Ebiquity Regulatory News (EBQ)

Ebiquity Plc

Final Results for the year ended 30 April 2012

Ebiquity Plc, the media and marketing performance measurement business, announces final results for the year ended 30 April 2012. Ebiquity provides services to over 1,000 clients across 70 countries, including over 85% of the major global advertisers.

Another year of strong financial performance with total revenue growing 20% to £52.9m, underlying operating profit up 55% to £8.2m and reported PBT of £2.6m

·; Revenue growth driven by Analytics division which has grown by 56% to £27.9m (2011: £17.9m)

·; 76% of group revenue now comes from international sources

·; Underlying profit before tax of £7.6m (2011: £4.8m) and reported profit before tax of £2.6m(2011: loss of £1.8m)

·; Underlying operating profit margin increased from 12.0% to 15.5% with full year benefit of Xtreme synergies

·; Underlying diluted EPS of 7.4p, up 23% on 2011, with reported diluted EPS of 2.2p (2011: loss of 2.2p)

Developed offering and expanded geography in line with growing demands from global corporates and advertisers

·; Company has reacted to growing international demand for data driven evaluation

·; Acquisitions of Joined Up Media, Faulkner Media Management and Fairbrother Lenz Eley have reinforced company's offering in Russia, the Asia Pacific region, Germany and France

·; Acquisition of Echo Research strengthens social media and brand reputation measurement

Group is in strong position to continue growth going forward

·; New banking facility put in place to help finance continued acquisition programme

·; Strong management team delivering on strategy

·; Independent performance measurement tools provide continued long term growth opportunities

Michael Greenlees, CEO, commented:

"Ebiquity is an international business that provides global brands a truly independent understanding of how effectively they are reaching their audience and delivering their message. The continued growth of our company and the high levels of renewals is an endorsement of the growing relationship we now enjoy with significant global advertisers and the importance of our data analytics. We anticipate another year of growing opportunities."

18 July 2012

Enquiries:

Chairman's Statement

The year to 30 April 2012 has yet again been one of significant achievement.

Notwithstanding five years of relatively continuous economic uncertainty, we have taken the business from revenues of approximately £16.0m in 2007 to £52.9m in 2012 by combining steady organic growth and judicious acquisitions. This has been matched by strong earnings growth with underlying diluted earnings per share of 7.4p in 2012, up 23% on the prior year. We have moved the business from being predominantly dependent on the UK to a truly international business active in nearly all the major economies in the world. We now have over 85% of the major global advertisers as our clients, evidence of our capability to service their needs on a global basis.

This performance demonstrates that the right acquisitions with strong strategic and commercial rationale, well planned and carefully executed, can play an important role in driving financial performance and shareholder value. The substantial advance in our underlying operating performance reflects, in part, the first full year of the benefit of the fully integrated Xtreme business.

There is no doubt that the global economy is creating a number of significant challenges for the business community as a whole. The economic uncertainty created over the last five years has impacted on the speed of decision making by corporates but has also led to a revolution in technology and social media. In 2007, the potential impact of the emerging online media companies was still in debate. However, some of these companies have grown to become giants of the corporate world and significant players in the evolving media environment. In technology, the widespread penetration of smart mobile devices has, and will continue to, change the method of engagement with consumers and clients globally.

Against this background, there is an ever increasing need for brand owners to better understand the impact of paid, earned and owned media on the effectiveness of their brand communications. This is what Ebiquity does for its clients - we help the global media and marketing community make better informed decisions.

Finally I must record again my thanks to the management and all our employees who continue to devote a huge effort to running and developing our company. We should not ignore the impact that the economic environment can have on them personally and their commitment is critically important to the continuing success of the group.

We look forward to the future of the Ebiquity business with confidence although we are wary of the potential disruption that further economic shocks could have on our clients. In light of this we will continue to be optimistic in our planning but exercise commercial and financial prudence in our execution.

