Final Results
Thomson Intermedia PLC
24 July 2007
24 July 2007
Thomson Intermedia plc
Final results for 15 months to 30 April 2007
Thomson Intermedia plc ('Thomson Intermedia' or the 'Group', AIM: THN), a
leading provider of media intelligence, today announces its final audited
results for the fifteen months to 30 April 2007.
Highlights
• Group revenue for the 15 month period was £20.0m (2006 - 12m to 31/1: £11.1m)
- 12 months Group revenue up 16% to £15.8m (2006 - 12m to 30/4: £13.7m)
- 12 months Core revenue up 29% to £15.1m (2006: £11.7m)
• Group underlying* operating profit for 15 months was £3.1m (2006: £2.4m)
- 12 months Group underlying* profit was £2.2m (2006: £2.9m)
- 12 months Core underlying* operating profit up 33% to £2.3m (2006: £1.8m)
• Group underlying* profit before tax for 15 months was £2.7m (2006: £2.4m)
• Group profit before tax for 15 months was £0.4m (2006: £1.9m)
• Underlying* diluted earnings per share for 15 months was 8.01p (2006: 7.30p)
• Management team strengthened across a number of levels
• Developed a new route to market to accelerate sales growth in the UK
• Strong international growth with the US up 57% on last year
- Investment completed in Spain and licensing deals signed in Greece and
Cyprus
• Encouraging momentum in current year with core renewal rates (by value) over
100%
* before Highlighted Items (see Note 3 below)
Sarah Jane Thomson, Joint Chief Executive of Thomson Intermedia plc, said:
'2006/07 was a particularly notable year for the Group with important advances
achieved although revenue from Development projects was lower than our original
expectations. Operationally we have now firmly established all of our key
capabilities in terms of products, data, technology and route to market.
Financially we are now in a much more robust position, having completed a
thorough overhaul of all our finances.
'This year we are seeing some good momentum in the Core business with renewal rates exceeding 100%. Furthermore, our
international operations continue to grow strongly, especially in the US where there are significant market
opportunities.'
Enquiries:
Thomson Intermedia
Sarah Jane Thomson, Joint Chief Executive Today 020 7457 2020
Michael Uzielli, Finance Director Thereafter 020 7321 4000
Bridgewell
Shaun Dobson/Fred Ward 020 7003 3000
College Hill
Adrian Duffield/Ben Way 020 7457 2815/2055
Overview
Thomson Intermedia made good progress during the past fifteen months with Group
revenues reaching £20 million, although revenue from Development projects was
lower than originally anticipated. As outlined below, there have been a number
of significant achievements which position the Group well for future growth:
• Completion of the integration of billetts, significantly bolstering the
overall management team
• Strengthening the Board with three new appointments, including a new Finance
Director
• Signing of a partnership agreement with WPP's GroupM, the world's leading
media agency group
• Development of a suite of tailored online systems to support a new route to
market
• Exploitation of the exclusive capture of advertising from over 90% of
regional newspapers
• Strong growth of the international business, particularly in the US, to 20%
of total revenues
• Completion of a licensing deal for media monitoring in Greece and Cyprus
• Investment in a media auditing business in Spain
The Group classifies its business into two types: Core and Development. The
Core business, encompassing Subscriptions, Consultancy and International income
streams, has continued to grow strongly. As highlighted earlier this year,
Development income was lower than originally anticipated as a result of delays
in securing pipeline opportunities. However, these projects remain active and
although they have the potential to be important sources of income, the
shortfall has not impacted the underlying performance and progress of the Group.
The new Finance Director initiated a comprehensive review of the Group's assets
and finances and consequently a more rigorous approach was adopted to revenue
recognition as part of the year end close process. This led to a one-off
adjustment to revenue and costs at the year end.
Strategy & Positioning
Thomson Intermedia aims to become the essential provider of business critical
media intelligence, measurement and evaluation services to UK and global
customers. The Group operates in a fast-changing market, historically based on
trust, where the need for reliable, comprehensive media data has never been
greater. There is also an increasing focus by advertisers on the value and
effectiveness of their marketing spend, often their largest external cost.
Thomson Intermedia is uniquely placed to capitalise on this market opportunity,
based on:
• Its leading positions in data capture, data analysis, and media consultancy
• The comprehensiveness, accuracy and sheer size of its database
• Its integrated, proprietary systems and technical expertise and
• The Group's deep knowledge and experience of the media industry
The database has been developed over ten years. It currently holds 72 terabytes
of data comprising four million advertisements which have appeared a quarter of
billion times across all the media including the internet. The database is a
key asset with market-leading functionality and content, providing the Group
with a notable competitive advantage. Uniquely, Thomson Intermedia receives
data in digital form from over 1,000 regional publications. Since its launch in
December 2005, the Publisher Platform has processed 2.3 million pdfs and has
captured some two million new creatives; the Group is currently processing over
300,000 regional pdfs a month.
