Interim Results
Torex Retail PLC
14 August 2006
14 August 2006
Torex Retail plc
Interim Results
Torex Retail plc ('Torex Retail' or 'the Group'), a leading supplier of IT
solutions to retailers worldwide, today announces its interim results for the
six months ended 30 June 2006.
Highlights:
Financial
• Sales of £131.9 million (2005: £52.5m) up 151% on 2005, with
continuing operations growth of 140% and underlying organic growth of 8%
• Operating profit* increased by 129% to £18.23 million (2005: £7.76
million). Underpinned by a strong 15% growth in organic profit
• EPS* up 21% to 2.9p (2005: 2.4p)
• Operating cash conversion rate excluding exceptional items of 119%
• Group net bank borrowing of £147.9 million, well within the available
facilities of £160.0 million
Business
• Senior management team strengthened with five operational CEOs,
alongside new Group and UK finance directors
• New market leading products acquired
• A number of significant customer wins across the business, including
contracts with United News Group, Great Northern Railways, Dutch Post Office,
Nokia, The Picture People, Bed Bath and Beyond, Punch Taverns and Tesco
• McDonalds gained as a worldwide client through the acquisition of
Savista Inc.
• Successful integration of acquisitions
• Acquisition of Retail-J was completed after the period end and
represents the completion of the acquisition phase of the strategy
*before goodwill amortisation, cost of employee share schemes and exceptional
items
Commenting on the results Chris Moore, Executive Chairman of Torex said,
'The Group has continued to make good progress during the period in both trading
and strategic development and we have delivered results for the period ahead of
market expectations.
Our acquisition led growth strategy has built a tremendous platform for growth
going forward, the Group now has a large blue-chip customer base, strong market
positions and global reach. It is now time to renew our focus on organic growth
and look to execute the substantial benefit from the business opportunities that
we have created.
Our sales pipeline is substantial with a large number of large and very exciting
opportunities and the Board remains confident of the Group's prospects for 2006
and beyond.'
Enquiries:
Mark Pearman, Marcus Leek
Torex Retail Plc
0870 300 6061
Ginny Pulbrook /Seb Hoyle/Lucie Holloway
Citigate Dewe Rogerson
020 7638 9571
Notes to Editors:
About Torex Retail Plc
Torex Retail is a leading independent provider of innovative retail technology
solutions to many of the world's principal retailers. Since the company's
flotation in spring 2004 Torex Retail has achieved rapid growth across all of
its markets and has rigorously pursued its goal of becoming the provider of
choice. As a result, the company now has a presence in all of the major markets
around the world and has built a strong platform for future growth in line with
its strategy. Torex's Retail's product and solution set spans high street and
out-of-town retail as well as hospitality and the petroleum and convenience
sector. With over 6,000 customer relationships, including McDonalds, Tesco,
Woolworth, Selfridges, Shell and Argos, the company has earned a leading
reputation amongst retailers. Torex Retail has more than 2,800 staff based in 17
countries. www.torexretail.com
Torex Retail Plc Interim Results
Chairman's Statement
I am pleased to present the results of the business for the six months ended 30
June 2006. The Group has continued to make good progress during the period in
both trading, with results slightly ahead of market expectations, and also
strategic development, with the significant enhancement of each area of our
business during the period.
The acquisition led strategy that we have pursued in 2005 and the first half of
2006 has established a tremendous platform for growth. The massive customer base
and extensive geographic reach that was put in place last year has been
complemented in 2006 with the acquisition of two leading edge products in
Retail-J and NewPOS.
The acquisition led phase of growth is now complete and the Group has the
necessary scale and market positions to compete on a global basis. Our focus is
now 100% on organic growth and we are very excited about the opportunities
available to the Group going forward.
Trading Results
The reported results for the first half of 2006 show sales of £131.9 million up
151% on the same period last year and an operating profit before amortization of
goodwill and exceptional items of £18.2 million up by 129% on 2005.
