Preliminary Results
Thomson Intermedia PLC
25 April 2006
Thomson Intermedia plc
Underlying pretax profits up 254%
Thomson Intermedia, a leading provider of media intelligence, today announces
its preliminary results for the year ended 31 January 2006
Group Financial Highlights
• Turnover increased by 88% to £11.1m (2005: £5.9m)
• Underlying pretax profit* increased by 254% to £2.2m (2005: £0.6m)
• Adjusted earnings per share** increased by 178% to 7.15p (2005: 2.57p)
• Gross sales increase by 30% to £12.3m (2005: £9.5m)
• Deferred income up 68% to £4.7m (2005: £2.8m)
Operational highlights
• Acquisition of billetts, the UK market leader in media and marketing
performance consultancy, in August 2005 for an initial consideration of £7.5m
o Integration progressing well
• 101 new group contracts secured and 32 upgraded
• Exclusive long-term deals signed with top six regional media owners
• Group renewal rate exceeds 90%
*pre amortisation and share incentives
** pre amortisation, share incentives and deferred tax
Sarah Jane Thomson, Joint Chief Executive Officer of Thomson Intermedia, said:
'The year to January 2006 has been one of the most exciting and dynamic for the
Group, as we not only reported very strong organic growth but completed the
strategically important acquisition of billetts in August 2005. These results
prove the significant benefit of the billetts acquisition across all metrics
despite the fact that both businesses largely traded independently during the
billetts earn-out phase.'
'The focus now is to complete in May the full integration of the two businesses,
products and personnel, in order to benefit from the combined strength of
Thomson Intermedia's technology & data with billetts value-added media
consultancy.'
'Next year will see the launch of unique products and we look forward to
benefiting financially & operationally from our strengthening customer base as
well as from a fully integrated Group in the UK.'
25 April 2006
Enquiries:
Thomson Intermedia
Sarah Jane Thomson, Joint Chief Executive Today 020 7457 2020
David Trendle, Finance Director Thereafter 020 8466 2906
College Hill
Adrian Duffield/Ben Way 020 7457 2815/2055
Financial Results
Group turnover in the year to 31 January 2006 increased by 88% to £11.1m (2005:
£5.9m), of which billetts contributed £3.7m. The original Thomson Intermedia
business showed strong organic revenue growth up 26% to £7.5m (2005: 5.9m),
whilst billetts' revenue increased by 16% for the comparative five months in its
2005 financial year.
Thomson Intermedia gross sales contracts grew by 26% to £8.1m (2005: £6.3m)
including fees of £400,000 (2005: £233,000) from its German investment. New
sales contracts continued at a strong pace, up 38%, to £3.4m (2004: £2.4m).
Retrospective vouching continued its growth contributing £1.0m (2005: £0.4m).
billetts billings (gross sales) were £4.3m for the five month period to January
2006, with £3.5m relating to subscription contracts and £0.8m to consultancy
projects.
The Group deferred income, secured on future contracts, increased by 68% to
£4.7m (2005: £2.8m), £0.5m which relates to billetts contracts.
Gross profit increased by 73% to £7.0m (2005: £4.1m), with billetts contributing
£1.6m. The original Thomson Intermedia's gross margin continues to improve, up
from 68.4% to 72.5%. billetts' gross margin improved to 43.5%. Overall Group
margin was 63%.
Underlying operating margins, before long term incentives and goodwill
amortisation, increased sharply to 23.4%, for the original Thomson Intermedia
business (2005: 10%) with billetts margin improving from 7% to 13%. The
resultant Group operating margin was 20%. This improvement was aided by tight
cost control resulting in single digit cost growth for both businesses.
Underlying group pretax profit increased by 254% to £2.2m (2005: £0.6m),
including a contribution of £0.4m from billetts. Group pretax profit was £1.8m
(2005: £0.4m).
Adjusted earnings per share improved by 178% to 7.15p from 2.57p. Basic
earnings per share improved from 3.30p to 7.00p.
The Group has a tax credit movement of £0.4m, with £3.8m of tax losses carried
forward. A tax charge of £0.1m has arisen against billetts profits.
