Ebiquity Regulatory News (EBQ)

12 Apr 2005 07:01

Thomson Intermedia PLC12 April 2005 Thomson Intermedia plc ("Thomson Intermedia" or "the Company") Preliminary results for the year ended 31 January 2005 Thomson Intermedia, a leading provider of media information, today announcesrecord preliminary results for the year ended 31 January 2005 • Turnover up 46% to £5.92m (2004: £4.05m) • Underlying Profit before tax of £0.62m (2004: loss of £0.65m) • Underlying eps of 2.56p (2004: loss per share of 1.1p) • Gross sales contracts increased by £1.55m to £6.29m (2004: £4.74m) • New contracts increased by 25% to £2.44m (2004: £1.95m), with 104 new annual contracts won, including Sony music, House of Fraser & Comet and 14 Vouching contracts • Sustained high client renewal rate of 83%, by value • Future contracted revenue of £2.79m already secured for next financial year • Net cash of £1.60m: continued and increasing cash generation • Upgrade and finalisation of German contract to include all media Sarah Jane Thomson, Joint Chief Executive Officer of Thomson Intermedia, said: "This year has been extremely rewarding with continued growth and increasingmarket appetite for our core products. The market-leading strength of ourproduct combined with a strengthening sales team will enable us to further drivemarket penetration both in the UK and internationally. This should result incontinuing increased profitability. In addition, our innovation and development continues at pace: the newlylaunched advertising verification, together with our developing effectivenesssystems, are meeting considerable demand in an advertising market whichincreasingly requires transparency and measurement." 12 April 2005 Enquiries: Thomson Intermedia Sarah Jane Thomson, Chief Executive David Trendle, Finance Director 020 8466 2906 College Hill Kate Pope 020 7457 2006 Adrian Duffield 020 7457 2815 Thomson Intermedia is delighted to announce record preliminary results. Theyear has been one of considerable progress with the full integration of allmedia and considerable progress made in international expansion, vouching andReturn on Investment (ROI) products. Thomson Intermedia provides competitive advertising evaluation and solutionsthrough the provision of comprehensive market data. Technology has always beenat the heart of the Company, allowing it to deliver its unique proposition ofreal time, integrated and tailored systems. We not only continue to focus onclient requirements and capture efficiencies, but also on driving the futureopportunities of our market. Our primary focus remains to empower UK companies with independent mediaintelligence. Increasing fragmentation in the market and requirements forgreater governance put us in a unique and market-leading position, offeringintegrated channel coverage and transparent data. Financial Results Revenue for the period was up 46% to £5.92m (2004: £4.05m) compared to anincrease in direct costs of only 5%, despite continued developments and newproduct launches. This high level of operational gearing has resulted in animproved gross margin of 68.4% (2004: 56.1%), as well as the Company's firstpositive underlying operating margin of 9.8%. The total value of sales contracts signed in the year rose by 33% to £6.29m(2004: £4.74m) and exceeds total expenditure incurred of £5.35m in the financialyear. It also results in future contracted revenues of £2.79m being alreadysecured for the next financial year New contracts signed in the year increased 25% to total £2.44m (2004: £1.95m).Existing clients have been keen to extend and upgrade their contracts into newmedia and products, with an 83% renewal rate and accounting for almost £1m ofthe new contract value. The average value of all contracts rose by 16% from£19,000 to £22,000, with average contract rates for new business continuing torise to £25,000. Profit before taxation and long term incentives improved to £618,000 (2004: Lossof £647,000). As previously advised the Company has expensed £258,000 inrelation to long term incentives, with revisions to the schemes, as fullydisclosed in note 2. The Company has a tax credit of £588,000 including deferredtax and a research & development tax credit, as disclosed in note 3. Basic earnings per share significantly improved to 3.29p this year compared to aloss per share of 1.1p in the previous year. Adjusted earnings per share was2.56p (2004: loss per share 1.1p) after extracting the effects of deferred tax,long term incentives and amortisation. This is provided as a more meaningfulyear on year