Michael Higgins

Chairman

17 July 2012

Chief Executive Officer's Review

Overview

I am happy to report another set of very strong results. At £52.9 million, total revenue grew by 20% compared to the same period last year (2011: £44.2m) with total underlying operating profit up by 55% to £8.2m (2011: £5.3m). Reported operating profit was £3.6m (2011: loss of £1.2m).

Underlying operating profit margins once again increased from 12.0% to 15.5% reflecting continued improvement in operational efficiencies in line with our profit improvement programme. I am particularly pleased that on an underlying organic basis, operating profit increased by 35%.

Underlying diluted EPS increased by 23% to 7.4p. Reported diluted EPS moves from a loss of 2.15p in 2011 to a profit of 2.18p.

Despite client confidence seemingly being put on hold during the year, as many people anticipated a worsening of the economic environment, our business has continued to achieve strong renewals, with the Platform Division recording a renewal rate of 92% (by value) and the Analytics Division performing particularly strongly, delivering 9% organic revenue growth.

Strengthening of international presence and product offering

Our international offices continue to perform well and we remain clear that our future growth is based upon deepening the existing relationships with our international clients in all aspects of our business.

It was for this reason that we announced the acquisition of the Joined Up Media Company, which operates in Moscow, in May 2011 and the acquisition of Faulkner Media Management Pty Limited ("FMM"), the leading media analytics consultancy business in Australia, in October 2011. In March 2012 we went on to announce the acquisition of Fairbrother Lenz Eley ("FLE"), one of the best-known international media analytics consultants.

These steps will significantly strengthen our international network, particularly in Russia, Germany, France and the Asia Pacific region, as well as provide new international client opportunities throughout the Group.

We have already begun to plan the integration of both FMM and FLE and anticipate that this will be completed during the first half of the next calendar year. We have been enormously impressed with the skills and talent of our new colleagues and the constructive relationships that have already begun to be built with the existing Ebiquity employees, all of which augurs well for the future.

Debt financing

In March 2012 we took advantage of current interest rates to negotiate a new debt facility with Bank of Ireland and Barclays to help finance our acquisition programme. We remain conservatively financed and we remain a cash generative business. 

The landscape in which we operate

Our overall growth story is one driven by the growing worldwide demand for independent marketing and media performance measurement - data-driven evaluation programmes that can help brand-owners improve the effectiveness and efficiency of their various marketing activities. We believe that the importance of this market is in turn driven by five key factors:

·; The enormous and continual proliferation of marketing and media channels and the impact of digital media distribution.

·; The consequent rise of user-generated content such as social media and blogs, which have led to the increasing empowerment of consumers.

·; The challenges of multi-channel marketing, and the burgeoning need for the measurement of marketing performance.

·; The growth in available data that can potentially provide clients with greater insight into the effectiveness of their marketing programmes.

·; The consolidation and globalisation of the marketing and advertising industry as it relates to brand owners.

These factors have combined to change the way that the world's brand-owners evaluate their brand performance, which in turn is leading to the evolution of both the agency supply chain and the increasing demand for independent measurement. Ebiquity is uniquely placed to take advantage of both, and our acquisition of Echo Research in May 2011 has strengthened our skills in both social media and brand reputation measurement - both increasingly important aspects of our clients' evaluation programmes.

Outlook

We start the new financial year with a strong new business pipeline and the basic building blocks of our business in place. However, while Ebiquity has developed the relevant products and services that help our clients invest their media and marketing funds with greater efficiency and effectiveness, we remain cognisant that the current economic uncertainty can affect the business environment and that the growth of our business in turn relies on customers being confident enough in the wider economy to invest in our products and services.

Although we are no better placed to predict the economic future, should all things remain equal, we remain confident of yet another year of strong growth. Our priority remains to deploy our current resources in favour of business expansion, and hence a dividend is not proposed. However, the Board continue to review the appropriateness and timing of commencing the payment of dividends.

Michael Greenlees

Chief Executive Officer

17 July 2012

Financial Review

Introduction

Ebiquity plc is publishing its final results for the year ended 30 April 2012. All results are stated before taking into account highlighted items unless otherwise stated. These include share option costs, amortisation of purchased intangible assets, acquisition costs, and restructuring and other non-recurring items.

