TIDMTWE
RNS Number : 6550T
Twenty PLC
10 June 2009
TWENTY PLC
(AIM: TWE)
FINAL RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2008
The Board of Twenty Plc ('Twenty' or 'the Group'), an investment vehicle
focusing on the marketing services sector, announces its final results for the
year ended 31 December 2008.
The Annual Report will be available and sent to shareholders at the end of June
2009.
Enquiries:
Twenty Plc Tel: 01908 329800
Ian Lancaster, Chief Executive
www.twentyplc.com
Daniel Stewart & Company plc Tel: 020 7776 6550
Graham Webster
CHAIRMAN'S STATEMENT
Whilst 2008 was undoubtedly a disappointing year this was caused by two distinct
factors that were to a large extent outside of the direct control of the
Directors. Firstly, a major customer, Inside Track, went into
administration leaving the business with a bad debt of GBP0.23m and a further
loss of GBP0.6m in forward committed revenues; and secondly the sub scale Direct
Communications business was hit by a deterioration in trading conditions. The
management took action to insure all debtors and disposed of the Direct
Communications business in September at a profit.
Whilst new business had converted more slowly than planned in the first half of
2008 this improved significantly in the second half of the year with Twenty
winning a number of notable data driven projects, which together with the
implementation of cost efficiencies, saw the business return an adjusted
operating profit for the second half of the year of GBP0.35m.
Twenty plc has undergone a transformation over the last two years and I am
pleased that this major restructuring work is now complete and the business is
operating effectively with a strong product proposition and team.This was
recognised in a recent Forrester Report where we were ranked as one of the
leading Database Marketing Service Providers in the UK.
The outlook for 2009 is more positive than this set of results suggests. The
Group is in robust shape and, economic conditions allowing, we have good growth
prospects in our digital and integrated data driven businesses.
As explained in more detail in the Chief Executive's report below the Board is
focused on restoring shareholder value and putting this year behind us.
The Board does not recommend payment of a final dividend.
We have a dedicated team and I would like to thank our management and staff,
shareholders, bankers and our professional advisers for their tremendous support
throughout this difficult period.
Mark Patron
Non-Executive Chairman
10 June 2009
CHIEF EXECUTIVE'S STATEMENT
We can't escape the fact that Twenty plc has had a very difficult year. Our
Direct Communications Division suffered in the first half year as the market
became increasingly competitive. We had a major customer go into administration
leaving a bad debt of GBP0.23m and an associated loss of GBP0.6m of forecast
revenues. We have tightened our credit policies for client engagements
supplemented by taking out credit insurance from our bankers, HBOS, to minimise
the potential of a significant bad debt occurring in the future.
In addition, our newly recruited new business teams took longer than we had
forecast to deliver new revenues into the Group in the first six months of the
year. The combined impact of these events when we reported at the half year was
an operating loss of GBP0.80m.This was not a satisfactory outcome.
The acquisition of our E-Commerce business, whilst strategically right to add
this capability in the fast growing digital sector, has taken more management
time and investment than anticipated to take this business forward. The first
year of ownership has required an investment of GBP0.55m to create a stable
platform upon which to grow. We believe the benefits of this investment will
flow through in the coming years as we establish the Group's e-commerce
reputation.
In the second half of the year the Group recovered and delivered an adjusted
operating profit of GBP0.35m in the last 6 months of the year as new business
teams started to deliver new revenues to replace the lost revenues in the first
half. This result excludes unutilised property costs in the last 6 months of
the year of GBP0.15m and a write off of capitalised software and consultancy
costs associated with our E-Commerce business of GBP0.12m.
In September we disposed of our Direct Communications Division which operated in
a very competitive market place for polywrapping, personalised print and machine
enclosing where we considered we were sub scale and would find it increasingly
difficult to compete going forwards.
Our investment in 2007 in new polywrapping machinery was the key enabler to
attract an acquirer for this business. This disposal was at book profit of
GBP0.14m as the GBP1.0m investment made in 2007 was on an operating lease that
transferred with the business.
