RNS Number:3450M
TripleArc PLC
16 June 2003
Embargoed until 0700 16 June 2003
TripleArc plc
Preliminary Results for the Year Ended 31 December 2002
Preliminary results from TripleArc plc, the UK based provider of technology led
print procurement solutions.
HIGHLIGHTS
*Results reflect TripleArc's transition from a development orientated
company to a service driven business with an expanding revenue stream
*Full year contribution from gl2
*Significant strategic purchase of ControlP in September 2002
*Revenue rose to #7.0m (2001: #1.4m)
*Gross profits increased to #0.91m (2001: #0.25m)
*Second half operating loss before amortisation of intangible assets and
share option compensation expense declined by 36% to #0.8m (Interim 2002
loss: #1.26m)
*Full year loss was #2.1m before amortisation of intangible assets and
share option compensation expense (2001: #1.3m)
*Full year loss before taxation was #3m (2001: #1.6m)
Commenting on the results, Jason Cromack, Chief Executive Officer stated:
"The last year has seen substantial progress within TripleArc as the business
moved out of its development phase and accelerated its sales effort. The
benefits can be seen in the rapidly increasing revenue flows, sharply falling
levels of R&D spending and significant reduction in operating losses during the
second half compared to the first.
"The upward trend has continued into the current year. gl2 is performing
strongly while technology revenues are increasing and ControlP has been
successfully integrated. We have taken action to reduce cost within the
technology division and development expenditure will continue to fall. We have
made a good start to 2003 and are expecting a significant improvement in the
Group's revenue."
For further information please contact:
TripleArc plc 020 7258 6290
Jason Cromack, Chief Executive Officer
Weber Shandwick Fleet Financial 020 7067 0700
Terry Garrett/ Nick Dibden
The Board of TripleArc plc, the UK based provider of technology driven print
management and procurement solutions, announces its preliminary results for the
year ended 31 December 2002.
Financial Review
Revenue for the year was #7m (2001: #1.4m), reflecting the Group's movement from
a development oriented Company to a services driven business with an expanding
revenue stream. Gross profit was #0.9m (2001: #0.25m). The increase in revenue
and gross profit was mainly attributable to gl2, the Group's print management
division which was acquired in October 2001.
Research and development costs were #0.7m in the year compared to #0.8m in the
prior year. This reduction reflects the initial phase of a significant change in
the Group's development programme from one of high investment, to develop and
complete its initial products, to a new phase of targeted development of
customer driven functionality to enhance completed products. As a result
research and development spend in the first half of the year of #450,000
declined to #250,000 in the second half. This trend will continue in 2003. The
outsourcing of software development to third parties enables flexibility so that
the Group can manage its development costs in line with operational
requirements.
Administration expenses and selling and distribution costs in the year were
significantly higher than the comparative period. The increase arose mainly from
the following two factors. First, the comparative base in 2001 is low relative
to 2002 as gl2 is included for a full twelve months in the 2002 figures and only
three months in 2001. Second, development of TripleArc's infrastructure and the
launch of its product line led to a substantial increase in administration and
marketing spend in 2002.
Amortisation of intangible assets was #0.28m during the period (2001: #0.07m),
reflecting twelve months amortisation of goodwill on the acquisition of gl2
(2001: three months) and three months amortisation of intellectual property
capitalised on the acquisition of the software business of ControlP (2001: nil).
A non-cash share option compensation expense of #0.67m was incurred in the year
(2001: #0.25m), reflecting a full twelve months charge in 2002 compared to a
two-month charge made in 2001. This arose on share options granted prior to
TripleArc's listing on AIM where the exercise price of the option was below the
prevailing market price at the date of grant. Substantially all of this expense
has now been charged to the Profit and Loss account, hence this item will
decline significantly in 2003.
The operating loss, before amortisation of intangible assets and share option
compensation expense, was #2.1m during the year (2001: #1.3m). The loss, which
amounted to #1.26m during the first half of 2002, declined by 36% during the
second half to #0.8m. After charging non-cash share option compensation of
#0.67m and amortisation of intangible assets of #0.28m, the loss before tax was
#3m (2001: #1.6m).
The loss per ordinary share was 4.58p pence for the year ending 31 December 2002
(2001: 3.80 pence).
Operational Review
Market
The commercial printing market is one of the largest custom manufacturing
processes in the world and, in an increasing trend to eliminate non-core
activities, businesses are looking to outsource their print buying requirements
to experts in this field. The result is a significant increase in demand for
print management solutions. The Group is well positioned to take advantage of
this trend as it is not only able to provide the expertise required to procure
print competitively but also has leading technology solutions to streamline the
business process, reducing transaction costs and providing customers with
sustainable lower prices.