The table below illustrates the geographic split of the sales and operating
profit gains headlined above. It is clear that the aggressive acquisition
strategy has delivered the required presence in key global markets with strong
growth across Continental Europe and the US. The Group has made two acquisitions
during the six months ended 30 June 2006 - Savista Inc and TQIPS Limited. Both
of these businesses have made positive contributions since acquisition. A third
acquisition, Retail-J was completed after the period end.
Unaudited six Unaudited six
months to 30 months to 30
June 2006 June 2005
£'000 £'000
Sales United Kingdom 70,506 39,700
Continental Europe 41,862 8,700
Rest of World 19,538 4,100
131,906 52,500
Operating profit before goodwill United Kingdom 10,957 6,7000
Amortisation and exceptional items Continental Europe 5,247 600
Rest of World 2,026 700
18,230 8,000
Adjusted earnings per share before goodwill amortisation and
exceptional items 2.9p 2.4p
Included in the figures above, continuing operations have delivered sales growth
of 140% during the period. Whilst much of this growth is attributable to
acquisitions made during 2005, the underlying organic growth of 8% remains
encouraging. Market forecasts for revenues in the second half are consistent
with low double digit organic growth for the full year.
Our UK & Irish operations have maintained a sales mix focussed on software and
services with 41% of activity being generated in these areas. Strengthening
sales in continental Europe and the Americas, both areas that traditionally have
a greater hardware requirement, alongside a small number of large hardware
inclusive deals has increased the proportion of hardware sales within the
overall group sales mix to 33.7%. The weighting of software sales in the second
half combined with the contribution from the recent acquisitions (Savista and
Retail-J) is expected to bolster software activity and related sales mix for the
full year.
Whilst gross margins were affected by the sales mix detailed above gross profit
remained strong in all areas of the business and the 62.0% delivered in the
period is in line with management expectations.
Restructuring activities in relation to the 2005 acquisitions have resulted in a
reduction in the level of administrative expenses over the period. Expenses now
represent 48% of turnover, a 6% reduction on the same period last year. In
addition to this, focus on additional cost savings and efficiency across the
business has continued into 2006. This has resulted in an exceptional
restructuring charge of £4.9 million primarily comprising of redundancy and
relocation costs across the UK and Continental Europe. This remains consistent
with our previous guidance that the full year exceptional restructuring charge
will not exceed £5.5 million.
Operating profit before amortization of goodwill and exceptional items of £18.2
million represents a 129% uplift on 2005. This reflects a strong 15% growth in
underlying organic profit and the full period impact of 2005 acquisitions.
The uplift in the interest payable figure in the period reflects the increased
level of bank borrowings as a result of acquisitions made in the second half of
2005.
The effective tax rate for the period is 25%. Taxation due on ordinary
activities has benefited from the utilisation of brought forward tax losses not
previously recognised and a prior year adjustment relating to deferred tax,
Balance Sheet & Cashflow
The balance sheet as at 30 June 2006 shows net assets of £257.0 million,
including goodwill of £396.7 million arising from the acquisitions during 2004,
2005 and those completed in 2006 detailed above. The goodwill is being written
off over twenty years.
Current asset levels continue to be closely managed. Stock days have improved on
2005. Whilst debtor and creditors falling due within one year have been affected
by recent acquisitions, more current trends are positive. This is expected to
continue into the second half of the year.
Provisions for liabilities and charges have significantly reduced in the period.
This is largely as a result of the 2005 exceptional accruals being matched to
the cash impact.
An operating cash conversion rate excluding exceptional items of 119% was
delivered in the period. Reflecting the impact of 2005 exceptional items, a
seasonal peak in the working capital requirement mid-way through project rollout
and the working capital items mentioned above combine to produce a cash outflow
from operating activities of £6.8 million.
