Maiden Interim Results
Calyx Group PLC
30 August 2005
For Immediate Release 30 August 2005
Calyx Group plc
('Calyx' or 'the Company')
Maiden interim results for the 6 months ended 30 June 2005
Calyx, one of the largest single-source providers of information and
communication technology ('ICT') network solutions throughout Ireland, today
announces its first set of interim results, since its successful admission to
AIM in March, for the 6 months ended 30 June 2005.
Key Points
• Successful admission to AIM and fund raising of net €9.1m (£6.2m) on 17
March 2005
• Revenue increased by 5% to €18.2m (H1 2004: €17.4m)
• Gross margins rose from 33% to 36%
• EBITDA up 31% to €1.7m (H12004: €1.3m)
• Profit before tax up 89% to €641,530 (H1 2004: €338,830)
• Net cash balances of €5.9m (31 December 2004 €1.1m and €1.2m at 30 June
2004).
• EPS (excluding goodwill amortisation and exceptional items) of 2.97cents
• Completion of Network Operating Centre ('NOC') in August 2005
• Acquired Convergent Systems Ireland post period.
Maurice Healy, Chief Executive of Calyx, commenting on the interim results said;
'I am pleased to report a very satisfactory set of interim results, this has
been a period of transition for Calyx and we now find ourselves in a strong
position to capitalise on the strong demand for our existing products and
services. We believe that the new Network Operating Centre service rollout over
the coming period will further strengthen our market position and enhance our
performance.'
For further details please contact:
Calyx Group plc Tel: +353 1 676 3363
Maurice Healy, Chief Executive
Ger Coakley, Finance Director
Buchanan Communications Tel: +44 (0) 20 7466 5000
Tim Thompson / James Strong
Company's Statement
Introduction
The Company is pleased to report its maiden set of interim results with all of
the key metrics; revenue, gross margins operating profits and EBITDA, ahead of
the same period last year. All growth for the period has been entirely organic.
This has been a period of significant transition for the business. In March 2005
we raised net €9.1 million in cash from our AIM listing. With the capital raised
it was our aim to fund further development of our ICT services portfolio and to
facilitate further strategic acquisitions. In the short period since flotation
we have made enormous progress on both of these fronts. We have developed our
Network Operating Centre ('NOC') and in a post period transaction, completed our
first acquisition as a public company.
Financial Review
The profit before taxation of €641,530 represents an increase of 89% on the
comparative period in 2004. Turnover growth of 5% coupled with an improved sales
mix, from Hardware to Services, has lead to an improvement in gross margins from
33% to 36% and a very successful trading period.
At the end of the period the Company had €5.9m cash, having used some of the
placing proceeds to reduce long-term debt and invest in the infrastructure
necessary to facilitate the development of our service offering.
Earnings per share before exceptional items and goodwill amortisation were
2.97cents. The Directors do not recommend the payment of a dividend.
Operating Review
Post the flotation the Company introduced measures to integrate the Voice and
Data elements of the business. These measures are designed to provide a more
comprehensive range of offerings to our existing clients, many of whom currently
only have either Voice or Data services.
Network Operating Centre ('NOC')
Since flotation the Company has successfully developed the NOC and we are
pleased to report that it is now fully functional and our national marketing
campaign is due to commence in September 2005.
New Business
The Company continues to benefit from the industries move towards greater
outsourcing of the ICT function. Significant business signed during the period
include contracts with Vodafone, The American Embassy, the Department of
Communications Marine and Natural Resources, Xtravision, AIB Internet Banking,
AXA Insurance and Banking 365.
Acquisitions
Since the period end the Company has acquired Convergent Systems for €600,000,
this has been satisfied by a €300,000 upfront payment in cash and a €300,000
cash payment deferred subject to achievement of certain performance criteria.
The Company is pleased to announce that the integration of Convergent into Calyx
has been extremely successful and synergies have already been realised between
the two companies.
The Company continues to look at suitable, synergistic and earnings enhancing
acquisitions in Ireland and the UK.
Outlook
Calyx continues to experience strong demands for its existing products and
services and believes that the new Network Operating Centre service rollout over
the coming period will further strengthen the Company's market position and
enhance the Company's performance. The Company looks forward to the coming
period with confidence.