Segmental reporting presentation

Our two segments are "Analytics" and "Platform". The Analytics division consists of our Media, Effectiveness and Reputation Management practices and our Platform division consists of our Advertising Intelligence and Media Technology practices.

Acquisitions and disposals in the financial year

On 20 May 2011, the Group acquired 100% of TCRG Holdings Limited (the holding company of the Echo Group, "Echo") for total expected consideration of £4.60m consisting of upfront consideration of £3.50m, deferred consideration of £0.30m and estimated earn out payments of £0.80m. Total consideration is capped at £10.00m. Echo operates from offices in London, Surrey, New York and Singapore and employs approximately 45 people.

On 27 May 2011, the Group acquired 50.1% of The Joined Up Media Company Limited ("JUMC") for total expected consideration of £0.57m consisting of an initial cash payment of £0.30m, deferred consideration of £0.02m and estimated earn out payments of £0.25m. Total consideration is capped at £1.20m. JUMC operate from offices in Moscow and London and employs approximately 10 people.

On 14 October 2011, the Group acquired 100% of Faulkner Media Management Pty Limited ("FMM", an Australian company) for total expected consideration of AUD $5.90m (approximately £3.74m) consisting of an initial cash payment of AUD $4.00m (approximately £2.54m) and estimated earn out payments of AUD $1.90m (approximately £1.21m). AUD $5.90m also represents the total maximum consideration payable. FMM operates from offices in Sydney and employs approximately 25 people.

On 12 March 2012, the Group acquired 100% of FLE Holdings Limited (the holding company of the FLE Group, "FLE") for total expected consideration of £9.37m consisting of an initial cash payment of £5.00m and estimated earn out payments of £4.37m. Total consideration is capped at £11m. FLE operates principally from offices in London, Hamburg and Paris and employs approximately 70 people.

The results of the above acquisitions are all consolidated into our Analytics division from their respective date of acquisition.

On 1 July 2011, the Group disposed of its editorial monitoring business, Newslive, for cash consideration of £0.17m which resulted in a small profit on disposal. Newslive was part of the Platform division and employed approximately 35 people.

Revenue

Total Group revenue increased by 20% to £52.92m (2011: £44.17m).

All of the acquisitions in the current year have been in the Analytics division, which has helped Analytics revenue increase by 56% to £27.93m. On an organic basis, Analytics revenue has grown by 9%, with particularly strong growth in international revenues (defined as non-UK sourced revenue, or UK sourced revenue where marketing activity is analysed in more than one country), which grew by 17% to £12.71m.

Platform revenue has fallen by 5%, largely due to the disposal of Newslive, but retention of clients has again been strong - the renewal rate for advertising monitoring has maintained at 92% in the year (2011: 92%).

With the Analytics division growing at 9%, offset by a marginal decline in the Platform division, total organic revenue has grown by 1%.

All of the acquisitions in the year have added to our international presence. 76% of total group revenue (£40.46m) now comes from international sources (as defined above), up from 71% for the same period last year (£31.31m).

Gross profit

On an organic basis, gross profit has increased by 4% to £25.78m (2011: £24.80m), with an improvement in gross margin from 56% to 58%. On a total basis, gross profit has increased by 21% to £29.90m (2011: £24.80m), with an improvement in gross margin from 56% to 57%.

On an organic basis, the Analytics gross margin has remained unchanged at 54%. On a total basis, Analytics gross profit has increased from £9.72m to £14.67m, with gross margin falling from 54% to 53% due to lower margins from acquired entities.

Platform gross margin has increased from 57% to 61%, largely as a result of the recognition of cost synergies realised as part of the Xtreme integration process and the impact of the disposal of Newslive.

Operating profit

Operating profit before highlighted items is termed "underlying operating profit". Certain items have been highlighted because separate disclosure is considered relevant in understanding the underlying performance of the business.

Underlying operating profit was £8.21m (2011: £5.30m), representing a 55% increase over the prior year. On an organic basis the increase is 35%.