Thomson Intermedia's proprietary technology is world-leading and scaleable. Its
systems are fully integrated into a single database to ensure that advertising
creatives and expenditure can be completely aligned. The technology allows the
fastest and most comprehensive capture of all advertising media and insertions
and uses sophisticated, tailored interfaces to provide this fundamental data,
peer group monitoring and associated analysis to marketeers.
UK Market
Thomson Intermedia is the leading provider of media auditing and competitive
monitoring to advertisers in the UK. The Group believes that the UK market
remains a source of significant growth. The Group aims to ensure that the
Thomson Intermedia system is available and in constant use on the desktops of as
many advertisers, agencies and media owners as possible in order to become the
standard currency of media spend in the UK. It is here that the Group's
development activities are focused. Not only will this create the opportunity
for a step-change in revenue for the Group in the UK, it will provide the
platform for significant growth in overseas markets.
In October 2006, the Group signed a partnership with GroupM, part of WPP plc,
which significantly enhances its route to market. GroupM will endorse Thomson
Intermedia's monitoring products and facilitate access to their customer base of
more than 650 of the UK's top advertisers. Thomson Intermedia has invested a
significant amount of development time in adapting its systems for the GroupM
partnership and for the agency environment in general. It has also been active
in building relationships and buy-in within the GroupM agencies, specifically
Mindshare, Mediacom and Mediaedge: CIA.
The development work has involved developing an entirely new agency and client
user front-end solution, automated reporting and distribution functions and
agency attribution (whereby advertisements can be filtered by agency which is a
fundamental requirement of this market). The new front-end product will be made
available to all of Thomson Intermedia's existing clients as well as to GroupM
and its clients which will bring significant upgrade opportunities.
The new system is currently in the late stages of beta testing and the Group
anticipates a controlled roll-out within GroupM and to existing clients starting
in September. The financial benefits of this new route to market should begin
to be felt by the end of the financial year.
International Development
The Group's business model is scaleable and there is a substantial opportunity
to grow revenues in international markets, many of which are less developed in
terms of media information and consultancy than the UK. The Board plans to
continue to invest in and develop businesses in key overseas markets in the form
of recruitment, small acquisitions and start-ups.
MPMA, the Group's US subsidiary, is a fast growth, profitable company with a
leadership position in the US media auditing market. The US is the largest
single advertising market in the world where media auditing (long accepted in
the UK) is still at a relatively early stage of penetration. The Group recently
launched its internet monitoring service in the US and is considering rolling
out other products in due course.
In Europe, the Group recently completed a modest investment in a media auditing
business in Spain and is actively pursuing the acquisition of a business in
another key market. These initiatives will strengthen the Group's competitive
position in the securing of global audit mandates as well as provide a platform
for domestic growth and non-audit products. The Group is committed to growing
its joint venture in Germany as well as to signing licence deals in smaller
territories such as the recently agreed transaction covering Greece and Cyprus.
In due course, the Group expects to establish a direct presence in other major
and developing advertising markets.
Financial Review
Following the extension of the Group's accounting reference date, Thomson
Intermedia is publishing its final results for the fifteen month period ended 30
April 2007. This review also contains unaudited proforma figures for the twelve
month period ended 30 April 2007.
Revenue
15 months 12 months 12 months 12 months
ended 30 ended 31 ended ended
April 2007 January 2006 30 April 2007 30 April 2006
(audited) (audited) (unaudited (unaudited
proforma) proforma)
£'000s £'000s £'000s £'000s
Core 19,131 8,918 15,084 11,712
Development 896 2,218 748 1,951
Total Revenue 20,027 11,136 15,832 13,663
Total Group revenue increased by £8.9m to £20.0m (12 months 2006: £11.1m) for
the fifteen month period. Group revenue in the final three months was adjusted
down by £0.4m (and costs increased by £0.1m) as a consequence of a comprehensive
review of accrued income and other receivables and the more rigorous approach
adopted to revenue recognition under existing policies. The adjustment relates
to income recorded in the twelve months preceding 31 January 2007 and does not
reflect the underlying trading performance during the final three months of the
period.
Core revenue was up £10.2m to £19.1m (12 months 2006: £8.9m). Development
revenue was £0.9m (12 months 2006: £2.2m) reflecting the previously announced
delays in project income and the high level of income in 2006 from retrospective
vouching and developing the Publisher Platform.
For the 12 months to 30 April 2007, total Group revenue was £15.8m, a 16%
increase (£2.2m) on the previous 12 months. On the same basis, Core revenue was
up £3.4m (30%) at £15.1m and Development revenue was £1.2m lower at £0.8m.
