive
income:
Profit for the
year - - - 1,698 1,698
Other comprehensive
income - - - (42) (42)
---------------------- ------ -------- -------- --------- --------- -------
Total comprehensive
income - - - 1,656 1,656
---------------------- ------ -------- -------- --------- --------- -------
Transactions with
owners:
Dividend 5 - - - (558) (558)
Credit to equity
for equity-settled
share-based payments - - 243 - 243
Transfer on exercise
of options - - (116) 116 -
Issue of shares 15 3 - - 18
Total transactions
with owners 15 3 127 (442) (297)
---------------------- ------ -------- -------- --------- --------- -------
At 28 February
2014 2,805 8,587 4,025 16,698 32,115
---------------------- ------ -------- -------- --------- --------- -------
Consolidated balance sheet
At 28 February 2014
2014 2013
Notes GBP000 GBP000
------------------------------- ------ -------- --------
Assets
Non-current assets
Intangible assets 6 25,939 25,578
Property, plant and equipment 1,950 2,188
Deferred tax asset 230 233
------------------------------- ------ -------- --------
28,119 27,999
------------------------------- ------ -------- --------
Current assets
Inventories 236 227
Trade and other receivables 5,311 5,198
Cash and cash equivalents 3,094 2,642
------------------------------- ------ -------- --------
8,641 8,067
------------------------------- ------ -------- --------
Total assets 36,760 36,066
------------------------------- ------ -------- --------
Liabilities
Current liabilities
Borrowings (194) (186)
Trade and other payables (3,590) (4,012)
Current tax liabilities (637) (647)
Provisions for liabilities (34) (46)
------------------------------- ------ -------- --------
(4,455) (4,891)
------------------------------- ------ -------- --------
Non-current liabilities
Borrowings (91) (285)
Provisions for liabilities (99) (134)
------------------------------- ------ -------- --------
(190) (419)
------------------------------- ------ -------- --------
Total liabilities (4,645) (5,310)
------------------------------- ------ -------- --------
Net assets 32,115 30,756
------------------------------- ------ -------- --------
Equity
Share capital 7 2,805 2,790
Share premium 8,587 8,584
Other reserves 4,025 3,898
Retained earnings 16,698 15,484
------------------------------- ------ -------- --------
Total equity attributable to
equity shareholders of the
company 32,115 30,756
------------------------------- ------ -------- --------
Consolidated statement of cash flows
for the year ended 28 February 2014
2014 2013
Notes GBP000 GBP000
--------------------------------------- ------ -------- --------
Cash from operations
Cash generated from operations 8 2,932 1,521
Interest paid (18) (25)
Tax paid (633) (600)
--------------------------------------- ------ -------- --------
Net cash inflow from operating
activities 2,281 896
--------------------------------------- ------ -------- --------
Investing activities
Payment of contingent consideration - (484)
Acquisition of subsidiary (net
of cash acquired) - (6,878)
Development of software (563) (759)
Purchase of property, plant
and equipment (527) (813)
Sale of property, plant and
equipment 29 26
Net cash used in investing
activities (1,061) (8,908)
--------------------------------------- ------ -------- --------
Financing activities
Dividends paid (558) (350)
Repayment of borrowings (186) (177)
Proceeds on issue of shares
(net of costs) 18 9,362
Net cash (outflow)/inflow from
financing activities (726) 8,835
--------------------------------------- ------ -------- --------
Increase in cash and cash equivalents 494 823
--------------------------------------- ------ -------- --------
Cash and cash equivalents at
beginning of year 2,642 1,819
--------------------------------------- ------ -------- --------
Effect of foreign exchange (42) -
rate changes
--------------------------------------- ------ -------- --------
Cash and cash equivalents at
end of year 3,094 2,642
--------------------------------------- ------ -------- --------
1. Basis of preparation
Tangent Communications plc is quoted on the AIM market of the
London Stock Exchange. It has the TIDM code TNG and is incorporated
in England.
The Group's consolidated financial statements for the year ended
28 February 2014, from which this financial information has been
extracted, and for the comparative year ended 29 February 2013 are
prepared on a going concern basis and in accordance with IFRS as
adopted by the EU ("IFRS"), and in accordance with those parts of
the Companies Act 2006 applicable to companies reporting under
IFRS.
The financial information set out in this preliminary
announcement does not constitute statutory accounts as defined in
section 434 of the Companies Act 2006 but it is derived from those
accounts. The financial information for the year ended 28 February
2013 is derived from the statutory accounts for that year which
have been delivered to the Registrar of Companies. The auditors
reported on those accounts; their report was unqualified and did
not contain a statement under s498(2) or s498(3) of the Companies
Act 2006. The consolidated statement of financial position at 28
February 2014, the consolidated statement of comprehensive income,
the consolidated statement of changes in equity, the consolidated
statement of cash flows and the related notes for the year then
ended have been extracted from the Group's 2014 statutory financial
statements upon which the auditor's opinion is unqualified and does
not include any statement under s498(2) or s498(3) of the Companies
Act 2006.