The underlying operating profit margin has improved from 12% to 16%, largely due to a full year impact of the Xtreme synergies.

The Analytics division has increased operating profit by £1.40m (a 20% increase), and on an organic basis the increase is £0.36m (a 5% increase).

The Platform division has seen an increase in operating profit of £0.57m (a 7% increase), where a revenue fall of £1.27m has been offset by cost savings of £1.84m, largely as a result of the Xtreme synergies and the disposal of Newslive.

Central costs predominantly represent central salaries (Board, Finance, IT and HR), certain UK property costs, and central legal and advisory costs. Central costs have fallen by 10%, largely due to the full year impact of cost savings being generated from the integration of Xtreme.

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 relevant in understanding the underlying performance of the business.

In the current year, the non-recurring items relate almost exclusively to costs associated with the acquisitions made in the year.

Amortisation of purchased intangibles relates to acquisitions made in the current financial year of £299,000 and to acquisitions made in prior years of £1,434,000.

Integration costs relate to certain one-off costs incurred whilst integrating the acquisitions made in the current and prior financial years in to the Group's existing operations.

Severance costs relate to de-duplication and restructure of senior management and support functions following the acquisitions made in the current and previous financial year.

Acquisition costs represent professional fees incurred in relation to acquisitions (£1,375,000) and adjustments to the fair value of deferred consideration liabilities (credit of £125,000), in line with IFRS3 'Business Combinations'. A profit of £50,000 arising on the disposal of Newslive has been netted off against acquisition costs.

Refinancing costs represent professional fees incurred in relation to the refinancing initiative undertaken in March 2012.

Finance costs relate to loan fees that were written off in the year, following the refinancing in March 2012.

As at 30 April 2012, £1,470,000 of the £1,931,000 cash highlighted items had been settled.

Result before tax

Underlying net finance costs were £644,000 (2011: £528,000) which reflects the higher level of debt following the acquisitions made during the year. The current year charge also includes the amortisation of loan arrangement fees of £123,000 (2011: £105,000) that were capitalised at the time of the previous and the current refinancing. As noted above, the highlighted net finance costs relate to loan fees that were written off in the year at the time of the refinance in March 2012.

Underlying profit before tax was up 59% to £7.6m (2011: £4.8m). Reported profit before tax is £2.6m (2011: £1.8m loss).

Taxation

The current tax charge relates to the tax on UK entity profits of £1,080,000 (2011: credit of £28,000) and the tax on overseas entity profits of £845,000 (2011: £617,000).

The deferred tax credit mainly arises on purchased intangible assets (£683,000, 2011: £618,000) and share options (£170,000, 2011: £234,000). In addition, there is an unrecognised deferred tax asset of £1,097,000 (2011: £1,934,000) relating to UK losses.

Equity

During the year, 2,850,000 new ordinary shares were issued to partially fund the acquisition of Echo. These were placed at 90p, a 2.2% discount to the closing middle market price of 92p at the time. A further 92,352 shares were issued upon the exercise of employee share options. These events have increased our share capital to 58,917,667 ordinary shares (2011: 55,975,315).

At the time of the acquisition of Xtreme in April 2010, convertible loan notes were issued that are convertible into 13,802,861 ordinary shares. These convertible loan notes have been included within equity as they demonstrate the characteristics of ordinary share capital. They are also included within the number of shares for the purposes of both the basic and diluted earnings per share calculations. None of the convertible loan notes have been converted into ordinary shares at this time.

Subsequent to the year end, a further 233,075 shares have been issued upon exercise of employee share options.

Earnings per share

Underlying diluted earnings per share was 7.40p (2011: 6.02p). This is an increase of 23% over the prior year, reflecting the positive impact of the acquisitions and the use of brought forward tax losses, partially offset by the impact of the geographical mix of our business with more profits coming, for example, from the US where tax rates are higher.

The Group reports a diluted earnings per share of 2.18p (2011: loss of 2.15p) due to improved underlying profitability and a reduced level of highlighted costs.

