RNS Number:7510T
Twenty PLC
27 March 2007
27 MARCH 2007
TWENTY PLC
(AIM: TWE)
PRELIMINARY RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2006
The Board of Twenty Plc ('Twenty' or 'the Group'), an investment vehicle
focusing on the marketing services sector, is pleased to announce preliminary
results for the year ended 31 December 2006.
The Group's results include the post-acquisition performance of Dataforce
Holdings Limited ("Dataforce"), a provider of integrated, data-driven,
multi-channel CRM solutions, which was acquired on 5 April 2006.
HIGHLIGHTS
*Revenue growth of 18% year on year in Dataforce;
*Operating profit increase of 53% year on year in Dataforce;
*Earnings per share of 1.96p basic and 1.96p diluted (2005: loss per share
1.52p basic and diluted)*;
*Acquisition of Emaginating Limited, a company that integrates and models
customer and geo-demographic data, for a maximum consideration of #85,000.
The acquisition was completed on 19 December 2006 and had little impact on
the 2006 results;
*Dataforce restructured to align the business to key vertical sectors and
provide a foundation to support future acquisitions; and
*Senior management team strengthened.
The Annual Report will be available and sent to shareholders on 30 April 2007.
Commenting on today's results, Ian Lancaster, CEO, said: "Since acquiring
Dataforce in April 2006, the Board has been pleased with the continued growth in
revenues and profits. In the 12 months to 31 December 2006, Dataforce delivered
growth of 18% on sales and 53% on operating profit compared to 2005.
"As I hope you can appreciate, our maiden voyage has been one that has seen us
go from an investment vehicle on PLUS Markets to being an AIM quoted company
with two subsidiaries, #20m in annual revenues and #900,000 operating profit
with over 700 staff."
* 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
ARM Corporate Finance Ltd Tel: 020 7512 0191
John Simpson
Bishopsgate Communications Ltd Tel: 020 7562 3350
Dominic Barretto
CHAIRMAN'S STATEMENT
On behalf of the Twenty Board, I am pleased to report that the last financial
year was in line with market expectations. The acquisition of Dataforce was the
first step in Twenty's stated ambition to create, through acquisition and
organic growth, a marketing services group with customers, prospect data and
data intelligence at its centre by investing in a diversified group of marketing
services businesses.
Dataforce is recognised for its ability to produce innovative, integrated
marketing solutions, from concept to delivery. Dataforce currently specialises
in sectors including Automotive, Financial, Charities & Government, Retail and
Travel & Leisure.
Since acquiring Dataforce in April 2006, the Board has been pleased with the
continued growth in revenues and profits. In the 12 months to 31 December 2006,
Dataforce delivered growth of 18% in sales and 53% in operating profit compared
to 2005.
A buy and build strategy remains at the forefront of the Board's plans for
Twenty. As announced on 20 December 2006, the Group acquired Emaginating Limited
("Emaginating"), for a maximum consideration of #85,000; on an earn-out linked
to its profits in the calendar year 2007. Emaginating integrates customer and
third party data and applies modelling techniques to help clients understand
their market opportunity and enable effective development and planning of their
channels to market. Twenty will continue to examine possible further
acquisitions and earnings enhancing initiatives that meet the Board's stringent
acquisition criteria.
The year was a busy one for Twenty with the commencement of a corporate
realignment to create a sector specialist approach and new appointments to drive
new sector focused divisions. I would like to take this opportunity to thank the
Board, Dataforce's management team and all employees who have participated in
the year's creditable results. I would also like to thank all shareholders for
their continued support and very useful feedback. The Board looks forward to
updating shareholders with many more positive developments in the future.
Mark Patron
Non-Executive Chairman
27 March 2007
CHIEF EXECUTIVE'S STATEMENT
I am pleased to be writing this report on Twenty's maiden year as an AIM quoted
company, following our short stay on PLUS Markets, after the Company's formation
in May 2005.
Financials
The business has delivered an excellent result in the period delivering profit
in line with the half year run rate and increasing Earnings per Share to 1.96p
basic and 1.96p diluted.
In the 12 months to 31 December 2006, Dataforce, our principal subsidiary,
delivered growth of 18% in sales and 53% in operating profit compared to 2005.
Sales growth was largely attributable to new contracts won at the end of 2005,
which contributed 22% of the total sales of the Group.
The sales growth converted into profit at a higher rate; increasing return on
sales by 1.8%; this reflects an improved ratio of administration costs to sales,
as fixed costs were recovered over greater volume. This was largely seen in the
CRM Division where sales growth was 31% year on year.