Our focus remains in building out our proposition and services around data
intelligence, e-commerce and customer insight and the provision of fully
integrated marketing services to our client base. We enable this insight within
the resulting customer interaction through our contact centres, fulfilment and
campaign management operations. The market is showing signs of following our
strategy as we are seeing increasing success in cross selling our integrated
services across our client base.
We finally completed all the investment in our Group facilities with the opening
of our 250 seat contact centre in Northampton which was co-developed with our
landlord who funded the GBP1.0m refit in exchange for a new lease. We are proud
to say that we now have set a new industry standard in the quality of this
facility which is already having a positive impact on our clients, new business
and most importantly staff retention and performance.
We have now reduced the building foot print from the six ramshackle sites we
inherited to three state of the art facilities and reduced our property overhead
costs by 49%.
The transformation of the Group over the last 2 years has been highlighted in a
recent Forrester report, where we were recognised as one of the leading Database
Marketing Service Providers in the UK.
Financials
The results for the period include a full year's trading of Ominor (acquired on
8 August 2007) and 8 months trading of the Direct Communications division which
was sold on 31 August 2008.
In the first half of the year we reported a pre tax loss of GBP0.98m. This was
largely as a result of a major customer going into administration owing the
Group GBP0.23m together with associated lost revenues of GBP0.6m for the year.
We also saw trading conditions in the Direct Communications Division becoming
increasingly difficult as excess capacity in the market resulted in pricing
becoming very competitive; and our presence was sub scale. We took action to
dispose of the Division during the first half of the year and completed the sale
in early September.
In addition we made significant changes to our operational environments during
the year, most notably the refurbishment of the contact centre in Northampton
which was completed in July 2008. This programme resulted in GBP0.22m of excess
property costs during the year, where leases were running to the end of the
term, but properties were not occupied. These leases expired in October 2008.
Together with the sale of the Direct Communications Division, we have reduced
our property requirement from 6 units to 3, however now have operational
facilities which are fit for purpose.
Following a successful period of new business wins during the third quarter of
the year worth approximately GBP8.0m for delivery over the next 2 - 3 years, we
have seen an improved performance in the second half of the year delivering an
adjusted operating profit in the second half of the year of GBP0.35m compared to
an adjusted operating loss in the first half of the year of GBP0.54m. Gross
profit performance for the second half of the year at 51.7% has improved by 4.0%
from the first half, and is in line with 2007 full year gross margin.
Administration expenses show a reduction year on year reflecting the impact of
the disposal of the Direct Communications Division, being partially offset by
full year costs of our E-Commerce business which was acquired in August 2007.
Included in the Administration costs for the second half of the year is a write
down of capitalised software acquired with our E-Commerce business which is now
considered to be obsolete, together with a write off of capitalized consultant's
costs. This one off cost was GBP0.12m. When added back with the unutilised
property costs, this would reflect an adjusted profit before tax and goodwill
impairment for the Group in the second half of the year of GBP0.18m.
The performance of our E-Commerce business has been disappointing. The amount of
management time and investment taken to take this business forward has been
greater than anticipated. This was compounded by a shortfall in the anticipated
net assets at the time of acquisition. We are pursuing relevant claims under
the sale and purchase agreement.
As a result of these factors, the Board has undertaken a review of the carrying
value of the investment and considered it appropriate to impair the valuation of
goodwill by GBP0.82m.
Earnings per share was (3.85p) (2007: 0.70p). Adjusted EPS was (1.05p).
The Group had net cash outflow of GBP0.16m (2007: GBP0.49m) during the period
after debt repayments of GBP0.77m. This includes capital expenditure for the
period of GBP0.26m and repayments under finance leases of GBP0.19m offset by the
proceeds from the sale of the Direct Communications Division GBP0.34m.
Cash at the end of the period was GBP0.04m (2007: GBP0.20m).