The Group net bank borrowing at the end of the period was £147.9 million
compared to available bank facilities of £160 million. Subsequent to the period
end the group has received the proceeds of the £65 million convertible bond
issue, which was primarily undertaken to fund the £40 million cash
consideration for the acquisition of Retail-J. The balance of funds have been
used to settle transaction fees and commissions and reduce bank borrowings. This
repayment has reduced the Group's bank facilities to £150 million.
Operational Review
Retail
The acquisition activity in 2004 and 2005 has given Torex a unique opportunity
to supply market leading applications to a large and growing customer base.
During the current period to June 2006 the retail business has been very
successful in selling these applications to new customers and cross selling
additional applications to existing customers. The recent acquisition of
Retail-J opens up further opportunities to penetrate the tier one UK retail
marketplace and offer retailers an exciting migration opportunity in the future.
The first six months of the year have delivered a number of significant EPoS
wins including contracts with United News Group, Great North Eastern Railways
and Reflections, increased activity through distribution channels and roll out
work that has continued on a number of large projects including with New Look,
Carphone Warehouse and Monsoon International Stores.
Trading has also been strong across the other product areas with notable wins
including Mexx for our Lucas Planning Solution (400 stores covering 125
countries), a major contract with Northgate HR to deliver a manpower and labour
scheduling solutions to Boots Group plc and the successful upgrade of a
merchandise management solution for Matalan.
The integration of the Anker business was completed in the first half with the
conclusion of work to unify all our UK field services and maintenance
activities. This has seen significant investment in equipping Field Based
Technicians with state of the art communications and call handling technology
which has enabled significant benefits from reduced call to fix times through
greater geographic coverage and efficiencies.
A major strategic landmark for our UK retail business was the acquisition of
Retail-J in July. Retail-J has established tremendous momentum in the UK EPoS
market and has won a number of contracts with blue chip retailers with its
leading edge Java based integrated EPoS and Back Office solution. The
combination of Retail-J's leading product with Torex Retail's unrivalled service
infrastructure and domain expertise in the UK market puts the Group in a strong
position to win significant new business going forward. The Retail-J product
also opens up tremendous opportunities for indirect sales through distributors
as the product has been specifically designed to be marketed and implemented by
third parties.
The acquisition of Retail-J has been well received by Torex Retail's customers
and sales prospects and we have already started to market the Retail-J product
through our UK sales force.
In the first half of 2006, the European retail business has also made good
progress and is developing an increasing pipeline of new business, as the Group
seeks to cross-sell and penetrate the aquired Anker customer base. Key business
wins included the Dutch Post office (5 year contract for roll-out, service and
maintenance across almost 800 outlets), AVA/Edeka in Germany (400 stores) and
Schlecker where Torex won an extension to its annual maintenance contract to
cover the entire European estate of some 13,000 stores. In addition, major
roll-outs continue for Marktkauf, Deichmann, Bellaflora, and Cora Cafeterias.
In Scandinavia, the Group has enjoyed a good first half which has included the
commencement of a major roll-out for Nordisgruppen (where we have deployed in
100 of a contractual 1100 stores), as well as the successful pilot at the
Finnish Post Office, where roll-out has also been commenced. In addition, we
have won a contract to supply Lucas to the new Nokia flagship stores globally,
and Lucas OSM for on-train hospitality to Avecra. In addition, we have recently
won a new 150 outlet coffee-shop chain for deployment in 2006 and 2007. Cruise
and Ferry operator ColorLine has agreed to take hand held terminals for all of
the fleet, and to pilot the Torex self-service pay terminal on their new ship,
the Colour Magic.
In Germany the restructuring programme resulted in the successful consolidation
of Anker Systems GmbH and Torex Retail Solutions GmbH. This was completed by the
end of April 2006 with a move to new consolidated premises in Berlin. The
inherent synergies of the restructure, integration of internal IT systems and
outsourcing of field service activity is producing both an enhanced customer
experience and significant cost savings. Reflecting this, the strong first half
hardware sales are continuing whilst software license and maintenance sales are
strengthening after a slower start.