The Board is not recommending a dividend in this financial year. In order to
create distributable reserves and provide flexibility, if required, the
Directors plan to apply to the courts to eliminate its cumulative losses against
its share premium account. This will be put forward for shareholder approval at
the AGM. The Board will review its dividend policy following this restructure.
The Group is operationally cash generative with cash flow improving by 223% to
£1.2m (2005: £0.4m). The Group has moved to a net debt position of £0.2m as
part of the the acquisition of billetts was funded by cash.
The initial consideration paid for billetts was £7.5m. The Group raised £4.5m
in a vendor placing, with the balance being funded by 403,153 shares to the
vendor and £3m of bank facilities.
The Group has a maximum contingent consideration of £5.6m, payable in loan notes
dependent on billetts' performance between 1 May 2005 and 30 April 2007. The
Board estimate that the maximum earn-out of £3.9m will be payable based on the
billetts' performance relating to year ending 30 April 2006. The performance of
the US subsidiary, MPMA, is encouraging with a number of recent new business
wins.
Strategy
Thomson Intermedia's vision to be the leading provider of advertising and media
transparency and intelligence has been significantly advanced by the earnings
enhancing acquisition of billetts. The enlarged Group will provide an
invaluable and comprehensive turnkey solution to advertisers, delivered directly
to the desktop supported by expert media consultants, to ensure they receive
maximum benefit from every pound of their marketing spend.
Thomson Intermedia is now capitalising on its proprietary technology and eight
years of data to penetrate the UK market and expand its product reach. The
combination of the Group's leading technology and scale of its dataset have
created significant barriers to entry for any potential competitors.
With the strength of billetts, the UK's leading media performance management
consultancy, the enlarged Group is now placed at the hub of the advertising
triangle (advertiser - agency - media owner). Thomson Intermedia will provide
essential solutions to all three groups.
The developed product suite will help advertisers throughout their whole
communications cycle, ensuring and monitoring every pound of marketing spend is
as effective as possible.
The constituents of the cycle offered by the Group now include:
• Agency Management: billetts consultancy services help advertisers to
identify the best agency for their requirements, construct the most appropriate
contract for their needs, and structure relevant incentivisation packages for
the agency.
• Planning & Insight: billetts consultants can help clients gain impartial
advice on the best strategy for them, independently reviewing agencies proposals
on levels of spend and which media routes to use.
• Market Intelligence: Thomson Intermedia's systems provide the insight into
the weight of competitor activity, the mix of communications channels being
used, and the likely impact of the clients' messages in real time.
• Verification: Thomson Intermedia's online vouching enables an instant audit
of a client's ads having appeared
• Performance & ROI: billetts' econometric capability coupled with Thomson
Intermedia technology and data can provide unique and valuable insights into the
effect of marketing spend. This is the final stage of the communications cycle,
thereby completing the product circle.
The Group can also extend its reach to advertisers targeting the top 5,000 with
highly functional web-based systems, for the first time enabling media auditing
and ROI analysis to be presented to this group via a Thomson Intermedia
interface.
The addition of the high value added consultancy, which billetts brings, will
also enable deeper penetration within the existing customer base as well as
cross selling opportunities for the full suite of products. The technological
and database skills held by Thomson Intermedia will enable a more efficient and
valuable service alongside the potential to be the independent supplier for all
the marketing needs of the advertiser.
The move into the publisher platform (details below) will allow the Group not
only to cut costs and improve it's product; it will provide the backbone for
numerous services to the media owners to assist them in reducing costs and
improving efficiencies. It will also place the Group at the forefront of
regional media in terms of intensity of data, cementing its position as the most
accurate and technologically advanced provider of marketing information.
Acquisition of billetts
The acquisition of a value added media consulting was logical for the business
as a complimentary area which enhanced Thomson Intermedia's position and further
differentiated its service as the key provider of independent and transparent
marketing information and knowledge.
The acquisition was structured to include two tranches of contingent
consideration based on the earnings performance of the billetts business in the
first instance, and the earnings of its US subsidiary, MPMA, in the second
instance. This was to accommodate the potential earnings growth of the
developing marketing sciences and international revenue streams within the
billetts business and the continued improvement in securing new revenue and
moving further into profitability for MPMA, which is still in the early stages
of the growth cycle in an emerging and transforming market in the US.
