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Interactive Prospect (STGR)

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Tuesday 14 March, 2006

Interactive Prospect

Final Results

Interactive Prospect TargetingHdgs
14 March 2006

14 March 2006


               Interactive Prospect Targeting Holdings Plc ('IPT')

             Preliminary Results for the Year Ended 31 December 2005

IPT ('IPH/L'), one of the UK's leading online direct marketing companies, today
announces record preliminary results for the year ended 31 December 2005, its
first full year of trading as a listed company on AIM.

Said Lionel Thain, Chief Executive: 'Each of our operating divisions has
performed to our expectations and continued to lead the market in its respective
sector. 2005 represented another year of development and expansion.'

Financial Highlights
•         Turnover up 61% to £13.6m
•         Diluted earnings per share up 158% from 2.6p to 6.7p
•         Operating profits increased by 90% to £1.7m
•         Profit before tax up by 160% to over £2.6m
•         Shareholders funds increased by £5.1m to £11.7m
•         £4.4m acquisition of Postal Preference Service (PPS), contributes to
          operating profits
•         Excluding PPS acquisition, organic growth of 44%
•         Secondary placing on AIM raising £2.8m, net of expenses
•         Cash balances of £5.4m for expansion and investment

Operational Highlights

•         Online advertising market fastest growing UK marketing sector
•         Consolidated position as number 1 online consumer and services
          provider in the UK, to over 750 mainly blue chip organizations, with 
          over 11 million registered consumers
•         Flagship online data collection site UK's most active website, 3rd
          fastest growing in broadband user terms
•         PPS adds postal database of over 3.5 million UK households, 9 million
          individual prospects
-         Customer Acquisition Division: Continued expansion of tailored 
          internet databases of consumer information via suite of websites
-         Direct Division: Expansion of fast, low cost service targeting 
          consumers for acquisition and brand building campaigns, including PPS
-         Services Division: Growth in additional services to support clients'
          direct marketing needs, including IPT's own email bureau
-         Innovation: Development of other web-based products/services, as
          incubator of new ideas for database development, contributed to group 
          revenues
•         Successful product launches; new products set for 2006

Prospects

Said Colin Lloyd, Non-Executive Chairman: 'The new financial year has commenced
in line with our expectations.'

Said CEO Lionel Thain: 'Our aim for 2006 is to continue to expand our core
businesses and to develop new opportunities within the rapidly expanding market
place in which we operate. The beginning of this year has seen our business
continue to expand and develop, and this together with the continued growth in
online marketing is reason for management, employees and shareholders to be
optimistic.'


-  ENDS -

Enquiries:

INTERACTIVE PROSPECT TARGETING HOLDINGS PLC           Tel: 020 7932 4100
Lionel Thain, CEO
Eoin Ryan, Finance Director
Ivan Southall, Director
www.ipt-ltd.co.uk

BINNS & CO PR LTD                                     Tel: 020 7786 9600
Peter Binns                                           Mob: 07768 392 582
Ben Knowles                                           Mob: 07900 346 978
Chris Steele                                          Mob: 07979 604 687

Canaccord Capital (Europe) Ltd
Mark Williams, VP Corporate Finance                   Tel: 020 7518 2777


Editor's Note

Since its formation in 2000, IPT has built a database of over four million '
opt-in' e-mail addresses, compiled from completed questionnaires on its
prize-draw websites, and leases those out to over 400 Blue Chip corporate
clients for direct marketing campaign.

IPT is benefiting from a fundamental shift in direct marketing towards e-mail
marketing. E-mail marketing spend in the UK has grown from nothing to £120
million in just five years as marketing directors have been attracted by its low
cost (sub a penny per mail shot versus over 50p for direct mail), speed of
delivery and high response rates.




CHAIRMAN'S STATEMENT

On 9 December 2004 the shares of the company were listed on the Alternative
Investment Market (AIM). In our first year of trading as a public company, I am
delighted to be able to report that turnover for the year was £13.6m, an
increase of 61% over 2004 and this was reflected in a 229% increase in profit on
ordinary activities after tax to over £2.3m. Included in this, the group also
reports £0.5m of exceptional profits (£0.7m before tax), the detail of which is
explained later in the Chief Executive's report. Together these profits have
produced basic earnings per share of 7.2 pence (2004: 3.0 pence).