Financial Position and Cash flow

Total net assets have increased by £4.71m since April 2011 primarily as a result of both the strong trading performance of the Group, and the placing of 2.85m shares in May 2011 (raising £2.60m before expenses). The most notable movements on the balance sheet are due to the acquisitions in the year, with goodwill and purchased intangible assets increasing by a combined total of £15.35m and other financial liabilities increasing by £18.13m mainly due to the increased level of debt and deferred contingent consideration.

A cash and net debt analysis is provided as follows.

1 Bank debt on the Balance Sheet at 30 April 2012 is shown net of £0.29m (2011: £0.32m) of loan arrangement fees that have been paid which are amortised over the life of the facility. The bank debt stated above excludes these costs.

Underlying net cash from operating activities represents the cash flows from operating activities excluding the impact of highlighted items. The underlying net cash inflow in the year was £3.13m (2011: £4.07m). After highlighted items are considered, net cash inflow from operations for the year was £1.17m (2011: £0.33m), reflecting the lower level of cash highlighted items occurring in the period.

As part of the acquisition of FLE in March 2012, the Group undertook a refinancing initiative with Bank of Ireland and Barclays Bank. The new facility comprises a term loan of £15.00m (of which all was drawn on 14 March 2012, and of which £14.38m remains outstanding at 30 April 2012), and a revolving credit facility of £15.00m (of which £3.98m was drawn on 14 March 2012, all of which remains outstanding at 30 April 2012). Both the term loan and the revolving credit facility have a maturity date of 9 March 2016. £8.98m of the term loan is being repaid on a quarterly basis to maturity, and the balance of the term loan and any drawings under the revolving credit facility are repayable on maturity of the facility. At 30 April 2012, £11.02m of the facility remains undrawn, which may be used to pay deferred consideration on completed acquisitions, upfront consideration on future potential acquisitions, or for general working capital requirements. Deferred consideration on completed acquisitions is currently estimated to be £7.17m.

During the year, the Group continued to trade within all of its banking facilities and covenants.

Andrew Beach

Chief Financial Officer

17 July 2012

Consolidated Income Statement

for the year ended 30 April 2012

Consolidated Statement of Comprehensive Income

for the year ended 30 April 2012

Consolidated Statement of Financial Position

as at 30 April 2012

Consolidated Statement of Changes in Equity

For the year ended 30 April 2012

Notes to the Consolidated Financial Statements

For the year ended 30 April 2012

1. Accounting policies

Basis of preparation

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB) as adopted by European Union (Adopted IFRSs) and with those parts of the Companies Act 2006 applicable to companies preparing their financial statements under Adopted IFRSs.

The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative instruments) at fair value through the Income Statement.

Significant Accounting Policies

The principal accounting policies adopted in these consolidated financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.

Changes in accounting policies

There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or after 1 May 2011 that have had a material impact on the group.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. The results of each subsidiary are included from the date that control is transferred to the Group until the date that control ceases.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in to line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Non-controlling interests represent the portion of the results and net assets in subsidiaries that is not held by the Group.

Business combinations

Purchase method of accounting

The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities assumed, and equity instruments issued by the Group in exchange for control of the acquiree. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date. All costs directly attributable to the business combination are recorded in the Income Statement within highlighted items.

Where the consideration for the acquisition includes a deferred contingent consideration arrangement, this is measured at fair value at the acquisition date. Any subsequent changes to the fair value of the contingent consideration are adjusted against the cost of the acquisition if they occur within the measurement period. Any subsequent changes to the fair value of the contingent consideration after the measurement period are recognised in the Income Statement within highlighted items. The carrying value of deferred contingent consideration at the Balance Sheet date represents Management's best estimate of the future payment at that date, based on historical results and future forecasts.

The interest of non-controlling shareholders in the acquiree is initially measured at the non-controlling interest's proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

Merger method of accounting

Under IFRS 1, the Group is not required to re-state acquisitions or business combinations prior to the date of transition. Therefore the Group is permitted to retain its historical merger accounting position in the consolidated accounts.