As the Group approaches the end of the first period to 30 April 2006, the
billetts business has continued to strengthen, not only winning more
international work, but also gaining market share in the UK, securing work in
new media and securing a healthy improvement in its marketing effectiveness
brand (marketing sciences).
Operational review
(i) Thomson Intermedia
Core business
Thomson Intermedia has continued to develop the core subscription business. New
contract activity was strong with 63 new contracts secured alongside a further
32 upgrades to existing contracts. Renewal rates continue to improve; up to 88%
(2005: 83%), with the corporate renewal rate over 90%, whilst continuing to
increase yields from existing clients. Average rates for new subscription
business increased to £28,000 from £25,000.
Publisher platform
Thomson Intermedia has already signed exclusive contracts with the top six
regional media owners to its publisher platform. This enables the media owners
to gain efficiencies through an electronic vouching system directly accessible
by the agencies. Using the Thomson Intermedia technology, over 1,000
publications are moving from a manual scanning process to electronic receipt of
pdf and metadata. Thomson Intermedia will therefore significantly enhance its
database to include the vast majority of the £3 billion regional advertising
spend.
Thomson Intermedia will also be able to expand its offering to media owners by
providing the first ever electronic system which enables communication and
analysis between media owners and agencies and will be used by most media
agencies in the UK. System developments will include electronic approval,
invoicing and sales ledger processes
Retrospective Vouching
Thomson Intermedia has continued to drive the importance of transparency and has
won additional clients for whom Thomson Intermedia has identified errors.. The
business model continues to be developed and will be integrated into the full
proposition over time.
Germany
Having now completed a year, the German operation is improving its offering with
more trend data. Operations are progressing well as they have benefited from
the latest versions of Thomson Intermedia's systems, with sales continuing to
improve. Recent wins include Sony and Unilever. The German operation expects
to break even in early 2007 with increasing returns as revenue exceeds the
relatively fixed cost base. The profit share agreement commences in 2007 when
the royalties agreement lapses at the end of 2006. This is pleasing progress as
it shows that the business is replicable in other countries and proves the
requirement for the products in other territories.
(ii) billetts
billetts media consulting
This division accounts for 78% of the billetts group's turnover and provides
media performance monitoring for high spending advertisers. billetts media
consulting has enhanced its position in the UK with further wins both from
competitors and new business. In addition, the billetts brand has been
broadening its international presence with numerous multi-national contracts
which have grown to nearly 30% of billetts media consulting's revenue. billetts
has developed a strong partnership network to assist this growth across Europe
and more recently into Asia.
A measure of the value and calibre of media consulting is demonstrated in its
exceptionally high retention rate with the loss of only three subscription
clients during the last nine months.
billetts marketing services (ROI)
This division accounts for 18% of the billetts group's turnover and provides
consultancy focused on optimising marketing return on investment for advertisers
through ad hoc consultancy projects. In the nine months to January 2006, 25
contracts were secured with an average value of £43,000. Revenue for this
period shows a 21% increase on the previous year, which is consistent with the
growing need and the enormous potential within the division.
The division has grown its client base with a large number of clients providing
recurring work and will be benefiting from developments providing ongoing
solutions to clients.
Media Performance Marketing America (MPMA)
billetts 80% owned US subsidiary, MPMA, continues to gain traction in this
emerging market, with revenue growth of circa 120% to $1.3m expected comparing
the year ending 30 April 2006 to the previous year. With John Billett's main
focus being MPMA from May 2006 along with the strengthening of the US based
team, the signs for continued expansion are extremely positive.
MPMA's clients collectively represent 7% of all US broadcast, cable and
syndication advertising spend for 2005. Analysis shows that TV advertisers
using MPMA services have on average enjoyed a 26% improvement in their media
value in 2005 compared to 2003, providing their advertisers with unparalleled
marketing efficiencies. The analysis identifies price ranges to be +/- 30%
around the average. MPMA have completed a comprehensive review of its data to
understand this differential including a review of upfront versus scatter
markets, the quality of buying and the size of budget available.