In August of 2005, your group completed the acquisition of the Postal Preference
Service, a leading 'permission' database company. I am pleased to report that
this acquisition has been integrated into the group in a most positive way
producing earnings of £0.2ma before goodwill amortisation, and, as equally
pleasing, of the staff that joined us from the Postal Preference Service, over
68% remain with the group. The success of this, our first acquisition,
encourages me to believe that the group can implement a successful acquisition
strategy in tandem with the continued expansion of core products.

IPT continues to assist digital marketers by providing exceptional direct
marketing solutions. In the year we provided data or services to over 750
clients and each of our divisions consolidated its position as a market leader
in its core area.

IPT is proud to have spearheaded the UK direct marketing industry's adoption of
the opt-in email marketing medium, and we aim to remain at the forefront of this
dynamic industry.

In conclusion, I am pleased to confirm that the new-year has commenced in line
with our expectations and I should particularly like to thank the Chief
Executive, his management team and all IPT employees for their efforts to date.

Colin Lloyd
Non-executive Chairman



CHIEF EXECUTIVE'S REVIEW

Overall, IPT has expanded its turnover from £8.4m in 2004 to £13.6m in 2005 - a
growth of 61%. This expansion has not only been fuelled by the growth in our
client numbers from over 400 to over 750, but I am pleased to report that
existing clients have increased their expenditure with IPT.

Each of our divisions has performed to our expectations and continued to lead
the market in its respective sector. We have invested, as we have seen the need,
to replace and upgrade technology to ensure we continue to provide our existing
clients with the level of service they demand in a fast and dynamic market. We
continue to expand our client base by demonstrating to prospects the quality of
our products and the high professional standards we adopt in our work practices.

Our innovation leads the way with the development of new web sites, each of
which expands the depth and size of our core asset, our consumer database. The
progress made this year will help us to achieve the ambitious targets we have
set for ourselves in 2006, as we make new data available to a market hungry to
expand the boundaries of email marketing.

In August 2005 we completed the acquisition of the Postal Preference Service,
which added to the group a postal database of over 3.5 million UK households and
the experienced and skilled personnel that worked with this data. I am pleased
that the integration of this data and our new employees has been completed in a
seamless manner, which has allowed the enlarged group to achieve its targets for
2005.

Previously I have described our trading divisions: Customer Acquisition, Direct
and Services, through which we conduct our business, and below I will outline
the progress these divisions have made during the year.

Customer Acquisition

Our flagship online data collection site MyOffers.co.uk is now one of the most
visited websites in the UK, frequently appearing in the top thirty by volume of
unique users in the industry tables. Notably, Nielsen Net Ratings (Oct. '05)
reported MyOffers as the third fastest growing website in terms of broadband
users. With over 200,000 unique new registrations each month, our Customer
Acquisition division is able to guarantee clients consistently high volumes of
fresh data to meet their needs.

To date, our Customer Acquisition division has delivered over 1,000 opt-in
prospect databases to well-known consumer brands. We are also recognised as one
of the UK's most reliable sources of fresh leads, particularly for clients
requiring opt-in telephone numbers for outbound call centres.

The MyOffers site is constantly evolving to meet the demands of our dedicated
online member base and to attract the many thousands of new members that join
the site each week.   We continually develop new promotions and content to
ensure increased repeat visits, which translate into greater numbers of
questionnaire completions. Members continue to return regularly to the site to
enjoy our online quizzes, daily prize draws, interactive games and daily polls.

Last year IPT introduced WebBrands, a co-operative online promotion tool giving
non-competing companies the opportunity to co-operate in a shared registration
program. When WebBrands was launched IPT predicted that each client would gain
1million new registrations within 18 months. Now the timescale to reach that
level has reduced to just 12 months.

This year IPT has launched DailyDietTracker, a simple and highly attractive
proposition to its users. Appealing to the health-conscious consumer,
DailyDietTracker enables its members to monitor and plan their daily nutritional
intake alongside their exercise routines. The data collected through
DailyDietTracker allows IPT to build a unique database of health-conscious
consumers and their consumption habits, appealing especially to FMCG and food
retailing clients.

IPT's consumer prospect data continues to be equally responsive, whether used
for email marketing, telesales, SMS or direct mail.

IPT Direct

With in-house databases of over 5.9 million email and 9 million individual
postal prospects (IPT Lifestyle incorporating the Postal Preference Service),
IPT Direct provides a fast, low cost and effective method of targeting consumers
for acquisition and brand-building campaigns. Across these files 3.6 million
records have both postal and email contacts and 1.2 million have mobile
contacts, providing access to true multi-channel marketing.