Gross Profit
Gross profit for the period was £11.3m, yielding a gross margin of 56.3% (2006:
62.9%) which has been consistent throughout the period. The margin decrease in
2007 reflects lower development income and the inclusion of billetts for the
full period, which has a lower gross margin than the original Thomson Intermedia
monitoring business.
Operating Profit
Profit before highlighted items is termed 'underlying operating profit'.
Certain items have been highlighted because separate disclosure is considered
helpful in understanding the underlying performance of the business.
15 months 12 months 12 months 12 months
ended 30 ended 31 ended ended
April 2007 January 2006 30 April 2007 30 April 2006
(audited) (audited) (unaudited (unaudited
proforma) proforma)
£'000s £'000s £'000s £'000s
Core 3,317 960 2,322 1,749
Development (192) 1,411 (134) 1,134
Underlying Operating Profit 3,125 2,371 2,188 2,883
Highlighted Items (2,337) (443)
Reported Operating Profit 788 1,928
Underlying operating profit for the fifteen months was £3.1m (2006: £2.4m).
Core business operating profit was £3.3m (2006: £1.0m). These figures were
adjusted down in the final three months by £0.5m as a result of the previously
mentioned year end review of accrued income and receivables. The Development
business recorded a loss of £0.2m (2006: £1.4m profit). Reported operating
profit was £0.8m (2006: £1.9m).
For the 12 months to 30 April 2007, underlying operating profit from Core
business was £2.3m which represents a £0.6m increase (33%) over the prior year.
Highlighted Items
15 months ended 12 months ended
30 April 2007 31 January 2006
(audited) (audited)
£'000s £'000s
Recurring:
Share based expenses 347 249
Amortisation of purchased intangible assets 484 162
Foreign exchange losses/(gains) 107 32
Total recurring 938 443
Non recurring:
Acquisition related (billetts) - performance bonus 206 -
- restructuring costs 155 -
Provision for doubtful debts 474 -
Onerous property lease obligations 218 -
Management restructuring 193 -
Holiday pay accrual (IFRS) 106 -
Professional fees 47 -
Total non recurring 1,399 -
Total highlighted items 2,337 443
The provision for doubtful debts relates to specific contracts from a line of
business which the Group no longer pursues. Other provisions for doubtful debts
are included within Administrative Expenses. This provision is unrelated to the
above-mentioned £0.5m adjustment to operating profit following the year end
review of accrued income and other receivables.
Profit Before Tax and EPS
Net finance costs were £0.4m (2006: £nil) which reflects an increase in the
Group's borrowings as a result of the billetts transaction.
Underlying profit before tax for fifteen months was £2.7m (2006: £2.4m). For
the 12 months to 30 April 2007, underlying profit before tax was £1.8m (2006:
£2.8m) whilst underlying profit before tax from the Core business increased by
17% to £2.0m (2006: £1.7m).
Reported profit before tax was £0.4m (2006: £1.9m).
Underlying diluted earnings per share for the 15 months was 8.01p (2006: 7.30p).
Diluted earnings per share was 1.87p (2006: 7.39p).
Cash and Debt
As at As at As at
30 April 2007 31 January 2007 31 January 2006
(audited) (unaudited) (audited)
£'000s £'000s £'000s
Cash 2,105 2,702 2,712
Debt (5,057) (6,400) (2,937)
Net Debt (2,952) (3,698) (225)
Operating cashflow for the 15 months was £2.8m (2006: £1.8m), reflecting an
improved working capital performance especially in the last nine months of the
period.
During the 15 months, the Group invested £0.8m in intangible assets (development
work now capitalised under IFRS). The associated amortisation cost in the
income statement was £0.6m.
The net debt position as at 30 April 2007 was £3.0m (2006: £0.2m) following the
issuance in August 2006 of vendor loan notes to the value of £3.7m related to
the billetts acquisition. As at 30 April 2007, £3.2m of these loan notes had
been redeemed. These redemptions were funded out of operating cash flow and a
£2.0m increase in bank debt.
As at 30 April 2007, the Group had unutilised banking facilities of £3.6m.
Dividend
The Board is not recommending the payment of a dividend, reflecting the high
growth nature of the Group and the numerous opportunities for further
development. However, given the cash generative nature of the Group's business
model this policy will be reviewed on an ongoing basis.
Operational Review
The Group classifies its business into two types: Core (which comprises
Subscriptions, Consultancy and International) and Development.
Core Business
Subscriptions
This area of the business comprises 67% of Group revenues and is made up of
advertiser monitoring, news monitoring, e-vouching and audit services.