Integration & management
During the second half of the year there have been a number of working groups
set up to ensure a successful integration of the two businesses, both from a
product point of view and importantly from a staff perspective.
The main areas of focus have been:
• Personnel and organisational changes into a new structure
• Group strategy and vision
• Development of billetts media audit product for new advertiser segments
• Improvement of data provision to billetts
• Development of Group products
The IT developers have been working extremely hard applying technology to the
billetts business which provides integrated databases across the Group business.
They have developed an extremely powerful and impressive new online audit system
planned to be launched in the summer.
One of the significant benefits of the acquisition was the high calibre
additional management resource which existed in billetts. The restructure
maximises the potential of this resource within the Group to drive the
integrated business forward.
On 1 May 2006 the integration of all the non US businesses will be finally and
fully implemented, which will include new key management Group roles for five of
the billetts staff.
Current trading and outlook
The focus over the last six months, has been to integrate the businesses in
order to capitalise on their combined influence and strengths. The integration
has been progressing well, and following the UK earn out completion date of 30
April 2006, Thomson Intermedia will be moving ahead with an exciting joint
development plan.
The Group already enjoys a strong client base, with over 70 of the top 100 UK
advertisers as ongoing clients. The Board looks forward to deepening these
relationships and providing more products and services to these clients as well
as driving penetration deeper into the additional 4,650 advertisers for whom it
has data and systems, as well as agencies and media owners. The new structure
will encourage both enhanced customer relationships and new business growth.
With a dedicated resource on international expansion Thomson Intermedia aims to
build on the lessons and experience of its German business and the opportunities
that exist both in the US, as part of MPMA and billetts partners to identify and
drive international expansion of the Group's products.
The Board is confident that the enlarged Group is in a significant and strong
position to continue its UK penetration, capitalise in the short to medium term
on revenue synergies from the integration of the businesses and develop its
international strategy to launch its scalable solution in other markets.
The first quarter of the year has started well, in line with the Board's
expectations, with a strong pipeline of business across the entire product
suite.
-------
Consolidated Profit and Loss Account
for the year ended 31 January 2006
Note 2006 2006 2005 2005
£'000 £'000 £'000 £'000
Turnover - continuing operations 7,459 5,924
Turnover - acquisitions 3,677 -
Total Turnover 2 11,136 5,924
Cost of sales - continuing operations (2,051) (1,870)
Cost of sales - acquisitions (2,078) -
Total cost of sales (4,129) (1,870)
Gross profit - continuing operations 5,408 4,054
Gross profit - acquisitions 1,599 -
Total Gross Profit 7,007 4,054
Overheads - continuing operations (3,676) (3,475)
Long term incentives (229) (258)
Overheads - acquisitions (1,345) -
Administrative Expenses - continuing operations (3,905) (3,733)
Administrative Expenses - acquisitions (1,345) -
Total Administrative Expenses (5,250) (3,733)
Operating profit - continuing operations 1,503 321
Operating profit - acquisitions 254 -
Total Operating Profit 2 1,757 321
Interest receivable 49 39
Interest payable and other finance costs (55) -
Profit on ordinary activities before taxation 1,751 360
Research and development tax credit - 114
UK Corporation tax on profits at 30% 5 (126) (6)
Deferred tax 5 430 480
Taxation 5 304 588
Profit on ordinary activities after taxation 2,055 948
Minority Interest 10
-
Retained profit for the year 2,065 948
Earnings per share, pence
- basic 3 7.00 3.30
- diluted 3 6.67 3.14
All amounts relate to continuing activities and acquisitions as part of
continuing operations
All recognised gains and losses are shown other than £6k of foreign currency
losses, which will be shown in the full statutory accounts within the Statement
of Total Recognised Gains and Losses.