measure for the performance of the Group. The Company recorded positive operating cash flow of £381,000 despite a negativeworking capital movement of £438,000. Net funds increased by £369,000 to £1.60m(2004: £1.23m). The high operational gearing of the business is expected to lead to increasingcash generation. The strength of the Balance Sheet continues to improve with net current assetsof £3.52m, no debt and shareholder funds of £0.54m. The Company has also builta significant asset in the data library it has created. This asset is notrecognised on the balance sheet and prudently all development expenditurecontinues to be expensed as incurred. Operational Review The Company continues to improve the breadth and scope of its core offeringproviding further differentiation in competitive monitoring. This has resultedin an additional 85 competitive monitoring contracts (new clients and upgradesto existing clients) won across various sectors and across all price points.Amongst the high spending advertisers we welcome Sony Music, House of Fraser andComet as new clients. The completion of an all media integrated solution andimproved front-end systems have resulted in a more than 20% of our client baseupgrading their subscription this year, as well as continuing our good renewalrate at 83%. The Company continues to drive new and upgrade business in asubstantial market; develop further products leveraging its data; and pursuevertical expansion opportunities. Press Vouching The launch of Press Vouching fulfils the next stage of development fromcompetitive monitoring to advising clients whether their advertising expenditurehas been placed in accordance with their booking. A survey carried out by ISBAfound that 7% of press advertising either appeared with errors or didn't appearat all. By providing instant reporting and an audit trail of the status of theiradvertising, Vouching represents a significant opportunity for advertisers toachieve maximum potential returns from their expenditure. Initial trials havealready identified errors running into millions of pounds. ROI Tools The Company continues to develop opportunities to leverage its data into newareas, with particular focus on providing insight into the Return On Investmentof advertising expenditure. We are currently undertaking a trial evaluation withour joint venture partner dunnhumby, to link our universal advertisinginformation with sales information from Tesco Clubcard. We are also in talkswith other potential suppliers of consumer purchasing activity. Sales and Marketing The Company has appointed a new Sales and Marketing Director during the period.The remit is to expand the sales and marketing resources and to put concentratedresources into three areas; new business, upgrades & retention and newdevelopments. The Company only has a 5% share of the top 5,000 advertisers butcaptures all their data and therefore has access to a sizeable new businessopportunity. During the development phase the systems were sold on an individualmedia basis; this now provides the Company with a significant upgradeopportunity. International expansion The previously announced partnership with Media Control, one of Germany'sleading media groups, is the Company's first entry into an overseas market.Initially the partnership was to launch a media monitoring service across TV,Radio & Internet. However, Media Control has now identified a high level ofdemand for press data, which represents 50% of the €17 billion advertisingexpenditure in Germany. The partnership terms have been modified to reflect the considerable additionalinvestment and the significantly larger scale of the projected opportunity. Thepartnership will develop the full media offering with Media Control stillassuming all operational responsibility and costs, which are likely to be inexcess of €10 million in the first three years. Under the revised terms ThomsonIntermedia is guaranteed minimum payments in the first two years of £400,000 perannum. Any profits before tax will be shared on a 30/70 basis by ThomsonIntermedia and Media Control respectively. The value of the growing venture isowned 50/50 and Thomson Intermedia retains an option to purchase Media Control's50% share in the venture should it so wish. Media Control is a significant and strong partner and we are delighted to haveconcluded negotiations and be involved in bringing world leading systems,integrated channel coverage and transparency to advertisers in Germany. Outlook The outlook remains extremely positive for the Company. Increased