MAURICE HEALY
CHAIRMAN & CHIEF EXECUTIVE
29 August 2005
Consolidated profit and loss account
for the six months ended 30 June 2005
Six months Six months Year to
ended ended ended
30 June 30 June 31 December
2005 2004 2004
(unaudited) (unaudited) (audited)
€ € €
Turnover
Continuing operations 18,249,637 17,364,955 33,971,489
Acquisitions - - 264,717
18,249,637 17,364,955 34,236,206
Cost of sales (11,717,058) (11,646,551) (21,628,842)
Gross profit 6,532,579 5,718,404 12,607,364
Operating expenses (5,205,662) (4,821,539) (9,778,912)
Operating profit before goodwill amortisation
Continuing operations 1,326,917 896,865 2,774,741
Acquisitions - - 53,711
1,326,917 896,865 2,828,452
Goodwill amortisation (297,696) (282,936) (595,918)
Share option charges (18,251) - -
Operating profit 1,010,970 613,929 2,232,534
Profit on disposal of fixed assets 1,141 26,491 34,213
Exceptional reorganisation costs (26,185) - -
Profit on ordinary activities before interest 985,926 640,420 2,266,747
Interest receivable 41,679 10,561 21,829
Interest payable (386,075) (312,151) (698,392)
Profit on ordinary activities before taxation 641,530 338,830 1,590,184
Taxation on profit on ordinary activities - - (1,138)
Retained profit for the period 641,530 338,830 1,589,046
Consolidated balance sheet
at 30 June 2005
As at As at As at
30 June 30 June 31 December
2005 2004 2004
(unaudited) (unaudited) (audited)
€ € €
Fixed assets
Intangible assets 10,692,468 11,164,381 10,832,414
Tangible assets 2,432,530 2,056,499 2,061,464
13,124,998 13,220,880 12,893,878
Current assets
Stocks 1,694,691 1,645,159 1,568,799
Debtors 7,158,035 7,620,058 6,672,076
Cash at bank and in hand 5,926,589 1,219,694 1,115,505
14,779,315 10,484,911 9,356,380
Creditors (amounts falling due
within one year) (12,596,607) (14,799,634) (14,154,711)
Net current assets / (liabilities) 2,182,708 (4,314,723) (4,798,331)
Total assets less current liabilities 15,307,706 8,906,157 8,095,547
Creditors (amounts falling due
after more than one year) (4,671,364) (9,411,215) (7,398,215)
Provisions for liabilities and charges 47,826 - 47,826
Net assets/(liabilities) 10,684,168 (505,058) 745,158
Capital and reserves
Called up share capital 3,818,181 413 413
Share premium 7,818,191 - -
Other capital reserves (604,152) - -
Share option reserve 18,251 - -
Profit and loss account (366,303) (505,471) 744,745
Equity shareholders' funds/(deficit) 10,684,168 (505,058) 745,158
Consolidated cash flow statement
for the six months ended 30 June 2005
Six months Six months For the year
ended ended ended
30 June 30 June 31 December
(unaudited) (unaudited) (audited)
2005 2004 2004
€ € €
Reconciliation of operating profit to net
cash (outflow)/inflow from operating activities
Operating profit 985,926 640,419 2,266,747
Depreciation of tangible fixed assets 375,539 338,757 666,646
Profit on disposal of tangible fixed assets (1,141) (26,491) (34,213)
Amortisation of goodwill 297,696 272,190 595,918
Amortisation of licenses 6,840 10,746 21,493
Share option charges 18,251 - -
Foreign exchange gain on UK loan notes - - (13,019)
(Increase) in stocks (125,892) (168,177) (91,817)
(Increase)/decrease in operating debtors (485,959) (896,211) 63,386
(Decrease)/increase in operating creditors (1,132,860) 815,682 (454,138)
(Decrease) in director's loan (818,784) - (388,012)
Net cash (outflow) /inflow from operating activities (880,384) 986,915 2,632,991
Cash flow statement
Net cash (outflow)/inflow from operating activities (880,384) 986,915 2,632,991
Servicing of finance and returns on investments (344,396) (301,587) (676,563)
Taxation 23,096 (1,841) -
Capital expenditure and financial investment (767,197) (474,366) (797,629)
Acquisitions and disposals - (51,629) (51,629)
Net cash (outflow)/inflow before financing (1,968,881) 157,492 1,107,170
Financing 6,962,565 (1,092,395) (2,255,845)
Increase/(decrease) in cash 4,993,684 (934,903) (1,148,675)
Reconciliation of net cash flow to
movement in net debt
Increase/(decrease) in cash in the period 4,993,684 (934,903) (1,148,675)
Cash inflow/(outflow) from lease financing 154,999 (89,323) (19,384)
Cash outflow for debt financing 2,018,808 1,181,718 2,275,229
Movement in net debt 7,167,491 157,492 1,107,170