We completed a renegotiation on the terms of the term debt with the Bank of
Scotland in December 2008, where the term of the repayments was extended from
April 2011 to December 2013. This reduced the debt repayments in the next 12
months from GBP0.81m to GBP0.43m.
Developments within the Group
Whilst our overall performance as a management team has been overshadowed by the
poor financial results, these are largely one off events that should not detract
from our vision and ability to create a valuable Group.
Whilst the new business activity was below forecast for the year as our new
teams took longer to build a sales pipeline around our integrated propositions,
by the middle of the year the momentum had been achieved. Our new business teams
converted in the second half of 2008 the following:
* Won first joint Royal Mail project with the NEC in Birmingham
* Appointed to build new redirections data warehouse for Royal Mail.
* Won five major Database projects within Publishing, Financial services, Leisure
market places
* Appointed to operate the Consumer Direct contact centre for the Government
replacing Energy Watch
* Contract extensions with major charity and Government agency
Most importantly we continued the journey we had started in 2007 through gaining
the ISO 9001 quality accreditation and the PCI data security standard for the
credit card payment industry. Our service delivery to our clients has continued
to exceed expectations which are flowing through into repeat engagements,
referrals, staff accolades and contract extensions.
Our investment in our people continued strongly in 2008 with over 1,200 training
days delivered across our 500 staff which has improved service delivery and
importantly retention within the Group. This continues to be an area of
considerable and constant focus for our management teams.
Outlook
The outlook for the Group in 2009 is more positive than the 2008 results would
suggest as we have taken significant cost actions in reducing our overheads and
improved our operating margins. The management teams are bedded in and making
positive contributions in each area of our business.
However as with all businesses the uncertainty in the economic environment has
the potential to impact any management plan. Our performance is closely linked
to the activity levels of our clients but with a wide and numerous client base
we are well placed to weather the economic conditions within reasonable
boundaries.
Ian Lancaster
Chief Executive
10 June 2009
+----+------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| Consolidated Income Statement |
+--------------------------------------------------------------------------------------------------------------------------------+
| For the year ended 31 December 2008 |
+--------------------------------------------------------------------------------------------------------------------------------+
| | | | | | | | |
+----+------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| | | | | | | | |
+----+------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| | | | | | Year to | | Year to |
+----+------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| | | | | | 31.12.2008 | | 31.12.2007 |
+----+------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| | | | | | | | |
+----+------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| | | | | | GBP | | GBP |
+----+------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| Continuing operations | | | | | |
+--------------------------------------------------+-----------+----+-------------+--------------------------------+-------------+
| Revenue | | | | 16,199,603 | | 18,796,748 |
+-----------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| | | | | | | | |
+----+------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| Cost of sales | | | | (8,167,211) | | (9,066,691) |
+-----------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| Gross Profit | | | | 8,032,392 | | 9,730,057 |
+-----------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| | | | | | | | |
+----+------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| Administrative expenses | | | (8,751,519) | | (8,946,699) |
+--------------------------------------------------+-----------+----+-------------+--------------------------------+-------------+
| Operating (Loss)/Profit pre-exceptional | | | (719,127) | | 783,358 |
+--------------------------------------------------+-----------+----+-------------+--------------------------------+-------------+
| | | | | | | | |
+----+------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| Exceptional item - goodwill impairment | | | (823,331) | | - |
+--------------------------------------------------+-----------+----+-------------+--------------------------------+-------------+
| | | | | | |
+--------------------------------------------------+-----------+----+-------------+--------------------------------+-------------+
