TIDMTST
RNS Number : 9259B
Touchstar PLC
26 September 2018
26 September 2018
Touchstar plc
Interim results for the
Six months ended 30 June 2018
The Board of Touchstar plc ((AIM:TST) 'Touchstar', the 'Company'
or 'the Group'), suppliers of mobile data computing solutions and
managed services to a variety of industrial sectors, is pleased to
announce its interim results for the six months ended 30 June
2018.
This announcement includes inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 and is
disclosed in accordance with the Company's obligations under
Article 17 of those obligations.
Key Financials:
30 June 2018 30 June 2017
* Revenues GBP3,244,000 GBP3,981,000
* Operating loss GBP(590,000) GBP(89,000)
* (Loss)/profit (after tax) GBP(415,000) GBP5,000
* EPS (4.90)p 0.08p
* Net cash/(borrowings) GBP180,000 GBP(168,000)
* Investment in development GBP380,000 GBP248,000
Commenting on the results, Ian Martin, Chairman of Touchstar,
said:
"The message I wish to give is simple - we are "on track".
As with last year, this year's trading is expected to be second
half weighed and, with the momentum that we have, the Board remains
confident of meeting expectations for the year. That achievement
alone will not determine our future as the real benefit of the
investment we are making is not expected to flow until next year
and beyond. Importantly, we are satisfied with our progress so
far."
For further information, please contact:
Touchstar plc Ian Martin 01274 741860
Mark Hardy 01274 741860
Mike Coe/Ed
WH Ireland - Nominated Adviser Allsopp 0117 945 3472
Information on Touchstar plc can be seen at:
www.touchstarplc.com
CHAIRMAN'S INTERIM STATEMENT 2018
I am pleased to report the Group's interim results for the six
months ended 30 June 2018 and to update you about the progress we
are making at Touchstar. The message I wish to give is simple - we
are "on track".
We are benefiting considerably from the successful fund raising,
which concluded in mid-February 2018, from which we raised GBP1.2m
post expenses by issuing 2,166,327 new shares at 60p. This has
enabled us to bring forward our plans by adding sales resource and
accelerating our product development. In 2018, we have made
investment and added additional costs ahead of profit, whilst
maintaining a healthy balance sheet.
The additional sales people we said we would recruit are now in
position. Investment has been made to improve support to our
customers; we now have the correct skills and enough resource in
place. We continue to engage well with our Indian development
partner and have recently completed a successful enhancement of the
Podstar system to cross platform the solution into the 'bulk'
logistics (tankers) side of the sector; an area where we are
exceedingly strong with our legacy systems. Within the Onboard
division we have now implemented inflight sales to incorporate
'contactless' as well as chip and pin transactions, which we
believe is a first in the airline sector, with off line sales.
Management can now focus upon sales of our new and enhanced
solutions, that enable critical business data to be captured, moved
and accessed across various platforms, a compelling proposition.
So, in respect of the main tenets of our strategy, we remain on
course.
After a slow first quarter, sales momentum built in the second
quarter and this momentum is expected to build further in the
second half. Trading has been in line or ahead of management budget
in three of the four business units. Encouragingly, the Onboard
division has doubled the airlines using its new Novostar solution
to four, and Podstar, a product we launched in 2017, also doubled
the user base using its solution.
Group financial results
As we stated in our year-end statements, the financial results
for the six months ended 30 June 2018 have been prepared for the
first time under IFRS 15. The Group has adopted this new standard
from 1 January 2018, applying the modified retrospective approach,
which results in the cumulative effect of initially applying this
standard being an adjustment to the opening balance of retained
earnings as at 1 January 2018. Therefore, where I make a comment on
the relative performance of the two periods, this should be only be
taken as an indicative guide.
Revenue for the period was GBP3,145,000 (H1 2017: GBP3,981,000).
The decline is a mix of three factors;
-- First, the adoption of IFRS 15, as stated in prior
communication to shareholders, the largest negative impact of this
change will occur in 2018. This accounts for an estimated
GBP150-200k of the 2018 decline against previous years.
-- Secondly, within the revenue mix we have two opposing trends.
