Interim Results
Calyx Group PLC
25 September 2006
For immediate release 25 September 2006
Calyx Group plc
('Calyx', 'the Group' or 'the Company')
Interim Results for the six months ended 30 June 2006
Calyx Group plc, one of the largest single source providers of Networked IT
Services in both the United Kingdom and Ireland, today publishes its Interim
Results for the six months to 30 June 2006.
Highlights:
• Turnover up 61% to €29.3 million (2005: €18.2 million)
• Gross margin up 3.8 percentage points to 39.6% (2005: 35.8%)
• Operating profit before goodwill amortisation and exceptional items up
134% to €3.1 million (2005: €1.3 million)
• Profit before goodwill amortisation, exceptional items and tax up 169%
to €2.6 million (2005: 1.0 million)
• Profit after tax up 85% to €1.2 million (2005: €0.6 million)
• Basic earnings per share up 42% to 2.82c (2005: 1.98c)
• Adjusted earnings per share (excluding goodwill amortisation and
exceptional items) up 64% to 4.87c (2005: 2.97c)
• During the period the Group made two acquisitions - Entropy on 1 March
2006 and the Matrix Companies on 13 June 2006
• On 13 June 2006, a placing of 25 million shares at 70p per share
raised £17.5 million and a new £25 million eight year loan was drawn
down
• Admitted to trading on the Irish Stock Exchange's IEX Market as well
as the AIM Market from 13 June 2006
• Board strengthened by new appointments during and after the end of the
period
Commenting on the strong six months Maurice Healy, Calyx Chief Executive Officer
said,
'I am extremely pleased with these excellent results and by the development of
the Group during the period. The acquisition of the Matrix Companies in mid June
has firmly established Calyx as a force in the UK Networked IT Services market
and these businesses are performing well under Calyx ownership.'
For further information please contact
Calyx Group plc
Maurice Healy Chief Executive Officer +353 1 8835555
Peter Jenkins Chief Financial Officer +353 1 8835555
Buchanan Communications
Tim Thompson/James Strong +44 (0)207 7466 5000
About Calyx
Calyx is a major single-source provider of Networked IT solutions with
operations across the UK and Ireland. In the UK it operates from Hook, Rainford,
East Grinstead, Swindon and Richmond and in Ireland it operates from Dublin,
Cork and Limerick. Calyx is listed on both the AIM market in London and the IEX
in Dublin. Since listing on AIM in March 2005, Calyx has made 5 acquisitions and
raised more than £45 million of equity and debt finance.
Overview
During the period, Calyx has continued its strong growth both organically and
through acquisition. Margins have improved, driven by new products and services,
many of which derive from the development of our, now fully operational, Network
Operating Centre ('NOC') in Dublin. The acquisition of the Matrix Companies in
June not only provides the Group with a significant platform for supplying the
UK market, it also enhances the product and service offering of the Group.
Not only are customers' networked IT needs increasing and converging, but the
complexity of their requirements is also increasing. The Group with its full
product offering is well placed to take advantage of this expanding market for
converged services. The Group provides a flexible range of service offerings,
but it is increasingly finding that customers want to outsource more of their
network operations to a trusted partner. As the trusted partner Calyx provides
their customers with a fully managed, end to end solution in data, voice,
security, systems integration, IP and carrier services.
Financial results
The turnover of the Group for the six months to 30 June 2006 was €29.3 million,
compared to €18.2 million in the first six months of 2005 and €38.4 million in
the full year 2005. Excluding acquisitions, the turnover of the Group for the
six months to 30 June 2006 was €23.1 million.
Operating profit before goodwill amortisation and exceptional items for the six
months to 30 June 2006 was €3.1 million compared to €1.3 million for the same
period last year and €3.8 million in the full year 2005. Excluding acquisitions,
the operating profit before goodwill amortisation and exceptional items of the
Group for the six months to 30 June 2006 was €2.3 million. The results for the
period were adversely impacted by the performance of ITS Technology Services,
the UK based IT infrastructure services business, which was acquired in October
2005. This business experienced some disruption as it was rebranded and
integrated into the Group.