accountabilityin Marketing departments combined with the fragmentation of the market presentfurther opportunities to the Company. We have strengthened our core propositionin the UK and continue to drive sales growth. We are also developing products toappeal to different sectors of the market. Our Vouching product is achievingsignificant presence in the market and provides a valuable additional ongoingservice to our clients to complement the competitive monitoring systems. Wecontinue to make in-roads into ROI products and maintain our position as marketleaders and innovators. We have now achieved our first expansion into Europe, combining our IntellectualProperty with Media Control's knowledge and distribution capabilities. We haveachieved this expansion with minimal risk but still with a considerable share offuture returns and an equal share in the business. We continue to investigateopportunities outside the UK. The current financial year has started well and the Board is confident that theCompany will continue to achieve sustained growth. 12 April 2005 Consolidated Profit & Loss AccountFor the year ended 31 January 2005 2005 2004 Note £'000 £'000 Turnover 5,924 4,047 Cost of sales (1,870) (1,778) Gross profit 4,054 2,269 Overheads (3,475) (2,934)Long term incentives 2 (258) -Administrative expenses (3,733) (2,934) Operating profit / (loss) 321 (665) Interest receivable 39 18 Profit / (loss) on ordinary activities beforetaxation 360 (647) Taxation 3 588 325 Profit / (loss) on ordinary activities aftertaxation 948 (322) Earnings / (loss) per share, pence 5 adjusted 2.56 (1.1)basic 3.29 (1.1)diluted 3.14 (1.1) All amounts relate to continuing activities All recognised gains and losses are included inthe profit and loss account Consolidated Balance Sheetas at 31 January 2005 2005 2005 2004 2004 Note £'000 £'000 £'000 £'000Fixed assets Intangible fixed assets 31 43Tangible fixed assets 518 451 549 494Current assets Debtors 2,292 1,438Deferred tax 480 -Cash at bank and in hand 1,598 1,229 4,370 2,667 Creditors: amounts falling duewithin one year (848) (637) Net current assets 3,522 2,030 Total assets less currentliabilities 4,071 2,524 Accruals and deferred income (3,535) (3,194) 536 (670) Capital and reservesShare capital 7,186 7,186Share premium 5,064 5,064Merger reserve (5,250) (5,250)Profit and loss account (6,464) (7,670) Equity shareholders' funds 536 (670) Consolidated Cash Flow Statementfor the year ended 31 January 2005 Note 2005 2005 2004 2004 £'000 £'000 £'000 £'000 Net cash inflow from operatingactivities 6 381 202 Returns on investments andservicing of financeInterest received 32 18 TaxationResearch & Development tax creditreceived 251 189 Capital expenditurePurchase of tangible fixed assets (295) (185)Sale of tangible fixed assets - 6 Net cash outflow from capitalexpenditure (295) (179) Net cash inflow before managementof liquid resources and financing 369 230 Management of liquid resources(Increase)/decrease in short termdeposits (91) 91 FinancingCapital element of finance leasepayments - (6) Increase in cash in the year 7,8 278 315 Notes to the Financial Statementsfor the year ended 31 January 2005 1. Basis of preparation The financial information set out above does not constitute the Group'sstatutory accounts, within the meaning of Section 240 of the Companies Act 1985,for the year ended 31 January 2005 or 2004, but is derived from those accounts.Statutory accounts for the year ended 31 January 2004 have been filed with theRegistrar of companies. The statutory accounts for 2005 will be delivered tothe Registrar of Companies following the Company's Annual General Meeting. Theauditors have reported on those accounts; their reports were unqualified and didnot contain a statement under Section 237(2) or (3) of the Companies Act 1985. When published, the Company's Annual Report and Accounts will be sent toshareholders and will be made available to the public at the Company'sregistered office, 1 Westmoreland Road, Bromley, Kent BR2 0TB. 2. Long term incentive plans 2005 2004 £'000 £'000Included in administrative expenses:Directors' emoluments - performance bonus 145 84 Included in long term incentives:Phantom share scheme award 230 -Issue of share options under UITF 17 28 - 258 - Due to the significant rise in the Company's share price the phantom shares inissue (equivalent to 1.8% of the share capital) gave rise to a substantialliability and cash requirement, which could continue to escalate with a risingshare price, until they were due to vest in 2007. The Company and Directors