RNS Number:1250J
Twenty PLC
19 September 2006
19 SEPTEMBER 2006
TWENTY PLC
(AIM: TWE)
INTERIM RESULTS
FOR SIX MONTHS ENDED 30 JUNE 2006
The Board of Twenty Plc ('Twenty' or 'the Group'), an investment vehicle
focusing on the marketing services sector, is pleased to announce interim
results for the six months ended 30 June 2006.
Highlights
* Acquisition of Dataforce Holdings Limited ("Dataforce"), a provider of
integrated, data-driven, multi-channel CRM solutions, for a consideration of
#10.5m. The Group's results include Dataforce from 5 April 2006, the date of
acquisition;
* Revenue growth of 23% like for like (see Financials below);
* Operating profit increase of 24% like for like (see Financials below);
* Earnings per share of 0.97p basic and 0.79p diluted (2005 loss per share
(1.52p) basic and diluted)*; and
* 4 new contracts won in period - Cancer Research UK 'Race for Life',
Department of Works and Pensions, The Mint Office and the Salvation Army.
Commenting on today's results, Ian Lancaster, CEO, said: "The ongoing policy of
the Group will be to continue to accelerate the growth of the current business
and to seek compatible acquisitions to enable it to further consolidate its
position in the sector. A number of opportunities have been identified and
discussions are taking place. In addition, current trading is in line with plan
and we expect a satisfactory outcome for the full year."
* For the period from incorporation on 13 May 2005 to 31 December 2005
Enquiries:
Twenty Plc Tel: 07801 212 862
Ian Lancaster, Chief Executive
www.twentyplc.com
Bishopsgate Communications Ltd Tel: 020 7430 1600
Dominic Barretto
Jenni Herbert
ARM Corporate Finance Ltd Tel: 020 7512 0191
John Simpson
Twenty Plc
Chairman's Statement
I am pleased to report as Non-Executive Chairman on Twenty's maiden set of
interim results, since it transferred its shares from PLUS-Quoted (formerly
Ofex) to the AIM Market of The London Stock Exchange on 5 April 2006. At that
time, the Group announced the reverse takeover of Dataforce Holdings Limited
("Dataforce"), a provider of integrated, data-driven, multi-channel CRM
solutions in the UK.
In June 2005, Twenty floated on PLUS-Quoted (formerly Ofex) as a newly
incorporated investment vehicle established by the Directors with the strategy
to create a marketing services group focused around customer data and integrated
customer management solutions. The acquisition in April this year saw the first
step in Twenty's stated ambition.
The Dataforce business, with 600 staff and annual revenues of circa #19m,
provides the platform from which Twenty is executing its strategy of developing
a marketing services group centered around the provision of data analysis
combined with the provision of a multi channel marketing services platform.
Since acquiring Dataforce in April 2006, the Board has been pleased with the
continued growth in revenues with a 23% increase in the first six months versus
the same period in 2005, and a corresponding increase of 24% in underlying
operating profits.
In addition to reinforcing the existing Dataforce platform, Twenty will continue
to examine possible further acquisitions and earnings enhancing initiatives that
meet the Board's stringent acquisition criteria.
I would like to take this opportunity to thank the Board, Dataforce's management
team and all employees who have participated in this excellent maiden set of
interim results for the Group. I would also like to thank all shareholders. The
Board looks forward to many more positive developments in the future, and will
update shareholders at the time of the Group's full year figures.
Mark Patron
Non-Executive Chairman
19 September 2006
Twenty Plc
Chief Executive's Statement
It has been a highly active period for the team at Twenty, and I am delighted to
report on the successful integration of Dataforce within the Group, since its
acquisition in April this year.
Dataforce, one of Europe's leading outsource providers of customer communication
solutions, has an established reputation for helping clients build meaningful
and long-term customer relationships through its offering of database services,
multi-channel contact centre, response management and fulfilment, direct mail
and email marketing and its Brand Advocacy approach. The company's clients
include Tesco, AXA, The Central Office of Information, the Directorate of Naval
Recruiting, British Heart Foundation, AIG and The National Trust.