Torex Retail Americas has made significant progress in retaining and growing the
solutions at the installed and existing customer base. Significant growth with
existing customers for hardware, software and services included business with
Academy Sports and Outdoors, BJ's Wholesale Club, CompUSA, IKEA, Mervyns,
Sedano's Supermarkets and Stein Mart. New customer engagements included wins
at Bed Bath and Beyond, Foodland Super Markets, Levi Strauss and Company and
National Wholesale Liquidators.
The strategy for our US retail business is to drive increasing revenue from the
Group's existing software products and one particular highlight in the US
business was our first win for Lucas from a US headquartered retailer. The
contract with the Picture People, a nationwide chain with over 300 outlets, was
secured within a year of the launch of Lucas in the US, which is an impressive
achievement. Roll-out is now underway and this will act as a valuable reference
site for future Lucas sales. The success of our market leading food and grocery
product, ISIS, continued with two further wins at Marukai Corporation and
Paramount Foods.
The integration of the Retail Store Systems and Systech businesses is now
complete. An integrated and comprehensive management team has been put in place
for the entire Americas organization covering all aspects of the operating
business.
Hospitality
The Hospitality division has enjoyed a good first half with over £7m of new
business wins including contracts with Punch Taverns, Mitchells and Butlers,
French contract caterer Elior and a number of casinos throughout Europe and
Africa.
The main highlight was our entry into the Quick Service Restaurant ('QSR')
market and gaining McDonalds as a worldwide client through the acquisition of
Savista in April 2006.
The key short term QSR opportunity relates to the global rollout of NewPOS
across the McDonald's Corporation. This will include deployments to new sites,
both owned and franchised, throughout Asia, Europe and North America. NewPOS is
now installed in over 6,000 of McDonalds 30,000 plus restaurants worldwide hence
the future revenue opportunity is substantial. We have also completed several
significant development projects for McDonalds and initiated a new ongoing
services contract to support software in all restaurants in their Asia Pacific
Middle East Africa region.
The broader launch of the NewPOS product to the QSR market outside of McDonalds
has continued to receive a strong reception from the marketplace. This has
resulted in significant increased sales opportunities and the first sale was
secured in July. This includes a pilot POS system and continued support service
to a multinational cafe operator. The QSR market is currently experiencing a
high level of activity with a number of international QSR companies looking for
replacement systems. As a proven international product with leading
functionality and architecture NewPOS is very well placed to compete for this
business.
The successful integration of Savista with Torex Retail is leading to expanded
opportunities to increase scope of offering and size of potential new contracts.
In the Hotels market we have successfully launched XN GlobalRES, an electronic
reservations service, directly linking the travel industry's Global Distribution
Systems to hotel management system users. With some 50 sites now connected to
the service in the United Kingdom, Australia and Denmark, sales channels for
this transaction-based service are now being developed through an established
commercial partner, Protel ,a leading hotel systems software vendor, and their
international dealer network. In addition we have made our first sales of our
innovative Microsoft based Inroom Entertainment System to three hotels owned by
Queensgate Holdings in South Africa.
Petrol and Convenience (P&C)
We are now in a strong position to capitalise on our unique offer and during the
second half of 2006 take advantage of the obvious synergies with other Torex
divisions throughout the world.
The Petroleum and Convenience division of Torex Retail has made rapid progress
in the first half of 2006, with full year revenues expected to be double those
of 2005.
In the first half of 2006, the P&C division has made good progress in developing
new business and cross-selling the group's existing services. The division's
restructuring of the five businesses into one body is proceeding well. Benefits
are already visible with the enhanced Torex brand allowing easier access to
potential key new accounts.
The successful integration of TQIPS into the group is proceeding according to
plan. Major new contract wins through TQIPS include projects with BT, Asda and
Tesco stores.
An important part of our P&C strategy is to increasingly target the major
supermarkets, oil companies and large convenience chains. It was therefore
pleasing to secure a major EPoS contract with Budgens for 60 sites amounting to
300 systems with an additional 40 sites (200 systems) expected to be
contractually signed within the second half of this year.