Profit before goodwill amortisation, exceptional items and tax for the six
months to 30 June 2006 was €2.6 million compared to €1.0 million in the first
six months of 2005 and €3.0 million in the full year 2005. A tax charge of €0.5
million has been included in these accounts relating to the profit before
goodwill amortisation, exceptional items and tax. This is based on the expected
overall effective tax rate of the Group for the full year 2006 of 20%. Had the
tax charge been based on the results for the six months to 30 June 2006, it
would have been lower due to the higher proportion of profits arising in the
Republic of Ireland (where tax rates are lower than the United Kingdom).
Adjusted earnings per share (excluding goodwill amortisation and exceptional
items) for the six months to 30 June 2006 were 4.87c compared to 2.97c the first
six months of 2005 and 7.17c for the full year 2005.
Exceptional costs of €0.3 million were incurred principally on rebranding and
relaunching the ITS Technology Services business based in Swindon. The goodwill
amortisation charge in the period was €0.7 million, of which €0.2 million
relates to the two acquisitions made during the period.
Profit after tax for the six months to 30 June 2006 was €1.2 million compared to
€0.6 million for the first six months of 2005 and €1.4 million for the full year
2005. Earnings per share (on an FRS3 basis) were 2.82c compared to 1.98c the
first six months of 2005 and 4.00c for the full year 2005.
Acquisitions
On 1 March 2006, the Group acquired Entropy Limited ('Entropy'), the Dublin
based IT security specialist, for a total consideration of up to €4.95 million
to be satisfied by cash of €3.72 million and the issue of Calyx shares with a
market value of €1.23 million.
On 13 June 2006, the Group acquired the Matrix Companies (which comprised of MXC
Integration Limited, Network Partners Holdings Limited and their subsidiaries)
for a total consideration of up to £40.5 million. Of this, £33.5 million was
paid in cash and £2.0 million of Calyx Group plc shares were issued on
completion. In addition, payments of up to £3.0 million and £2.0 million are
payable based on earn outs in the periods June to December 2006 and January to
May 2007 respectively. The shares in Calyx Group plc held by Fujin Technology
plc are locked in for a period of one year from 13 June 2006 and thereafter they
are subject to an orderly market agreement.
The Group is continuing to review corporate and strategic developments in its
core UK and Irish markets and will consider further acquisition opportunities in
these markets where appropriate.
Network Operating Centres (NOC's)
A detailed review of the comparative capabilities of the Dublin and East
Grinstead NOC's has now been completed. As a result of this, we have decided to
extend the East Grinstead NOC to cover the full range of services from WAN to
desktop and the Dublin NOC will mirror the East Grinstead set up. This project
will start in November and be completed by next February.
Financing and working capital management
To finance the acquisition of the Matrix Companies on 13 June 2006 the Group
placed 25 million shares at 70p raising £17.5 million of new equity capital. In
addition, the Group increased its senior debt facilities by drawing down a new
£25 million eight year debt facility. As at 30 June 2006 the Group had cash (net
of overdrafts) of €8.7 million, virtually all of which is held in sterling.
Bank loans as at 30 June 2006 amounted to €46.1 million of which €36.1 million
relates to the new £25 million sterling loan. Other loans amounting to €10.0m
are euro denominated loans, as are the Group's finance leases of €1.3 million.
Net cash inflow from operating activities in the six months to 30 June 2006 was
€2.8 million compared to an outflow of €0.5 million in both the six months to 30
June 2005 and the full year 2005. This reflects increased profits and tighter
control of working capital where the outflow was €0.8 million in the six months
to 30 June 2006, compared to an outflow of €2.2 million in the six months to 30
June 2005 and an outflow of €4.6 million in the full year 2005.
The balance sheet at the 30 June 2006 includes the full net assets of the Matrix
Companies whereas the profit and loss account for the six months to 30 June 2006
only includes the results of the Matrix Companies for 17 days.
Board and management changes
Following the acquisition of the Matrix Companies, Ian Smith, Chief Executive of
Fujin Technology plc, (previously Matrix Communications Group plc, the vendor of
the Matrix Companies) became a non-executive director of the Group. Tony
Weaver, who was Chief Operating Officer of Matrix Communications Group plc
business, is now Managing Director of the Matrix Companies.