havereviewed the incentivisation arrangements of the Company as they pertain to boththe Directors and the Company and as a consequence of this, one action has beenthat the Directors have agreed to waive their rights to the Phantom shares intheir entirety. As a result of the broader review of Directors incentivisation arrangements, theBoard has awarded share options to the Directors to act as an incentive andlock-in. The main effects of these changes are to negate the significant cashpayment which would have been due under the phantom scheme and to cap theaccounting liability under long term incentives. The accounting treatment ofthese transactions effectively spreads the total liability calculated at themarket value on the date the share options were granted over the period fromaward to the earliest exercise date. This gives rise to a charge of £258,000 inthis financial year, and a further charge of £229,000 for each of the next twofinancial years 3. Taxation on profit / loss on ordinary activities The tax charge is made up as follows: 2005 2004 £'000 £'000Corporation tax at 30% 6 -Research and development tax credit (114) (325) (108) (325)Deferred tax at 30% (480) - (588) (325) 4. Provisions for liabilities and charges 2005 2005 2004 2004 Provided Unprovided Provided Unprovided £'000 £'000 £'000Deferred taxation Accelerated capital allowances - 13 - 18Other timing differences - (85) - (37)Losses (480) (1,110) - (1,701)Provision / (Asset) for the period (480) (1,182) - (1,720) Assuming future profits are taxable at a rate of 30%, the balance of availabletax losses for offset against future taxable profits amount to £1.66m (2004:£1.72m), which gives rise to a deferred tax asset. In accordance with FinancialReporting Standard 19 "Deferred taxation", this asset has been provided to theextent that trade losses will be recoverable against future profits in theforeseeable future and is included within current assets. 5. Earnings per share 2005 2004 £'000 Weighted Earnings / £'000 Weighted Earnings / average (Loss) per average (Loss) per number of share pence number of share shares shares penceEarnings / (Loss)per share beforedeferred tax,amortisation andshare incentives 738 28,744,247 2.56 (310) 28,640,080 (1.1)Deferred tax 480 -Adjustment foramortisation (12) - (12) -Adjustment for shareincentives (258) - - -Basic Earnings /(Loss) per share 948 28,744,247 3.29 (322) 28,640,080 (1.1)Effect of options - 1,437,212 - -Diluted earnings /(loss) per share 948 30,181,459 3.14 (322) 28,640,080 (1.1) Earnings per share before deferred tax, amortisation and share incentives arepresented as the Directors consider it a more appropriate measure of theunderlying trend than basic or diluted eps. For diluted earnings per share, theweighted average number of shares in issue is adjusted to assume conversion ofall dilutive potential ordinary shares: those share options granted to employeeswhere the exercise price is less than the market price of the Company's ordinaryshares. The impact of any potential ordinary shares in the year ended 31January 2004 is antidilutive. 6. Net cash inflow from operating activities 2005 2004 £'000 £'000 Operating profit / (loss) 321 (665) Depreciation 228 211 Amortisation 12 12Phantom share non-cash movement 230 -Issue of share options under UITF17 28 - Other non-cash operating expense - 31 Increase in debtors (853) (306) Increase in creditors 211 106 Increase in accruals and deferred income 204 813 Net cash flow from operating activities 381 202 7. Reconciliation of net cash flow to movement in net funds 2005 2004 £'000 £'000 Increase in cash in the year 278 315Cash outflow from decrease in debt andlease financing - 6Cash inflow/(outflow) from decrease inliquid resources 91 (91)Movement in net funds in the year 369 230 Net funds at start of year 1,229 999Net funds at end of year 1,598 1,229 8. Analysis of net funds Opening Cash Closing balance flow balance £'000 £'000 £'000 Cash 470 278 748 Liquid resources 759 91 850 Cash at bank and in hand 1,229 369 1,598 9. Post Balance Sheet Event We have completed negotiations for Germany, our first investment in Europe.Thomson Media Control GmbH and Co Kg is an equal partnership between ThomsonIntermedia Plc and Media Control GmbH. Thomson have licenced their technology tothe partnership to launch the media monitoring system in Germany. Our income forthe first two years is guaranteed plus we shall receive a share of the ongoingprofits of the partnership This information is provided by RNS The company news service from the London Stock Exchange