The adverse effect from the continued waning of revenue from
historic products reaching their end of life, weighed against the
increasing momentum in sales as we introduce new products, which
are now growing rapidly, albeit from a low base level. For the
first half, as in recent trading periods, the adverse effect of
waning historic revenue has outweighed momentum in new product
sales. However, we expect the balance to tip in our favour by the
end of this year as new products being introduced build market
share and become a more meaningful part of our installed client
base, and so of revenues; and
-- Thirdly, one of our business units, Access Control Systems
(ACS), has made a slower than expected start to the year as the
enhancement and fine-tuning of certain software has taken longer
than expected. This has had an impact on both revenue and
contribution.
Group margins declined slightly to 48.2% (H1 2017: 50.9%) due to
product mix, increased spending as we moved to a more
growth-oriented phase, and introductory pricing as we establish new
products within the market place.
The Group produced an operating loss of GBP590,000 (H1 2017:
loss GBP89,000). This is reflective of the investment made and the
costs associated with accelerating the company's business plan.
Basic loss per share was 8.02 p (H1 2017: earnings 0.08p)
The Group has had no borrowings and with net cash balances of
GBP180k at 30 June 2018 we retain a robust financial position. This
improved further as post the reported period we received a GBP300k
cash payment from HMRC in respect of our R&D expenditure, a
payment that is historically included at the interim stage.
Group operating review
We have four business units each at different points in their
strategic development
Proof of delivery / Podstar.
http://www.podstar.co.uk/http://www.fuel-logistics-it.com/
This business unit has made a good start to the year and is
trading ahead of budget; providing cloud-based software as a
service allowing customers to plan driver and delivery schedules.
The objective for the remainder of 2018 is to secure and expand its
customer base to over 400 users.
Onboard - Airline retail systems
http://www.warehouse-logistics-it.com/
Onboard has made a solid start to the year and is trading in
line with budget. Four airlines with over 200 users have now
selected our complete end to end back office and point of sales
system; Novostar. The objective for the remainder of 2018 is to
secure additional airline customers.
Warehouse and Logistics
http://www.warehouse-logistics-it.com/
The warehouse and logistics unit has made a steady start to the
year, trading broadly in line with budget. During the second half,
we expect that all devices will be available on Android operating
system which will facilitate greater sales penetration during
2019.
Access Control Systems ("ACS")
http://www.touchstar-atc.com/
ACS has made a slower than expected start to the year as the
enhancement and fine- tuning of certain software has taken longer
than expected. Momentum is expected to build in the second half of
the year, particularly around CCTV control and monitoring.
Outlook
First, to repeat how I started - we remain "on track". I have
asked shareholders to be patient in 2018 as we invest the proceeds
of the fundraising to deliver the platform to scale the business
and reward the faith you have placed in Touchstar.
As with last year, this year's trading is expected to be second
half weighed and, with the momentum that we have, the Board remains
confident of meeting expectations for the year. That achievement
alone will not determine our future as the real benefit of the
investment we are making is not expected to flow until next year
and beyond. Importantly, we are satisfied with our progress so
far.