Consolidated Balance Sheet
as at 31 January 2006
Note 2006 2006 2005 2005
£'000 £'000 £'000 £'000
Fixed assets
Intangible fixed assets 11,054 31
Tangible fixed assets 706 518
Investments 122 -
11,882 549
Current assets
Debtors: Due within one year 5,926 2,290
Debtors: Due after more than one year 1,235 2
Total Debtors 7,161 2,292
Deferred tax 910 480
Cash at bank and in hand 2,774 1,598
3,684 2,078
Total current assets 10,845 4,370
Creditors: amounts falling due within one year (2,479)
(848)
Net current assets 8,366 3,522
Total assets less current liabilities 20,248 4,071
Creditors: amounts falling due after one year (2,687) -
Provisions for liabilities and charges 6 (4,119) -
Accruals and deferred income (5,767) (3,535)
2 7,675 536
Capital and reserves
Share capital 7,823 7,186
Share premium 8,869 5,064
Merger reserve (4,504) (5,250)
Profit and loss account (4,405) (6,464)
Shareholders' funds 7,783 536
Minority Interest 108 -
7,675 536
Consolidated Cash Flow Statement
for the year ended 31 January 2006
Note 2006 2005
£'000 £'000
Net cash inflow from operating activities 7a 1,231 381
Returns on investments and servicing of finance 7b (28) 32
Taxation 7b (6) 251
Capital expenditure and financial investment 7b (264) (295)
Acquisitions and disposals 7b (7,099) -
Cash inflow before financing and management of liquid (6,166) 369
resources
Management of liquid resources 7b (515) (91)
Financing 7b 7,280 -
INCREASE IN CASH IN THE YEAR 599 278
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
2006 2005
£'000 £'000
Increase in cash in the year 599 278
Cash inflow from increase in debt (2,937) -
Cash outflow from change in liquid resources 515 91
Movement in net funds in the year (1,823) 369
Net funds at start of year 1,598 1,229
Net (Debt)/Funds at end of year 7c (225) 1,598
Notes to the Financial Statements
for the year ended 31 January 2006
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:
Acquisition method of accounting
As per FRS 7 Fair Values in acquisition accounting, any subsidiary's
identifiable net assets acquired will be attributed fair values reflecting
conditions at the date of acquisition. Under the acquisition method the results
of subsidiaries acquired are included from the effective date of acquisition.
When the cost of acquisition exceeds the fair values attributable to the group's
share of acquired net assets, the difference is treated as purchased goodwill.
This is capitalised and amortised as per the group goodwill policy stated below.
Future anticipated payments to vendors in respect of earn-outs are based on the
directors best estimates of future obligations, which are dependent on the
future performance of the interests acquired and assume the acquired company
maintain/improve profits in line with directors estimates. When earn outs are
to be settled by cash consideration, the fair value of the consideration is
obtained by discounting to present value the amounts expected to be payable in
the future. The discount rate used is that at which the group could obtain a
similar amount of borrowing. The resulting interest charge is included within
other finance costs adjacent to interest.
Transactions and balances between subsidiary undertakings are eliminated. The
results, assets and liabilities, including related goodwill, of overseas
subsidiaries are translated into sterling at rates of exchange ruling at the
balance sheet date. Exchange adjustments arising when the opening net assets
and the profits for the year retained by an overseas subsidiary are translated
into sterling, less exchange differences arising on related foreign currency
borrowings, are taken directly to reserves and reported in the statement of
total recognised gains and losses.
Goodwill
Goodwill is the difference between the cost of an acquired entity and the
aggregate of the fair value of that entity's identifiable assets and
liabilities.
Positive goodwill is capitalised, classified as an asset on the balance sheet
and amortised on a straight-line basis over its useful economic life. It is
reviewed for impairment at the end of the first full financial year following
the acquisition and in other periods if events or changes in circumstances
indicate that the carrying value may not be recoverable.
Acquisitions that entail significant market positions and which are of long-term
strategic significance to the Company's operations are classified as strategic
acquisitions, with goodwill amortised over 20 years.
For acquisitions of complementary operations in markets where the Company is
already established, the amortisation period for goodwill is between 5 and 10
years.
2. Turnover
The turnover and operating profit for the year was derived from the Group's
principal activities, which were carried out in the following regions:
2006 2005
U.K. Europe Rest of world U.S. Total U.K. Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Turnover 9,569 834 452 281 11,136 5,924 5,924
Operating profit 1,363 193 239 (38) 1,757 321 321
Net assets 7,979 - - (304) 7,675 536 536
The segmentation is based on origination, which is not materially different from
destination.