Investments in associates

An associate is an entity over which the Group is in a position to exercise significant influence, but not control or joint control, through participation in the financial and operating policy decisions of the investee. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting. Investments in associates are carried in the statement of financial position at cost as adjusted by post-acquisition changes in the Group's share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate) are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

Any excess of the cost of acquisition over the Group's share of the fair values of the identifiable net assets of the associate at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment annually.

Where a group company transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group's interest in the relevant associate. Losses may provide evidence of an impairment of the asset transferred in which case appropriate provision is made for impairment.

Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of a subsidiary. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised immediately in the Income Statement and is not subsequently reversed.

For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

Goodwill arising on other acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP amounts subject to being tested for impairment at that date.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of discounts, VAT and other sales related taxes. Income is recognised evenly over the period of the contract for our Platform businesses, and in accordance with the stage of completion of the contract activity for our Analytics businesses. The stage of completion is determined relative to the total number of hours expected to complete the work or provision of services.

Where services are performed by an indeterminate number of acts over a specific period, revenue is recognised on a straight-line basis over the specific period unless there is evidence that some other method better represents the stage of completion.

If the outcome of a contract cannot be estimated reliably, the contract revenue is recognised to the extent of contract costs incurred that it is probable would be recoverable. Costs are recognised as an expense in the period in which they are incurred.

Finance income and expenses

Finance income and expense represents interest receivable and payable. Finance income and expense is recognised on an accruals basis, based on the interest rate applicable to each bank or loan account.

Foreign currencies

For the purposes of the consolidated financial statements, the results and financial position of each Group company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of transactions. At each year end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the year end date.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the year end date. Income and expense items are translated at the average exchange rate for the period, which approximates to the rate applicable at the dates of the transactions.

The exchange differences arising from the retranslation of the year end amounts of foreign subsidiaries and the difference on translation of the results of those subsidiaries into the presentational currency of the Group are recognised in the translation reserve. All other exchange differences are dealt with through the Income Statement.

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 relevant in understanding the underlying performance of the business.

Taxation

The tax expense included in the Income Statement comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted by the year end date.

Tax is recognised in the Consolidated Income Statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Using the liability method, deferred tax is provided on all temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases, except for differences arising on:

·; the initial recognition of goodwill;

·; the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and

·; investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised. The carrying amount of deferred tax assets is reviewed at each year end date.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the year end date and are expected to apply when the deferred tax liabilities/assets are settled/recovered.

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

·; the same taxable group company; or

·; different group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss.

Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives. The rates generally applicable are:

Other intangible assets

Internally-generated intangible assets - development expenditure

An internally-generated intangible asset arising from the Group's development expenditure is recognised only if all of the following conditions are met:

·; It is technically feasible to develop the asset so that it will be available for use or sale;

·; Adequate resources are available to complete the development and to use or sell the asset;

·; There is an intention to complete the asset for use or sale;

·; The Group is able to use or sell the intangible asset;

·; It is probable that the asset created will generate future economic benefits; and

·; The development cost of the asset can be measured reliably.

Internally-generated intangible assets are amortised on a straight-line basis over their useful lives. Amortisation commences when the asset is available for use and useful lives range from 1-5 years. The amortisation expense is included within administrative expenses. Where an internally-generated intangible asset cannot be recognised, development expenditure is recognised as an expense in the period in which it is incurred.

Purchased intangible assets

Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives, which vary from 3 to 10 years. The amortisation expense is included as a highlighted item within the administrative expenses line in the Income Statement. Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques. The significant intangibles recognised by the Group are customer relationships.

Impairment

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If any such condition exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. Where the asset does not generate cash flows that are independent from other assets, estimates are made of the cash flows of the cash generating unit to which the asset belongs.

Recoverable amount is the higher of fair value, less costs to sell, and value in use. In assessing value in use, estimated future cash flows are discounted to their present value using a discount rate appropriate to the specific asset or cash generating unit.

If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount, the carrying value of the asset or cash generating unit is reduced to its recoverable amount. Impairment losses are recognised immediately in the Income Statement.