Importantly, our robust data collection programmes, which are expected to add
1.2 million records to our databases in 2006, place IPT in the forefront of the
UK 'Lifestyle' data industry in terms of data recency.

For clients wishing to target prospects who share the same characteristics as
their best customers, IPT has recently relaunched its Profiling service which
employs proven analytical techniques in order to deliver insight and selective
targeting.

IPT Direct provides a measurable, predictable and scaleable channel for our
broad blue chip client base.

IPT Services

IPT Services continues to offer clients a range of email marketing and database
management solutions using the most innovative technology available.

EmailBureau provides a fast and effective campaign management solution, built on
the most advanced hardware and database technology platforms in the UK. The
flagship IronPort C300D broadcast platform is now complimented by eBizmailer, a
licensed software solution which allows our clients to enjoy optimum delivery
performance and the most efficient email service on the market. We currently
broadcast in excess of 100 million emails per month on behalf of our clients.

Through Internet Market Research Services (IMRS) we offer a wealth of expertise
in market research, both online and in the real world.  IMRS conducts
Internet-based surveys and focus groups, and we also offer mixed-model surveys
combining telephone, postal or face-to-face surveys with Internet interviews.
Our expertise extends to the latest innovations in market research, allowing
IMRS to offer marketers an ever-growing range of services to help to gather
intelligence relevant to their businesses.

Holistic List management & Broking is more than just a list management service.
By taking a highly targeted approach, holistic focuses on established and proven
responsive lists, both for mail and email. This means that the highest quality
data is guaranteed to the list buyer, whilst an exceptional level of service is
assured for list owners. By the end of 2006 holistic aims to hold the largest
email list management portfolio in the UK, and to be the first choice for third
party email data.

Exceptional Items

The shortage of investment funds available to Internet-based businesses in the
recent past has led to many of these businesses failing or being starved of
growth. As part of its business model IPT has assisted selected Internet-based
clients by providing prospect data at market rates but paid for by a mix of cash
and equity in these businesses. During 2005 a proportion of the equity acquired
through this arrangement was sold, realising an exceptional profit of £727,000
pre tax, which is included in the profit and loss account.

Employees

I am delighted with the dedication of IPT's employees and am pleased that the
employees of the Postal Preference Service have integrated so positively. The
management team and all our employees have shown outstanding commitment to
achieving our business development objectives and new product initiatives.

Outlook

Our aim for 2006 is to continue to expand our core businesses and to develop new
opportunities within the rapidly expanding market place in which we operate. The
beginning of this year has seen our business continue to expand and develop, and
this together with the continued growth in on-line marketing is reason for
management, employees and shareholders to be optimistic.

Lionel Thain
Chief Executive Officer



FINANCIAL REVIEW

In 2005 IPT enjoyed another successful year of development and expansion.
Through organic growth IPT is now firmly established as a leading provider of
email marketing services in the UK, and with the acquisition of the Postal
Preference Service (PPS) in August 2005, IPT has expanded its offering in more
traditional direct marketing sectors.

Results of Operations

Revenues increased to £13.6m in 2005 from £8.4m in the prior year, an increase
of 61%. Excluding the impact of the PPS acquisition, revenues increased to
£12.2m in 2005 (2004: £8.4m) representing organic growth of 44% in the year.
IPT's position as a principal supplier of opt-in email data underpinned revenue
growth of 62% in our Data divisions to £11.4m (2004: £7.0m). IPT's Services
division also experienced strong growth of 56% to £2.2m (2004: £1.4m) as its
email delivery and market research services continued to build a wider client
base.

Gross profit margins have remained healthy and improved to 82% in 2005 (2004:
81%), with gross profit increasing to £11.2m (2004: £6.8m), an increase of 64%.

Administrative expenses include sales and support services costs for the
business, together with the various central overheads of the group, and
amortisation costs. Overall administration expenses grew to £9.5m (2004: £5.9m),
and excluding the impact of the PPS acquisition expenses grew to £8.5m,
representing an increase of 43%. The increase in administrative expenses relates
to the expansion of the infrastructure of the group due to the increased level
of activity in the business. This includes an increase in average headcount from
104 in 2004 to 132 in 2005, an increase of 27%.

Operating profit was £1.7m (2004: £0.9m), an increase of 90% over the prior
year. Excluding exceptional restructuring costs within PPS of £0.2m, and
goodwill amortisation of £0.1m, operating profits would have increased by 128%
to £2.0m in 2005.