Mailing Services had a disappointing year and delivered a loss after central
costs as the operation suffered from increased price pressure, whilst supporting
clients with obsolete equipment. As a consequence the Board has invested in two
new poly-wrapping lines, which operate at over twice the running speed of
existing equipment. This will reduce operating costs, and together with
increased functionality will allow the unit to be more competitive in the market
place.
The cash position of the Group improved significantly from the half year with
cash from operating activities improving by #1.1m in the last 6 months, and
overall generation in cash of #278,000 after financing activities. This was
partially due to an improvement in working capital of #400,000.
At the end of the year net debt was #1.9m with cash of #686,273, #2.3m remaining
on the term loan with the bank of Scotland and obligations under finance leases
of #317,000.
Differentiators
As with all maiden voyages, much has transpired since I conceived the creation
of Twenty as an entrant into the marketing services sector. Our raison d'etre
and differentiation from our peers is our focus on providing our clients with an
integrated multi channel marketing services platform through which they can
serve their customers.
This differentiation is increasingly important as the market in which we compete
becomes ever more crowded. Before I go on to describe in detail what we offer,
it is perhaps a good place to start by stating what we are not.
We are not an agency, we are not a PR company consolidator, we are not a pure
contact centre operator, we are not a mailing house, we are not a CRM software
provider and we are not a data reseller.
There are many organisations providing the above services very effectively; what
it is difficult to do is to join up some of these services and to provide client
organisations with an integrated marketing services platform across all the
channels that they need to operate.
Twenty is focused on the provision of these joined up services starting at the
point that the advertising or media agency finishes. Once a marketing campaign
has been designed, whether above or below the line, client organisations require
a marketing services platform to handle the responses generated by telephone,
email, SMS, mail or online. Following this response there is often the need to
take an order or to send out some product or marketing materials and to report
the effectiveness of campaigns and to provide target customer profiles and to
manage the customer databases. Twenty, through Dataforce, provides these
services.
It is critical to the delivery of effective sales conversion and customer
service that an organisation is joined up across all these channels and can
present a single view of a customer and the intelligence to identify who is
interacting in each and multiple channels. Increasingly clients choose to
outsource this critical activity to marketing services specialists such as
Twenty. The first acquisition that we have made, Dataforce, acquired for #10.5m
in April 2006, provides exactly these services across its wide and diverse
client base.
However hard you search the market place it is difficult to find the perfect
acquisition that will match exactly a purchaser's requirements. The skill is in
planning the integration and development of that business once acquired.
Dataforce is no different. Whilst I'm pleased with the results we have achieved
in 2006, with an increase year on year in revenues of 18% and operating profits
of 53% within Dataforce, we still have work to do as we make structural changes
within the business.
During the past nine months the Board has embarked on a number of key
initiatives to align Dataforce more closely with the vision that the Board has
for Twenty.
Historically, Dataforce has gone to market as a generalist marketing services
supplier promoting its capabilities by function such as contact centres,
campaign management, marketing fulfilment, data analytics and mailing services
under a single brand.
During the period since acquisition, we have listened very closely to our
clients and the market place and commenced the transformation of Dataforce into
five business units focused around the key sectors that we believe represent the
most fertile ground for growth. As a result Dataforce has been re-branded around
the following sector specialisms:
- Charity and Government
- Travel and Leisure
- Multi Channel Retail
- Financial Services
- Automotive
To support this approach to market Dataforce has repackaged and rebranded its
skill based practices that also retain an outward market face in addition to
supporting the sector business units.
The skill based business units include:
- Direct Communications focussing on Personalised Laser Mailing and
Polywrapping;
- Knowledge focusing on Data Analytics, Marketing Databases and Modelling;
and
- Dataforce Cortex focussing on supporting the group operating our contact
centres, campaign services and fulfilment activities.
To support the development of these business units the Board is strengthening
the senior leadership team within Dataforce with the planned appointment of
heads of each of these business units, an overall Commercial Director, I.T.
Director and a Strategy Director. During 2007, we will be building up the
commercial teams within each business unit to drive new and existing business
and propositions within each distinct market place.
An important component of our strategy for Twenty is to have appropriate
environments for our clients and staff to perform their business with us. We
have inherited a ramshackle selection of leasehold buildings with Dataforce with
a number of near term lease endings, which have presented an opportunity to
create a fit for purpose buildings strategy alongside our business growth plans.