Key wins in the service environment include the award of a three year main
contract of 214 UK forecourt sites for Tesco in addition to 24 sites on the
Tesco distribution network. Our Irish business has re-signed Tesco Ireland on
service and support and won an additional contract with Stat Oil.
The portfolio of future projects is strong with advanced discussions on major
contracts with customers based in China, Jordan and Romania.
Board and Management
As I announced in my Chairman's Statement to the 2005 results, we are planning
to split the role of Chairman and Chief Executive currently held by myself. We
have been undertaking an extensive search process and we are committed to
announce an appointment in the second half.
Mark Pearman continues as acting Finance Director, on the PLC Board, but as
announced on 27 July 2006, we have appointed Marcus Leek to the role of Group
Finance Director. Marcus, who has a strong retail finance background joins from
the Caudwell Group where he was a divisional Finance Director. Marcus has
already effectively taken on full responsibility for all aspects of Group
Financial Management and reporting.
As recently announced, the Group has also made a number of new senior management
appointments as follows:
• CEO of UK General Retail: Doug Hargrove (age 39)
(Previously Chief Operating Officer, UK & Ireland)
• CEO of Overseas Business: Phil Cox (age 40)
(Previously Group Treasury Officer)
• CEO of Hospitality & QSR: Keith Pascal (age 41)
(Previously VP Sales & Marketing, Savista Inc.)
• CEO of P&C :Brendan Kavanagh (age 41)
(Previously Head of P&C Division Worldwide)
• CEO of Americas General Retail: Mike Hess (age 43)
(Previously President and COO of Torex North America)
This structure has been put in place to improve the Group's focus on its major
markets so that product strategy can be refined and targeted to better meet
customers requirements. This new structure reflects the completion of the
acquisition and integration phase of the Groups strategy which required strong
central control and leadership.
A more decentralised management style and culture is required to drive the total
focus on organic growth going forward.
Outlook
The Group's acquisition led growth strategy has built a tremendous platform for
growth going forward - the Group has a large blue chip customer based, strong
market positions and global reach. The full benefits of this investment will
accrue in 2007 and beyond.
Nearer term we have a challenging and exciting second half ahead of us. We have
a substantial sales pipeline including a number of very large opportunities
which gives the Board confidence for the Group's prospects for the remainder of
2006.
Dividends
It is the Board's intention that shareholders benefit from the continued
progress of the Group through a progressive dividend policy, which at the same
time balances the need to retain funds within the Group for investment
opportunities. Consequently an interim dividend of 0.137p (2005 - 0.125p) is
being declared today. The dividend will be paid on 22 September 2006 to
shareholders on the register at the close of business on 25 August 2006.
Chris Moore
Chairman & Chief Executive
14 August 2006
Consolidated Profit and Loss Account
Unaudited six Unaudited six Audited twelve
months to 30 months months to 31
June 2006 to 30 June 2005 December 2005
(Restated)
Note £'000 £'000 £'000
Turnover 6
Continuing operations 126,099 52,466 167,366
Acquisitions 5,807 - -
Total turnover 131,906 52,466 167,366
Cost of sales (50,083) (16,156) (62,200)
Gross profit 81,823 36,310 105,166
Total administrative expenses (80,541) (32,513) (113,001)
Operating (loss)/profit
Continuing operations before goodwill amortisation,
employee share schemes and exceptional items 17,069 7,959 27,854
Acquisitions before goodwill amortisation,