3. Earnings per share
2006 2005
£'000 Weighted Earnings per £'000 Weighted Earnings
average number share pence average per share
of shares number of pence
shares
Basic Earnings per share 2,055 29,380,750 7.00 948 28,744,247 3.30
attributable to ordinary
shareholders
Effect of options - 1,432,829 - - 1,437,212 -
Diluted Earnings per share 2,055 30,813,608 6.67 948 30,181,459 3.14
Adjustment for deferred tax (430) - - (480) - -
Adjustment for amortisation 246 - - 12 - -
Adjustment for share incentives 229 - - 258 - -
Adjusted Basic Earnings per 2,100 29,380,750 7.15 738 28,744,247 2.57
share before deferred tax,
amortisation and share
incentives
Effect of options - 1,432,829 - - 1,437,212 -
Adjusted Diluted Earnings per 2,100 30,813,608 6.82 738 30,181,459 2.45
share
Earnings per share before deferred tax, amortisation and share incentives are
presented as the Directors consider that this represents a meaningful measure of
performance of the Group. For diluted earnings per share, the weighted average
number of shares in issue is adjusted to assume full conversion of all dilutive
potential ordinary shares: those share options granted to employees where the
exercise price is less than the market price of the Company's ordinary shares.
4. Fixed asset investments
Company
Subsidiary
undertaking
£'000
Cost and net book value
At 1 February 2005 5,250
Additions ( see 24d ) 12,320
At 31 January 2006 17,570
At 31 January 2006 the company had interests in the following subsidiary
undertakings:
Direct Indirect Nature of business
Subsidiary undertaking Country of Class of share
incorporation capital held
Thomson Intermedia England and Wales Ordinary £1 100% - Technology and media
Associates Limited monitoring business
Acquisitions and other investments acquired during the year
Thomson Media Control Germany Baden-Baden Fixed capital 50% - Media consultants
Gmbh & Co Kg (TMC)
BCMG Ltd England and Wales Ordinary £1 100% - Holding company
billetts media consulting England and Wales Ordinary £1 100% - Media consultants
Ltd
billetts international England and Wales Ordinary £1 100% - Media consultants
Ltd
billetts marketing England and Wales Ordinary £1 100% - Marketing
sciences Ltd consultants
Barsby Rowe Ltd England and Wales Ordinary £1 - 100% Non-trading
billetts consulting England and Wales Ordinary £1 100% - Holding company
Limited
BCMG Acquisitions Limited England and Wales Ordinary £1 - 100% Holding company
billetts media management England and Wales Ordinary £1 - 100% Dormant
Ltd
BCMG US Inc US Corporation Ordinary $1 100% - Holding company
billetts America LLC US LLC Ordinary $1 - 80% Media consultants
During the year Thomson Intermedia PLC (TI) added or acquired the above
investments for the group.
For fair values of billetts group assets acquired see note 7d.
On the 23rd August 2005 the company acquired the entire share capital of BCMG
Limited (billetts Group) for a maximum total consideration of £13.1m. The
initial consideration comprised the allotment and issue of £0.85m ordinary
shares and £6.7m in cash. The final consideration is dependent on the financial
performance of the billetts Group for the period to 30th April 2006 and the
financial performance of billetts America LLC, BCMG's subsidiary in the United
States, to 30th April 2007. The maximum amount of deferred consideration is
£3.85m and £1.75m respectively.
The deferred consideration has been discounted in line with the Group's policy
and FRS 7. The deferred consideration is secured by Loan notes issued in favour
of BCMG's directors. The Loan note amounts reflect the estimated financial
performance against targets and a provision has been made for the contingent
consideration as shown in note 6. The loan notes as well as the Group's facility
with the Bank of Scotland are secured by way of a debenture agreement over the
assets of the Group.
The acquisition method of accounting has been used in the consolidation of the
billetts Group accounts with the Thomson Intermedia PLC Group's accounts.
Merger relief has been taken for the consideration shares.