I'm pleased to report that early in 2007 the Board plans to open a new
purpose-equipped fulfilment centre in Northampton, a new combined commercial
centre for Dataforce and head office for Twenty and to refit our Northampton
contact centre environment.
These initiatives will, we believe, greatly enhance the growth prospects for the
Group and will enable us to attract and retain high calibre staff.
Client Wins
Whilst these initiatives are clearly exciting we have also been performing on
the ground with a number of new client wins within Dataforce that we hope will
build into significant relationships over the coming years.
Dataforce has won new projects with Wyndham Worldwide, Capita, AXA, AIG, The Red
Cross, Mothercare, The Home Office and The Post Office during 2006, all of which
should show growth in the 2007 and beyond.
Acquisition of Emaginating
Our growth strategy is based on acquisitions in addition to pursuing strong
organic growth within our existing businesses. We were pleased to complete the
acquisition in December 2006 of Emaginating, which brings Professor Martin
Clarke into the fold on a full time basis to develop this specialist spatial
modelling business. There are a number of synergies within our two client bases
and core technologies that we can leverage over the next years to develop
Emaginating into a positive earnings contributor.
The Board is very focused on continuing the pipeline of acquisitions and is
actively considering a number of businesses against the strict criteria of our
business model.
We made six acquisition approaches during the last quarter of 2006 and completed
only one because of a combination of unrealistic vendor expectations and
unrealistic prices being paid by other listed marketing services groups. The
Board is concentrating on identifying businesses that fit our strategy and are
earnings enhancing by making direct approaches as a more effective method of
meeting our goals.
With a client base now exceeding 70 and a more focused organisation within
Dataforce combined with the recently completed acquisition of Emaginating we are
positive about the future opportunities for the Group.
As I hope you can appreciate, our maiden voyage has been one that has seen us go
from an investment vehicle on PLUS Markets to being an AIM traded company with
two subsidiaries, #20m in annual revenues and #900,000 operating profit with
over 700 staff.
That brings me onto my final point; we are a people business and our clients buy
our people. It is important that we develop and invest in our people to
successfully grow our business over the coming years, which we are committed to
do. A huge thanks to all the staff within Dataforce who have lived through a
year of transition, which will continue into 2007 as we structure the business
for organic growth.
Ian Lancaster
Chief Executive
27 March 2007
Consolidated Income Statement
For the year ended 31 December 2006
2006 2005
# #
Continuing operations
Revenue 14,326,155 -
Cost of sales (7,333,030) -
--------- ---------
Gross Profit 6,993,125 -
Administrative expenses (5,897,722) (52,752)
--------- ---------
Operating Profit/(Loss) 1,095,403 (52,752)
Finance Income 7,449 6,238
Finance Costs (170,089) -
--------- ---------
Profit/(Loss) before Taxation 932,763 (46,514)
Taxation (211,401) -
--------- ---------
Profit/(Loss) for the year from continuing
operations 721,362 (46,514)
========= =========
Attributable to:
Equity holders of the parent 721,362 (46,514)
--------- ---------
721,362 (46,514)
========= =========
Earnings/(Loss) per share:
Basic 1.96 p (1.52)p
========= =========
Diluted 1.96 p (1.52)p
========= =========
Consolidated Balance Sheet
At 31 December 2006
2006 2005
# #
Assets
--------
Non-current assets
Property, plant and equipment 1,022,365 -
Goodwill 9,980,273 -
-------- --------
11,002,638 -
-------- --------
Current assets
Trade and other receivables 4,565,793 12,264
Cash and cash equivalents 686,273 408,269
-------- --------
Total current assets 5,252,066 420,533
-------- --------
Total assets 16,254,704 420,533
======== ========
Equity & liabilities
----------------------
Current liabilities
Trade and other payables 4,206,850 29,031
Obligations under finance leases 143,091 -
Interest bearing loans and overdrafts 458,042 -
-------- --------
Total current liabilities 4,807,983 29,031
-------- --------
Non-current liabilities
Bank loans 1,851,674 -
Obligations under finance leases 173,744 -
-------- --------
Total non-current liabilities 2,025,418 -
-------- --------
Total liabilities 6,833,401 29,031
-------- --------
Equity
Share capital 4,827,060 340,000
Share premium account 3,901,164 98,016
Share options reserve 18,231 -
