2006 Interim Results

1
2006 Interim Results
14 August 2006
2
Disclaimer
Any statements set forth herein or communicated
verbally that are not historical facts are
forward-looking statements or opinions that
involve risks and uncertainties that could cause
actual results to differ materially from those in
the forward-looking statements.
3
Contents

• Overview
• Interim results
• New management team and focus
• Operational review
• Platform for growth
• Buoyant market conditions
• Real growth drivers
• Strong market positions
• Best of breed products
• Organic growth strategy
• Organic growth case studies
• Summary

4
Overview

• Business
• International market leading provider of retail
  IT systems and services
• 2005 and 2006 acquisitions successfully
  integrated
• Strong platform for growth now established
• Absolute focus on driving organic growth going
  forward
• Financial
• Sales of 131.9m up 151 on 2005 with operating
  profit of 18.2 million up 129 on last year
• Strong underlying organic growth achieved Sales
  8 and Operating Profit 15
• Adjusted EPS of 2.9p represents a 21 uplift on
  2005

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Interim Results Profit and Loss
Summary Profit Loss m Six months to 30 June 2006 Six months to 30 June 2005 Increase
Revenue
Continuing 126.1 52.5 140
Acquisitions 5.8 - 11
131.9 52.5 151
Overheads as of Sales 48.2 54.1
EBIT
Continuing 17.1 8.0 114
Acquisitions 1.1 - 14
18.2 8.0 128
Exceptional costs - restructuring (4.9) (1.8)
Adjusted EPS 2.9p 2.4p 21
Return on Sales
Continuing 13.6 15.5
Acquisitions 19.0 12.9
Group 13.8 15.2
Acquisition driven sales growth underpinned by
strong organic growth
6 reduction in Overheads arising from 2005
restructuring activity
Return on sales is effected by increased
proportion of hardware sales in Continental
Europe
before goodwill amortisation, cost of employee
share schemes and exceptional items
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Interim Results Geographical Analysis
Sales
ROW 8
ROW 17
CE 16
CE 36
UK 76
UK 47
2005
2006
EBIT
ROW 8
ROW 11
CE 8
CE 37
UK 84
UK 52
2005
2006
The aggressive acquisition strategy has
delivered the required presence in key global
markets with strong growth across Continental
Europe and the US
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Interim Results - Analysis of First-Half
Revenues
2006
Other
Hardware
United Kingdom
Maintenance
Continental Europe
Software
Services
2005
Rest of World

• Software and Services sales in the UK remain
  strong, representing 41 of sales
• Strengthening sales in Continental Europe and the
  Americas have increased the Hardware proportion
  of Group sales
• The weighting of Software sales in the second
  half, combined with the contribution from recent
  acquisitions is expected to bolster the level of
  software activity and the mix for the full year

8
Interim Results Organic Growth
H1 2005 Pro-forma m H1 2005 Pro-forma m Underlying organic growth H1 2006 Continuing operations m
Revenue
Continuing operations 52.5 52.5 126.1
Add pre acquisition 64.5 64.5 -
Underlying revenue 117.0 117.0 126.1
EBIT EBIT
Continuing operations 8.0 8.0 17.1
Add pre acquisition 3.8 3.8 -
Less annualised savings arising from 2005 exceptional items - - (3.6)
Underlying EBIT 11.8 11.8 13.5




8
15

• Organic sales growth of 8 remains encouraging.
  The forecast revenues for the second half are
  consistent with low double digit organic growth
  for the full year
• The 15 growth in underlying organic profit is
  reflective of the full period impact of 2005
  acquisitions

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Interim Results Balance Sheet
Balance sheet m 30 June 2006 30 June 2005
Fixed assets
Intangible assets 396.7 105.2
Tangible assets 9.9 3.4
Investments 0.1 -
406.7 108.6
Current assets
Stocks 26.7 11.9
Debtors 89.1 38.5
Cash at bank and in hand 8.1 3.3
123.9 53.8
Creditors amounts falling due within one year (119.7) (50.1)
Net current assets 4.2 3.7
Total assets less current liabilities 410.9 112.3
Creditors amounts falling due after one year (153.9) (33.9)
Net assets 257.0 78.5

Increase in fixed assets arising
from acquisitions
Positive current trends in working capital
management
Bank borrowings of 147.9m compare to facility
of 160m
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Interim Results - Cashflow
Cashflow m Six months to 30 June 2006 Six months to 30 June 2005
Net operating cashflow pre exceptional items 12.1 4.2
Exceptional items (18.9) (1.8)
Net cashflow from operating activities (6.8) 2.4
Returns on investment and servicing of finance (5.4) (3.2)
Taxation (1.4) (0.3)
Capital expenditure (1.7) (0.3)
Acquisitions (3.1) (18.6)
Dividends (2.3) (1.1)
Net cashflow before financing (20.8) (21.1)
Issue of ordinary share capital - 0.1
Issue of share options 0.5 -
Finance lease repayments (0.8) -
New loans 15.7 13.2
Increase/(decrease) in cash in the period (5.4) (7.8)
Operating cash conversion rate pre exceptional items 119 75
Net operating cashflow pre exceptional items of
12.1m
Operational cashflow and servicing of finance
impacted by acquisitions
Encouraging cash conversion rates pre
Exceptional items
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New Management Structure and Focus