The Board has been further strengthened by the appointment of two additional
independent non-executive directors, Gary Kennedy and Nicholas Koumarianos on 29
June 2006 and by the appointment of Peter Jenkins as Chief Financial Officer on
21 August 2006.
Current trading and outlook
The Board continues to be encouraged by the progress being made in the existing
businesses and is very pleased with the way that the Matrix Companies are
performing under Calyx ownership.
Calyx Group plc
Consolidated Profit & Loss Account
For six months ended 30 June 2006
Six months to 30 June 2006 (Unaudited) Six months to Year to
Before goodwill Goodwill Exceptional Total 30 June 2005 31 December 2005
amortisation and amortisation items (Unaudited) (Audited)
exceptional items
Notes €'000 €'000 €'000 €'000 €'000 €'000
Group turnover 2 29,350 0 0 29,350 18,250 38,410
Existing operations 23,133 23,133 18,250 38,410
Acquisitions 6,217 6,217
Cost of sales (17,735) (17,735) (11,717) (23,554)
Gross profit 11,615 11,615 6,533 14,856
Administrative 3 (8,548) (259) (8,807) (5,249) (11,640)
expenses
Goodwill amortisation (681) (681) (298) (667)
Group operating 2 3,067 (681) (259) 2,127 986 2,549
profit
Existing operations 2.258 (481) (259) 1,518 986 2,549
Acquisitions 809 (200) 609
Interest receivable 50 50 42 73
Interest payable (526) (526) (386) (879)
Profit on ordinary 2,591 (681) (259) 1,651 642 1,743
activities before tax
Tax on loss on 4 (544) 78 (466) (298)
ordinary activities
Retained profit for 8 2,047 (681) (181) 1,185 642 1,445
the period
Basic diluted 6 2.82c 1.98c 4.00c
earnings per share
(pence)
Adjusted earnings per 6 4.87c 2.97c 7.17c
share (pence)
All of the results presented above derive from continuing operations.
Administrative expenses include a charge relating to share options of €15,000.
Calyx Group plc
Consolidated Balance Sheet
At 30 June 2006
Six months to Six months to Year to
30 June 2006 30 June 2005 31 December 2005
(Unaudited) (Unaudited) (Audited)
€'000 €'000 €'000
Notes
Fixed Assets
Tangible assets 7,219 2,433 3,076
Intangible assets 79,233 10,692 16,402
86,452 13,125 19,478
Current assets
Stocks 3,143 1,694 2,134
Debtors 28,487 7,158 9,751
Cash at bank and in hand 11,603 5,927 6,462
43,233 14,779 18,347
Creditors: amounts falling due within (43,247) (12,597) (15,642)
one year
Net current liabilities (14) 2,182 2,705
Total assets less current liabilities 86,438 15,307 22,183
Creditors: amounts falling due after (45,472) (4,623) (9,944)
more than one year
Net assets 40,966 10,684 12,239
Capital and reserves
Called up equity share capital 6,737 3,818 3,859
Share premium account 33,531 8,000 8,524
Merger reserve (2,499) (2,499) (2,499)
Share option reserve 46 18 31
Profit and loss account 2,941 1,347 2,147
Shares to be issued 210 177
Equity shareholders' funds 8 40,966 10,684 12,239
Calyx Group plc
Consolidated Cash Flow statement
For six months ended 30 June 2006
Six months to Six months to Year to
30 June 2006 30 June 2005 31 December 2005
(Unaudited) (Unaudited) (Audited)
€'000 €'000 €'000
Notes
Net cash inflow from operating activities 9 2,847 (480) (527)
Returns on investment an servicing of
finance
Interest paid (401) (386) (667)
Interest received 50 42 (40)
Interest element of finance leases paid 73
Net cash outflow from returns on (351) (344) (634)
investments and servicing of finance
Tax paid (334) 23 (28)
Capital expenditure and financial
investment
Purchase of tangible fixed assets (832) (752) (1,570)
Proceeds from the disposal of fixed 7 29
assets
Purchase of intangible fixed assets (22) (165) (61)
Net cash outflow from capital expenditure (854) (910) (1,602)
and financial investment
Acquisitions and disposals
Purchase of subsidiary undertakings (54,087) (3,628)
Disposal of financial instruments 101
Cash in subsidiaries at acquisitions 1,011
Deferred consideration on prior year (1,278) (646) (487)