Financials
The interim results for Twenty reflect the six-month period to 30 June 2006
including Dataforce from 5 April 2006, the date of acquisition. As this was a
reverse take over, Twenty has adopted Dataforce Holdings Limited's accounting
policies and moved its year end date to 31 December.
The comparative numbers in the financial results are the audited financial
statements for the period from incorporation on 13 May 2005 to 31 December 2005,
and the results have been prepared in accordance with International Financial
Reporting Standards (IFRS) and International Accounting Standards (IAS).
Operating profit for the Group (including Dataforce from 5 April 2006) was
#0.40m, which delivered earnings per share of 0.97p (basic) and 0.79p (fully
diluted). Operating profit is after providing for a charge based on the fair
value of share-based payments arising from share options which equated to #5.6k
in the period.
For the period 1 January 2006 to 30 June 2006, Dataforce Group Limited (the
operating company), generated an operating profit of #0.78m on sales of #10.72m.
These results reflect sales growth of 23% on the same period in 2005. The sales
growth has been primarily driven by the introduction of new clients in 2006 -
which include Cancer Research and The Mint Office. Both of these accounts are
complex multi service CRM projects, which required one off investment during the
implementation stage. This cost the business circa #0.22m, and due to its
operating nature has been fully expensed during the period. Operating profit
before one off implementation costs was #1.0m and reflects growth on 2005 of
24%.
The Group had net cash outflow of #0.35m during the period. This was primarily
due to timing differences relating to postage & carriage costs to be passed
through to clients that had not been billed at the balance sheet date. Capital
expenditure during the period has been relatively low at #0.07m and mainly for
equipment to support the sales growth.
Net debt at the end of the period was #2.7m, of which #2.53m relates to the term
loan with Bank of Scotland, and the remainder relates to obligations under
finance leases. Debt repayments due in the next 12 months equate to #0.35m.
The Group has a further #2.0m of Invoice Financing facility with the Bank of
Scotland, of which #0.82m was used at the end of the period to fund the movement
in working capital. This balance has been reflected in Other Creditors.
Acquisition
The acquisition of Dataforce was completed on 5 April 2006, for a consideration
of #10.5m settled in cash and shares (net of expenses and deferred
consideration). #7.67m (net of costs) was raised through the placing of 41.8m
shares on AIM with the remainder being funded via existing cash and a term loan
of #2.6m from the Bank of Scotland.
The Dataforce Management team, led by Managing Director Andy Lee and Finance
Director Grant Newton, remained with the business and joined the Twenty Board.
They, along with other senior management, converted 50% of their share options
into new equity in Twenty as a mark of their commitment to building the Group.
Strong operational progress
During the six months under review four new clients were won; namely Cancer
Research UK ("CRUK"), Department of Works and Pensions, The Mint Office and the
Salvation Army, which we expect to generate over #3 million of revenue across
the Group during the financial year. CRUK was the first major contract win for
Dataforce since its acquisition by Twenty Plc and encompasses administration,
registration and sponsorship payment services to CRUK's 'Race for Life' events.
CRUK is the world's leading independent organisation dedicated to cancer
research, with a team of over 3,000 scientists, doctors and nurses. CRUK's Race
for Life began in 1994 with 680 women participating in one race in Battersea
Park. Race for Life is the UK's biggest women only fundraising event with
750,000 women taking part in 240 sponsored races during 2006.
The Market
According to the Direct Marketing Association, the direct marketing industry in
the UK is worth circa #14 billion per annum, and is increasing mainly as a
result of increasing pressure on marketers to provide accountability through
demonstrable return on investment ("R.O.I"). Twenty's strategy of focusing on
data integrated with multi-channel CRM services differentiates it from the other
smaller UK quoted marketing services companies. The Group aims to acquire
companies whose businesses are driven by data, fulfilling the need for more
targeted and strategic marketing approaches.