Following recent development work, subscribers will soon be able to access these
services via new interfaces enabling both individual and bundled sales.
This business currently has over 360 customers (including 74 of the top 100 UK
advertisers), 54 of which currently take more than one Group product. The
renewal rate (by contract value) for the 12 months to April 2007 was maintained
at 90%, although this rate has increased to over 100% in the early months of
2007/08. The average contract value across the Group is £38,000 and for
customers who hold more than one Group product the average aggregate contract
value is over £90,000. Developing the cross selling opportunities is a key
priority for the Group.
During 2006/07, the Group consolidated its position as the pre-eminent provider
of media auditing, e-vouching and competitive monitoring in the UK.
Thomson Intermedia diversified its monitoring service into new client areas.
This included a significant healthcare related project from the Government, a
market-leading email monitoring product and a unique, real-time news monitoring
service.
In media auditing, the Group's market share increased to 64% with some
significant client wins, including Renault, Bird's Eye and Standard Life.
Revenues from the auditing of internet advertising and best practice consultancy
have more than doubled over the past year. Thomson Intermedia is the only
company offering a credible audit of online advertising in the UK.
The Publisher Platform, which was launched in December 2005, has exclusive long
term contracts with 10 regional media owners covering over 1,400 publications
and accounting for 90% of total regional press. The platform is now accessed by
70,000 users in the UK within media owners themselves, advertisers and over 100
national and provincial agencies across the UK. Due to the extensive volume of
publications being received digitally, the Group is now able to offer UK media
owners the first comprehensive monitoring and market share analysis system with
a lead generation tool. Thomson Intermedia is currently in discussions with the
regional media owners to roll out this new product.
Consultancy
This area of the business comprises 8% of Group revenues. Trading as billetts
marketing sciences, this unit is the leading independent provider of marketing
effectiveness consultancy in the UK. It focuses on answering the fundamental
questions facing marketeers about allocation of marketing spend and return on
investment. The consultants use a mixture of advanced analytical tools,
modelling, bespoke software tools and marketing experience. The Group has
developed a range of market-leading products across the FMCG, financial services
and retail sectors.
billetts marketing sciences has built strong client relationships and there is a
high level of repeat business: in 2006/07, 80% of revenues were derived from
established clients. There has also been significant growth in international
contracts, managed out of London, with successful projects undertaken across
five continents.
International
The Group's products and services have international appeal. International
revenues now comprise 20% of total revenues, up from 16% in 2006. For the 12
months to 30 April 2007, MPMA - the Group's US subsidiary - increased revenue by
57% over the prior year.
USA: The Group views the US media audit market as an area of significant
opportunity and MPMA, the Group's 80% owned subsidiary, is one of the leading
players in a relatively immature market segment. MPMA has continued to make
excellent progress with ten new client wins since April 2006, bringing the total
client base to 26. For the 12 months to 30 April 2007, MPMA recorded $2.1m in
revenues, an increase over the prior year of 57%, and contributed operating
profit of $0.3m. Approximately 80% of MPMA revenues are generated from US-based
customers with the remainder coming from international assignments. MPMA's
earn-out from the billetts acquisition ended on 30 April 2007 and, having
recently launched its online monitoring service in the US, the Group is now
considering extending its range of products and services further.
Germany: The Group owns 50% of Thomson Media Control (TMC) which currently
offers media monitoring services in Germany. It has grown well with a current
client base of 43 of which 23 were signed since May 2006. The Group is
currently exploring opportunities to extend products and services in Germany.
For the 12 months to 30 April 2007, TMC recorded €2.0m of revenues and is
expected to be in operating profit by the end of the calendar year. Under the
terms of the joint venture, the Group does not bear any financial risk but
receives a percentage of the profit arising once the accumulated losses have
been repaid. The Board does not expect TMC to have a material financial impact
on Group results until 2008/09.
Partners: The Group has partnerships with 16 companies in 25 countries to secure
local data, benchmarks and media training insight in order to provide an
international audit service. The Group believes there is an opportunity to
establish or acquire wholly-owned operations in certain larger key markets. As
described earlier, the Group has recently invested in a media auditing business
in Spain and is actively pursuing an acquisition in another key European market.
In May 2007, Thomson Intermedia signed a licence agreement with MMA Media
Analysis to launch a media monitoring operation in Greece and Cyprus. The Group
will supply its proprietary software and provide technical support to the
venture, without any financial exposure in exchange for an annual licence fee
and a percentage share of the operation's revenues. The Group may sign similar
deals in the future to gain footholds in other smaller countries.
Development Business
Development business is characterised by one-off project income which is
targeted so that it often leads to additional ongoing Core revenue sources. In
the past, development income has been derived from areas such as retrospective
vouching, licence fee income from Germany and up-front fees for the Publisher
Platform.