| Operating (Loss)/Profit post-exceptional | | | (1,542,458) | | 783,358 |
+--------------------------------------------------+-----------+----+-------------+--------------------------------+-------------+
| | | | | | |
+--------------------------------------------------+-----------+----+-------------+--------------------------------+-------------+
| Finance Income | | | 3,562 | | 13,497 |
+--------------------------------------------------+-----------+----+-------------+--------------------------------+-------------+
| Finance Costs | | | (359,357) | | (282,243) |
+--------------------------------------------------+-----------+----+-------------+--------------------------------+-------------+
| | | | | | | | |
+----+------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| (Loss)/profit before Taxation | | | (1,898,253) | | 514,612 |
+--------------------------------------------------+-----------+----+-------------+--------------------------------+-------------+
| | | | | | | | |
+----+------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| Taxation | | | | 39,622 | | (177,323) |
+-----------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| (Loss)/profit for the year from continuing operations | | | | |
+ +----+-------------+--------------------------------+-------------+
| | | (1,858,631) | | 337,289 |
+--------------------------------------------------------------+----+-------------+--------------------------------+-------------+
| | | | | | | | |
+----+------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| | | | | | | | |
+----+------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| Attributable to: | | | | | |
+--------------------------------------------------+-----------+----+-------------+--------------------------------+-------------+
| Equity holders of the parent | | | (1,858,631) | | 337,289 |
+--------------------------------------------------+-----------+----+-------------+--------------------------------+-------------+
| | | | | | | | |
+----+------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| | | | | | | | |
+----+------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| Earnings per share from continuing and total | | | | | |
| operations: | | | | | |
+--------------------------------------------------+-----------+----+-------------+--------------------------------+-------------+
| Basic | | | | (3.85 p) | | 0.70 p |
+-----------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| | | | | | | | |
+----+------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| Diluted | | | | (3.85 p) | | 0.70 p |
+-----------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
| | | | | | | | |
+----+------------+--------------------------------+-----------+----+-------------+--------------------------------+-------------+
+--------------+--------------+----------+--+--+--+--+-------------+---+-------------+
| Consolidated Balance Sheet |
+------------------------------------------------------------------------------------+
| At 31 December 2008 |
+------------------------------------------------------------------------------------+
| | | | | | | | | | |
+--------------+--------------+----------+--+--+--+--+-------------+---+-------------+
| | | | | | | | | | |
+--------------+--------------+----------+--+--+--+--+-------------+---+-------------+
| | | | | | | | | | Restated |
+--------------+--------------+----------+--+--+--+--+-------------+---+-------------+
| | | | | | | | As at | | As at |
+--------------+--------------+----------+--+--+--+--+-------------+---+-------------+
| | | | | | | | 31.12.2008 | | 31.12.2007 |
+--------------+--------------+----------+--+--+--+--+-------------+---+-------------+
| | | | | | | | GBP | | GBP |
+--------------+--------------+----------+--+--+--+--+-------------+---+-------------+
| Assets | | | | | | | | |
+-----------------------------+----------+--+--+--+--+-------------+---+-------------+
| Non-current assets | | | | | | | |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| Property, plant and equipment | | | | | 1,199,795 | | 1,193,941 |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| Software development costs | | | | | 172,993 | | 178,656 |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| Goodwill | | | | | | 10,730,273 | | 11,356,981 |
+-----------------------------+----------+--+--+--+--+-------------+---+-------------+
| Deferred Tax | | | | | | 87,304 | | 147,719 |
+-----------------------------+----------+--+--+--+--+-------------+---+-------------+
| | | | | | | | 12,190,365 | | 12,877,297 |
+--------------+--------------+----------+--+--+--+--+-------------+---+-------------+
| Current assets | | | | | | | |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| Trade and other receivables | | | | | 3,307,885 | | 4,966,293 |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| Cash and cash equivalents | | | | | 38,727 | | 198,719 |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| Total current assets | | | | | 3,346,612 | | 5,165,012 |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| | | | | | | | | | |