The ongoing policy of the Group is to continue to accelerate the growth of the
current business and to seek compatible acquisitions to enable it to further
consolidate its position in the sector.
Outlook
The Directors believe that there is opportunity for organic growth within the
Dataforce business, through a closer alignment of the business with the key
vertical markets that it currently serves. To this effect, a review has been
conducted post acquisition of the opportunity within the Charity, Government,
Travel & Leisure, Retail, Automotive and Financial Services sectors from which
the Group derives its revenues. As a result Dataforce is being structured around
strategic business units that will address each of these markets with relevant
propositions supported by a central services group containing the contact
centres, mailing and fulfilment platforms.
The Board is actively pursuing acquisitions which support the development of
additional data and analytical capability in addition to targeted acquisitions
which bring client contracts to support the growth in the chosen vertical
markets.
Current trading is in line with plan and we expect a satisfactory outcome for
the full year.
Ian Lancaster
Chief Executive
19 September 2006
Twenty Plc
Consolidated Income Statement (Unaudited)
For the period ended 30 June 2006
6 months to Period to
30.06.2006 31.12.2005
Note Unaudited Audited
# #
Revenue:
Continuing operations 2 5,033,119 -
Cost of sales (2,742,470) -
------- --------
Gross Profit 2,290,649 -
Administrative expenses (1,888,909) (52,752)
------- --------
Operating Profit/(Loss):
Continuing operations 2 401,740 (52,752)
Finance Income 5,885 6,238
Finance Costs (61,081) -
------- --------
Profit/(Loss) before Taxation 346,544 (46,514)
Taxation 3 (103,963) -
------- --------
Profit/(Loss) for the period
242,581 (46,514)
======= ========
Attributable to:
Equity holders of the parent 242,581 (46,514)
------- --------
11 242,581 (46,514)
======= ========
Earnings/(Loss) per share:
Basic 4 0.97 p (1.52)p
======= ========
Diluted 4 0.79 p (1.52)p
======= ========
Twenty Plc
Consolidated Balance Sheet (Unaudited)
For the period ended 30 June 2006
As at As at
30.06.2006 31.12.05
Note Unaudited Audited
# #
Non-current assets
Goodwill 5 9,954,660 -
Property, plant and equipment 902,275 -
------- --------
10,856,935 -
------- --------
Current Assets
Trade and other receivables 7 6,347,030 12,264
Cash and cash equivalents 60,765 408,269
------- --------
Total current assets 6,407,795 420,533
------- --------
Total Assets 17,264,730 420,533
======= ========
Current liabilities
Interest bearing loans and overdrafts (450,826) -
Trade and other payables 8 (5,221,236) (29,031)
Current tax liabilities (62,177) -
Obligations under finance leases 9 (101,706) -
------- --------
Total current liabilities (5,835,945) (29,031)
------- --------
Non-current liabilities
Bank loans (2,076,588) -
Obligations under finance leases (39,416) -
Provisions (382,915) -
------- --------
Total non-current liabilities (2,498,919) -
------- --------
Total liabilities (8,334,864) (29,031)
======= ========
Net Assets 8,929,866 391,502
======= ========
Equity
Share capital 4,827,060 340,000
Share premium account 3,901,164 98,016
Share options reserve 5,575 -
Retained earnings 196,067 (46,514)
------- --------
Total equity 11 8,929,866 391,502
======= ========
Approved by the board on 14 September 2006
Ian Lancaster
Director
Twenty Plc
Consolidated Cash Flow Statement (Unaudited)
For the period ended 30 June 2006
Six Months to Period Ended
30 June 2006 31 December 2005
Unaudited Audited
# # # #
Cash flow from operating activities
Profit/(loss) for the period 242,581 (46,514)
Adjustments for:
Finance income (5,885) (6,238)
Finance costs 61,081 -
Taxation 103,963 -
Depreciation of property,
plant and equipment 135,663 -
Share-based payment expense 5,575 -
Profit on sale of fixed assets (648) -
-------- -------
299,749 (6,238)
------- --------
Operating cash flow before
movements in working capital 542,330 (52,752)
Decrease in inventories 117,178 -
Increase in receivables (1,866,464) (12,264)
Increase in payables 965,454 29,031
-------- -------
(783,832) 16,767
------- --------