The announcement has been agreed with the company's auditor for
release.
2. Non-recurring expenses
In order to provide a clear view on operating performance,
Tangent shows separately on the face of the statement of
comprehensive income those items that are both significant and
non-recurring in nature.
During the year Tangent began the process of disposing of the
majority share in Tangent Snowball PTY Limited. The costs incurred
to February 2014 have been included in non-recurring expenses as
they do not form part of the normal activities of Tangent and were
as follows:-
GBP000
Redundancy and restructuring costs 91
Fees and expenses 40
131
-------
This process was completed in the year to February 2015 and it
is expected that an additional charge of GBP120,000 will be borne
in that year.
3. Segment Information
Management has determined the operating segments based on the
reports reviewed by the Board of Directors that are used to make
strategic decisions, which reviews revenues and operating profits
by segment but assets at a consolidated level.
The group had two reportable segments. Unallocated corporate
expenses are shown below under PLC.
At the start of the year the Services segment was re-named
Agency, there was no change in the business units included therein
and no change in any previously reported performance.
Online - Comprises Ravensworth, printed.com and goodprint.
Agency (Formerly Services) -Comprises Tangent Snowball and T/OD
(Tangent on Demand).
PLC - PLC costs relate to the cost of non-executive directors,
maintenance of Tangent's stock market listing, general professional
advice together with the share-based payment charge. Executive
directors' costs are allocated to the Online and Agency business
segments.
The segment results for the year ended 28th February 2014 were
as follows:
Agency Online PLC Total
GBP000 GBP000 GBP000 GBP000
Revenue 11,315 16,488 - 27,803
Less inter segment sales (223) (548) - (771)
------- ------- ------- -------
Revenues from external customers 11,092 15,940 - 27,032
------- ------- ------- -------
Results
Underlying operating profit 1,184 1,801 (510) 2,475
Non-recurring
costs (131) - (131)
------- ------- ------- -------
Profit from
operations 1,053 1,801 (510) 2,344
------- ------- ------- -------
Net finance
costs (18)
-------
Profit before
tax 2,326
Income tax
expense (628)
-------
Profit for
the year 1,698
-------
Other segment information
Agency Online PLC Total
GBP000 GBP000 GBP000 GBP000
Depreciation 217 534 - 751
Amortisation 54 148 - 202
------- ------- ------- -------
Major customers
During the year Tangent had no customer that represented more
than 10% of revenues.
Online had no customer that represented more than 10% of that
segment's revenues.
Agency customers representing more than 10% of that segments
revenue for the year were as follows:
Customer one 15%
Customer two 11%
The segment results for the year ended 28th February 2013 were
as follows:
Agency Online PLC Total
GBP000 GBP000 GBP000 GBP000
Revenue 13,120 12,985 - 26,105
Less inter segment sales (228) (1,588) - (1,816)
------- -------- ------- --------
Revenues from external customers 12,892 11,397 - 24,289
------- -------- ------- --------
Results
Underlying operating profit 1,171 816 (372) 1,615
Restructuring
costs (119) (541) (74) (734)
------- -------- ------- --------
Profit from
operations 1,052 275 (446) 881
------- -------- ------- --------
Net finance
costs (25)
--------
Profit before
tax 856
Income tax
expense (236)
--------
Profit for
the year 620
Agency Online PLC Total
GBP000 GBP000 GBP000 GBP000
Other segment information
Depreciation 201 546 1 748
Amortisation - 3 - 3
------- -------- ------- --------
Major customers
During the year Tangent had no customer that represented more
than 10% of revenues.
Online had no customer that represented more than 10% of that
segment's revenues.
Agency had one customer that represented 13% of that segment's
revenues.
Geographical information 2014 2013
GBP000 GBP000
------- -------
Revenues from external customers
United Kingdom 23,226 21,028
Europe 3,151 2,253
Australia 529 652
Other countries 126 356
------- -------
27,032 24,289
------- -------
Non-current assets
United Kingdom 28,114 27,990
Australia 5 9
------- -------
28,119 27,999
------- -------
Non-current assets for this purpose consist of property, plant
and equipment, intangible assets and deferred tax assets.
4. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following:
2014 2013
GBP000 GBP000
------------------------------------- -------- --------
Profit attributable to shareholders 1,698 620
------------------------------------- -------- --------
2014 2013
Number Number
000 000
------------------------------------- -------- --------
Weighted average number of shares:
For basic earnings per share 278,341 205,019
Adjustment for options outstanding 8,902 6,255
For diluted earnings per share 287,243 211,274
------------------------------------- -------- --------
Pence per Pence per
Share Share
--------------------- ---------- ----------
Earnings per share:
Basic 0.61 0.30
Diluted 0.59 0.29
--------------------- ---------- ----------
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.
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. Dividends
2014 2013
GBP000 GBP000
--------------------------------------- ------- -------
Recommended final dividend for the
year of 0.24p (2013: 0.2p) per share 671 555
--------------------------------------- ------- -------
The recommended final dividend is subject to approval by
shareholders at the 2014 annual general meeting and has not been
included as a liability in these financial statements.