The profit before tax was £2.6m (2004: £1.0m), an increase of 160% over the
prior year. 2005 includes a profit on disposal of fixed asset investments of
£0.7m (2004: £0.08m).

The group tax charge of 11% for 2005 reflects a significant tax deduction for
the costs of employee share options exercised in the year.

Dividends of £0.1m were paid during 2004 to the holders of preference shares in
the group's principal trading subsidiary. The preference shares were converted
to ordinary shares as part of the flotation process in December 2004. No
dividends were declared or paid in 2005.

Basic earnings per share increased from 3.0p to 7.2p in 2005, with diluted EPS
increasing by 158% to 6.7p.

Balance Sheet & Cash Flow

Net assets increased to £11.7m (2004: £6.6m) during the year. The group
generated operating cash of £2.0m compared to £1m in 2004, although, largely due
to the cash outlay of £4.4m on the acquisition of PPS (made up of the £1.1m cash
consideration and £3.3m repayment of PPS debt), overall cash balances only
increased by £0.2m in the year. Group cash balances at 31 December 2005 were
£5.4m allowing for further expansion and investment in the future.

In August 2005, the group completed the acquisition of the Postal Preference
Service (PPS) for a cash consideration of £1.1m, and including net debt at
acquisition of £3.3m, a total cash outlay of £4.4m. At the acquisition date, a
fair value adjustment of £4.6m was booked, mainly to reflect the alignment of
the accounting policies of PPS to the rest of the group. The group also
recognised a deferred tax asset of £0.4m in relation to trading losses within
PPS that it believes would reverse in the short term. This adjusted the fair
value of net liabilities acquired to £1.8m. In total this gave rise to goodwill
of £2.9m, which is being written off over a period of 10 years.

Data acquisition costs of £0.8m were capitalised in the year, an increase of
£0.4m on 2004 with added investment in new data. These data costs will be
written off over 3 years.

Capital expenditure on tangible fixed assets increased to £0.45m in 2005 (2004:
£0.24m), as the group continues to invest in the latest market leading
technology and improve infrastructures.

Trade debtors increased to £4.3m (2004: £2.1m) due to the increased turnover of
the group in the year. Trade creditors increased to £1.8m (2004: £0.7m) also due
to increased activity in the year.

In August 2005, to coincide with the acquisition of PPS, the group successfully
raised £2.8m, net of expenses, in a secondary placing of 2.6 million shares on
the AIM, at a price of £1.15 per share.

Eoin Ryan
Finance Director


CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2005
                                                                        Acquisition        Total        Total
                                             Note              2005            2005         2005         2004
                                                              £'000           £'000        £'000        £'000

TURNOVER                                         2           12,172           1,388       13,560        8,441
Cost of sales                                               (2,070)           (311)      (2,381)      (1,607)

Gross profit                                                 10,102           1,077       11,179        6,834

Administrative expenses                                     (8,465)           (674)      (9,139)      (5,939)
Costs of restructuring                                            -           (230)        (230)            -
Amortisation of goodwill                                        (5)           (113)        (118)          (5)

Total administrative expenses                               (8,470)         (1,017)      (9,487)      (5,944)

OPERATING PROFIT                                              1,632              60        1,692          890
Profit on disposal of fixed asset investments    3                                           727           78
Interest receivable and similar income                                                       190           34

PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
                                                                                           2,609        1,002
Tax charge on profit on ordinary activities      4                                         (297)        (299)

PROFIT FOR THE FINANCIAL YEAR AFTER TAXATION                                               2,312          703
Minority interest                                                                              -          (2)

PROFIT FOR THE FINANCIAL YEAR AFTER TAXATION &
MINORITY INTEREST                                                                          2,312          701
Dividends                                        5                                             -        (115)

Retained profit for the year                     7                                         2,312          586

Earnings per share                               6

Basic earnings per share (pence)                                                             7.2          3.0
                                                                                             
Diluted earnings per share (pence)                                                           6.7          2.6
                                                                                             


All results arise from continuing operations

There are no recognised gains or losses other than the results for the year.
Accordingly, a statement of total recognised gains and losses has not been
presented.



