Final Results
Thomson Intermedia PLC
25 March 2004
Thomson Intermedia plc
Preliminary results for the year ended 31 January 2004
31% Increase in gross sales with significant cash generation
Thomson Intermedia is a leading provider of media information.
• Turnover up 38% to £4.05m (2003: £2.94m)*
• Gross sales contracts increased by 31% to £4.74m (2003: £3.61m)
• Deferred income of £2.52m secured for next financial year
• Loss before tax significantly reduced to £647,000 (2003: £1.34m)*
• Net cash of £1.23m: operational net cash inflow of £422,000 (2003:
outflow £242,000)**
• New contracts increased by 17% to £1.95m (2003: £1.66m), with 70 new
clients won
• 82% of client revenue renewed
• Revenue in first six weeks of current financial period better than
anticipated
• Group in final stages of negotiation with a third party to provide
additional product offering
* Results stated and previous year's figures restated following adoption of
amendment to FRS5
** Adjusted figures to provide comparative performance
Sarah Jane Thomson, Joint Chief Executive Officer of Thomson Intermedia, said:
'We have continued to successfully develop and enhance the business, whilst
showing strong sales growth and cash generation.'
'For the first time since float, we have reached the critical point where our
revenues now exceed our cost base. We have growing demand for our products,
huge market opportunity and improving market conditions, which will drive
considerable and exciting growth to our bottom line.'
25 March 2004
Enquiries:
Thomson Intermedia
Sarah Jane Thomson, Chief Executive 020 7457 2020 (today)
David Trendle, Finance Director 020 7549 4343 (thereafter)
College Hill
Kate Pope 020 7457 2006
Adrian Duffield 020 7457 2815
Results
Thomson Intermedia has achieved market expectations in all metrics. The
introduction of amendments to FRS5 regarding the recognition of revenue,
however, has had a material impact on the results. The effect has been to defer
an additional £600,000 of contract revenue to the next financial year.
Consequently, both the loss before tax and the deferred income balance have
increased by the same amount.
The total value of sales contracts signed in the year rose by 31% to £4.74m
(2003: £3.60m) and exceeds total expenditure incurred of £4.69m in the financial
year. It also results in deferred income of £2.52m (2003: £1.83m), secured for
the next financial year. This provides a solid base for contract renewals.
New contracts signed in the year increased 17% to total £1.95m (2003: £1.66m).
The average value of all contracts rose by 28% with the average value of new
contracts substantially increasing by 76% to £22,000. The 82% rate of renewal of
existing contracts further endorses the competitive advantage gained by the
Group's products.
On the new accounting basis, revenue for the period was up 38% to £4.05m (2003:
£2.94m). Direct costs increased by 11% as a result of the expansion of Thomson
Intermedia's product range during the year. Gross margin improved to 56.1%
(2003: 45.6%).
Overheads were well controlled showing an increase of only 8% to £2.93m. The
Group has continued to invest substantial sums improving existing systems as
well as developing new systems. This cost has been expensed as incurred. The
year-on-year increase in expenditure relating to research and development
amounted to £136,000 and accounted for 5% of the increase in overheads.
The loss before taxation has been significantly cut to £647,000 (2003: £1.34m).
Thomson Intermedia has obtained tax credits in respect of its development
expenditure for prior periods, which leaves a balance of £322,000 to be debited
to reserves.
Basic and diluted loss per share significantly improved to 1.1p this year
compared to a loss per share of 4.7p in the previous year.
The Group recorded positive operating cash flow of £202,000, reflective of the
relationship between contracts signed and costs incurred. On a comparative
year-on-year basis the operational cash flow improved to an inflow of £422,000
from an outflow of £242,000 in the previous year. Given the high operational
gearing of the business, the Group will continue to generate cash as revenues
grow, with the only major non-operational cash outflow being investment in
technology.
The Group increased net funds by £230,000 during the year, this includes a cash
inflow of £189,000 relating to Research and Development tax credits, with a
further £136,000 received after the year-end. The Group had a year-end cash
balance of £1.23m (2003: £1.00m).
The strength of the Balance Sheet continues to improve with net current assets
of £2.03m. The Group has also built a significant asset in the data library it
has created. This asset is not recognised on the Balance Sheet and all
development expenditure continues to be expensed as incurred.
Strategy
The Group has focussed on providing innovative systems in the Advertising and PR
sectors, empowering companies with real-time and insightful information. Our
strategy is to drive growth in the UK market, where our systems capture data for
the entire population, targeting the 5,000 companies with advertising
expenditure in excess of £100,000. Thomson Intermedia's News Evaluation product
has also become a 'currency' in the market featuring in PR Week, with revenue
growth expected as the Group expands publication coverage.