• Operational management has been restructured to
  focus on maximising organic growth opportunities
  in the coming period
• More de-centralised style of management to
  closely address market and customer requirements
• Five internal appointments that have been made
  reporting directly to the Plc Board
• CEO of UK General Retail Doug Hargrove (age 39)
  
• (Previously Chief Operations Officer, UK
  Ireland)
• CEO for Overseas Business Phil Cox (age 40)
• (Previously Group Treasury Officer)
• CEO of Hospitality QSR Keith Pascal (age 41)
• (Previously VP Sales Marketing Torex
  Corporation)
• CEO of Petroleum Convenience Brendan Kavanagh
  (age 41)
• (Previously Head of PC Division Worldwide)
• CEO of Americas General Retail Mike Hess (age
  43)
• (Previously President COO of Torex North
  America)
• The appointment of Marcus Leek as Group FD and
  Mark Lovett as UK FD has bolstered the finance
  function

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Operational Review - Retail

• Significant level of business wins across all
  markets from new and existing customers
• New - United News, GNER, Boots, Dutch Post
  Office, Nokia, Bed Bath and Beyond
• Existing - Matalan, Schlecker, CompUSA, Stein
  Mart, BJs Wholesale Club
• Integration of Anker now virtually complete
• Social plan agreed with work force in Germany and
  operations rationalised to one main site in
  Berlin
• UK operational teams unified
• Integration of Retail-J underway with very
  encouraging response from customers and prospects
• Strategy to drive own IPR software sales in US
  market starting to bear fruit
• First win for Lucas (The Picture People)
• Continued wins for ISIS (Paramount Foods, Marukai
  Corp)

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Operational Review - Hospitality

• Continued success in UK market
• Punch Taverns, Elior, Mitchells and Butlers
• Entry into international QSR market and McDonalds
  gained as worldwide POS client with acquisition
  of Savista
• Successful launch of XN GlobalRes product in
  hotel market and first sale of new in-room
  entertainment system
• Gaming business continuing to perform well with
  number of significant casino wins in both Europe
  and Africa

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Operational Review Petrol Convenience

• The PC division has made rapid progress in the
  period and is now in a strong position to
  capitalise on significant global opportunities
  available as part of the Torex brand
• Strategy to target supermarkets, MOCs and large
  convenience chains progressing well with wins
  including Budgens, Tescos and Statoil
• The divisional restructure into one trading
  entity is progressing successfully and already
  benefiting key accounts
• Significant extension of services portfolio with
  acquisition of TQIPS
• The integration of TQIPS is proceeding to
  schedule. New contracts secured through TQIPS
  include BT, Asda and Tesco
• The pipeline of future projects is strong
  including major contract opportunities in China,
  Jordan and Romania

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Platform For Growth - Buoyant Market Conditions

• Retail applications represent a large, growing
  market opportunity1

Market Size (MM)
Region
2005
2009
CAGR
North America
3,975
5,370
7.8
The global Retail software market is highly
fragmented no vendor has greater than 9 market
share1
Europe
1,659
2,207
7.4
Asia-Pacific
564
974
14.6
Central South America
229
505
21.9
Rest of World
209
218
1.1
Total
6,636
9,274
8.7
In-store and Enterprise Systems represent 60 of
all software spending in 20052
Over 50 of global Retailers indicated a
near-term project to upgrade or replace existing
systems1
Price
Inventory
Promotion 10
Management 9
Other Store
Operations 8
Retail Planning 9
Other 31
Retail Supply
Chain 10
Other Enterprise
POS Software 17
Retail 6

1. Source AMR Research, Retail Industry Market
   Analysis 2004-2009, December 2005. Includes
   Application License, Subscription, Maintenance
   and Implementation/Training.
2. Source AMR Research, Retail Industry Market
   Analysis 2004-2009, December 2005. 2005 Retail
   software license revenue market by application
   segment.