Cash generated from operations (241,502) (35,985)
Tax paid - -
------- --------
Net cash from operating activities (241,502) (35,985)
------- --------
Twenty Plc
Consolidated Cash Flow Statement (Unaudited)
For the period ended 30 June 2006 (Continued)
Six Months to Period Ended
30 June 2006 31 December 2005
Note Unaudited Audited
# # # #
Net cash from operating
activities (241,502) (35,985)
Investing activities
Purchase of property,
plant and equipment (68,512) -
Proceeds from sale of
fixed assets 648 -
Purchase of subsidiary
undertakings 5 (10,080,455) -
Interest bearing loans and
overdrafts acquired with 5 (70,183) -
subsidiary
Interest received 5,885 6,238
-------- -------
Net cash from investing
activities (10,212,617) 6,238
Financing activities
Interest paid (61,081) -
Repayments of borrowings (72,586) -
Repayments of obligations
under finance leases (33,806) -
Proceeds from issue of
shares 7,674,088 438,016
New bank loans raised 2,600,000 -
-------- -------
Net cash from financing
activities 10,106,615 438,016
------- --------
Net (decrease)/increase in
cash and cash equivalents (347,504) 408,269
Cash and cash equivalents
at the beginning of the
period 408,269 -
------- --------
Cash and cash equivalents
at the end of the period 60,765 408,269
======= ========
Twenty Plc
Notes to the Unaudited Interim Financial Statements
For the period ended 30 June 2006
1 Accounting Policies
a) Basis of preparation
AIM rules require that the consolidated financial statements of the company, for the year ended 31
December 2007, be prepared in accordance with International Financial Reporting Standards (IFRSs)
adopted for use in the EU ('adopted IFRS'). As a result, the directors have decided on early adoption
of IFRSs with effect from the year ended 31 December 2006.
This interim report has been prepared in accordance with these International Accounting Standards
(IAS) and IFRS issued by the International Accounting Standards Board (IASB), that are expected to be
adopted by the European Union, and available for use when the annual report and accounts for the year
ended 31 December 2006 are prepared. However, the accounting policies may need to be updated for
interpretations issued by the International Financial Reporting Interpretations Committee, new
standards issued by the IASB, or continuing evolution of interpretation of existing IAS and IFRS.
The adoption of IFRS has had no impact on net assets or the net income of the Group. The consolidated
financial information has been prepared under the historical cost convention.
b) Publication of non-statutory accounts.
The financial information contained in this document is unaudited and does not constitute statutory
accounts within the meaning of section 240 of the Companies Act 1985.
The information for the period ended 31 December 2005 is based on the company's statutory accounts for
that period, restated for IFRS. These statutory accounts, which were prepared under UK Generally
Accepted Accounting Principles (UK GAAP) received an unqualified audit report and have been filed with
the Registrar of Companies.
c) Basis of consolidation
The consolidated financial statements comprise the financial statements of the company and its
subsidiaries. The results of subsidiaries acquired or disposed of during the period are included in
the consolidated income statement from the effective date of acquisition or disposals, as appropriate.
d) Goodwill
Goodwill arising from the acquisition of a subsidiary represents the excess of the fair value of the
cost of acquisition over the Group's net interest in the fair value of the identifiable net assets
acquired. In accordance with IFRS3, goodwill is not amortised.
Goodwill is reviewed for impairment annually, or more frequently if events or changes in circumstances
indicate that the carrying value is impaired. An impairment loss is recognised for the amount by which
the carrying net value of the asset exceeds its recoverable amount. An impairment loss recognised for
goodwill is not reversed in a subsequent period.
Goodwill is allocated to cash generating units for the purpose of impairment testing.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of
the profit or loss on disposal.