I Martin
Executive Chairman
26 September 2018
Unaudited consolidated income statement
for the six months ended 30 June 2018
Six months ended 30 June Year ended 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
------------------------------------ ------------------- ----------------------- -----------------------
Revenue 3,244 3,981 7,868
Operating (loss)/profit before
exceptional items (590) 39 111
Exceptional costs - (128) (3,965)
------------------------------------- ------------------- ----------------------- --------------------------
Operating (loss)/profit (590) (89) (3,965)
Finance costs (2) (6) (11)
------------------------------------- ------------------- ----------------------- --------------------------
(Loss)/profit before income tax (592) (95) (3,865)
Income tax credit 177 100 280
------------------------------------- ------------------- ----------------------- --------------------------
(Loss)/profit for the period
attributable to the owners of the
parent (415) 5 (3,585)
------------------- ----------------------- --------------------------
(Loss)/earnings per ordinary share (pence) attributable to owners of the parent
during the
period:
Pence per share Pence per share Pence per share
(Loss)/earnings per share (4.90)p 0.08p (56.83)p
Unaudited consolidated statement of changes in equity
for the six months ended 30 June 2018
Retained
earnings/
Share premium (accumulated Total
Share capital account losses) equity
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------------- -------------- -------------- --------
For the six months ended 30 June 2018
-------------------------------------------------------------------------------------
Balance at 31 December
2017 315 - 1,856 2,171
Revenue recognised under
IAS 18 adjusted for IFRS
15 (note 3) - - (91) (91)
--------------------------- -------------- -------------- -------------- --------
Revised balance 1 January
2018 315 - 1,765 2,080
Share issue 109 1,191 - 1,300
Cost of share issue - (72) - (72)
Loss for the period - - (415) (415)
Balance at 30 June 2018 424 1,119 1,350 2,893
--------------------------- -------------- -------------- -------------- --------
For the six months ended 30 June 2017
--------------------------------------------- ------
Balance at 1 January 2017 315 - 5,441 5,756
Profit for the period - - 5 5
Balance at 30 June 2017 315 - 5,446 5,761
--------------------------- ---- ------ ------
For the year ended 31 December 2017
-----------------------------------------------------------
Balance at 1 January 2017 315 - 5,441 5,756
Loss for the year - - (3,585) (3,585)
Balance at 31 December
2017 315 - 1,856 2,171
--------------------------- ---- -------- --------
Unaudited consolidated statement of financial position
at 30 June 2018
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
------------------------------- -------- -------- ------------
Non-current assets
------------------------------- -------- -------- ------------
Goodwill - 3,824 -
Development expenditure 1,305 1,042 1,136
-------------------------------- -------- -------- ------------
Total intangible assets 1,305 4,866 1,136
Property, plant and equipment
EQUIPMENTEQUIPMENTEQUIPMENT
EQUIPMENTequipment 210 224 237
Deferred tax assets 168 67 168
-------------------------------- -------- -------- ------------
1,683 5,157 1,541
------------------------------- -------- -------- ------------
Current assets
Inventories 1,414 1,265 1,387
Trade and other receivables 1,708 1,950 2,256
Current tax recoverable 449 72 272
Cash and cash equivalents 1,788 2,398 2,159
-------------------------------- -------- -------- ------------
5,359 5,685 6,074
------------------------------- -------- -------- ------------
Total assets 7,042 10,842 7,615
-------------------------------- -------- -------- ------------
Current liabilities
Trade and other payables 2,214 2,309 2,619
Borrowings 1,608 2,566 2,495
-------------------------------- -------- -------- ------------
3,822 4,875 5,114
Non-current liabilities
Deferred tax liabilities 179 75 179
Trade and other payables 148 131 151
Total liabilities 4,149 5,081 5,444
-------------------------------- -------- -------- ------------
Unaudited consolidated statement of financial position
at 30 June 2018 (continued)
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
Capital and reserves attributable
to owners of the parent
Share capital 424 315 315
Share premium account 1,119 - -
Profit and loss account 1,350 5,446 1,856
------------------------------------ -------- -------------- ------------
Total equity 2,893 5,761 2,171
------------------------------------ -------- -------------- ------------
Total equity and liabilities 7,042 10,842 7,615
------------------------------------ -------- -------------- ------------
Unaudited consolidated cash flow statement
for the six months ended 30 June 2018
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
------------------------------------------------- -------------- ------------
Cash flows from operating activities
Operating (loss)/profit (590) (89) (3,854)
Depreciation 42 41 91
Amortisation 211 196 400
Goodwill impairment - - 3,824
Movement in:
Inventories (27) (6) (128)
Trade and other receivables 548 76 (248)
Trade and other payables (499) (4) 326
---------------------------------------- -------- -------------- --------------
Cash generated from/ (used in)
operating activities (315) 214 411
Interest paid (2) (6) (11)
Corporation tax received - 231 231
---------------------------------------- -------- -------------- --------------
Net cash generated from/ (used
in) operating activities (317) 439 631
---------------------------------------- -------- -------------- --------------
Cash flows from investing activities
Purchase of intangible assets (380) (249) (547)
Purchase of property, plant and
equipment (15) (29) (91)
---------------------------------------- -------- -------------- --------------
Net cash used in investing activities (395) (278) (638)
---------------------------------------- -------- -------------- --------------
Cash flows from financing activities
Share issue 1,300 - -
Cost of share issue (72) - -
Net cash used in financing activities 1,228 - -
---------------------------------------- -------- -------------- --------------
Net increase/ (decrease) in cash
and cash equivalents 516 161 (7)
Cash and cash equivalents at start
of the year (336) (329) (329)
---------------------------------------- -------- -------------- --------------
Cash and cash equivalents at end
of the year 180 (168) (336)
---------------------------------------- -------- -------------- --------------
Cash and cash equivalents
Cash at bank and in hand 1,788 2,398 2,159
Less: bank overdraft (included
within borrowings) (1,608) (2,566) (2,495)
180 (168) (336)
---------------------------------------- -------- -------------- --------------
Notes to the interim report and accounts
for the six months ended 30 June 2018
1. General information
Touchstar plc is a public company limited by share capital
incorporated and domiciled in the United Kingdom. The Company has
its listing on AIM. The address of its registered office is 1
George Square, Glasgow, G2 1AL.