employee share schemes and exceptional items 1,161 - -
18,230 7,959 27,854
Exceptional items 5 (4,870) (1,807) (19,995)
Charges in respect of employee share schemes (2,640) - (5,663)
Goodwill amortisation (9,438) (2,355) (10,031)
Operating profit/(loss) 6
Continuing operations 852 3,797 (7,835)
Acquisitions 430 - -
Total operating profit 1,282 3,797 (7,835)
Net interest payable (4,968) (1,711) (5,785)
(Loss)/Profit on ordinary activities before
taxation (3,686) 2,087 (13,620)
Taxation on ordinary activities (1,438) (1,332) 1,272
(Loss)/Profit on ordinary activities after
taxation (5,124) 754 (12,348)
Minority interest 100 - (184)
(Loss)/Profit for the financial period (5,024) 754 (12,532)
Basic earnings per share 4 (1.5)p 0.4p (5.4)p
Diluted earnings per share 4 (1.5)p 0.4p (5.4)p
Consolidated Balance Sheet
Unaudited six Unaudited six Audited twelve
months to 30 months months to 31
June 2006 to 30 June 2005 December 2005
(Restated) (Restated)
Note £'000 £'000 £'000
Fixed assets
Intangible assets 396,686 105,202 361,814
Tangible assets 9,872 3,425 9,385
Investments 140 - 140
406,698 108,627 371,199
Current assets
Stocks 26,691 11,913 23,974
Debtors 7 89,157 38,536 76,517
Cash at bank and in hand 8,126 3,321 13,442
123,974 53,770 113,933
Creditors: amounts falling due within one year 8 (119,769) (50,061) (102,494)
Net current assets 4,205 3,709 11,439
Total assets less current liabilities 410,903 112,336 382,638
Creditors: amounts falling due after more than
one year 9 (142,387) (33,860) (134,432)
Provision for liabilities and charges (8,261) - (21,302)
Net assets excluding pension liabilities 260,255 78,476 227,044
Pension liabilities (3,244) - (3,556)
Net assets 257,011 78,476 223,488
Capital and reserves
Called up share capital 3,706 1,886 3,265
Share premium account 62,188 71,714 61,733
Merger reserve 202,410 - 164,357
Other reserve 8,244 545 5,603
Profit and loss account 14 (19,790) 4,331 (11,823)
Employee benefit trust (39) - (39)
Equity shareholder's funds 256,719 78,476 223,096
Equity minority interests 292 - 392
257,011 78,476 223,488
Consolidated Cashflow Statement
Unaudited Unaudited Audited twelve
six months six months months to 31
to 30 June to 30 June December 2005
2006 2005
£'000 £'000 £'000
Net cash (outflow)/inflow from operating
activities 12 (6,792) 2,424 12,192
Return on investments and servicing of finance
Interest paid (5,213) (3,241) (4,570)
Issue costs of new bank loan - - (1,608)
Interest paid on finance leases (162) - (577)
Interest received - 26 111
Net cash outflow from returns on investments and (5,375) (3,215) (6,644)
servicing of finance
Taxation (1,435) (352) (619)
Capital expenditure
Purchase of tangible fixed assets (1,697) (262) (1,943)
Proceeds from sale of tangible fixed assets - - 78
Net cash outflow from capital expenditure and
financial investment (1,697) (262) (1,865)
Acquisitions and disposals
Purchase of subsidiary undertakings (2,150) (17,887) (60,835)
Disposal of investments - - 92
(Overdraft) included within acquisitions (140) (743) (4,737)
Deferred consideration payments (858) - (3,200)
Net cash outflow from acquisitions and disposal
of businesses (3,148) (18,630) (68,680)
Equity dividends paid (2,311) (1,058) (1,474)
Net cash flow before financing (20,758) (21,093) (67,168)
Financing
Issue of ordinary share capital - 47 -
Exercise of share options 447 - 151
Loan advances 15,778 13,236 111,312
Loan repayments - - (39,499)
Finance lease inception - - -
Capital element of finance lease payments (783) - (612)
(Decrease)/increase in cash (5,316) (7,810) 4,184
Reconciliation of net cashflow to movement in net debt
Unaudited Unaudited Audited twelve
six months six months months to 31
to 30 June to 30 June December 2005
2006 2005
£'000 £'000 £'000
Increase /(Decrease) in cash in the period (5,316) (7,810) 4,262