Non cash movements:
Foreign exchange gain on UK loan notes - - 13,019
Net debt at beginning of year (10,876,388) (11,996,577) (11,996,577)
Net debt at year end (3,708,897) (11,839,085) (10,876,388)
Notes to the Interim Report
for the six months ended 30 June 2005
1. Accounting policies
Basis of preparation
The Company was incorporated on 1 February 2005 and became the holding company
of Calyx Limited and Calyx Computers Limited on 4 March 2005. The interim report
has been prepared in accordance with generally accepted accounting principles
under the historical cost convention and modified by the revaluation of certain
fixed assets and comply with financial reporting standards of the Accounting
Standards Board, as promulgated by The Institute of Chartered Accountants in
Ireland.
The financial information contained in this report does not constitute statutory
accounts as defined in Section 19 of the Irish Companies (Amendment) Act 1986.
The figures for the year ended 31 December 2004, are extracted from the
statutory accounts of Calyx Limited and its subsidiaries for that year. The
statutory accounts for that year, upon which the auditors, BDO Simpson Xavier
issued an unqualified audit opinion, have been delivered to the Irish Companies
Registration Office. The interim figures for 2004 and 2005 are unaudited.
Basis of consolidation
The Group financial statements consolidate the financial statements of the Calyx
Group plc and all of its subsidiary undertakings made up to 30 June, 2005.
The results of subsidiary undertakings acquired or disposed of in the year are
included in the consolidated profit and loss account from the date of
acquisition or up to the date of disposal. Upon the acquisition of a business,
fair values are attributed to the identifiable net assets acquired. Goodwill
arising on acquisitions is dealt with as set out below.
The combination of the businesses, Calyx Group plc, Calyx Limited and Calyx
Computers Limited, under the criteria of Financial Reporting Standard No. 6
'Acquisitions and Mergers', has been included in the consolidated financial
statements using merger accounting rules. The results and assets and liabilities
of companies accounted for under these provisions are incorporated in the
financial statements for the whole of the current and prior periods as if these
entities had been combined throughout these periods. The merger adjustment,
which is the difference between the fair value of the shares issued to effect
the merger and the nominal value of the shares acquired, is dealt with on
consolidation through reserves. All inter-group transactions and balances are
eliminated on consolidation.
Turnover
Turnover represents net sales to customers and excludes value added tax.
Tangible fixed assets and depreciation
Tangible fixed assets are stated at cost, less accumulated depreciation.
The charge for depreciation is calculated to write off the original cost of
fixed assets from date of purchase over their estimated useful lives at the
following annual rates:
Computer and office equipment - rates between 15% and 33.3% straight line
Plant and maintenance equipment - rates between 10% and 33.3% straight line
Equipment, fixtures and fittings - rates between 15% and 20% straight line
Motor vehicles - rates between 20% and 33% straight line and reducing balance
Leasehold improvements - rates between 2.857% and 33.3% straight line
1. Accounting policies (continued)
Intangible fixed assets
Goodwill
Purchased goodwill arising on the acquisition of a business represents the
excess of the fair value of the acquisition cost over the fair value of the
identifiable net assets when they were acquired. Any excess of the aggregate of
the fair value of the identifiable net assets acquired over the fair value of
the acquisition cost is negative goodwill.
Purchased goodwill arising on acquisitions is capitalised in the balance sheet
and amortised over the estimated economic life of the goodwill, currently 20
years.
Goodwill is reviewed on a regular basis for possible impairment. Any impairment
in value is written off to the profit and loss account in the year in which the
impairment is discovered.