+--------------+--------------+----------+--+--+--+--+-------------+---+-------------+
| Total assets | | | | | | 15,536,977 | | 18,042,309 |
+-----------------------------+----------+--+--+--+--+-------------+---+-------------+
| | | | | | | | | | |
+--------------+--------------+----------+--+--+--+--+-------------+---+-------------+
| Equity & liabilities | | | | | | | |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| Current liabilities | | | | | | | |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| Trade and other payables | | | | | 4,918,274 | | 5,044,370 |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| Obligations under finance leases | | | | | 244,150 | | 140,775 |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| Current tax liabilities | | | | | - | | 108,570 |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| Interest bearing loans, overdrafts and | | | | | 433,332 | | 758,231 |
| bank loans | | | | | | | |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| Total current liabilities | | | | | 5,595,756 | | 6,051,946 |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| | | | | | | | | | |
+--------------+--------------+----------+--+--+--+--+-------------+---+-------------+
| Non-current liabilities | | | | | | | |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| Bank loans | | | | | | 1,681,299 | | 2,128,041 |
+-----------------------------+----------+--+--+--+--+-------------+---+-------------+
| Obligations under finance leases | | | | | 406,102 | | 175,071 |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| Total non-current liabilities | | | | | 2,087,401 | | 2,303,112 |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| | | | | | | | | | |
+--------------+--------------+----------+--+--+--+--+-------------+---+-------------+
| Total liabilities | | | | | 7,683,157 | | 8,355,058 |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| | | | | | | | | | |
+--------------+--------------+----------+--+--+--+--+-------------+---+-------------+
| Equity | | | | | | | | |
+-----------------------------+----------+--+--+--+--+-------------+---+-------------+
| Share capital | | | | | | 4,827,060 | | 4,827,060 |
+-----------------------------+----------+--+--+--+--+-------------+---+-------------+
| Share premium account | | | | | 3,901,164 | | 3,901,164 |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| Share options reserve | | | | | 68,631 | | 43,431 |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| Retained earnings | | | | | (943,035) | | 915,596 |
+----------------------------------------+--+--+--+--+-------------+---+-------------+
| Total equity | | | | | | 7,853,820 | | 9,687,251 |
+-----------------------------+----------+--+--+--+--+-------------+---+-------------+
| | | | | | | | | | |
+--------------+--------------+----------+--+--+--+--+-------------+---+-------------+
| Total equity & liabilities | | | | | 15,536,977 | | 18,042,309 |
+--------------+--------------+----------+--+--+--+--+-------------+---+-------------+
+---+----------+---------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Consolidated Cash Flow Statement |
+--------------------------------------------------------------------------------------------------------------------------------------+
| For the year ended 31 December 2008 |
+--------------------------------------------------------------------------------------------------------------------------------------+
| | | | | | | | | | | | |
+---+----------+---------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| | | | | | | | |
+---+----------+---------------------+----------+---+------------------------------------------------+--+------------------------------+
| | | | | | As at 31.12.2008 | | As at 31.12.2007 |
+---+----------+---------------------+----------+---+------------------------------------------------+--+------------------------------+
| | | | | | GBP | | GBP | | GBP | | GBP |
+---+----------+---------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| | | | | | | | | | | | |
+---+----------+---------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Cash flow from operating activities | | | | | | | | |
+-----------------------------------------------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| | | | | | | | | | | | |
+---+----------+---------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| (Loss)/Profit for the year | | | |(1,858,631) | | | | 337,289 |
+-----------------------------------------------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| | | | | | | | | | | | |
+---+----------+---------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Adjustments for: | | | | | | | | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Finance income | | | (3,562) | | | | (13,497) | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Finance costs | | | 359,357 | | | | 282,243 | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Taxation | | | | (39,622) | | | | 177,323 | | |