acquisitions
Net cash outflow from acquisitions and (54,354) (646) (4,014)
disposals
Net cash outflow before use of liquid (53,046) (2,357) (6,805)
resources and financing
Financing
New loans 36,128 4,300
Issue of equity share capital 23,764 9,136 9,150
Loan notes paid (1,773) (1,773)
Capital element of finance leases 10 (607) (199) (330)
Net cash inflow from financing 59,285 7,164 11,347
Increase in cash 11 6,239 4,807 4,542
Calyx Group plc
Notes to the Interim Financial information
For six months ended 30 June 2006
1. Basis of preparation
This interim Financial Information has been prepared under the historical cost
convention and is in accordance with the Group's accounting policies as set out
in the Group's financial statements for the year ended 31 December 2005. The
Interim Statement which has been prepared on a going concern basis was approved
by the Board on 22 September 2006 and the Interim Financial Information is
unaudited. This Interim Financial Information does not constitute statutory
accounts as defined in the Irish Companies (Amendment) Act 1986.
The Financial information for the year ended 31 December 2005 is derived from
the statutory accounts which have been delivered to the Irish Companies
Registration Office and on which the auditors gave an unqualified opinion.
2. Geographical analysis
Six months to 30 June 2006 (Unaudited) Republic of Ireland United Kingdom Total
€'000 €'000 €'000
Sales 22,127 7,223 29,350
Operating profit before goodwill amortisation and 2,618 449 3,067
exceptional items
Six months to 30 June 2005 (Unaudited)
Sales 18,250 0 18,250
Operating profit before goodwill amortisation and 1,309 0 1,309
exceptional items
Year to 31 December 2005 (Audited)
Sales 37,505 905 38,410
Operating profit before goodwill amortisation and 3,327 458 3,785
exceptional items
3. Exceptional items
In the six months to 30th June 2006 costs of €247,000 were incurred on
rebranding and relaunching the ITS Technology Services business based in Swindon
and a loss of €12,000 was incurred on the disposal of fixed assets.
4. Tax
Provision for taxation is based upon forecast taxable profits for the year at
the anticipated effective tax rate for the year of 20%. Had the tax charge been
based on the taxable profits for the six months to 30 June 2006, it would have
been lower due to the higher proportion of profits arising in the Republic of
Ireland (where the tax rate is lower) in the first half of the year compared to
the forecast for the full year.
5. Dividends
No interim dividend is proposed.
6. Earnings per share
Basic earnings per share have been calculated by dividing the profit
attributable to members of the parent company - €1,184,605 (six months ended 30
June 2005: €641,530, Year ended 31 December 2005: €1,444,704) by the weighted
average number of ordinary shares in issue during the period 42,070,256 (six
months ended 30 June 2005: 32,457,640, Year ended 31 December 2005: 36,017,872).
Adjusted earnings per share figures exclude goodwill amortisation and
exceptional items in earnings.
7. Acquisitions
On 1st March 2006, the Group acquired Entropy Limited. €2.98 million was paid
in cash and shares with a market value of €1.02 million were issued to the
vendor. In addition up to €0.74 million in cash and shares with a market value
of €0.21 million are payable should certain performance targets be met. This
cash is included in creditors at 30th June 2006.
On 13th June 2006, the Group acquired the integration businesses of Matrix
Communications Group plc. £33.5 million was paid in cash and shares with a
market value of £2.0 million were issued to the vendor. In addition up to £5.0
million in cash is payable should certain performance targets be met. This is
included in creditors at 30th June 2006.
Other deferred consideration amounting to €150,000 is included in creditors at
30th June 2006.
