Final Results
Calyx Group PLC
06 March 2006
For Immediate Release Monday 6 March 2006
CALYX GROUP PLC
('Calyx', 'the Group' or 'the Company')
Preliminary Results for the Year Ended December 2005
Calyx, the largest single-source provider of information and communication
technology ('ICT') network solutions throughout Ireland, today announces its
preliminary results, for the year ended 31 December 2005, since its successful
IPO and fund raising in March 2005.
Calyx provides a suite of high quality ICT products and services, including
voice and data network design, supply and management, technical help desks,
field support, consultancy and training services. Through a menu of options
Calyx provides individual elements of support right up to supporting and
managing the customer's entire ICT infrastructure.
Financial Highlights:
•Revenue up 12% to €38.4 million (2004: €34.2 million)
•Gross Margin up 1.9% to 38.7% (2004: 36.8%)
•Profit from operations increased by 40% to €3.12 million (2004: €2.23
million)
•Profit before tax up 9.6% to €1.74 million (2004: €1.59 million)
•EBITDA up 32% to €4.6 million (2004: €3.5 million)
Operational Highlights:
•Successful IPO and admission to AIM in March 2005, raising €10.5 million
(£7.25 million)
•Three acquisitions completed and successfully integrated into the Group
- including the first acquisition of a UK based company
•€1.2 million Network Operating Centre facility completed and operational
•Calyx's largest acquisition to date, that of Entropy the Dublin based IT
security specialist, completed post year end in March 2006
Commenting on the strong preliminary results Maurice Healy, Chief Executive of
Calyx, said:
'2005 has been a very successful year for Calyx. Having completed a successful
IPO in March we also developed our Network Operating Centre ('NOC') and
completed and integrated three acquisitions, one of which brought us into the UK
marketplace for the first time. It is a testament to the strength of our
management team that along with this busy corporate activity the core business
delivered both revenue growth and an increase in gross margins in a competitive
market.
We begin 2006 in a very strong position and look forward with confidence to the
coming year with our NOC providing new and higher margin products, for which we
are experiencing strong customer demand. 2006 will also provide a full year of
contribution from our 3 acquisitions which have provided us with new skills, new
management talent and tremendously loyal customers. We continue to differentiate
ourselves from the competition with our high level of both voice and data
skills. This becomes increasingly important as the VoIP market continues to grow
and converged solutions are in increasing demand.'
For further details please contact:
Calyx Group plc Tel: +353 1 676 3363
Maurice Healy, Chief Executive
Buchanan Communications Tel: +44 (0)20 7466 5000
Tim Thompson / James Strong
NOTES TO EDITORS
About Calyx - Calyx is the largest single-source provider of information and
communication technology ('ICT') network solutions throughout Ireland and
includes the largest technical training operation in Ireland. Calyx is
headquartered in Dublin, and has offices in Cork, Limerick and Swindon. The
fourth, latest and largest acquisition by Calyx, of Entropy Ireland's leading IT
security specialist, was completed earlier last week.
Chairman's Statement
During 2005 we continued to grow our revenues both organically and through
acquisition. We continued to focus on margin enhancement through the ongoing
expansion in the range of services available to our customers. New products and
services were primarily driven by the development of our Network Operating
Centre (NOC).
Strategy
Calyx continues to benefit from the growth of the European market for networked
ICT services. The key drivers of this market stem from the continued adoption of
a 'multi-sourcing' business model by our customers and the migration from
traditional voice only services to networked ICT services. Calyx provides its
clients with a flexible managed service offering that can be tailored to their
ever changing needs. This is an important requirement for our customers as they
find their communications and ICT needs increasing and converging. This
increasing complexity of solutions is attracting customers to Calyx's resource
and knowledge capability.
In addition the increased stipulation for information security has led our
customers to demand higher levels of expertise as they strive to meet compliance
obligations and to adopt best practice frameworks such as BS7799. Calyx will
develop its already significant security capability and build the necessary
scale required to deliver these security services to meet the markets multi site
networked ICT services needs.
Network Operations Centre
We invested over €1.2 million in a state of the art Network Operations Centre
(NOC) specifically to look after the growing requirement from our clients to
outsource their ICT management. Partnering with a number of leading third party
vendors such as Microsoft, Castlerock, Altiris and iQuate, we have developed a
service that will monitor and protect our clients IT network 24x7x365 to deliver
reduced costs, increased efficiencies and take the risk out of their IT
environment.