Technology solutions are recognised as playing a pivotal role in allowing
organisations to manage and reduce printing costs. Job Definition Format ("JDF")
technology remains at the heart of TripleArc's products and the Group is
benefiting from the increasing adoption of JDF within the print industry which
is continuing to gain momentum. In the run up to the DRUPA trade fair next year,
the world's largest print exhibition, there is an increasing focus on JDF that
reinforces the positive outlook for TripleArc's technology products. In addition
the ControlP acquisition and a number of new customer implementations in the
last quarter of 2002 and the first part of 2003 have established a growing
technology revenue stream for the Group.
The current economic climate is having a mixed effect on the business. Although
customers and potential customers are very focused on reducing costs, which
favours TripleArc's technology and print management solutions, the technology
division continues to experience a long sales cycle prior to signing up new
customers.
Print Procurement Solutions
In September 2002, TripleArc acquired the business of ControlP, the print
e-procurement division of Documedia Solutions plc. The acquisition of ControlP
strengthened TripleArc's position as a leading provider of e-commerce
procurement solutions for the printing sector. TripleArc has now brought
together the industry's leading e-procurement technology within one company.
Following this acquisition, TripleArc has seen an increase in the level of
interest for its solutions.
TripleArc's approach to providing an end-to-end online procurement solution for
the print industry consists of three components; the Collaborative Workflow
System, edit2print and iPMS. TripleArc has made several important customer
gains, including the provision of an edit2print system to one of the UK's
largest print management companies, following an extensive technical due
diligence process.
Collaborative Workflow System ("CWS")
CWS provides a procurement solution to project manage the complex print buying
and production process. It allows print buyers, to project manage the complex
print purchasing and production process
edit2print
edit2print is an advanced print ordering system allowing users to edit, proof
and order marketing collateral online. The system allows users without design
experience to upload files and vary graphics and text at will themselves.
iPMS
iPMS is a workflow management tool for ordering print that allows print buyers
and print managers to increase the efficiency in their ordering process.
These products place TripleArc at the leading edge of print procurement
technology. CWS is one of the first fully JDF compliant print procurement
solutions in an industry that is rapidly moving to adopt the format. JDF is a
data exchange standard that acts as an electronic "job ticket", allowing the
integration of products from diverse vendors into seamless workflow solutions,
enabling every part of the process, including customers, designers as well as
printers, to communicate more effectively throughout the completion of a print
job.
TripleArc has been actively pursuing partnership strategies to exploit the
Company's technology. TripleArc recently became a Hewlett-Packard (HP)
collaborative partner. As part of this arrangement, TripleArc and HP will
co-market the edit2print solution which integrates into HP's ProductionFlow
system installed at digital printers using HP Indigo Presses. The intention is
to promote a seamless print on-demand workflow solution for the delivery of
variable printed products to large organisations.
Print Management Services
The Group provides print management services through gl2 directly to print
buying customers that include the retail, marketing agencies and publishing
sectors. gl2 saves its customers time and expense by utilising its expertise in
project management, purchasing print and managing suppliers, allowing customers
to outsource some or all of the complex process of buying print.
2002 provided some notable highlights for gl2. A new managing director, Neil
Watson, was appointed to head gl2. gl2 implemented a CWS driven workflow to
improve and streamline its business processes which has had a positive impact on
performance through improved business practice and control over the whole print
management process. Furthermore, the benefits of including the TripleArc
procurement solutions as part of the print management offering of gl2 are
bearing fruit. gl2 has gained several new high profile clients from the retail,
mail order and leisure industries. Increasing volumes of business with existing
clients has provided the impetus for gl2 to establish a Northern office in
Manchester.
As announced in the interim results in September 2002, the first half was a
difficult trading period for gl2 as a result of the downturn in the marketing
services sector in which many of its clients focussed. This has been followed by
a much-improved performance in the second half. New account wins in the latter
part of 2002 have already made a positive impact on 2003 performance with
revenues significantly higher than 2002.
Management changes
During the year Jason Cromack, formerly Chief Operating Officer, assumed the role
of Chief Executive. Conor O'Brien who was Chief Executive and one of the founders
of TripleArc became the Group's Technical Director before leaving the Group in
April 2003. The Board would like to thank Conor for all his hard work in helping
steer the Group through its early development and onto the AIM market.
During the second half of the year Neil Watson was appointed as managing director
of gl2. Neil was previously the managing director of the Carlton Barclay Group
and brings extensive experience in leading growing companies and winning new
accounts to the gl2 management team.