In 2006/07, Development income was lower than originally anticipated due to
delays in the securing of projects in the pipeline. The Group is still working
on a significant pipeline of projects and remains confident that a high
proportion will be closed during the current financial year.
The current pipeline includes projects to expand the Publisher Platform by
bringing on more media owners and by developing new services using the same
data. In addition, there are a number of international opportunities and other
bespoke projects in the pipeline.
Outlook
2006/07 was an important year for the enlarged Group, both operationally and
financially.
All the key operational capabilities, product, data, technology and route to
market are now in place to grow the business substantially and the investment in
the Group's sales and account management capabilities has continued to be a
priority. A new Sales Director, with 10 years of relevant industry experience,
was recently hired. The Board has also completed a thorough review of the
Group's balance sheet and taken a prudent view on assessing receivables. This
leaves the Group in a robust financial position going forward.
The Board is encouraged by the recent momentum in the Core business where the
Group has seen renewal rates by contract value exceeding 100%. Furthermore the
Group's international operations continue to grow strongly, especially the US
subsidiary where there is a significant market opportunity.
Thomson Intermedia has entered 2007/08 on a solid financial footing and the
Board is confident that the Group is well-placed to capitalise on its many
growth opportunities.
Consolidated Income Statement
for the fifteen months ended 30 April 2007
15 months 12 months ended
ended 31 January 2006
30 April
2007
Note £'000s £'000s
Revenue 20,027 11,136
Cost of Sales (8,758) (4,129)
Gross Profit 11,269 7,007
Administrative expenses - excluding highlighted items (8,144) (4,636)
Administrative expenses - highlighted items 3 (2,337) (443)
Total administrative expenses (10,481) (5,079)
Operating profit before highlighted items 3,125 2,371
Administrative expenses - highlighted items 3 (2,337) (443)
Operating profit 788 1,928
Finance income 80 49
Finance expenses (473) (55)
Net finance costs (393) (6)
Profit before taxation 395 1,922
Corporation tax 4 (79) (126)
Deferred tax 4 342 471
Tax income 263 345
Profit for the period 658 2,267
Attributable to:
Equity holders of the parent 607 2,277
Minority interests 51 (10)
658 2,267
Earnings per share
Basic 5 1.94p 7.75p
Diluted 5 1.87p 7.39p
All amounts relate to continuing activities.
Consolidated Statement of Recognised Income and Expense
for the fifteen months ended 30 April 2007
15 months 12 months ended
ended 31 January 2006
30 April
2007
£'000s £'000s
Profit for the period 658 2,267
Exchange differences on translation of overseas
subsidiary net assets 56 (6)
Deferred tax movement on share based expenses (101) (71)
Net losses not recognised in income statement (45) (77)
Total recognised income for the period 613 2,190
Attributable to:
Equity holders of the company 562 2,200
Minority interest 51 (10)
613 2,190
Consolidated Balance Sheet
as at 30 April 2007
30 April 31 January
2007 2006
Note £'000s £'000s
Non current assets
Goodwill 8,625 8,924
Other intangible assets 6 4,432 4,759
Property, plant & equipment 610 706
Investment in joint ventures 115 122
Deferred tax asset 895 952
Total non current assets 14,677 15,463
Current assets
Trade & other receivables: Due within one year 7 5,715 5,452
Current tax assets 105 -
Cash & cash equivalents 2,105 2,774
Total current assets 7,925 8,226
Total assets 22,602 23,689
Current liabilities
Bank overdrafts - (62)
Other financial liabilities (2,857) (250)
Trade & other payables (2,132) (2,041)
Current tax liabilities - (126)
Provisions (59) (3,850)
Accruals & deferred income (3,828) (3,644)
Total current liabilities (8,876) (9,973)
Non current liabilities
Other financial liabilities (2,200) (2,687)
Provisions (159) (269)
Deferred tax liability (825) (1,019)
Total non current liabilities (3,184) (3,975)
Total liabilities (12,060) (13,948)
Total net assets 10,542 9,741
Capital & reserves
Share capital 7,828 7,823
Share premium 1,840 8,869
Merger reserve (4,504) (4,504)
Translation reserve 50 (6)
Retained earnings 5,385 (2,333)
Capital and reserves attributable to the equity
holder of the parent 10,599 9,849
Minority interest (57) (108)
Total equity 10,542 9,741
Consolidated Cashflow Statement
for the fifteen months ended 30 April 2007
15 months 12 months
ended ended
30 April 31 January
2007 2006
£'000s £'000s
Cashflows from operating activities
Profit before taxation 395 1,922
Adjustments for:
Depreciation 414 276
Amortisation 1,120 593
Foreign exchange differences on operating activities - 32
Share option charges 307 249
Finance income (80) (49)
Finance expenses 473 55
2,629 3,078
Increase in trade receivables (225) (945)
Increase/(decrease) in trade payables 385 (324)
Cash generated from operations 2,789 1,809
Finance expenses (473) (71)
Income taxes paid (308) (6)
Net cash from operating activities 2,008 1,732
Cashflows from investing activities
Purchase of subsidiary, net of cash acquired - (7,012)
Purchase of property, plant & equipment (317) (264)