We focus on a partnership approach with all of our customers. Using field-tested
and proven processes, our Managed Service Solutions are designed to meet our
customers specific business needs.
Acquisitions/Alliances
The acquisition of Convergent was completed on 8 July 2005 and has been
successfully integrated into the Group. Convergent brought a high level of
professional telephony services into the Group along with a blue chip client
base. All Convergent staff are now operating from our facility in Dublin and
subsequent savings and performance are in line with management expectations.
The acquisition of Quality Care Limited ('QCL') in Cork was completed on the 19
October 2005 and further broadened the Group's geographic footprint in the South
of Ireland whilst bringing subsequent synergies to our existing offering. This
entire business has already been successfully incorporated in to our new
facility in Cork.
Our initial entry into the UK market began with the completion of the
acquisition of ITS Ltd on the 24 October 2005. ITS operates out of Swindon and
provides us with a hugely strategic foothold in the UK marketplace and will
allow us to expand our business and services within the UK market, in particular
our NOC services. The MD, Kieran Archer, has 25 years experience and has
demonstrated his significant capability in the development of our UK strategy.
The UK provides a tremendous growth opportunity to the Group, a market which we
will aggressively address going forward.
Post period transactions
Acquisition of Entropy
Last week we completed our largest acquisition to date that of Entropy Limited.
Entropy is Ireland's leading IT security specialist and delivers security
solutions which help clients, across all industries, secure their business
assets. Entropy designs, implements and manages the security of complex networks
and has strong relationships with all the top security providers. Conall Lavery,
who will remain as MD of Entropy, has 30 years experience in the IT industry and
is a recognised specialist in the security industry.
The addition of Entropy to Calyx positions the enlarged Group to meet the
growing demand for services as companies in the UK and Ireland adopt a 'zero
tolerance' approach to the security and integration of their I.T. networks and
infrastructures. The combination of Entropy's capability and the existing Calyx
resource has created a very significant presence in the UK and Irish security
services sector.
BT Agreement
At the beginning of the year Calyx announced the launch of a unique
communications package to small and medium business across Ireland in
conjunction with BT (Ireland), the wholly owned subsidiary of BT Group plc one
of the world's leading providers of communications solutions.
The solution, 'Exchange', is the only office communications solution of its kind
in Ireland that bundles the communications requirements of SMEs into one package
for a fixed monthly price. The new service includes a VoIP enabled-telephone
system, handsets, broadband and ISDN line rental, voice service, software
updates and a comprehensive technical support and maintenance agreement.
The service was developed after market research showed a gap in the market for
SMEs to source their entire communications needs from one supplier. The
advantages of a 'single point of contact' include supplier rationalisation,
greater transparency of telecoms charges and equipment and better cost
management. Businesses are also freed up to concentrate on their core business
and not on managing their communications systems.
Management
As the Group experiences a strong increase in demand for our services coupled
with the continuing expansion of the Group in Ireland and our accelerated UK
expansion we have made certain management changes. From 1 April Judith O'Brien,
who currently holds the position of Managing Director, will be appointed Chief
Operating Officer (COO). Ger Coakley will assume the role of Managing Director
(Ireland) and Kieran Archer, formerly MD of ITS, assumes the role of Managing
Director (UK). We are in the process of appointing a new Group Finance
Director, a position which Ger Coakley previously occupied.
Employees
This year has seen some frenetic corporate activity. The IPO and admission to
AIM, three acquisitions and a complex deal negotiated with BT (Ireland). To
accomplish all of this and not lose focus on the core business requires a
talented and committed team.
The hard work and dedication of all of our employees has been the reason for the
company's success in this our first year as a PLC. I want to sincerely thank
them for their enormous efforts this year.
Outlook
Calyx operates in a highly competitive market. However with our the acquisitions
bedded in, an expanding customer base, the NOC up and running, our enhanced
service offering and a strengthened management team we look forward to building
on last year's success and view the coming year with confidence.
Maurice Healy
Chairman
5 March 2006
Financial Review
Group turnover rose by 12% to €38.4 million (2004: €34.2 million) including a
contribution from the acquisitions of QCL (the IT product and services company)
ITS (the UK-based IT infrastructure services Company) and Convergent (a leading
supplier of communication solutions) of €1.78 million. The underlying organic
growth in turnover excluding acquisitions was 7%.
