Triplearc's Huge Leap In Profits - Up 256%

The Triplearc Group has reported massive increases in turnover and profitability - with sales up more than 100 per cent and profits boosted by more than 200 per cent.

The Triplearc Group has reported massive increases in turnover and proftiability - with sales up more than 100 per cent and profits boosted by more than 200 per cent.

Turnover for the year ended December 2004 was GBP 48.7m, compared with GBP 20.9m in 2003 - a 134 per cent increase, whilst gross profit for 2004 was GBP 12.2m, compared up 256 per cent on 2003's GBP 3.4m.

Earnings before interest, tax and amortisation were GBP 4.5m GBP 0.9m, an increase of 391 per cent over 2003, whilst profit before tax was GBP 3.3m (2003 - GBP 0.8m) which was up by 301 per cent and earnings per share were 1.31p (2003 - 0.71p), an increase of 85 per cent.

Cash generation from operations was GBP 3.4m, up 108 per cent on 2003's GBP 1.6m.

Commenting on the results, Jason Cromack, Triplearc's chief executive officer said: "The year ended December 2004 was a year of huge progress for.

We accomplished the complete integration of Access Plus, which transformed the group and delivered a significant improvement in our earnings stream.

Looking to the future we expect this trend to continue as we progressively move away from ad hoc print supply orders towards longer term print management contracts.

The substantial contract wins and the expansion of the CWS network provides clear evidence of this.

The Group remains determined to drive growth both organically and via acquisition to provide complete communications support services to our customers.

We are focusing on adding complementary services and developing the potential of our technology.

We look forward to delivering another successful year." He added that the revenue for the year reflected the first full year of sales from Access Plus and that the consolidated gross profit's growth was primarily achieved by the group's print management operations.

In 2004, exceptional costs of GBP 0.3m were incurred by the integration of Access Plus and the reorganisation of the Group's print management activities in to one operating company.

Amortisation of intangible assets was GBP 2.1m during 2004 (2003 - GBP 0.6m), reflecting a full year's charge on the acquisition of Access Plus.

Operating profit before allowing for exceptional costs, amortisation and share option compensation (EBITA) was GBP 4.5m in 2004, compared to an operating profit of GBP 0.9m on the same basis in 2003, which represented a five per cent increase over the pro forma annualised EBITA of GBP 4.3m in 2003.

The operating profit before interest and taxation was GBP 2.1m (2003 - GBP 0.1m) and the net interest payable was GBP 1.4m (2003 - GBP 0.1m, after allowing for amortisation of deferred financing costs of GBP 0.1m (2003 - Nil).

The profit before tax in 2004 was GBP 0.8m, compared with a loss in 2003 of GBP 0.04m.

Cromack added that cash generation had also been strong in 2004, with the group producing net cash inflow from operating activities of GBP 3.4m (2003 - GBP 1.6m) which had allowed the group to make accelerated bank debt repayments during 2004.

Last December the group acquired HFS Projects Limited, now trading as Stream, giving rise to goodwill on acquisition of GBP 8.2m and an estimated liability for deferred consideration of GBP 7.0m included in long term liabilities.

Stream provides direct marketing fulfillment services and enhances Triplearc's suite of services, expanding in to data management and fulfillment services.

Those capabilities allow TripleArc to add further value throughout the supply chain, ensuring that clients' objectives are met, said Cromack.

Cromack added that Triplearc's vision was to provide total communications support services and the strategy involved the provision of complementary services to assist companies in communicating more intelligently and effectively, through traditional print as well as with digital methods.

Triplearc said that it has developed further services internally and through partnerships to ensure that it can help its clients improve their communications and offer them competitive advantages.

Those services include digital asset management, document creation, retail campaign management and digital communication management and integration.

The value of an all encompassing service to a client's print needs is reflected in the level of contracts Triplearc won last year including Virgin Mobile and Virgin Retail and that ability to deliver several added value services in the supply chain helped the group cement relationships with its customers.

The strategy behind the acquisition of Access Plus in November 2003 was to enable the Group to compete for the large scale, long term print management outsourcing contracts put out to tender.