+--------------+---------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Depreciation of property, plant | | | 586,856 | | | | 534,935 | | |
| and equipment | | | | | | | | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Amortisation of Software | | | 228,091 | | | | 67,232 | | |
| Development Costs | | | | | | | | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Impairment of goodwill | | | 823,331 | | | | - | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Share-based payment expense | | | 25,200 | | | | 25,200 | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Gain on disposal of property, | | | (140,000) | | | | (26,704) | | |
| plant and equipment | | | | | | | | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| | | | | | | | 1,839,651 | | | | 1,046,732 |
+---+----------+---------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Operating cash flows before movements in | | | | | | | | |
| working capital | | | | | | | | |
+ +---+------------+---------------------+-------------+--+-------------+--+-------------+
| | | | | (18,980) | | | | 1,384,021 |
+-----------------------------------------------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| | | | | | | | | | | | |
+---+----------+---------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| | | | | | | | | | | | |
+---+----------+---------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Decrease/(increase) in receivables | | | 1,658,408 | | | | (363,806) | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| (Decrease)/increase in payables | | | (331,252) | | | | 840,755 | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| | | | | | | | 1,327,156 | | | | 476,949 |
+---+----------+---------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Cash generated from operations | | | | | 1,308,176 | | | | 1,860,970 |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| | | | | | | | | | | | |
+---+----------+---------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Taxation paid | | | | | - | | | | (37,082) |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Net cash from operating activities | | | | | 1,308,176 | | | | 1,823,888 |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| | | | | | | | | | | | |
+---+----------+---------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Investing activities | | | | | | | | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Interest received | | | 3,562 | | | | 13,497 | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Proceeds on disposal of property, | | | 340,000 | | | | 26,704 | | |
| plant and equipment | | | | | | | | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Purchases of property, plant and | | | (264,575) | | | | (620,112) | | |
| equipment | | | | | | | | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Payments for intangible assets | | | (222,428) | | | | - | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Acquisition of subsidiary | | | - | | | | (1,669,260) | | |
| undertakings | | | | | | | | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Interest bearing loans and | | | - | | | | (96,024) | | |
| overdrafts acquired with | | | | | | | | | |
| subsidiary | | | | | | | | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Net cash used in investing | | | | | (143,441) | | | | (2,345,195) |
| activities | | | | | | | | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| | | | | | | | | | | | |
+---+----------+---------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| | | | | | | | | | | | |
+---+----------+---------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Financing activities | | | | | | | | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Interest paid | | | (359,357) | | | | (282,243) | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Repayments of borrowings | | | (771,641) | | | | (423,444) | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Repayments of obligations under | | | (193,729) | | | | (164,019) | | |
| finance leases | | | | | | | | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Dividends | | | | - | | | | (96,541) | | |
+--------------+---------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| New bank loans raised | | | - | | | | 1,000,000 | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Net cash from financing activities | | | | | (1,324,727) | | | | 33,753 |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| | | | | | | | | | | | |
+---+----------+---------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Net decrease in cash and cash | | | | | (159,992) | | | | (487,554) |
| equivalents | | | | | | | | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| | | | | | | | | | | | |
+---+----------+---------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Cash and cash equivalents at the | | | | | 198,719 | | | | 686,273 |