2. Status of interim report and accounts
The financial information comprises the consolidated interim
balance sheet as at 30 June 2018, 30 June 2016 and the year ended
31 December 2017 along with related consolidated interim statements
of income and cash flows for the six months to 30 June 2018 and 30
June 2017 and year ended 31 December 2017 of Touchstar plc
(hereinafter referred to as 'financial information').
This financial information for the half year ended 30 June 2018
has neither been audited nor reviewed and does not comprise
statutory accounts within the meaning of the section 434 of the
Companies Act 2006. This financial information was approved by the
Board on 25 September 2018.
The figures for the year ended 31 December 2017 have been
extracted from the audited annual report and accounts that have
been delivered to the Registrar of Companies. The auditors,
PricewaterhouseCoopers LLP, reported on those accounts under
section 495 of the Companies Act 2006. Their report was unqualified
and did not contain a statement under section 498 of that Act.
3. Basis of preparation
The interim report and accounts have been prepared using
accounting policies to be applied in the annual report and accounts
for the year ended 31 December 2018. These are consistent with
those included in the previously published annual report and
accounts for the year ended 31 December 2017, which have been
prepared in accordance with IFRS as adopted by the European Union
except for revenue recognition where IFRS 15 Revenue - Revenue from
Contracts with Customers has been applied from 1 January 2018.
New accounting standard
Previously income arising from the sale of hardware
installations and initial software were recognised in accordance
with IAS 18 at the point of hardware delivery to the customer.
Under IFRS 15 this revenue will be shown as deferred income in the
balance sheet and released to revenue over the length of the
contract in line with the substance of the relevant agreement.
The cumulative effect of the changes made to our consolidated 1
January 2018 balance sheet for the adoption of IFRS 15 Revenue -
Revenue from Contracts with Customers were as follows:
Balance at Adjustments Balance at
31 December due to IFRS 1 January
2017 15 2018
GBP'000 GBP'000 GBP'000
---------------------------- ----------------- ----------------- -----------------
Consolidated balance sheet
Current liabilities
Trade and other payables 2,619 91 2,710
Equity
Retained earnings 1,856 (91) 1,765
---------------------------- ----------------- ----------------- -----------------
There was no impact on the closing figures for the balance sheet
at 30 June 2018.
Going Concern
The directors have a reasonable expectation that the Group has
adequate resources to continue operating for the foreseeable
future, and for this reason they have adopted the going concern
basis of preparation in the consolidated interim financial
statements. The financial statements may be obtained from Touchstar
plc, 7 Commerce Way, Trafford Park, Manchester, M17 1HW or online
at www.touchstarplc.com.
4. Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year are discussed below.
Development expenditure
The Group recognises costs incurred on development projects as
an intangible asset which satisfy the requirements of IAS 38. The
calculation of the costs incurred includes the percentage of time
spent by certain employees on the development project. The decision
whether to capitalise and how to determine the period of economic
benefit of a development project requires an assessment of the
commercial viability of the project and the prospect of selling the
project to new or existing customers.