The Tangent employee share ownership trust, which holds a total
of 1,428,340 ordinary shares, has agreed to waive all dividends so
the directors estimate that the dividend will be payable on
approximately 279m ordinary shares.
2014 2013
GBP000 GBP000
---------------------------------- ------- -------
Final dividend paid for the year
of 0.2p (2012: 0.2p) per share 558 350
---------------------------------- ------- -------
6. Intangible assets
Goodwill Software Other Total
assets intangible
assets
Group GBP000 GBP000 GBP000 GBP000
----------------------------- ------------------- --------- ------------ -------
Cost
At 1 March 2012 16,865 - 117 16,982
Acquired with subsidiary - 51 - 51
Additions 7,936 759 - 8,695
At 28 February 2013 24,801 810 117 25,728
Additions - 563 - 563
----------------------------- ------------------- --------- ------------ -------
At 28 February 2014 24,801 1,373 117 26,291
----------------------------- ------------------- --------- ------------ -------
Amortisation and impairment
At 1 March 2012 - - 115 115
Acquired with subsidiary - 32 - 32
Amortisation during
the year - 1 2 3
----------------------------- ------------------- --------- ------------ -------
At 28 February 2013 - 33 117 150
Amortisation during
the year - 202 - 202
At 28 February 2014 - 235 117 352
----------------------------- ------------------- --------- ------------ -------
Net book value
At 28 February 2014 24,801 1,138 - 25,939
----------------------------- ------------------- --------- ------------ -------
At 28 February 2013 24,801 777 - 25,578
----------------------------- ------------------- --------- ------------ -------
The addition to software assets represents the acquisition and
development of software platforms for the group. These assets are
being amortised over their expected useful life, estimated to be 5
years.
Impairment of goodwill
Goodwill acquired in a business combination is allocated for
impairment testing to the cash-generating units (CGUs) that are
expected to benefit from that business combination.
Tangent has the following business segments:-
Online
This business segment includes printed.com, goodprint (including
smileprint) and Ravensworth; and
Agency (Formerly Services)
This business segment includes Tangent Snowball and T/OD
(Tangent on Demand).
The above represents the lowest level within Tangent at which
goodwill is reviewed for impairment.
Tangent tests goodwill annually for impairment, or more
frequently if there are indications that goodwill might be
impaired.
The recoverable amounts of the CGU's are determined from
value-in-use calculations. The key assumptions for the value-in-use
calculations are those regarding the discount rates, growth rates
and expected changes to forecast profitability. These assumptions
have been revised in the year to take account of the current
economic environment. Management estimates discount rates using
pre-tax rates that reflect the current market assessments of the
time value of money and the risks specific to each CGU.
Future cash flows are derived from the most recent financial
budget approved by management for the next five years, beyond that
period cash flows are extrapolated using a growth rate of 3% (2013:
3%).
The rate used to discount forecast future cash flows for both
business segments is 10% (2013: 10%).
In 2014 no impairment charge has been made against goodwill for
either CGU (2013: GBPnil). Headroom in the Online CGU is GBP18.57
million and GBP17.76 million in the Agency CGU.
Tangent has conducted a sensitivity analysis on the impairment
test of each CGU's carrying value with the following results:
-- The discount rate would need to increase to 19.6% to remove
the headroom in the Online CGU and to 20.6% to remove the headroom
in the Agency CGU.
-- Reducing the long term growth rate to 0% does not create an
impairment charge in either CGU.
-- Cash flows over the next five years would need to reduce by
58.3% to remove the headroom in the Online CGU and by 60.7% to
remove the headroom in the Agency CGU.
7. Share capital
Number of ordinary Nominal value
1p shares
----------------
2014 2013 2014 2013
000 000 GBP000 GBP000
-------------------- ---------- --------- ------- -------
Allotted and fully
paid
At 1 March 278,813 176,445 2,790 1,766
Issued in the year 1,500 102,368 15 1,024
-------------------- ---------- --------- ------- -------
At 28 February 280,313 278,813 2,805 2,790
-------------------- ---------- --------- ------- -------
The company has one class of ordinary share which carries no
right to fixed income, each share carries the right to one vote at
general meetings of the company.
At 28 February 2014 the number of shares in issue was
280,312,981 and at the date of this report 280,889,648 were in
issue.
8. Cash generated from operations
2014 2013
Group GBP000 GBP000
---------------------------------------------- ------- -------
Profit before tax for the year 2,326 856
Depreciation and amortisation of non-current
assets 953 751
(Profit)/loss on sale of plant and
equipment (17) 6
Net interest charge 18 25
Share-based payment charge 183 110
---------------------------------------------- ------- -------
3,463 1,748
Movements in working capital:
Increase in inventories (9) (56)
Increase in receivables (113) (206)
(Decrease)/increase in payables and
provisions (409) 35
Cash generated from operations 2,932 1,521
---------------------------------------------- ------- -------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR AFMLTMBABMFI
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