Purchase of intangible assets (793) (538)
Purchase of investments - (87)
Finance income 80 43
Net cash used in investing activities (1,030) (7,858)
Cashflows from financing activities
Proceeds from issue of share capital 32 4,343
Proceeds from long term borrowings 2,000 3,000
Repayment of bank loans (375) (63)
Loan note settlement (3,218) -
Net cashflow used in financing activities (1,561) 7,280
Net increase in cash, cash equivalents and bank overdrafts (583) 1,154
Effect of foreign exchange rate changes (24) (40)
Cash, cash equivalents and bank overdraft at beginning of period 2,712 1,598
Cash, cash equivalents and bank overdraft at
end of period 2,105 2,712
1. Accounting policies
Basis of preparation
The consolidated financial statements of the Group have been prepared in
accordance with International Financial Reporting Standards (IFRSs) and
International Financial Reporting Interpretations Committee (IFRIC)
interpretations as adopted by the European Union (EU) and with those parts of
the Companies Act 1985 applicable to companies reporting under IFRS.
This is the Group's first set of financial statements prepared in accordance
with IFRS. The transition date for the Group's application of IFRS is 1
February 2005, and the comparative figures for 31 January 2006 have been
restated accordingly.
Change in year end
The Group has changed its year-end from 31 January to 30 April in order to
better accommodate the commercial needs of the Group. These financial
statements therefore cover the 15 month period to 30 April 2007. As a result,
the comparative amounts in the income statement, cashflow statement and
statement of recognised income and expense (which cover the 12 months to 31
January 2006) are not entirely comparable.
Highlighted items
Highlighted items comprise significant non-cash charges and non-recurring items
which are highlighted in the income statement because separate disclosure is
considered helpful in understanding the underlying performance of the business.
2. Segmental reporting
The Group offers its clients a range of media information products and services.
These products and services were considered under a number of criteria
(including nature of the products and services, type or class of clients,
methods of distribution and supply), and it was concluded that the following
segments generally have separate risks and returns:
Core - Ad monitoring and media auditing products and services (subscriptions)
and marketing effectiveness services (consultancy)
Development - Projects leading to the creation of new revenue streams and/or the
enhancement of existing revenue streams
Primary reporting format - business segments
15 months ended 30 April 2007
Total
Other continuing
Core Development operations Eliminations operations
£'000s £'000s £'000s £'000s £'000s
Revenue
External 19,131 896 - - 20,027
Inter-segment 233 - - (233) -
Total revenue 19,364 896 - (233) 20,027
Result
Segment result 4,093 (192) - - 3,901
Unallocated corporate expenses (776)
Operating profit before 3,125
highlighted items
Highlighted items - (1,943) - (394) - (2,337)
administrative expenses
Operating profit 788
Finance income 80
Finance expenses (473)
Share of profit of associates/JVs -
Profit before tax 395
Tax income 263
Profit 658
Total
Other continuing
Core Development Operations Eliminations operations
£'000s £'000s £'000s £'000s £'000s
Other information
Segment assets 20,876 1,413 - - 22,289
Investment in equity method - - 115 - 115
associates/JVs
Unallocated corporate assets 198
Consolidated total assets 20,876 1,413 115 - 22,602
Segment liabilities (6,660) - - - (6,660)
Unallocated corporate (5,400)
liabilities
Consolidated total (6,660) - - - (12,060)
liabilities
Capital expenditure on PP&E 317 793 - - 1,110
and IFAs
Depreciation of PP&E (413) - - - (413)
Amortisation of intangible - (636) (484) - (1,120)
fixed assets
Other non-cash expenses
- foreign exchange (30) - (77) - (107)
Year ended 31 January 2006
Total
Other continuing
Core Development operations Eliminations operations
£'000s £'000s £'000s £'000s £'000s
Revenue
External 8,918 2,218 - - 11,136
Inter-segment - - - - -
Total revenue 8,918 2,218 - - 11,136
Result
Segment result 977 1,411 - - 2,388
Unallocated corporate expenses (17)
Operating profit before 2,371
highlighted items
Highlighted items - (194) - (249) - (443)
administrative expenses
Operating profit 1,928
Finance income 49
Finance expenses (55)
Share of profit of associates/JVs -
Profit before tax 1,922
Tax income 345
Profit 2,267
Other information
Segment assets 21,436 1,603 - - 23,039
Investment in equity method - - 115 - 115
associates/JVs
Unallocated corporate assets 535
Consolidated total assets 21,436 1,603 115 - 23,689
Segment liabilities (6,644) - - - (6,644)
Unallocated corporate (7,304)
liabilities
Consolidated total liabilities (6,644) - - - (13,948)
Capital expenditure on PP&E 264 538 3,395 - 4,197
and IFAs
Depreciation of PP&E (276) - - - (276)
Amortisation of intangible - (431) (162) - (593)
fixed assets
Other non-cash expenses
- foreign exchange (10) - (23) - (33)
Secondary reporting format - geographical segments
The Groups business segments operate in 4 main geographical areas. The home
country of the Group is the United Kingdom.