Thomson Intermedia continues to drive cost efficiencies through increasing use
of automation technologies, leveraging its high operational gearing to ensure
the Group delivers strong EBITDA growth.
The Group continues to improve and extend its product range providing
differentiated and new services through its proprietary technology and
innovation.
Products
There is a growing need for companies to understand the impact of their
advertising against the backdrop of competitor noise and an increasingly
fragmented media market.
The Group's unique product positioning is focussed on meeting this need. The
product range provides empowerment to advertisers whose combined expenditure
exceeds £10 billion per annum. Thomson Intermedia's current market penetration
is only 3% for the top 5,000 spending advertisers, and is only 9% for those
spending in excess of £1 million, yet the systems capture data for the entire
population. The Group's cost base is therefore stable and hence its continued
focus on increasing product penetration into the market will have significant
impact on future results.
Over the last 12 months the Group have grown its subscriptions by 70 clients
selling in at senior level, with recent wins including the following:
Churchill, Ladbrokes, More Th>n, Marks and Spencer, BSkyB and WH Smith.
Thomson Intermedia has had an extremely encouraging rate of new client
subscriptions with total new business value exceeding £2 million. The newly
developed Utopia product, which combines advertising and news in a tailored and
timely environment, has an average value of £37,000.
Thomson Intermedia has continued to accelerate its research and development with
a growing number of in-house developers. This has resulted in some significant
breakthroughs in technology and further advancements of our existing capture and
delivery techniques.
The Group has successfully developed the cornerstone of automatic sentiment
evaluation, which when completed will enable significant expansion of its
syndicated news evaluation system, Newsmetrics. It will quantify the impact of
vast quantities of news from multi-channel news feeds into comparable indices.
Some exciting opportunities, which add further value to the Group's existing
proposition, are now in the final stages of negotiation with third parties. If
successfully completed, these will significantly affect the revenue opportunity
and the Group's standing in the coming year.
Current trading and prospects
The Group is now in a very strong position within the media monitoring industry.
The continuation of its recent progress in securing contracts will ensure
markedly improved trading results.
Market conditions are gradually improving and the Board is experiencing a
notable increase in the level of interest and acceptance of the Group's existing
products. Revenue in the first six weeks of the current financial period is
better than anticipated and Thomson Intermedia has received higher levels of new
enquiries.
Consolidated Profit & Loss Account
For the year ended 31 January 2004
As restated
2004 2003
Note £'000 £'000
Turnover 1, 6 4,047 2,939
Cost of sales (1,778) (1,599)
Gross profit 2,269 1,340
Operating expenses (2,934) (2,708)
Operating loss (665) (1,368)
Interest receivable 18 27
Interest payable - (1)
Loss on ordinary activities before taxation (647) (1,342)
Taxation 325 -
Loss on ordinary activities after taxation (322) (1,342)
Loss per share 2
Loss per share, pence - basic and diluted (1.1) (4.7)
All amounts relate to continuing activities
Consolidated Statement of Total Recognised Gains and Losses
For the year ended 31 January 2004
As restated
2004 2003
Note £'000 £'000
Consolidated statement of total recognised gains and
losses
Loss for the financial year (322) (1,342)
Total recognised gains and losses for the year
Prior year adjustment 6 (369)
(691)
Consolidated Balance Sheet
as at 31 January 2004
As restated As restated
2004 2004 2003 2003
Note £'000 £'000 £'000 £'000
Fixed assets
Intangible fixed assets 43 55
Tangible fixed assets 451 483
494 538
Current assets
Debtors 1,438 995
Cash at bank and in hand 1,229 1,005
2,667 2,000
Creditors: amounts falling due
within one year (637) (536)
Net current assets 2,030 1,464
Total assets less current
liabilities 2,524 2,002
Accruals and deferred income (3,194) (2,381)
(670) (379)
Capital and reserves
Share capital 7,186 7,155
Share premium 5,064 5,064
Merger reserve (5,250) (5,250)
Profit and loss account 6 (7,670) (7,348)
Equity shareholders' funds (670) (379)
Consolidated Cash Flow Statement
for the year ended 31 January 2004
Note 2004 2004 2003 2003
£'000 £'000 £'000 £'000
Net cash outflow from operating 3 202 (22)
activities
Returns on investments and
servicing of finance
Interest received 18 24
Taxation
Research & Development tax credit 189 -
received
Capital expenditure
Purchase of tangible fixed assets (185) (167)
Sale of tangible fixed assets 6 -
Net cash outflow from capital (179) (167)
expenditure
Acquisitions and disposals
Purchase of business assets - (60)
Net cash inflow / (outflow)
before management of liquid
resources and financing 230 (225)
Management of liquid resources
Reduction in short term deposits 91 161
Financing
Capital element of finance lease (6) (3)
payments
Increase / (decrease) in cash in 5 315 (67)
the year
Notes to the Financial Statements
for the year ended 31 January 2004
1. Accounting Policies
The financial statements have been prepared in accordance with applicable
Accounting Standards under the historical cost convention.