Twenty Plc
Notes to the Unaudited Interim Financial Statements
For the period ended 30 June 2006 (Continued)
e) Property, plant and equipment
Property, plant and equipment are stated at cost or valuation, net of depreciation and any
provision for impairment. Depreciation has been calculated on the straight line method and
aims to write down the cost, less estimated residual value, of property, plant and
equipment over their expected useful lives, using the following periods:
Leasehold improvements Over the terms of the lease
Plant, machinery and database equipment 4 to 8 years
Fixtures, fittings and office equipment 3 to 10 years
Motor vehicles 4 years
f) Deferred taxation
Deferred tax asset and liabilities arising from timing differences between the recognition
of gains and losses in the financial statements and their recognition in the tax
computation have been recognised in full, calculated at a rate at which it is estimated
that tax will be payable. Deferred taxation has not been discounted.
g) Share-based payments
The Group issues equity-settled share-based payments to certain employees. Equity-settled
share-based payments are measured at fair value (excluding the effect of non market-based
vesting conditions) at the date of grant. The fair value determined at the grant date of
the equity-settled share-based payments is expensed on a straight line basis over the
vesting period, based on the Group's estimate of the shares that will eventually vest and
adjusted for the effect of non market-based vesting conditions.
Fair value is measured using a Black-Scholes pricing model. The expected life used in the
model has been adjusted, based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural considerations.
h) Leasing
Assets held under finance leases, which confer rights and obligations similar to those
attached to owned assets, are capitalised as tangible fixed assets and are depreciated over
the shorter of the lease terms and their useful lives. The capital elements of future lease
obligations are recorded as liabilities, while the interest elements are charged to the
profit and loss account over the period of the lease to produce a constant rate of charge
on the balance of capital repayments outstanding. Hire purchase transactions are dealt with
similarly, except that assets are depreciated over their useful lives.
Rentals under operating leases are charged on a straight line basis over the lease term,
even if the payments are not made on such a basis. Benefits received and receivable as an
incentive to sign an operating lease are similarly spread on a straight line basis over the
lease term, except where the period to the review date on which the rent is first expected
to be adjusted to the prevailing market rate is shorter than the full lease term, in which
case the shorter period is used.
i) Retirement benefits
Pension payments are made in respect of defined contribution schemes. The annual payments
are charged to the profit and loss account. The company has no potential further liability
in respect of pensions.
Twenty Plc
Notes to the Unaudited Interim Financial Statements
For the period ended 30 June 2006 (Continued)
2 Segmental analysis
CRM Services Analytical Mailing 6 months to
CRM & Data Services 30.06.2006
Services Unaudited
# # # #
Revenue 3,875,442 386,820 770,857 5,033,119
Cost of sales (2,050,613) (220,409) (471,448) (2,742,470)
------- --- -------- --- ------- -------
Gross Profit 1,824,829 166,411 299,409 2,290,649
Administrative expenses (1,368,165) (110,053) (309,845) (1,788,063)
------- --- -------- --- ------- -------
Segment result 456,664 56,358 (10,436) 502,586
Unallocated corporate expenses (100,846)
-------
Operating profit 401,740
Finance Income 5,885
Finance Costs (61,081)
-------
Profit before Taxation 346,544
Taxation (103,963)
-------
Profit for the period
242,581
=======
Administrative costs are allocated based on directly attributable costs, plus property costs based on space
utilisation and the remaining administration expense based on revenue percentage.
All revenue and profit has been generated solely within the United Kingdom.
3 Taxation
The taxation charge has been estimated by the company based on previous taxation adjustments and future rates.
4 Earnings per share
The basic earnings per share is based on the profit for the period of #242,581( (2005 : Loss of #46,514) and
the weighted average number of ordinary shares in issue during the period of 24,967,636 (six months average) in
accordance with IAS33.
The earnings per share has been fully diluted to take into account potentially dilutive shares held under
option agreements. This increased the weighted average number of shares used in the basis EPS calculation from
24,967,636 to 30,770,924 used in the fully diluted EPS calculation.