Outlook
TripleArc Group has experienced a good start to 2003, reflecting the Group
transition from a development focused business to a services orientated business
enhanced by technology.
The successful integration of the ControlP acquisition into the Group's
Technology Division in the last quarter was followed by a management review of
the merged Technology Division's costs and synergy opportunities during the
first quarter of 2003. This has resulted in a number of actions to reduce costs.
These combined with strong performance at gl2, increasing technology revenue
streams, and the decline in research and development costs, will assist the
Group in 2003.
Sales are accelerating and the Board believes that the adoption of TripleArc's
technology by key players in the industry, including one of the UK's top print
management companies and Hewlett-Packard, will provide its solutions with the
endorsement needed to accelerate the technology sales process with other
potential customers. Demand for print management services among corporates is
strong, providing opportunities for significant growth in this market.
The Board has reviewed the Group's current financial resources and is satisfied
that sufficient cash and cash facilities are available to fund the Group's
current activities for the forseeable future.
The Directors view the future with confidence. Good performance at gl2 and
increasing revenues in the technology division have given a good start to 2003.
The Group is well positioned to participate in the consolidation of the print
management sector and the Board is continuing to examine the potential of
strategic acquisitions which could enhance the prospects for organic growth.
Consolidated profit and loss account
for the year ended 31 December 2002
Notes
2002 2001
# #
--------- ---------
Revenue
- continuing operations 7,009,905 19,405
- acquisitions - 1,423,304
--------- ---------
7,009,905 1,442,709
Cost of sales (6,097,723) (1,194,740)
--------- ---------
Gross profit 912,182 247,969
Selling and distribution costs (658,626) (67,853)
Research and development (719,317) (807,305)
Administration expenses (1,592,451) (651,255)
--------- ---------
Loss before amortisation of intangible
assets and share option compensation
expense (2,058,212) (1,278,444)
Amortisation of intangible assets (280,791) (65,762)
Non cash share option compensation
expense
(672,573) (251,330)
--------- ---------
Operating loss
- continuing operations (3,011,576) (1,623,609)
- acquisitions - 28,073
--------- ---------
Loss on ordinary activities before interest
and taxation (3,011,576) (1,595,536)
Interest receivable 44,779 3,881
Interest payable and similar charges (12,163) (3,812)
--------- ---------
Loss on ordinary activities before
taxation (2,978,960) (1,595,467)
Tax on loss on ordinary activities (9,739) (11,800)
--------- ---------
Loss for the financial year (2,988,699) (1,607,267)
========== ==========
Loss per ordinary share
- basic and diluted (pence) 2 (4.58p) (3.80p)
========== ==========
The Group had no recognised gains or losses in the financial year or preceding
financial year other than those dealt with in the profit and loss account.
Consolidated balance sheet
at 31 December 2002
2002 2001
Notes # #
---------- ----------
Fixed assets
Intangible assets 3,789,811 3,769,767
Tangible assets 157,113 104,174
---------- ----------
3,946,924 3,873,941
---------- ----------
Current assets
Stocks 44,349 27,680
Debtors 1,872,896 1,451,664
Cash at bank and in hand 740,143 2,901,154
---------- ----------
Creditors: amounts falling due within one 2,657,388 4,380,498
year (2,798,013) (2,273,735)
---------- ----------
Net current (liabilities)/assets (140,625) 2,106,763
---------- ----------
Total assets less current liabilities 3,806,299 5,980,704
Creditors: amounts falling due after more than
one year (111,056) (15,312)
Net assets 3,695,243 5,965,392
========== ==========
Capital and reserves
Called up share capital 3,275,259 3,259,579
Share premium account 5,478,487 5,448,190
Share option reserve 923,903 251,330
Merger reserve (621,490) (621,490)
Group interest in shares of TripleArc Plc (150,000) (150,000)
Profit and loss account (5,210,916) (2,222,217)
---------- ----------
Shareholders' funds - equity 6 3,695,243 5,965,392
========== ==========
Consolidated cash flow statement
for the year ended 31 December 2002
Notes 2002 2001
# #
---------- ----------
Net cash outflow from operating
activities 3 (1,758,775) (925,003)
Returns on investments and servicing of
finance
Interest received 44,779 3,881
Interest paid (12,648) (1,712)
---------- ----------
Net cash inflow from returns on investments
and servicing of finance 32,131 2,169
Corporation tax paid (11,800) -
Capital expenditure and financial
investment
Purchase of tangible fixed assets (94,744) (41,026)
Disposal of tangible fixed assets 11,750 -
---------- ----------
Net cash outflow for capital expenditure (82,994) (41,026)
Acquisitions and disposals
Acquisition of business undertaking (137,960) (82,426)
Cash acquired with subsidiary undertaking - 20,996
---------- ----------
Net cash outflow for acquisitions and
disposals (137,960) (61,430)
Net cash outflow before use of liquid
resources and financing (1,959,398) (1,025,290)
Financing
Proceeds from issue of share capital - 4,168,709
Expenses paid in connection with share
issue (104,006) (331,224)
Debentures repaid (50,000) (10,000)
Capital element of finance lease payments (7,607) -
---------- ----------
Net cash (outflow) / inflow from
financing (161,613) 3,827,485
---------- ----------
(Decrease) / Increase in cash 4,5 (2,121,011) 2,802,195
========== ==========
Note 1: Basis of consolidation
The consolidated financial statements include the financial statements of
TripleArc Plc and its subsidiary undertakings prepared up to 31 December 2002.