The principal accounting policies are:
Basis of preparation
The accounts have been prepared on a going concern basis taking into account
continued sales growth predicted for the future and high operational gearing, as
outlined in more detail in the Press Release. Accordingly the Directors, at the
date of approval of these financial statements, consider it appropriate to
prepare the financial statements on a going concern basis.
Basis of consolidation
The consolidated financial statements incorporate the results of Thomson
Intermedia Plc and its subsidiary undertaking, as at 31 January 2004, using the
merger method of accounting.
Merger accounting
Where merger accounting is used, the investment is recorded in the Company's
balance sheet at the nominal value of the shares issued together with the fair
value of any additional consideration paid.
In the Group financial statements, merged subsidiary undertakings are treated as
if they had always been a member of the Group. The results of the subsidiary
are included for the whole period in the year it joins the Group. The
corresponding figures for the previous year include its results for that period,
the assets and liabilities at the previous balance sheet date and the shares
issued by the Company as consideration as if they had always been in issue. Any
difference between the nominal value of the share capital acquired and those
issued by the Company to acquire them is taken to reserves.
Turnover
Turnover represents income earned during the period on contracts with customers
after the deduction of value added tax. The Company has changed its accounting
policy following the amendment to Financial Reporting Standard 5 'Commercial
substance over legal form' (Application note G). Details of the impact of this
change are shown in note 6. Income is now recognised evenly over the period of
the contract.
2. Loss per share
Basic loss per share, calculated in accordance with Financial Reporting Standard
14 'Earnings per share', is based upon the loss on ordinary activities after tax
of £322,769 (2003: Loss £1,342,416) apportioned over the weighted average number
of ordinary shares that were in issue for the period of 28,640,080 (2003:
28,619,247). The calculation of diluted loss per share is the same as basic
loss per share as the impact of any potential ordinary shares is antidilutive.
3. Net cash outflow from operating activities
As restated
2004 2003
£'000 £'000
Operating loss (665) (1,368)
Depreciation 211 170
Amortisation 12 5
Other non-cash operating expense 31 -
Increase in debtors (306) (133)
Increase in creditors 106 159
Increase in accruals and deferred income 813 1,145
Net cash flow from operating activities 202 (22)
4. Reconciliation of net cash flow to movement in net funds
2004 2003
£'000 £'000
Increase / (decrease) in cash in the year 315 (67)
Cash outflow from decrease in debt and lease financing 6 3
Cash inflow from decrease in liquid resources (91) (161)
Movement in net funds in the year 230 (225)
Net funds at start of year 999 1,224
Net funds at end of year 1,229 999
5. Analysis of net funds
Opening Cash Closing
balance flow balance
£'000 £'000 £'000
Cash 155 315 470
Liquid resources 850 (91) 759
Cash at bank and in hand 1,005 224 1,229
Finance leases - due within 1 year (6) 6 -
999 230 1,229
6. Prior year adjustment
The Board approved a change in accounting policy relating to revenue recognition
following the amendment to Financial Reporting Standard 5. Revenue arising from
all contracts is now recognised evenly across the contractual period of those
contracts. The change in policy has impacted the results as shown below:
Results under previous
policy Movement As restated
£'000 £'000
£'000
Turnover FY 03/04 4,647 (600) 4,047
FY 02/03 3,066 (127) 2,939
Deferred Income At 31 Jan 04 1,548 969 2,517
At 31 Jan 03 1,457 369 1,826
Profit & Loss account At 31 Jan 03 (6,979) (369) (7,348)
Relating to 02/03 (127)
Relating to previous
periods
(242)
The previous policy recognised a proportion of revenue on signature of the
contracts to fairly reflect the delivery of the developed systems and extensive
data library. The amended Financial Reporting Standard 5 'Commercial substance
over legal form' (Application note G) only allows separate recognition of
revenue where this is recognised contractually and those revenue components are
delivered separately. The Board implemented the change in policy to comply with
the amendment to this Financial Reporting Standard.
7. The Accounts
The preliminary results for the year ended 31 January 2004 do not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
The full statutory accounts, which will be available to shareholders shortly,
have been reported on by the Group's auditors but have not yet been delivered to
the Registrar of Companies. Full accounts in respect of the year ended 31
January 2004 will be delivered to the Registrar of Companies and the Audit
Report on these accounts is unqualified.
8. The Annual Report and the AGM
The Annual Report and Accounts will be posted to shareholders by 7 May 2004, and
the Annual General Meeting will be held on 9 June 2004.
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