| beginning of the year | | | | | | | | | |
+------------------------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
| Cash and cash equivalents at the | | | | | 38,727 | | | | 198,719 |
| end of the year | | | | | | | | | |
+---+----------+---------------------+----------+---+------------+---------------------+-------------+--+-------------+--+-------------+
+--+----+--------------+---+------+-----+--+----+-----+--+------+-----+--+-------+-----+--+-------+-----+-----+
| Statement Of Changes In Equity |
+-------------------------------------------------------------------------------------------------------+
| For the year ended 31 December 2008 |
+-------------------------------------------------------------------------------------------------------+
| | | | | | | | | | | | | |
+--+----+--------------+---+------+--------+----+--------+------+--------+-------+----------------+-----------+
| | Group | | | | | | | | | | |
+--+-------------------+---+------+--------+----+--------+------+--------+-------+----------------+-----------+
| | | | |Share Capital | Share | Share | Retained | Total |
| | | | | | options | premium | earnings/ | |
| | | | | | reserve | account | (losses) | |
+--+----+--------------+---+---------------+-------------+---------------+----------------+-------------+
| | | | | GBP | | GBP | | GBP | | GBP | | GBP |
+--+----+--------------+---+------------+--+----------+--+------------+--+-------------+--+-------------+
| | | | | | | | | | | | | |
+--+----+--------------+---+------------+--+----------+--+------------+--+-------------+--+-------------+
| | At 1 January 2007 | | 4,827,060 | | 18,231 | | 3,901,164 | | 674,848 | | 9,421,303 |
+--+-------------------+---+------------+--+----------+--+------------+--+-------------+--+-------------+
| | Loss for the | | - | | - | | - | | 337,289 | | 337,289 |
| | period | | | | | | | | | | |
+--+-------------------+---+------------+--+----------+--+------------+--+-------------+--+-------------+
| | Dividends paid | | - | | - | | - | | (96,541) | | (96,541) |
+--+-------------------+---+------------+--+----------+--+------------+--+-------------+--+-------------+
| | Share options | | - | | 25,200 | | - | | - | | 25,200 |
+--+-------------------+---+------------+--+----------+--+------------+--+-------------+--+-------------+
| | At 31 December | | 4,827,060 | | 43,431 | | 3,901,164 | | 915,596 | | 9,687,251 |
| | 2007 | | | | | | | | | | |
+--+-------------------+---+------------+--+----------+--+------------+--+-------------+--+-------------+
| | Loss for the | | - | | - | | - | | (1,858,631) | | (1,858,631) |
| | period | | | | | | | | | | |
+--+-------------------+---+------------+--+----------+--+------------+--+-------------+--+-------------+
| | Dividends paid | | - | | - | | - | | - | | - |
+--+-------------------+---+------------+--+----------+--+------------+--+-------------+--+-------------+
| | Share options | | - | | 25,200 | | - | | - | | 25,200 |
+--+-------------------+---+------------+--+----------+--+------------+--+-------------+--+-------------+
| | At 31 December | | 4,827,060 | | 68,631 | | 3,901,164 | | (943,035) | | 7,853,820 |
| | 2008 | | | | | | | | | | |
+--+-------------------+---+------------+--+----------+--+------------+--+-------------+--+-------------+
| | | | | | | | | | | | | |
+--+----+--------------+---+------+-----+--+----+-----+--+------+-----+--+-------+-----+--+-------+-----+-----+
Earnings per Share
The calculation of the basic and diluted earnings per share from continuing and
total operations attributable to the ordinary equity holders of the company is
based on the following data:
+-----+------------------+-+--------+-+------------+-+-----+----+---------------+-+---------------+
| | | | | | | | | | 2008 | | 2007 |
+-----+------------------+-+--------+-+------------+-+-----+----+---------------+-+---------------+
| | | | | | | | | | GBP | | GBP |
+-----+------------------+-+--------+-+------------+-+-----+----+---------------+-+---------------+
| Earnings | | | | | | | | | | |
+------------------------+-+--------+-+------------+-+-----+----+---------------+-+---------------+
| Earnings for the purposes of basic earnings per | | | | (1,858,631) | | 337,289 |
| share | | | | | | |
+--------------------------------------------------+-+-----+----+---------------+-+---------------+
| | | | | | | | | | | | |
+-----+------------------+-+--------+-+------------+-+-----+----+---------------+-+---------------+
| Effect of dilutive potential ordinary shares: | | | | - | | - |
+--------------------------------------------------+-+-----+----+---------------+-+---------------+
| Earnings for the purposes of diluted earnings | | | | (1,858,631) | | 337,289 |
| per share | | | | | | |
+--------------------------------------------------+-+-----+----+---------------+-+---------------+
| Goodwill impairment of Ominor Limited | | | | 823,331 | | - |