Retained earnings 674,848 (46,514)
-------- --------
Total equity 9,421,303 391,502
-------- --------
Total equity & liabilities 16,254,704 420,533
======== ========
Consolidated Cash Flow Statement
For the year ended 31 December 2006
2006 2005
# # # #
Cash flow from
operating activities
Profit/(loss) for
the period 721,362 (46,514)
Adjustments for:
Finance income (7,449) (6,238)
Finance costs 170,089 -
Taxation 211,401 -
Depreciation of
property, plant and
equipment 393,953 -
Share-based payment
expense 18,231 -
Gain on disposal
of property, plant
and equipment (648) -
-------- --------
785,577 (6,238)
-------- --------
Operating cash flows
before movements
in working capital 1,506,939 (52,752)
Decrease in inventories 117,178 -
Decrease/(increase)
in receivables 7,797 (12,264)
(Decrease)/
increase in
payables (524,691) 29,031
-------- --------
(399,716) 16,767
-------- --------
Cash generated/
(used) from operations 1,107,223 (35,985)
Taxation paid (262,639) -
-------- --------
Net cash generated/
(used) in operating
activities 844,584 (35,985)
-------- --------
Investing activities
Interest received 7,449 6,238
Proceeds on disposal
of property, plant and
equipment 648 -
Purchases of property,
plant and equipment (217,151) -
Acquisition of
subsidiary
undertakings (10,008,868) -
Interest bearing
loans and
overdrafts acquired
with subsidiary (70,183) -
-------- --------
Net cash (used in)
/from investing
activities (10,288,105) 6,238
Financing activities
Interest paid (170,089) -
Repayments of
borrowings (290,284) -
Repayments of
obligations
under finance
leases (92,190) -
Proceeds on
issue of shares 7,674,088 438,016
New bank
loans raised 2,600,000 -
-------- --------
Net cash
from
financing
activities 9,721,525 438,016
-------- --------
Net increase in
cash and
cash equivalents 278,004 408,269
Cash and cash
equivalents
at the beginning of
the year 408,269 -
-------- --------
Cash and cash
equivalents
at the end of the
year 686,273 408,269
======== ========
Earnings per Share
The calculation of the basic and diluted earnings per share attributable to the
ordinary equity holders of the company is based on the following data:
2006 2005
# #
Earnings
Earnings for the purposes of
basic earnings per share 721,362 (46,514)
Effect of dilutive potential ordinary - -
shares: ------- -------
Earnings for the purposes of
diluted earnings per share 721,362 (46,514)
======= =======
2006 2005
No. No.
Number of shares
Weighted average number
of ordinary shares 36,714,884 3,054,701
------- -------
Weighted average number of
ordinary shares for the
purposes of diluted EPS 36,714,884 3,054,701
======= =======
Basic Earnings per Share (in
pence) 1.96 (1.52)
======= =======
Diluted Earnings per Share
(in pence) 1.96 (1.52)
======= =======
Share options and warrants do not have a dilutive effect because the exercise
price was above the average market price during the period.
Segmental analysis
CRM Services Analytical CRM & Mailing 2006
Data Services Services
# # # #
Revenue 10,886,081 1,333,765 2,106,309 14,326,155
Cost of sales (5,334,397) (679,873) (1,318,760) (7,333,030)
-------- ------- -------- --------
Gross Profit 5,551,684 653,892 787,549 6,993,125
Administrative
expenses (4,053,870) (424,825) (1,065,695) (5,544,390)
-------- ------- -------- --------
Segment result 1,497,814 229,067 (278,146) 1,448,735
Unallocated
corporate
expenses (353,332)
--------
Operating
profit 1,095,403
Finance Income 7,449
Finance Costs (170,089)
--------
Profit before
Taxation 932,763
Taxation (211,401)
--------
Profit for the
period 721,362
========
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.
Basis of preparation
The financial information contained in this document does not constitute
statutory accounts within the meaning of section 240 of the Companies Act 1985.
The comparative figures for the financial period ended 31st December 2005 have
been extracted from the company's audited financial statements for that
financial period. The statutory accounts for the period ended 31 December 2005
have been given an unqualified audit report and have been filed with the
Registrar of Companies. The financial information set out above has been
prepared in accordance with the company's accounting policies and International
Financial Reporting Standards (IFRS) and International Accounting Standards
(IAS).
The Directors are of the opinion that the Group has sufficient working capital
for the foreseeable future and therefore the accounts have been presented on the
going concern basis.
Annual Report
The Annual Report will be available and sent to shareholders on 30 April 2007.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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