Intercompany profits, transactions and account balances have been eliminated.
The acquisition method of accounting is applied for acquisitions with fair
values being attributed to the identifiable net assets acquired. The results of
subsidiary undertakings acquired during the year are included in the
consolidated profit and loss account from the date of acquisition.
Note 2: Loss per ordinary shares
2002 2001
---------- ---------
Basic
Loss attributable to ordinary shareholders 2,988,699 1,607,267
========== ==========
Weighted average number of ordinary shares
outstanding 65,273,191 42,307,700
========== ==========
Basic loss per share (in pence) (4.58p) (3.80p)
========== ==========
Basic loss per share is calculated by dividing the weighted average number of
ordinary shares in issue into the loss after taxation for the year attributable
to ordinary shareholders. There is no difference for 2001 and 2002 between the
basic net loss per share and the diluted net loss per share as all potentially
dilutive ordinary shares outstanding have been excluded from the computation as
their effects are anti-dilutive.
Note 3: Reconciliation of operating loss to net cash outflow from operating
activities
2002 2001
# #
---------- ----------
Operating loss (3,011,576) (1,595,536)
Depreciation 62,063 15,452
Loss on disposal of fixed assets 1,117 -
Amortisation of intangible assets 280,791 65,762
Non cash share option compensation expense
672,573 251,330
(Increase) / Decrease in stocks (16,669) 3,232
(Increase) / decrease in debtors (421,232) 144,563
Increase in creditors 674,158 190,194
----------- -----------
(1,758,775) (925,003)
=========== ===========
Note 4: Analysis of changes in net funds
At 31 December At 31 December
2001 Cashflow 2002
# # #
Cash at bank and on hand 2,901,154 (2,161,011) 740,143
Bank loans (100,000) 40,000 (60,000)
Debenture loan (50,000) 50,000 -
--------- --------- ---------
Total 2,751,154 (2,071,011) 680,143
=========== =========== ===========
Note 5: Reconciliation of net cash movements to net funds
2002 2001
# #
---------- ----------
(Decrease) / increase in cash in the year (2,161,011) 2,802,195
Decrease in debt 90,000 10,000
---------- ----------
(Decrease) / increase in net funds resulting from
cashflows (2,071,011) 2,812,195
---------- ----------
Increase in debt arising from acquisition of
subsidiary undertaking - (160,000)
---------- ----------
Movement in the net funds in the year (2,071,011) 2,652,195
Net funds at the beginning of the year 2,751,154 98,959
---------- ----------
Net funds at 31 December 2002 680,143 2,751,154
=========== ===========
Note 6: Reconciliation of movements in equity shareholders' funds
2002 2001
# #
---------- ----------
Opening equity shareholders' funds /(deficit) 5,965,392 (38,374)
Total recognised gains and losses (2,988,699) (1,607,267)
Issued share capital including premium, net of
expenses 45,977 8,131,193
Merger reserve - (621,490)
Increase in share option reserve 672,573 251,330
Increase in interest in TripleArc Plc - (150,000)
---------- ----------
Closing equity shareholders' funds 3,695,243 5,965,392
=========== ===========
Note 7: Publication of non-statutory accounts
The financial information set out in this preliminary results announcement does
not constitute statutory accounts as defined in Section 240 of the Companies Act
1985. The financial information for the year ended 31 December 2002 is extracted
from the statutory accounts for that year on which the auditors' report was
unqualified. The Accounts for the year ended 31 December 2002 will be delivered
to the Registrar of Companies in due course. The financial information for the
year ended 31 December 2001 is extracted from the statutory accounts of
TripleArc Plc for that year on which the auditors' report was unqualified.
This information is provided by RNS
The company news service from the London Stock Exchange
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