Negative goodwill arising on such acquisitions is also capitalised and shown
separately in the balance sheet and credited to the profit and loss account to
match the periods in which the acquired non-monetary assets are recovered,
currently 20 years. Any excess over the non-monetary assets acquired is
credited to the profit and loss account in the periods benefited.
Customer lists
Customer lists are included at cost and are being amortised over their useful
economic life of 20 years.
Website development
Website development is included at cost and is being amortised over its useful
economic life of 3.5 years.
Licenses
Training licenses are included at cost and are being amortised in equal annual
amounts over 20 years.
Financial fixed assets
Financial fixed assets are shown at cost less provision for permanent
diminutions in value.
2. Reserves
Share Profit
option and loss
reserve account Total
€ € €
At beginning of period - 744,745 744,745
Retained profit for the period - 641,530 641,530
Redemption premium (i) - (1,752,578) (1,752,578)
Share option charges (18,251) - (18,251)
At end of period (18,251) (366,303) (384,554)
(i) Redemption premium
On 4 March 2005, in consideration of a redemption premium payable to the Loan
Note Holders, Calyx Limited issued 255 ordinary shares of €0.10 each having an
aggregate fair value of €1,752,578 to the Loan Note holders. In order to more
fairly present the results of the Group for the six months ended 30 June 2005,
the directors have charged the redemption premium directly to revenue reserves
rather than to the profit and loss account.
3. Merger Accounting
On 4 March 2005, the business combination of Calyx Group plc, Calyx Limited and
Calyx Computers Limited was declared unconditional.
The combination, which was effected by way of an offer of shares made by Calyx
Group plc for all of the shares of Calyx Limited and Calyx Computers Limited,
has been accounted for as a merger as set out in Financial Reporting Standard 6
'Acquisitions and Mergers'. Consequently, these financial statements have been
prepared on the basis of the merger method of accounting.
In order to effect the merger, 99,999,997 shares in Calyx Group plc with a
market value of €6,374,278 were issued to Calyx Limited shareholders and
14,999,998 shares in Calyx Group plc with a market value of €9,561,419 were
issued to Calyx Computers Limited shareholders. This represented 68,728 Calyx
Group plc shares for every 1 Calyx Limited share and 5084 Calyx Group plc shares
for every 1 Calyx Computers Limited share.
The merger reserve represents the difference between the nominal value and
related share premium of the new shares issued in Calyx Group plc to effect the
merger and the nominal value of the issued share capital of Calyx Limited and
Calyx Computers Limited.
In accordance with Section 62 of the Companies Act 1963, the premium arising on
the issue of new shares in Calyx Group plc to the shareholders of Calyx Limited
and Calyx Computers Limited as part of the combination has been recorded in the
company balance sheet as share premium. On consolidation, this share premium
amount has been classified with the merger reserve.
In accordance with the provisions of Section 149 (5) of the Companies Act 1963,
the directors, being satisfied that it would be fair and reasonable and would
not prejudice the rights or interests of any person, have determined that the
preacquisition reserves of Calyx Limited and Calyx Computers Limited should be
treated as distributable by the company to the extent that they were
distributable by Calyx Limited and Calyx Computers Limited.
There were no other changes to the accounting policies.
4. Reconciliation of movement in equity shareholders' funds
Six months Six months For the year
ended ended ended
30 June 30 June 31 December
2005 2004 2004
(unaudited) (unaudited) (audited)
€ € €
Total recognised gains and losses for the period 641,530 338,830 1,589,046
Transactions with shareholders
Nominal value of shares issued - Calyx Limited 28 - -
Nominal value of shares issued - Calyx Group plc 3,818,181 - -
Merger reserve on issuance of shares relating to merger (2,499,559) - -
Replacement of shares in Calyx Limited and Calyx
Computers Limited (441) - -
Premium on shares issued 11,080,301 - -
Redemption premium (1,752,578) - -
Other movements
Share issue costs (1,366,703) - -
Share option reserve 18,251 - -
Net increase in shareholders' funds/(deficit) 9,939,010 338,830 1,589,046
Opening equity shareholders' funds/(deficit) 745,158 (843,888) (843,888)
Closing shareholders' funds/(deficit) 10,684,168 (505,058) 745,158
Shareholders' funds/(deficit) fully comprise equity interest.
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