Profit from operations before share option charges and amortisation of acquired
intangibles rose by 35% to €3.82 million (2004: €2.83 million). Profit from
operations after share option charges and amortisation of acquired intangibles
was €3.12 million (2004: € 2.23million), and profit before tax increased by 9.6%
to €1.74 million (2004: €1.59 million).
Basic earnings per share was 4.01c with adjusted diluted earnings per share
excluding share option charges and amortisation of acquired intangibles was
6.54c.
The Group's cash position changed from net cash of €10.9 million at the start of
the period to €6.9 million due to the IPO inflow of €9.14 million and additional
long term funding inflow of €4.3 million and the acquisitions outflow of €4.046
million including costs, capital investment of €1.68 million and a decrease in
debt financing of €2.1 million. The net cash inflow, excluding acquisitions, was
€2.3 million.
During the period we continued to concentrate our efforts on developing our
services revenue. Our contracted revenue rose from €5.3 million to €6.12 million
with deferred income rising from €2.3 million to €3.1 million. Services revenue
as a whole rose 75% from €2.4 million to €4.2 million which accounts in large
part for our increase in operating profit.
We continue to differentiate ourselves from the competition with our high level
of both voice and data skills. This becomes increasingly important as the VoIP
market continues to grow and converged solutions are in increasing demand.
Ger Coakley
Financial Director
Calyx Group Plc and its subsidiary companies
Consolidated profit and loss account
for the year ended 31 December, 2005
2005 2004
€ € € €
Turnover
Continuing operations 36,625,738 33,971,489
Acquisitions 1,784,139 264,717
--------- ---------
38,409,877 34,236,206
Cost of sales (23,553,730) (21,628,842)
--------- ---------
Gross profit 14,856,147 12,607,364
Operating expenses (11,040,443) (9,778,912)
--------- ---------
--------- ---------
Operating profit before
exceptional administration
costs and goodwill amortisation
Continuing operations 3,800,927 2,774,741
Acquisitions 14,777 53,711
--------- ---------
3,815,704 2,828,452
Share option charges (31,036) -
Goodwill amortisation (667,274) (595,918)
--------- ---------
Operating profit 3,117,394 2,232,534
Profit on disposal of 7,847 34,213
fixed assets
Exceptional reorganisation (576,255) -
costs
--------- ---------
--------- ---------
Profit on ordinary activities
before 2,548,986 2,266,747
interest
Interest receivable 73,329 21,829
Interest payable and (879,070) (698,392)
similar charges
--------- ---------
--------- ---------
Profit on ordinary activities
before 1,743,245 1,590,184
taxation
Taxation (298,541) (1,138)
--------- ---------
Retained profit for the financial year
attributable to equity shareholders 1,444,704 1,589,046
========= =========
Basic earnings per share 4.01c 6.36c
The group had no recognised gains or losses other than the profit for the year
as disclosed above.
Calyx Group Plc and its subsidiary companies
Statement of total recognised gains and losses
for the year ended 31 December 2005
2005 2004
€ €
Profit for the year 1,444,704 1,589,046
Currency translation effects:
On foreign currency net investments (1,865) -
----------- ----------
Total recognised gains for the year 1,442,839 1,589,046
----------- ----------
Note of historical cost profit and losses:
The difference between the reported profits and those calculated on an
unmodified historical cost basis is not material.