5. Income tax credit
Six months ended Year ended
30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
---------------------------------- ----------------- ----------------- --------------
Corporation Tax
Current tax (140) (70) (254)
Adjustments in respect of prior
years (37) (30) (29)
Deferred tax - - 3
---------------------------------- ----------------- ----------------- --------------
Total current tax (177) (100) (280)
---------------------------------- ----------------- ----------------- --------------
6. Earnings per share
Earnings per ordinary share (pence) attributable to owners of the parent during the
period:
Year ended 31 December
Six months ended 30 June
2018 2017 2017
------------------------------------------ --------------------- --------------------- -----------------------
(Loss)/earnings per share (4.90)p 0.08 p (56.83)p
Reconciliations of the earnings and weighted average number of
shares used in the calculation are set out below:
For six-month period 30 June 2018 30 June 2017
------------------------------- ----------------------------------------- ------------------------------------------
Loss Weighted average number of Earnings Weighted average number of
GBP'000 shares (in thousands) GBP'000 shares (in thousands)
------------------------------- --------- ------------------------------ --------- -------------------------------
EPS
Shares in issue 1 January 6,309 6,309
Share issue 2,166 -
------------------------------- --------- ------------------------------ --------- -------------------------------
(Loss)/earnings attributable
to owners of the parent (415) 8,475 5 6,309
------------------------------- --------- ------------------------------ --------- -------------------------------
For year ended 31 December 2017
------------------------------------------- ------------------------------------------------------------
Loss
GBP'000 Weighted average number of shares (in thousands)
------------------------------------------- --------- -------------------------------------------------
EPS
Loss attributable to owners of the parent (3,585) 6,309
------------------------------------------- --------- -------------------------------------------------
7. Share capital
Number of shares Ordinary shares Share premium Total
(thousands) GBP'000 GBP'000 GBP'000
---------------------- ------------------ ---------------- -------------- ---------------------
At 1 January 2018 6,309 315 - 315
Share issue 2,166 109 1,191 1,300
Cost of share issue - - (72) (72)
At 30 June 2018 8,475 424 1,119 1,543
---------------------- ---------------- -------------- ---------------------
On 17 January 2018 the Group announced the terms of a
fundraising by WH Ireland Limited, acting as its Nominated Adviser
and Broker, to raise a total of up to approximately GBP1,300,000
(before expenses) by way of a firm placing, a conditional placing
and an open offer.
In each case new ordinary shares of 5 pence each ("Ordinary
Shares") were issued at a price of 60 pence per share.
The issue price of 60 pence per new Ordinary Share ("Issue
Price") represented a discount of 24 per cent against the
mid-market price of 79 pence per share at which the Ordinary Shares
were quoted on AIM as at close of trading on 16 January 2018, the
last trading day prior to announcement of the Fundraising.
The firm placing comprised of 630,840 new Ordinary Shares (the
"Firm Placing Shares") at the Issue Price (the "Firm Placing"). A
total of GBP378,504 (before expenses) has been raised by way of the
Firm Placing utilising the existing share authorities granted at
the 2017 AGM. The Firm Placing was conditional only upon compliance
by the Company in all material respects with its obligations under
the Placing Agreement and the admission of the Firm Placing Shares
to trading on AIM.
The conditional placing comprised of 639,158 new Ordinary Shares
(the "Conditional Placing Shares") at the Issue Price (the
"Conditional Placing"). The Conditional Placing raised GBP383,495
(before expenses). The Conditional Placing was conditional, inter
alia, upon Shareholders approving Resolution 1 at the General
Meeting, compliance by the Company in all material respects of its
obligations under the Placing Agreement and the occurrence of First
Admission and Second Admission which took place on 13 February
2018.
The Open Offer comprised of 901,250 new Ordinary Shares to
Qualifying Shareholders pursuant to the Open Offer at the Issue
Price. The Open Offer was conditional, inter alia, upon
Shareholders approving Resolution 2 at the General Meeting,
compliance by the Company in all material respects of its
obligations under the Placing Agreement and the occurrence of First
Admission and Second Admission which took place on 13 February
2018.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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