In respect of assets other than goodwill, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if the impairment loss had been recognised.

Financial instruments

Financial assets and financial liabilities are recognised in the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

Financial assets

The Group classifies its financial assets as 'loans and receivables' and 'other financial assets'. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables, which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the Income Statement. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Financial liabilities

The Group classifies its financial liabilities as 'Other financial liabilities'. These are initially recognised at fair value. Interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the statement of financial position. "Interest expense" in this context includes initial transaction costs as well as any interest or coupon payable while the liability is outstanding.

Forward currency contracts and interest rate swaps are carried at fair value with changes in fair value being reflected in the Statement of Comprehensive Income, and are classified within other financial assets and liabilities as appropriate.

Convertible loan notes possess all the characteristics of an equity instrument and have therefore been classified as such.

Derivative financial instruments

The Group uses derivative financial instruments to reduce its exposure to foreign exchange and interest rate movements. The Group does not hold or issue derivative financial instruments for financial trading purposes but derivatives that do not qualify for hedge accounting are accounted for at fair value through the Income Statement. Derivative financial instruments are initially recognised at fair value at the contract date and continue to be stated at fair value at the balance sheet date with gains and losses on revaluation being recognised immediately in the Income Statement.

Cash flow hedges are used to hedge against fluctuations in future cash flows on the Group's debt funding due to movements in interest rates, and on certain foreign currency trade receivable balances. When a cash flow hedge is employed, the effective portion of the change in the fair value of the hedging instrument is recognised directly in equity (hedging reserve) until the gain or loss on the hedged item is realised. Any ineffective portion is always recognised in the Income Statement.

The fair value of derivatives is determined by reference to market values for similar instruments.

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and short term deposits. Bank overdrafts are an integral part of the Group's cash management and are included as a component of cash and cash equivalents for the purpose of the Cash Flow Statement.

Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the Directors' best estimate of the expenditure required to settle the obligation at the year end date, and are discounted to present value where the effect is material.

Employee Share Ownership Plan (ESOP)

As the Company is deemed to have control of its ESOP trust, it is treated as a subsidiary and consolidated for the purposes of the Group accounts. The ESOP's assets (other than investments in the company's shares), liabilities, income and expenses are included on a line-by-line basis in the Group financial statements. The ESOP's investment in the Company's shares is deducted from shareholders' equity in the Group statement of financial position as if they were treasury shares, except that profits on the sale of ESOP shares are not credited to the share premium account.

Share-based payments

Where equity settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the Income Statement over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity investments expected to vest at each year end date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. A charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

Where there are modifications to share based payments that are beneficial to the employee then as well as continuing to recognise the original share based payment charge, the incremental fair value of the modified share options as identified at the date of the modification is also charged to the Income Statement over the remaining vesting period. Where the Group cancels share options and identifies replacement options this arrangement is also accounted for as a modification.

Retirement benefits

Contributions to defined contribution pension schemes are charged to the Income Statement in the year to which they relate.

Leased assets

Where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to the Group (a "finance lease"), the asset is treated as if it had been purchased outright. The amount initially recognised as an asset is the lower of the fair value of the leased property and the present value of the minimum lease payments payable over the term of the lease. The corresponding lease commitment is shown as a liability. Lease payments are analysed between capital and interest. The interest element is charged to the Income Statement over the period of the lease and is calculated so that it represents a constant proportion of the lease liability. The capital element reduces the balance owed to the lessor.

Where substantially all of the risks and rewards incidental to ownership are retained by the lessor (an "operating lease"), the total rentals payable under the lease are charged to the Income Statement on a straight-line basis over the lease term. The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight-line basis. The land and buildings elements of property leases are considered separately for the purposes of lease classification.

Government grants

Government grants are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions.

Government grants relating to costs are deferred and recognised in the Income Statement over the period necessary to match them with the costs that they are intended to compensate.

Government grants relating to property, plant and equipment are deducted from the carrying value of the assets that they are intended to compensate and are credited to the Income Statement on a straight-line basis over the expected lives of the related assets.