+--------------------------------------------------+-+-----+----+---------------+-+---------------+
| Software development and consultancy costs write | | | | 526,086 | | - |
| off, Inside Track bad debt and excess property | | | | | | |
| costs | | | | | | |
+--------------------------------------------------+-+-----+----+---------------+-+---------------+
| Earnings for the purposes of adjusted earnings | | | | (509,214) | | 337,289 |
| per share (basic & diluted) | | | | | | |
+--------------------------------------------------+-+-----+----+---------------+-+---------------+
| | | | | | | | | | | | |
+-----+------------------+-+--------+-+------------+-+-----+----+---------------+-+---------------+
| | | | | | | | | | | | |
+-----+------------------+-+--------+-+------------+-+-----+----+---------------+-+---------------+
| | | | | | | | | | 2008 | | 2007 |
+-----+------------------+-+--------+-+------------+-+-----+----+---------------+-+---------------+
| | | | | | | | | | No. | | No. |
+-----+------------------+-+--------+-+------------+-+-----+----+---------------+-+---------------+
| Number of shares | | | | | | | | | | |
+------------------------+-+--------+-+------------+-+-----+----+---------------+-+---------------+
| Weighted average | | | | | | | | 48,270,600 | | 48,270,600 |
| number of ordinary | | | | | | | | | | |
| shares | | | | | | | | | | |
+------------------------+-+--------+-+------------+-+-----+----+---------------+-+---------------+
| | | | | | | | | | | | |
+-----+------------------+-+--------+-+------------+-+-----+----+---------------+-+---------------+
| Weighted average number of ordinary shares for | | | | 48,270,600 | | 48,270,600 |
| the purposes of diluted EPS | | | | | | |
+--------------------------------------------------+-+-----+----+---------------+-+---------------+
| | | | | | | | | | | | |
+-----+------------------+-+--------+-+------------+-+-----+----+---------------+-+---------------+
| Basic Earnings per Share (in pence) | | | | (3.85) | | 0.70 |
+--------------------------------------------------+-+-----+----+---------------+-+---------------+
| | | | | | | | | | | | |
+-----+------------------+-+--------+-+------------+-+-----+----+---------------+-+---------------+
| Diluted Earnings per Share (in pence) | | | | (3.85) | | 0.70 |
+--------------------------------------------------+-+-----+----+---------------+-+---------------+
| | | | | | | | | | | | |
+-----+------------------+-+--------+-+------------+-+-----+----+---------------+-+---------------+
| Adjusted Earnings per Share (in | | | | | | (1.05) | | 0.70 |
| pence) | | | | | | | | |
+-----+------------------+-+--------+-+------------+-+-----+----+---------------+-+---------------+
Share options and warrants do not have a dilutive effect because the exercise
price was above the average market price during the period.
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 2007 have
been extracted from the company's audited financial statements for that
financial period. The statutory accounts for the period ended 31 December 2007
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).
Going Concern
The performance of the Group in 2008 was adversly effected due to the following:
* Loss of a major customer resulting in a bad debt of GBP0.23m and associated lost
revenues of GBP0.6m for 2008;
* Poor trading performance of the direct mailing business prior to disposal in
September 2008
* Refurbishment of the Groups property portfolio resulting in excess property
costs of GBP0.22m. The property requirement has now reduced from 6 units to 3
As a result of the adverse performance in the first half of 2008 as noted above,
the Group was close to its funding limits as at 30 June 2008. The Group's bank
commissioned an independent review of the Groups financial position and
forecasts. Based on the results of the report, actions which the directors have
taken to improve working capital, and the Group's forecasts, the Group
renegotiated the terms of the bank debt in December 2008, where the term of the
repayments was extended from April 2011 to December 2013.
Following a successful period of new business wins during the third quarter of
2008, together with cost efficiencies implemented by the board, the Group
returned an operating profit of GBP0.08m and adjusted operating profit of
GBP0.35m (prior to one-off goodwill impairment of GBP0.82m) compared to an
operating loss of GBP0.8m in the first half of the year.
Considering the actions taken by the directors to reduce the Groups underlying
cost base, the renegotiated terms of the bank debt and the increase in the sales
pipeline moving into 2009 the directors consider it is appropriate to adopt the
going concern basis in preparing the Annual Accounts.
Annual Report
The Annual Report will be available and sent to shareholders at the end of June
2009.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SFSSASSUSEDM
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