Twenty Plc
Notes to the Unaudited Interim Financial Statements
For the period ended 30 June 2006 (Continued)
5 Acquisition of subsidiary
On 5 April 2006, the company acquired 100% of the share capital of Dataforce Holdings Limited for
consideration of #10.5m, partly payable in cash and partly in shares. In addition, costs directly
relating to the acquisition of #0.22m were incurred and deferred consideration of #0.38m has been
provided for in relation to expected tax credits. This transaction has been accounted for by the
purchase method of accounting.
The net assets acquired in the transaction, and the goodwill arising are as follows:
Fair Value
Net assets acquired: #
Property, plant and equipment 965,070
Deferred tax asset 161,141
Trade and other receivables 4,424,339
Interest bearing loans and overdrafts (70,183)
Trade and other payables (4,355,537)
Goodwill 9,954,660
--------
11,079,490
========
Satisfied by:
Shares allotted 616,120
Cash (including expenses) 10,080,455
Deferred consideration 382,915
--------
11,079,490
========
Net cash outflow arising on acquisition
Cash consideration paid 10,080,455
Interest bearing loans and
overdrafts acquired (70,183)
--------
10,010,272
========
The goodwill arising on the acquisition of Dataforce Holdings Limited is
attributable to the reputation, customer base and expected future
profitability of Dataforce.
Dataforce Holdings Limited contributed #5.03m revenue and #0.49m to the
Group's profit before taxation for the period between the date of
acquisition and the balance sheet date.
If the acquisition had been completed on 1 January 2006, total Group
revenue for the period would have been #10.72m and profit for the period
(after tax) would have been #0.55m.
Twenty Plc
Notes to the Unaudited Interim Financial Statements
For the period ended 30 June 2006 (Continued)
6 Property, plant and equipment (Net book value) 30.06.2006 31.12.2005
# #
Leasehold improvements 90,367 -
Plant, machinery and database equipment 483,195 -
Fixtures, fittings and office equipment 324,955 -
Motor vehicles 3,758 -
------- --------
902,275 -
======= ========
7 Trade and other receivables 30.06.2006 31.12.2005
# #
Trade debtors 4,876,670 -
Prepayments & accrued income 1,309,219 -
Deferred tax asset 161,141 -
Other debtors - 12,264
------- --------
6,347,030 12,264
======= ========
8 Trade and other payables 30.06.2006 31.12.2005
# #
Trade creditors 2,575,164 16,834
Other taxes and social security 551,330 -
Other creditors 1,145,735 -
Accruals and deferred income 949,007 12,197
------- --------
5,221,236 29,031
======= ========
9 Obligations under finance leases 30.06.2006 31.12.2005
# #
Repayable in less than one year 101,706 -
Repayable between one and five years 39,416 -
------- --------
141,122 -
======= ========
10 Share Capital 30.06.2006 31.12.2005
# #
Authorised
80,000,000 Ordinary shares of 10p each 8,000,000 1,000,000
======= ========
Allotted, called up and fully paid
48,270,600 Ordinary shares of 10p each 4,827,060 340,000
======= ========
Twenty Plc
Notes to the Unaudited Interim Financial Statements
For the period ended 30 June 2006 (Continued)
11 Statement of changes in equity Share Share Share Retained Total
Capital options premium earnings/
reserve account (losses)
# # # # #
At 1 January 2006 340,000 - 98,016 (46,514) 391,502
Profit for the period - - - 242,581 242,581
Issue of shares 4,487,060 - 4,487,060 - 8,974,120
Costs associated with issue of shares - - (683,912) - (683,912)
Share options - 5,575 - - 5,575
------- -------- ------- ------- --------
At 30 June 2006 4,827,060 5,575 3,901,164 196,067 8,929,866
======= ======== ======= ======= ========
12 Other information
This interim statement was approved by the directors of the company on 14 September 2006.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DVLFFQKBFBBK
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