The year under review saw that strategy pay off with Triplearc being awarded contracts with an aggregated value of approximately GBP 32 million, added the company.

Those contracts range from one year rolling contracts to five year fixed term agreements with companies that include BAA, Virgin Retail, Virgin Mobile, BMI Healthcare and Matalan.

Triplearc believes that the prevailing business environment is continuing to drive interest in outsourcing as companies focus on reducing costs to improve bottom line performance.

Its opinion is also that whilst the print industry is the UK's fifth largest sector, the supply chain is complex and fragmented.

As a result, companies with a large print spend will almost certainly benefit from an outsourced print management service, particularly as Triplearc has demonstrated savings of over 30 per cent to some of its clients.

As the outsourcing market continues to grow, so the contracts being awarded become more complex and sophisticated and information technology has become a major driver.

Triplearc said it believes that it is well placed to capitalise on that because of its technology that is designed to streamline the supply chain and help it to re-engineer customers' business processes to achieve greater savings.

The division now trades under the name of Accessplus and provides print management direct to print buying customers across a diversity of industries that includes retail, financial services, leisure, publishing and the public sector.

The year saw the integration of Access Plus with the group's existing print management business, gl2.

The integration of Access Plus was combined with the roll out of a group-wide accountancy system and Triplearc's proprietary technology across the divisions and its suppliers.

On an operational level the newly created division performed well and overall sales margins were ahead of initial expectations.

However, the achievement of full-scale revenue generation on certain new contracts took longer than originally anticipated due to contract timing delays.

Whilst those timing delays had an impact on the 2004 financial performance, Triplearc's board fully expected the group to generate the revenues anticipated from those contracts in the current financial year.

The company reported that the UK business forms market continues to decline as more businesses move towards automated systems requiring single sheet products.

That had an effect on the profitability of one of Triplearc's business groups that manages a high percentage of that work.

However, the group said it is confident that it will be able to continue to migrate its business away from that sector and provide a more comprehensive group-wide offer to those customers.

That, combined with a slow down in the retail sector has led to a slightly slower than expected start for the print management division in 2005.

Accessplus experienced a good level of success during 2004 in the public sector that now accounted for seven per cent of the group's gross profit.

Triplearc said that it aimed to continue growing that part of its business, which will benefit from the public sector's commitment to e-business and cost savings.

The print management division has also been successful in providing cost savings to the retail sector.

That was highlighted by the winning of the Virgin Mobile and Virgin Retail POS contracts.

The sophistication of those contracts had enabled the division to further enhance its services and technology.

Technology from partner companies had been adopted and integrated in to Triplearc's existing systems and fulfilment services, which had enabled it to provide a comprehensive POS service that is now being cross-sold to other customers.

The new business activity within Accessplus remains high and the division is currently at preferred bidder status with a large financial services business to provide a significant print management contract.

The board expected to be able to confirm details of the contract soon said the group.

The group's technology division, TripleArc , markets and supports the group's proprietary systems, Collaborative Workflow System (CWS), Edit2print and Online Stock Catalogue and Ordering System (OSCOS), and provides internal support to the print management division, providing a strong competitive advantage believes Triplearc.

Triplearc added that its JDF1 compliant technology remained at the core of its offer and the group is benefiting from the increasing adoption of JDF within the print industry.

In 2004, Triplearc announced a strategic partnership with Four51 Inc to distribute CWS in the US market.

Four51 is seeing an increase in demand for CWS as the US market's appetite to outsource commercial print from large enterprises grows.

The roll out of the CWS technology in to the customer base of Pathforward (a business unit of Standard Register, one of the largest print groups in the US) was progressing well and the board expected to be able to give further updates on its strategic partnership with Four51 and opportunities in the US later in the year.

The CWS network now has suppliers connected to it across the UK, Europe and US, said the group, which said it is currently identifying suppliers in the Far East and Asia that will add further competitive services to the fast growing network.

The print spend through the network is continuing to gain momentum and the group is beginning to see a solid recurring revenue stream being generated from CWS.

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