15 months to 30 April 2007 12 months to 31 January 2006
External Total assets Capital External revenue Total assets Capital
revenue by by location expenditure by by location of by location expenditure by
location of of assets location of customers of assets location
customers assets of assets
United Kingdom 16,438 22,119 1,092 9,569 23,535 4,197
Rest of Europe 1,405 - - 834 - -
North America 1,534 484 18 281 154 -
Rest of world 650 - - 452 - -
Total 20,027 22,602 1,110 11,136 23,689 4,197
3. Highlighted items
15 months ended 12 months ended
30 April 2007 31 January 2006
£'000s £'000s
Recurring:
Share based expenses 347 249
Amortisation of purchased intangible assets 484 162
Foreign exchange losses 107 32
938 443
Non recurring:
Acquisition related - performance bonus 206 -
- restructuring costs 155 -
Provision for doubtful debts 474
Onerous property lease obligations 218
Management restructuring costs 193 -
Holiday pay accrual 106 -
Professional fees 47 -
1,399 -
Total highlighted items 2,337 443
The performance bonus relates to the acquisition of billetts in August 2005.
The restructuring costs relate to the closure of the acquired entity's previous
head office.
The provision for doubtful debts relates to specific contracts from a line of
business which the Group no longer pursues. All other provisions for doubtful
debts are included within Administrative expenses.
The onerous property lease obligation relates to a property that the Group will
be vacating during the next financial year for which a shortfall between head
lease costs and sub lease income is expected.
The management restructuring costs relate to the replacement of the Finance
Director during the period.
The holiday pay accrual is an adjustment which has resulted following our change
in year end. This is expected to be a one time adjustment, since movements to
this accrual in subsequent years are not anticipated to be material.
Professional fees relate to legal and accounting advice in relation to the share
premium reduction and IFRS transition. All other professional fees are included
within 'Administrative expenses - excluding highlighted items'.
4. Taxation
15 months ended 12 months ended
30 April 2007 31 January 2006
£'000s £'000s
UK tax
Current year 60 126
60 126
Foreign tax
Current year 19 -
Total current tax 79 126
Deferred tax
Origination and reversal of temporary differences (69) (471)
Adjustments in respect of prior periods (273) -
(342) (471)
Total tax income (263) (345)
The difference between tax as charged in the financial statements and tax at the
nominal rate is explained below:
15 months ended 12 months ended
30 April 2007 31 January 2006
£'000s £'000s
Profit before tax 395 1,927
Corporation tax at 30% 119 578
Non deductible taxable expenses/(income) 14 (23)
Previously unrecognised deferred tax asset assessed as
recoverable at the end of the period (225) (853)
Overseas tax rate differential (2) -
Capital allowances 20 9
Pre acquisition profits - 113
EMI Options Sch 23 FA 2003 relief - (159)
Additional deduction for R&D expenditure (139) (113)
Prior year amortisation of other intangibles (49) -
Other timing differences (1) 103
Total tax income (263) (345)
5. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
15 months ended 12 months ended
30 April 2007 31 January 2006
£'000s £'000s
Earning for the purpose of basic earnings per 607 2,277
share being net profit attributable to equity
holders of the parent
Adjustments:
Deferred tax (342) (471)
Highlighted items - recurring* 938 443
Highlighted items - non recurring* 1,399 -
Earnings for the purpose of underlying earnings 2,602 2,249
per share
Number of shares
Weighted average number of ordinary shares for the 31,299,591 29,380,750
purpose of basic earnings per share
Effect of dilutive potential ordinary shares
Share options** 1,185,915 1,432,829
Weighted average number of ordinary shares for the 32,485,506 30,813,579
purpose of diluted earnings per share
Basic earnings per share 1.94p 7.75p
Diluted earnings per share** 1.87p 7.39p
Underlying basic earnings per share 8.31p 7.65p
Underlying diluted earnings per share 8.01p 7.30p
*Highlighted items (see note 3).