8. Reconciliation of movements in Group equity shareholder's funds
Six months to Six months to Year to
30 June 2006 30 June 2005 31 December 2005
(Unaudited) (Unaudited) (Audited)
€'000 €'000 €'000
Profit for the period 1,185 642 1,445
New equity share capital issued 2,878 1,318 1,358
Premium on new share capital issued 25,007 8,000 8,524
Preference shares redeemed (39) (39)
Currency translation differences (391) (2)
Share options charge 15 18 31
Increase in shares to be issued 33 177
Net addition to shareholders' equity 28,727 9,939 11,494
funds
Opening shareholders' equity funds 12,239 745 745
Closing shareholders' equity funds 40,966 10,684 12,239
9. Reconciliation of operating profit / (loss) to net cash inflow from
operating activities
Six months to Six months to Year to
30 June 2006 30 June 2005 31 December 2005
(Unaudited) (Unaudited) (Audited)
€'000 €'000 €'000
Operating Profit 2,127 986 2,549
Amortisation of goodwill 681 298 667
Depreciation 544 376 817
Loss / (profit) on disposal of fixed 12 (1) (26)
assets and financial assets
Decrease / (Increase) in stocks 183 (126) (309)
Decrease / (Increase) in debtors (5,623) (486) (836)
Increase / (Decrease) in creditors 4,593 (1,552) (3,440)
Share option charge 15 18 31
Foreign exchange gain / (loss) on net debt 315 (2)
Other 7 22
Net cash inflow / (outflow) from operating 2,847 (480) (527)
activities
10. Reconciliation of net cash flow to movement in net debt
Six months to Six months to Year to
30 June 2006 30 June 2005 31 December 2005
(Unaudited) (Unaudited) (Audited)
€'000 €'000 €'000
Increase in cash in the period 6,239 4,851 4,542
Loans advanced (36,128) (4,300)
Loan notes paid 1,773 1,773
Capital element of finance leases 607 199 330
Change in net debt resulting from cash flow (29,282) 6,823 2,345
New finance leases (1,527) (44) (76)
Change in net debt (30,809) 6,779 2,269
Net debt at the start of the period (7,877) (10,146) (10,146)
Net debt at the end of the period (38,686) (3,367) (7,877)
11. Analysis of changes in net funds
At 31 December 2005 Cash flow Other At June 30 2006
(Audited) (Unaudited)
€'000 €'000 €'000 €'000
Cash:
Cash at bank and in hand 6,462 5,141 11,603
Bank overdrafts (3,976) 1,098 (2,878)
2,486 6,239 0 8,725
Debt
Bank loans (10,006) (36,128) (46,134)
Finance Leases (357) 607 (1,527) (1,277)
(10,363) (35,521) (1,527) (47,411)
(7,877) (29,282) (1,527) (38,686)
Independent Review Report to Calyx Group plc
Introduction
We have been instructed by the group to review the financial information for the
six months ended 30 June 2006 set out on pages 4 to 9 and we have read the other
information contained in the interim report and considered whether it contains
any apparent misstatements or material inconsistencies with the financial
information.
Our report has been prepared in accordance with the terms of our engagement to
assist the group in meeting the requirements of the rules of the London Stock
Exchange for companies trading securities on the Alternative Investment Market
and for no other purpose. No person is entitled to rely on this report unless
such a person is a person entitled to rely upon this report by virtue of and for
the purpose of our terms of engagement or has been expressly authorised to do so
by our prior written consent. Save as above, we do not accept responsibility for
this report to any other person or for any other purpose and we hereby expressly
disclaim any and all such liability.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the rules of the
London Stock Exchange for companies trading securities on the Alternative
Investment Market which require that the half-yearly report be presented and
prepared in a form consistent with that which will be adopted in the group's
annual accounts having regard to the accounting standards applicable to such
annual accounts.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board. A review consists principally of making
enquiries of management and applying analytical procedures to the financial
information and underlying financial data and based thereon, assessing whether
the accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with Auditing
Standards and therefore provides a lower level of assurance than an audit.
Accordingly, we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2006.
BDO Simpson Xavier 25 September 2006
Registered Auditors
This information is provided by RNS
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