Cash inflow from increase in debt (14,995) (13,236) (71,201)
Changes in net debt resulting from cash flow (20,311) (21,046) (66,939)
Debt acquired on acquisitions (270) (825) (41,930)
New finance leases incepted in the period (490) (157) (1,981)
Issue costs of new financing - 1,528 1,354
Exchange movement 78 (309) (1,206)
Movement in net debt in the period (20,993) (20,809) (110,702)
Net debt at beginning of the period 11 (130,058) (19,356) (19,356)
Net debt at end of the period 11 (151,051) (40,165) (130,058)
Consolidated Statement of Total Recognised Losses for the financial period
Unaudited six Unaudited six Audited twelve
months ended 30 months ended 30 months to 31
June 2006 June 2005 December 2005
£'000 £'000 £'000
Loss for the financial period (5,024) (304) (12,532)
Actuarial adjustments to defined benefit pension
liability - - (406)
Exchange differences on translation of net assets of
subsidiary undertakings (632) (85) (2,132)
Total losses for the financial period (5,656) (389) (15,070)
TOREX RETAIL PLC INTERIM REPORT AND ACCOUNTS
Notes to the financial statements
1 The interim results for the six month period ended 30 June 2006 are
unaudited and do not constitute statutory accounts within the meaning of s.240
of the Companies Act 1985. They have been prepared in accordance with accounting
policies adopted in the Torex Retail Group statutory accounts for 31 December
2005.
Charges in respect of employee share schemes will be completed in
accordance with FRS 20 as part of the full year audited accounts. The effect of
the change of accounting policy is expected to significantly accelerate the
timing of the schemes' cost.
Goodwill arising from the acquisition of subsidiary undertakings, representing
the difference between the purchase consideration and the fair value of the net
assets acquired, has been capitalised and is amortised on a straight line basis
over its estimated useful economic life.
No fair value adjustments have been made in respect of any of the acquisitions
made in the period.
2 During the period the Torex Retail acquired Savista Inc and TQIPS Limited.
The goodwill on these acquisitions and those made last year is being written off
on a straight line basis over a period of twenty years.
Subsequent to the 30 June 2006, Torex Retail plc has also acquired Retail-J
Limited and issued £65 million convertible bonds ( 'the Bonds' ) in a private
placement.
The Bonds are issued by Torex Retail (Jersey) Limited and guaranteed by Torex
Retail. The proceeds of the issue have been used for the acquisition of Retail-J
Limited, repayment of senior debt facilities and for general corporate purposes.
The Bonds have a maturity of 5 years and are convertible into ordinary shares of
Torex Retail and have a coupon of 5.5% and a conversion price of 86 pence. The
Bonds are listed on the Channel Islands Stock Exchange.
3 The proposed interim dividend of 0.137p (2005: 0.125p) per ordinary share
will be paid on 22 September 2006 to shareholders on the register at the close
of business on 25 August 2006.
4 Earnings per share for the six month period ended 30 June 2006 is based on
the profit after taxation and minority interests of £5,124,000 divided by the
weighted average number of shares during the period, 340,513,562 (basic) and
375,366,394 (diluted) 1p ordinary shares.
Adjusted earnings per share (excluding goodwill amortisation, share scheme
charges and exceptional items) for the period is 2.9p (2005: 2.4p).
A reconciliation of the basic and diluted number of shares used in the six month
period ended 30 June 2006 is:
Weighted average number of shares 340,513,562
Dilutive share options 17,469,478
Dilutive deferred consideration 17,383,394
Diluted 375,366,394
5 Exceptional items
The exceptional items represent restructuring costs arising from rationalising
and reorganising companies acquired.