CONSOLIDATED BALANCE SHEET

As at 31 December 2005
                                                       Note                                 2005         2004
                                                                                           £'000        £'000
FIXED ASSETS
Intangible assets - goodwill                                                               2,855           45
Intangible assets - other                                                                  1,520          403
Tangible fixed assets                                                                        756          385
Investments                                                                                    -            2

                                                                                           5,131          835

CURRENT ASSETS
Debtors                                                                                    5,553        2,473
Current asset investments                                                                      -           28
Cash at bank and in hand                                  9                                5,414        5,204

                                                                                          10,967        7,705
CREDITORS: amounts falling due
  within one year                                                                        (4,382)      (1,894)

NET CURRENT ASSETS                                                                         6,585        5,811

TOTAL ASSETS LESS CURRENT LIABILITIES                                                     11,716        6,646

CREDITORS: amounts falling due
  after one year                                                                               -          (3)

NET ASSETS                                                                                11,716        6,643

CAPITAL AND RESERVES
Called up share capital                                   7                                  143          133
Share premium account                                     7                                6,747        3,926
Merger reserve                                            7                                2,354        2,354
EBT reserve                                               7                                 (72)          (2)
Other reserve                                             7                                   18           18
Profit and loss account                                   7                                2,526          214

EQUITY SHAREHOLDERS' FUNDS                                7                               11,716        6,643




CONSOLIDATED CASHFLOW STATEMENT
For the year ended 31 December 2005


                                                                  Notes                     2005         2004
                                                                                           £'000        £'000

Net cash inflow from operating activities                            8                     2,011          950
Returns on investments and servicing of finance                                              190         (99)
Taxation                                                                                   (152)            -
Capital expenditure and financial investment                                               (504)        (503)
Acquisitions and disposals                                                               (2,487)            -

Cash (outflow)/inflow before management of liquid
resources and financing                                                                    (942)          348
                                                                                           
Financing                                                                                  1,152        3,952

Increase in cash in the year                                         9                       210        4,300



NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2005

1.              The financial information set out above does not constitute the 
company's statutory accounts for the years ended 31 December 2005 or 2004, but 
is derived from those accounts. Statutory accounts for 2004 have been delivered 
to the Registrar of Companies and those for 2005 will be delivered following the 
company's annual general meeting. The auditors have reported on those accounts; 
their reports were unqualified and did not contain statements under s237(2) or 
(3) Companies Act 1985.

2.              SEGMENTAL INFORMATION

Turnover and profit before tax are derived from the one principal activity of
the group, being the provision of email marketing services. The directors
consider there is only one class of business.

Additional information of analysis of turnover by division is given below:
                                                                                            2005         2004
                                                                                           £'000        £'000

Data Rental and Acquisition                                                               11,369        7,035
Services                                                                                   2,191        1,406

                                                                                          13,560        8,441

All turnover, operating profits and net assets are sourced in the UK.

A geographical analysis of the turnover by destination in the year is given
below:
                                                                                            2005         2004
                                                                                           £'000        £'000

Europe                                                                                    13,482        8,099
North America                                                                                 78          342

                                                                                          13,560        8,441

3.              PROFIT ON DISPOSAL OF FIXED ASSET INVESTMENTS

On 8th December the group disposed of its shareholding in Research Now plc,
realising a profit of £147,000 (see Note 12). The tax effect of this is £44,000.

On 28 January 2005, the group disposed of its shareholding in Allegran Limited
realising a profit of £450,000 (see Note 12). The tax effect of this is
£135,000.

During the year the group disposed of the remainder of its shareholding in
themutual.net, realising a profit of £130,000 (see Note 13). The tax effect of
this is £39,000.

4.              TAX CHARGE ON PROFIT ON ORDINARY ACTIVITIES

The tax charge comprises
                                                                                           2005         2004
                                                                                          £'000        £'000

Current tax
UK corporation tax                                                                         (171)        (137)
Adjustment in respect of prior years                                                        (16)          (7)

                                                                                           (187)        (144)
Deferred tax

Utilisation of deferred tax asset                                                          (139)        (169)
Origination and reversal of timing differences                                                29            -
Adjustment in respect of prior years                                                           -           14

                                                                                           (110)        (155)

Total tax on profit on ordinary activities                                                 (297)        (299)


The difference between the total current tax as shown and the amounts calculated
by applying the standard rate of UK corporation tax to the profit before tax is
as follows:
                                                                                            2005         2004
                                                                                           £'000        £'000

Profit on ordinary activities before tax                                                   2,609        1,002

Tax on profit on ordinary activities at standard UK
corporation tax rate of 30%                                                                (783)        (301)

Effects of:
Depreciation in excess of capital allowances                                                 (9)         (22)
Expenses not deductible                                                                     (50)         (17)
Prior period adjustments                                                                    (16)          (7)
Utilisation of prior period losses                                                             -          186
Other timing differences                                                                     185            5
Goodwill expense not deductible                                                             (35)            -
Tax deduction for employee share options                                                     525            -
Other                                                                                        (4)           12

Current tax charge for period                                                              (187)        (144)


Movement on the group's and company's deferred tax asset is shown in note 14.

