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) ========== ========== ========== ========== This information is provided by RNS The company news service from the London Stock Exchange

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