Reconciliation of movement in equity shareholder's funds
for the year ended 31 December 2005
As restated
2005 As restated
2004
€ €
Total recognised gains and losses for the year 1,442,839 1,589,046
Transactions with shareholders
Nominal value of shares issued - Calyx Limited 28 -
Nominal value of share issued - Calyx Group plc 1,359,258 -
Replacement of shares in Calyx Limited and Calyx
Computers Limited (441) -
Premium on shares issued 9,837,473 -
Redemption premium - -
Other movements - -
Share issue costs (1,353,267) -
Share option reserve 31,036 -
Net increase in shareholders' funds/(deficit) 11,316,926 1,589,046
Opening equity shareholders' funds/(deficit) 745,158 (843,888)
Closing shareholders' funds/(deficit) 12,062,084 745,158
Calyx Group Plc and its subsidiary companies
Consolidated balance sheet
for the year ended 31 December 2005
2005 Restated
2004
€ €
Fixed assets
Tangible assets 3,076,228 2,061,464
Intangible assets 16,402,233 10,832,414
----------- ----------
19,478,461 12,893,878
----------- ----------
Current assets
Stocks 2,133,855 1,568,799
Debtors 9,751,468 6,719,902
Cash at bank and in hand 6,461,613 1,115,505
----------- ----------
18,346,936 9,404,206
Creditors: amounts falling due within one year (15,819,423) (14,154,711)
----------- ----------
Net current assets/(liabilities) 2,527,513 (4,750,505)
----------- ----------
Total assets less current liabilities 22,005,974 8,143,373
Creditors: amounts falling due after more than one
year (9,943,890) (7,398,215)
----------- ----------
Net assets 12,062,084 745,158
=========== ==========
Capital and reserves
Called up share capital 3,857,817 2,539,091
Share premium 8,484,207 -
Profit and loss account 2,187,583 704,626
Merger reserve (2,498,559) (2,498,559)
Share option reserve 31,036 -
----------- ----------
Equity shareholders' funds 12,062,084 745,158
=========== ==========
Calyx Group Plc and its subsidiary companies
Consolidated cash flow statement
for the year ended 31 December 2005
2005 2004
€ €
Net cash inflow/(outflow) from operating activities 2,312,985 2,632,991
Servicing of finance and returns on investments (633,741) (676,563)
Taxation 27,896 -
Capital expenditure and financial investment (1,677,045) (797,629)
Acquisitions and disposals (4,046,915) (51,629)
----------- ----------
Net cash inflow/(outflow) before financing (4,016,821) 1,107,170
Financing 10,935,557 (2,255,845)
----------- ----------
Increase/(Decrease) in cash 6,918,736 (1,148,675)
=========== ==========
Reconciliation of net cash flow to movement in net debt
for the year ended 31 December 2005
2005 2004
€ €
Increase/(decrease) in cash 6,918,736 (1,148,675)
Cash inflow from increase in lease financing (75,392) (281,754)
Cash outflow from decrease in debt financing (2,040,026) 2,275,229
Cash outflow from decrease in lease financing 329,670 262,370
----------- ----------
Movement in net debt 5,132,987 1,107,170
Non cash movement
Deferred consideration (1,185,295) -
Foreign exchange gain on UK loan notes - 13,019
Net debt at beginning of year (10,876,388) (11,996,577)
----------- ----------
Net debt at end of year (6,928,696) (10,876,388)
=========== ==========
Calyx Group plc
Notes to the preliminary statement for the year ended 31 December 2005
1. Analysis of turnover
The group's principal activities are the sale and maintenance of computer and
telecommunications equipment and the supply of training modules for application
software.
An analysis by geographical market is detailed below:
Geographical analysis by market 2005 2004
€ €
United Kingdom 970,000 0
Ireland 37,439,877 34,236,206
---------- --------
38,409,877 34,236,206
========== ========
2. Earnings per ordinary share
Basic earnings per share is based on profit after taxation of €1,444,704 (2004:
€1,589,046) and on a weighted average number of ordinary shares in issue of
36,017,082 (2004: 24,999,995).
3. Exceptional items
During the financial year 2005, the company incurred significant reorganisation
costs amounting to €576,255. The expenditure was incurred on the implementation
of a infrastructure to integrate the 2005 acquisitions but more importantly to
facilitate the ease of integration of any future acquisitions. The costs
comprised of design and consultancy services, systems integration services and
hardware and software implementation. Included in the above figure is an amount
of €78,616 in respect of group re-branding costs associated with the IPO.
Calyx Group plc
Notes to the preliminary statement for the year ended 31 December 2005 -
continued
4. Analysis of net debt
At beginning Other Closing
of year Cash flow non cash Balance
€ € € €
Cash at bank and in
hand 1,115,505 4,785,708 - 5,901,213
Bank overdrafts (3,171,228) 2,133,027 - (1,038,201)
---------- ---------- ---------- ----------
(2,055,723) 6,918,735 - 4,863,012
Bank loans (5,706,461) (4,300,000) - (10,006,461)
Finance leases (610,896) 254,277 - (356,619)
Loan notes (1,772,974) 1,772,974 - -
Deferred consideration (730,334) 487,001 (1,185,295) (1,428,628)
---------- ---------- ---------- ----------
(10,876,388) 5,132,987 (1,185,295) (6,928,696)
========== ========== ========== ==========
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