6 Segmental analysis
Unaudited six months Unaudited six months
to 30 June 2006 to 30 June 2005
Turnover Operating profit Turnover Operating profit
before goodwill before goodwill
amortisation, share amortisation, share
schemes and schemes and
exceptional items exceptional items
£'000 £'000 £'000 £'000
Geographical split
United Kingdom 61,915 9,505 39,931 6,672
Continental Europe 46,936 6,689 8,467 618
Rest of World 23,055 2,036 4,068 669
131,906 18,230 52,466 7,959
Goodwill amortisation (9,438) (2,355)
Exceptional items (4,870) (1,807)
Charges in respect of
employee share schemes (2,640) -
Operating profit 1,282 3,797
7 Analysis of debtors
Unaudited six Unaudited six Audited twelve
months to 30 June months to 30 June months to 31
2006 2005 December 2005
£'000 £'000 £'000
Trade debtors 55,997 17,807 54,781
Prepayments and other debtors 33,161 20,729 21,736
89,157 38,536 76,517
8 Analysis of creditors: amounts falling due within one year
Unaudited six Unaudited six Audited twelve
months to 30 June months to 30 June months to 31
2006 2005 December 2005
£'000 £'000 £'000
Bank loans and overdrafts 17,068 9,221 9,022
Finance leases 2,343 405 1,345
Trade creditors 24,086 13,472 23,853
Corporation tax 3,519 1,348 3,131
Deferred income 20,298 11,456 26,030
Other creditors 52,454 14,159 39,113
119,769 50,061 102,494
9 Analysis of creditors: amounts falling due after more than one year
Unaudited six Unaudited six Audited twelve
months to 30 June months to 30 June months to 31
2006 2005 December 2005
£'000 £'000 £'000
Bank loans 137,927 33,574 131,309
Finance leases 1,839 286 1,824
Other creditors 2,621 - 1,299
142,387 33,860 134,432
10 Deferred consideration
Other creditors contains a total of £13,538,000 in relation to deferred
consideration. This amount, which represents the current estimate of the amount
due, is wholly payable in shares, with £12,038,000 falling due within one year
and £1,500,000 falling due after more than one year.
11 Analysis of Net Debt
At 1 January Cash flows On Non cash Exchange At 30 June
2006 acquisition movements movement 2006
£'000 £'000 £'000 £'000 £'000 £'000
Cash at bank and in hand 13,442 (5,316) - - - 8,126
Short term loans (9,022) (8,058) - - 12 (17,068)
Long term loans (131,309) (6,677) - - 59 (137,927)
Finance leases (3,169) (260) (270) (490) 7 (4,182)
(130,058) (20,311) (270) (490) 78 (151,051)
12 Net Cashflow from Operating Activities
Unaudited six Unaudited six Audited twelve
months ended months ended months to 31
30 June 2006 30 June 2005 December 2005
£'000 £'000 £'000
Operating profit 1,282 3,797 (7,835)
Depreciation charges 1,834 500 2,249
Goodwill amortisation 9,438 2,355 10,031
Exchange differences (115) - 210
Loss on sale of tangible fixed assets - - 64
Non cash exceptional share schemes 2,642 - 5,058
(Increase) in stocks (2,362) (1,529) (2,661)
(Increase) in debtors (6,427) (1,116) (7,882)
Increase/(Decrease) in creditors 939 (1,583) 4,869
(Decrease)/Increase in provisions (14,023) - 8,089
(6,792) 2,424 12,192
13 Contingent liability
During the period Torex Retail have received a claim for additional
consideration from Alphameric Plc of up to £13 million, in relation to the
acquisition of Alphameric Retail Limited by Torex Retail. Based on advice
received from our legal and financial advisors, Torex Retail is of the opinion
that no additional payments are due to Alphameric Plc in respect of the
acquisition and will resist strongly the claim being made.
14 The Profit and Loss account is stated after the payment of the final 2005
dividend of £2,311,000.
15 A copy of this interim statement is being sent to all shareholders and
further copies are available from the Company's Registered Office at the address
below as well as on the Company's website: www.torexretail.com
Torex Retail Plc, Telfer House, Range Road, Witney, Oxfordshire OX29 0YN
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