5.              DIVIDENDS

                                                                                             2005        2004
                                                                                            £'000       £'000
Non-equity shares

Class B-1 (10% cumulative dividend)                                                             -          34
Class B-2 (10% cumulative dividend)                                                             -          36
Class C-1 (10% cumulative dividend)                                                             -          45

                                                                                                -         115

The preference dividend related to the preference shares held in Interactive
Prospect Targeting Limited, a subsidiary undertaking.

The holders of the 'B-1', 'B-2' and 'C-1' preference shares in Interactive
Prospect Targeting Limited were entitled to a fixed gross cumulative dividend of
10% per annum commencing from 11 November 2003.  The preference dividend was
calculated on the aggregate of the nominal amount of such preference share, the
premium paid on subscription and any arrears of the dividend for such preference
share.

The preference shares were converted to ordinary shares on 30 November 2004 at a
rate of 1 ordinary share per preference share held, and the accumulated dividend
outstanding was paid on that date.

On 1 December 2004 Interactive Prospect Targeting Holdings plc acquired all the
share capital of Interactive Prospect Targeting Limited pursuant to a share for
share exchange agreement.



6.              EARNINGS PER SHARE

Basic earnings per share has been calculated in accordance with FRS 14 by
dividing the consolidated profit after tax attributable to ordinary shareholders
by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share have been calculated on the same basis as above
except the weighted average number of shares that would be issued on the
conversion of all dilutive potential ordinary shares into ordinary shares has
been added to the denominator.

The calculation of earnings per share is based on the following profits and
number of shares:
                                                    2005                                2004


                                          Profit     Number of Pence per Profit after    Number of Pence per
                                       after tax        shares     share          tax       shares     share

                                           £'000          '000                  £'000         '000

Basic earnings per share                   2,312        32,048       7.2          586       19,406       3.0
Impact of share options                        -         2,556     (0.5)            -        3,130     (0.4)
Impact of preference shares                    -             -         -          115        4,471         -

                                           2,312        34,604       6.7          701       27,007       2.6



7.              SHARE CAPITAL AND RESERVES

Group                                                                      
                                        Profit and                                     Share
                                  Share       loss     Merger       EBT      Other   premium
                                Capital    account    reserve   reserve    reserve   account        2005
                                  £'000      £'000      £'000     £'000      £'000     £'000       £'000


Balance at beginning of year        133        214      2,354        (2)        18     3,926       6,643
Placing of shares                    10          -          -         -          -     2,991       3,001
Placing costs                                                                           (170)       (170)
Profit retained for the year          -      2,312          -         -          -         -       2,312
Purchase of own shares                -          -          -       (72)         -         -        (72)
Share options exercised               -          -          -         2          -         -           2

At 31 December 2005                 143      2,526      2,354      (72)         18     6,747      11,716



8.              RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS

                                                                                           2005         2004
                                                                                          £'000        £'000

Operating profit                                                                          1,692          890
Depreciation                                                                                350          238
Amortisation                                                                                594          141
Loss on disposal of investment                                                                -            1
Profit on disposal of fixed assets                                                            -           (2)
Increase in debtors                                                                      (1,746)        (701)
Increase in creditors                                                                     1,121          383

Net cash inflow from operating activities                                                 2,011          950


9.              ANALYSIS AND RECONCILIATION OF NET FUNDS

                                                                                     
                                                                                                 
                                                                           1 January  Cash flow   31 December
                                                                                2005                     2005
                                                                               £'000       £'000        £'000

Cash in hand, at bank                                                          5,204         210        5,414

Finance leases                                                                  (14)           9          (5)

Net funds                                                                      5,190         219        5,409



                                                                                            2005         2004
                                                                                           £'000        £'000
                                                                                   
Increase in cash in the year                                                                 210        4,300
Cash flow from movement in debt and lease financing                                            9          (1)

Change in net funds resulting from cash flows                                                219        4,299

Movement in net funds in the year                                                            219        4,299
Net funds at 1 January                                                                     5,190          891

Net funds at 31 December                                                                   5,409        5,190





--------------------------


a Represented by Gross Profit of £1,077,000, less administrative expenses of
£674,000, less restructuring costs of £230,000.


                      This information is provided by RNS
            The company news service from the London Stock Exchange