5. Taxation on profit on ordinary activities
2006 2005
Group £'000 £'000
Corporation Tax at 30% 126 6
Research and development tax credit - (114)
Deferred tax (430) (480)
304 (588)
6. Contingent consideration for acquisitions
The acquisition of billetts, includes a deferred element that is contingent on
the future financial performance of the acquired entity. No material contingent
consideration will become payable unless the acquired entity delivers greater
profits during the earn-out period than prior to the acquisition. If the
earn-out conditions are met, £3.85m of the consideration will become payable in
2006, the remaining £1.75m will become payable in 2007. The provision for
contingent consideration for acquisitions represents the best estimate of the
amount expected to be payable in cash or loan notes. The contingent
consideration has been discounted in line with the group's policy and FRS 7.
Maturity of contingent consideration for acquisitions:-
Group Company
Cash or loan notes Cash or loan notes
2006 2005 2006 2005
£'000 £'000 £'000 £'000
In one year or less 3,793 - 3,793 -
In more than one year but less than two 326 - 326 -
years
Total contingent consideration 4,119 - 4,119 -
(See note 7d)
7. Notes to consolidated cash flow statement
a Reconciliation of operating profit to net cash inflow from 2006 2005
operating activities
£'000 £'000
Operating profit 1,751 321
Depreciation 276 228
Amortisation 246 12
Foreign exchange non-cash movement (8) -
Phantom share non-cash movement (106) 230
Issue of share options under UITF 17 335 28
Increase in debtors (2,648) (853)
Decrease in creditors (145) 211
Increase in accruals and deferred income 1,530 204
Net cash inflow from operating activities 1,231 381
b Analysis of cash flows for headings netted in the cash 2006 2005
flow statement
£'000 £'000
Returns on investments and servicing of finance
Interest received 43 39
Interest paid (71) (7)
Net cash (outflow)/inflow from returns on investments and (28) 32
servicing of finance
Taxation
Corporation tax (paid)/received (6) 251
Capital expenditure and financial investment
Purchase of tangible fixed assets (264) (295)
Acquisitions and disposals
Purchase of investment (87) -
Purchase of subsidiary undertakings (6,665) -
Net cash acquired with subsidiaries 344 -
Expenses paid in connection with purchase of subsidiary (691) -
undertakings
Net cash outflow from returns on investments and servicing of (7,099) -
finance
Management of liquid resources
Payments to deposit accounts (515) (91)
Financing
Receipts from issue of shares 4,500 -
Receipt of bank loan 3,000 -
Repayments of bank loan (63) -
New share issue costs (157) -
Net cash inflow from financing 7,280 -
c Analysis of net Opening Cash flow Acquisition Closing balance
funds
balance
£'000 £'000 £'000 £'000
Cash at bank and in hand 748 (164) 825 1,409
Liquid resources 850 515 - 1,365
1,598 351 825 2,774
Overdrafts - (62) - (62)
1,598 289 825 2,712
Loans - (2,937) - (2,937)
Net (Debt)/Funds 1,598 (2,648) 825 (225)
d Purchase of subsidiary undertakings
Description of item acquired Net Book Fair Value Fair Value
Value £'000 adjustment
£'000
£'000
Fixed Assets 196 - 196
Debtors 1,162 - 1,162
Other Debtors 851 - 851
Bank and Cash 344 - 344
Trade Creditors (421) - (421)
Other Creditors (623) - (623)
Taxation Liabilities (541) - (541)
Accruals and Deferred Income (13) - (13)
NET ASSETS ACQUIRED 955 - 955
Minority Interests 96 - 96
Goodwill Capitalised 11,269 - 11,269
Total 12,320 - 12,320
Comprising:
Cash 6,665
Shares 845
Deferred consideration (discounted) 4,119
Professional fees and costs 691
Total cost of acquisition 12,320
8. Financial Information
The financial information set out above does not constitute the company's
statutory accounts, within the meaning of Section 240 of the Companies Act 1985,
for the year ended 31 January 2006 or 2005, but is derived from those accounts.
Statutory accounts for the year ended 31 January 2005 have been filed with the
registrar of companies and those for 2006 will be delivered following the
Group's Annual general meeting. The auditors have reported on these accounts;
their reports were unqualified and did not contain a statement under Section 237
(2) or (3) of the Companies act 1985.
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.
This information is provided by RNS
The company news service from the London Stock Exchange
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