**Note that certain share options have been excluded from the calculation of
diluted EPS as their exercise price is greater than the weighted average share
price during the year (i.e. they are out-of-the-money) and therefore it would
not be advantageous for the holders to exercise those options. 297,647 (2006:
117,026) share options have not been included within the diluted earnings per
share calculation at 31 April 2007 as they are anti-dilutive for the periods
presented. These shares could potentially dilute earnings per share in the
future.
6. Other intangible assets
Capitalised Purchased Total
development costs intangible intangible
assets assets
£'000s £'000s £'000s
Cost
At 1 February 2005 2,157 - 2,157
Additions 538 3,395 3,933
At 1 February 2006 2,695 3,395 6,090
Additions 793 - 793
At 30 April 2007 3,488 3,395 6,883
Amortisation
At 1 February 2005 (738) - (738)
Provision for the year (431) (162) (593)
At 1 February 2006 (1,169) (162) (1,331)
Provision for the period (636) (484) (1,120)
At 30 April 2007 (1,805) (646) (2,451)
Net book value
At 30 April 2007 1,683 2,749 4,432
At 31 January 2006 1,526 3,233 4,759
At 31 January 2005 1,419 - 1,419
The capitalised development costs are internally generated.
On 23 August 2005 the Company acquired the entire share capital of BCMG Limited
(billetts) for a maximum total consideration of £13.1m. In line with IAS 38
intangible assets owned by billetts have been independently valued by an
external consultant and shown within 'Other intangible assets' on the balance
sheet.
Amortisation is charged within administrative expenses so as to write off the
cost of the purchased intangible assets over their estimated useful lives. The
assets, initial values and periods used are as follows:
Purchased intangibles Cost at acquisition Useful Remaining period of
economic life amortisation
£'000s Years Years
Media Consulting Customer relationships 2,859 10 8.5
Marketing Sciences Customer relationships 271 5 3.5
MPMA Customer relationships 43 2 0.5
Trade name 215 10 8.5
Non-compete 7 1.5 -
3,395
The carrying values of the Media Consulting Customer relationships and the
Marketing Sciences Customer relationships at 30 April 2007 are £2,383,000 and
£181,000 respectively (31 January 2006: £2,740,000 and £248,000 respectively).
The group tests other intangible assets annually for impairment, or more
frequently if there are indications that the assets may be impaired. No
impairment was recognised in 2007 (2006: £nil).
7. Trade and other receivables
30 April 2007 31 January 2006
£'000s £'000s
Trade and other receivables due within one year
Trade receivables 4,739 4,019
Less provision for doubtful debts (574) (144)
Net trade receivables 4,165 3,875
Other receivables 65 427
Prepayments & accrued income 1,485 1,150
5,715 5,452
There are no trade and other receivables due after one year.
The Directors consider that the carrying amount of receivables and prepayments
are reasonable approximations of their fair value.
The provision for doubtful debts is estimated by the Directors based on prior
experience, the result of specific contract disputes, and their assessment of
the current economic environment.
8. Financial information
The financial information set out above does not constitute the company's
statutory accounts for the fifteen months ended 30 April 2007 or the year ended
31 January 2006, but is derived from those accounts. Statutory accounts for the
year ended 31 January 2006 have been delivered to the Registrar of Companies and
those for the fifteen months ended 30 April 2007 will be delivered following the
company's annual general meeting. The auditors have reported on those accounts;
their reports were unqualified, did not include references to any matters to
which the auditors drew attention by way of emphasis without qualifying their
reports and did not contain statements under the Companies Act 1985, s 237(2) or
(3).
When published, the Group's annual report and Accounts will be sent to
shareholders and will be made available to the public at the Group's registered
office, 1 Westmoreland Road, Bromley, Kent BR2 0TB.
Notes supplementary to, but not forming part of, the Group financial statements
for the period ended 30 April 2007
Unaudited proforma Consolidated Income Statement for the twelve months ended 30
April 2007
The following unaudited proforma consolidated income statement for the twelve
months ended 30 April 2007 has been prepared for illustrative purposes only to
provide results for a twelve month period following the change in our year end
from January to April.
Unaudited proforma
12 months ended
30 April 2007
£'000s
Revenue 15,832
Cost of Sales (7,026)
Gross Profit 8,806
Administrative expenses - excluding highlighted items (6,618)
Administrative expenses - highlighted items (2,161)
Total administrative expenses (8,779)
Operating profit before highlighted items 2,188
Administrative expenses - highlighted items (2,161)
Operating profit 27
Finance income 63
Finance expenses (416)
Net finance costs (353)
Loss before taxation (326)
This information is provided by RNS
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