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Platform For Growth - Real Growth Drivers

• First major replenishment cycle post Y2K
• Massive IBM installed base becoming increasingly
  old and expensive for retailers to maintain
• New JAVA and .NET technologies create real
  benefits for retailers
• Real time data speeds up supply chain
• Increased flexibility and speed with pricing
  promotions
• Improved integration to ERP and CRM systems
• Significantly lower total cost of ownership
• Simplifies/enables multi-channel retailing

Buoyant market conditions set to continue for
next 3-5 years
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Platform For Growth - Strong Market Positions
Top European EPoS Software Provider2
Top Global Retail Software Provider2
2005 License Software
2005 Revenue
Company
Revenue (MM)1
Share
Not known
In-house
9
Others
23
13
2
Retail-J
Wincor Nixdorf
13
IBM
2
2
NCR
3
TEC
Retalix
Torex
Fujitsu
6
BT Expedite
10
7
10

1. Source AMR Research, Retail Industry Market
   Analysis 2004-2009, December 2005. Retail
   application license and hosting revenue.
2. Source Martec primary and secondary research

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Platform For Growth Best of Breed Products

• World class POS portfolio with significant growth
  opportunities via direct and indirect channels
• General retail Retail-J and Lucas
• Food retail ISIS
• Hospitality NewPOS
• SME DRS
• Complementary portfolio of leading in-store and
  head office solutions which provide significant
  cross selling opportunities
• Labour Scheduling ePerformance
• Merchandise planning Lucas Planning
• Warehouse management WMS
• Automated compliance Edict
• Business intelligence Galaxy
• Loss Prevention Lord

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Organic Growth Strategy

• Platform for growth achieved primarily through
  acquisition in 2005 and first half 2006
• Focus on organic growth in all markets
• Migrate massive installed base to own POS
  products
• Cross sell other applications
• Develop indirect channels
• Leverage market leadership position and brand
• Economies of scale

20
Organic Growth Case Study - Savista

• Increased business with McDonalds
• Accelerate POS rollout 24,000 plus restaurants
• Systems integration, implementation and
  maintenance services
• Torex software applications
• Hardware supply
• Target Top 100 international QSR chains sales
  pipeline gt 50m of live deals
• Develop indirect channel NewPOS currently
  implemented in 65 countries
• Sell NewPOS through own direct hospitality sales
  force in UK and Europe

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Organic Growth Case study Retail-J

• The Retail-J acquisition has completed the
  world-class POS portfolio and has created a
  substantial opportunity for both direct and
  channel sales
• Accelerated penetration of the UK market place
  has commenced with the product now actively
  marketed by the Torex UK sales force
• The pull-in of outsourced portions of Retail-J
  deals to in-house Torex resource is progressing
  well (i.e. hardware, services, other software)
• The Retail-J solution has been designed as a
  product that can be sold by third parties.
  Acceleration of worldwide distribution is a
  priority and the Group is actively creating an
  appropriate distribution network

22
Organic Growth Case Study Cross Selling

• Sample of executed deals
• Reiss have signed up to Edict business control
  software, WMS and Merchandise Planning
• Bargain Crazy have signed up to WMS
• 99p Stores have agreed to do a pilot of MCast and
  committed WMS
• Slaters Menswear are committed to Merchandise
  Planning
• There is an extensive portfolio of cross sell
  prospects. A sample of
• those at latter stage discussion include
• International Retail chains considering
  merchandise planning and business control
  software
• US retailer considering labour scheduling
• Tender to US QSR chain for full turnkey solution

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Summary
Sales and EBIT target achieved. Strong
underlying organic growth - Sales 8 and
Operating Profit 15
Results ahead of expectations
A massive customer base, extensive geographic
reach and leading edge products now in place
Platform for growth established
Senior management team strengthened with five
operational CEOs, alongside new Group and UK
finance directors
New management team in place
2005 and 2006 acquisitions successfully integrated

100 focus on organic growth
before goodwill amortisation, cost of employee
share schemes and exceptional items
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Any Questions ?
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Appendices
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Interim Results
Profit Loss m Six months to 30 June 2006 Six mothhs to 30 June 2005 Increase
Revenue 131.9 52.5 151
Cost of sales (50.1) (16.2)
Gross profit 81.8 36.3 125
Overheads (63.6) (28.3)
EBIT 18.2 8.0 128
Exceptional items (4.9) (1.8)
Charges for employee share schemes (2.6) -
Goodwill amortisation (9.4) (2.4)
Operating profit 1.3 3.8
Net interest payable (5.0) (1.7)
Profit on ordinary activities before tax (3.7) 2.1
Taxation (1.4) (1.3)
Profit on ordinary activities after tax (5.1) 0.8
Minority interest 0.1 -
Dividend (2.3) (1.1)
Retained (loss)/profit (7.3) (0.3)


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Interim Results
Balance sheet m 30 June 2006 30 June 2005
Fixed assets
Intangible assets 396.7 105.2
Tangible assets 9.9 3.4
Investments 0.1 -
406.7 108.6
Current assets
Stocks 26.7 11.9
Debtors 89.1 38.5
Cash at bank and in hand 8.1 3.3
123.9 53.7
Creditors amounts falling due within one year (119.7) (50.0)
Net current assets 4.2 3.7
Total assets less current liabilities 410.9 112.3
Creditors amounts falling due after one year (153.9) (33.9)
Net assets 257.0 78.4
Capital and reserves
Share capital 3.7 1.9
Share premium account 62.2 71.7
Merger reserve 202.4 -
Other reserve 8.5 0.5
Profit and loss account (19.8) 4.3
Shareholders funds 257.0 78.4