STAFFORDSHIRE, U.K., Nov. 11, 2004 (PRIMEZONE) -- Tricell Inc. (OTCBB:TCLL), a supplier and distributor of mobile telephones and accessories, today provided an overview and a clarification of the Company's strategy going forward.
2004 has seen the management of Tricell focused on a strategy to meet changing market and regulatory conditions with the objective of maximizing shareholder value. The organization was built on wholesale distribution and trading of handheld mobile phones sourced from worldwide mobile connection networks. Tricell accessed predominantly excess stock and sold it on to distribution companies, brokers, retail outlets and networks in other countries. This business grew exponentially and engendered significant profitability for all the participants to a point when the whole market, including wholesalers and exporters, faced new regulation and changes in the tax reclaim procedures. This squeezed out the smaller companies and led Tricell's management to adjust its strategy to focus on acquisitions, diversification and other opportunities that had arisen.
"We deliberately reduced our sales volume and inventory last year due to the potential withholding of tax reclaims," commented Andre Salt, chief executive officer of Tricell Inc. "The amount of money that could have been withheld would have had an unacceptable impact on the shareholders had we not taken this action. As a result, management has largely avoided the problem and put in place all the procedures necessary to move forward once again with all our existing contacts, be they manufacturers, suppliers or their partners. This gives us the opportunity not only to return to our 2002 performance from existing operations but also to increase our profit levels because of our increased ability to move the stock ourselves. In addition, we have broadened our scope of operations around our core capabilities and restructured with appropriate access to product supplies -- including distribution and logistics -- to facilitate rapid inventory turnovers with minimal operating expenses. The time is now right to grow by strategic acquisition and partnership and that is what we have done."
Mr. Salt continued, "Today, Tricell has the infrastructure capable of supporting that diversification and growth at a time when demand for product has never been greater. Tricell is the only Company in the market with the ability to deliver a variety of products to the entire market -- wholesale, retail, domestic and international -- with delivery within 48 hours regardless of the size or value of the order, and this is a key differentiator between Tricell and the competition. We at Tricell have developed an impressive and diverse suite of products which we can sell through a variety of channels to our large captive audience. I believe we are now well positioned for long term success."
The first part of Tricell's new strategy was to create a vertical market to guarantee supply and minimize corporate overhead and management time. Accordingly, Tricell agreed to acquire Capital Logistics, a distribution company with proven management capabilities and excellent technical products with its own impressive client base. The Capital Logistics bolt-on means access to their lower courier and freight forwarding costs, their network of other exporters, and their trading desk, all of which means an increase in inventory turnover with minimal additional capital expenditure. The inventory turnover of Capital Logistics, a key metric, is in excess of $45 million in 2004.
Tricell's strategy of gaining market share has been achieved by negotiating with trading companies who both export and distribute stock throughout the U.K., Europe, Far East and Middle Eastern countries. The Company is in a high volume business, currently in excess of $345 million annually, with a gross profit in excess of 2.5 per cent. In this high volume business, the profit is directly affected by the Company's logistics performance. Tricell can now handle all the transfers and stock movement alongside inspections and electronic tagging and this allows increased profits without decreasing inventory turnover. Tricell is pleased to announce that it has partnered with Ace Telecom for distribution capability (Ace Telecom has a turnover of circa $224 million for the first eight months of the year, with a full-year projection of nearly $336 million).
Tricell is negotiating to acquire another distribution company in the entertainment sector, which will naturally mesh into the logistics operation. As important is the bolt onto the delivery mechanism which is normally one of the highest cost components and this fits naturally with the delivery mechanism of the recently announced D-ISC acquisition -- the Intranet discount shopping company which currently serves large captive employee audiences. The forecast 2005 turnover for D-ISC is circa $90 million, which will be driven forward as additional products and clients are accessed in the current program.
Capital Management expects the turnover and profit within each acquisition to double in the Tricell infrastructure.
"Taking into account the volumes of current operations, our targets and expectations internally, and the revenue of the acquisitions we have made, we expect the overall revenue levels to exceed $1 billion next year," Mr. Salt continued. "Clearly, this marks a substantial improvement over our 2003 results but represents incremental growth compared to our 2002 revenue levels, which were at $756 million prior to the change in the tax laws. Management has aggressively built a substantial Company with established product acquisition, distribution, and logistic components which we can leverage to grow revenues while minimizing fixed expenses. We are in the process of putting the final pieces in place and expect additional meaningful announcements in the near term. With the current businesses in place, we have the ability to scale beyond the $1 billion revenue mark while maintaining reasonable gross profit levels and we believe additional opportunities for leverage exist and are attainable, both through organic growth and through acquisition."
About Tricell, Inc.
Tricell International, the trading subsidiary, supplies and distributes mobile telephones, telephone accessories and electronic commodities in Europe and Asia. Tricell Distribution, the U.K. logistics and support division, supply airtime and hardware to the dealer network and call centers throughout the U.K. Tricell Distribution has recently completed the Virtual Service Provision License agreement with Vodafone and the Guardline Group.
For more information, please visit www.tricell.co.uk