Critical accounting estimates and judgements

The Group makes estimates and judgements concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Carrying value of goodwill and other intangible assets

Determining whether goodwill and other intangibles should be capitalised, the amortisation period appropriate to intangible assets and whether or not these assets are impaired requires estimation of the value in use of the cash-generating units to which the goodwill and other intangible assets has been allocated. The value in use calculation requires the entity to estimate future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Details regarding the goodwill and other intangible assets carrying value and assumptions used in carrying out the impairment reviews are provided in notes 7 and 8.

Income taxes

The Group is subject to income taxes in all the territories in which it operates, and judgement and estimates of future profitability are required to determine the Group's deferred tax position. If the final tax outcome is different to that assumed, resulting changes will be reflected in the Income Statement, unless the tax relates to an item charged to equity in which case the changes in the tax estimates will also be reflected in equity. The Group believes that its accruals for tax liabilities are adequate for all open audit years based on its assessment of many factors including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgements about future events. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact income tax expense in the period in which such determination is made.

Valuation of share based payments

In determining the fair value of share based payments management have to assess which valuation models are appropriate and estimate various inputs into these models, in particular, expected option lives, share price volatility and the number of awards expected to vest.

Deferred contingent consideration

The Group has recorded liabilities for deferred consideration on acquisitions made in the current and prior periods. The calculation of the deferred consideration liability requires judgements to be made regarding the forecast future performance of these businesses for the earnout period.

Provisions

The Group provides for certain costs of reorganisation that has occurred due to the Group's acquisition and disposal activity. These provisions are based on the best estimates of management.

The Group provides for the costs of property leases where the property is vacant or if the lease is considered onerous. The quantification of these provisions depends upon the Group's ability to exit the leases early or to sublet the properties and has been determined based on external professional advice. In general, property costs are expected to be incurred over periods for which individual properties remain vacant or, where occupied, to the termination of the leases in question, which range from one to three years.

Adoption of new standards and interpretations

Certain new standards, amendments to new standards and interpretations have been published that are mandatory to the Group's future accounting periods but have not been adopted early in these financial statements. These are set out below:

IFRS 7, 'Financial Instruments: Disclosures' (effective on or after 1 July 2011). This amendment enhances the disclosure requirements in respect of transfers of financial assets. The Group will apply IFRS 7 (amendment) from 1 May 2012.

IFRS 9, 'Financial Instruments: Classification and Measurement' (effective on or after 1 January 2015). This standard introduces new requirements for the classification and measurement of financial assets and financial liabilities and for derecognition. The Group will apply IFRS 9 from 1 May 2015.

IFRS 10, 'Consolidated Financial Statements' (effective on or after 1 January 2013). This standard builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements. The Group will apply IFRS 10 from 1 May 2013.

IFRS 12, 'Disclosures of interests in other entities' (effective on or after 1 January 2013). This standard includes disclosure requirements for all forms of interests in other entities. The Group with apply IFRS 12 from 1 May 2013.

IFRS 13, 'Fair value measurement' (effective on or after 1 January 2013). This standard provides guidance on how fair value accounting should be applied and disclosed where its use is already required by other IFRS standards. The Group will apply IFRS 13 from 1 May 2013.

IAS 1, 'Financial statement presentation' (effective on or after 1 July 2012). This amendment outlines new disclosure requirements for 'other comprehensive income'. The Group will apply IAS 1 (amendment) from 1 May 2013.

The Directors do not expect that the adoption of the Standards and amendments listed above will have a material impact on the financial statements of the Group in future periods, although the detailed impact has not yet been quantified.

2. Segmental reporting

In accordance with IFRS 8 the Group's operating segments are based on the reports reviewed by the Executive Directors that are used to make strategic decisions. Certain operating segments have been aggregated to form two reportable segments, Analytics and Platform:

·; Analytics comprises revenue from audit services, marketing effectiveness consultancy and reputation management, which are delivered by teams of media professionals using proprietary technology solutions and support services.

·; Platform comprises revenue from competitive advertising monitoring, news monitoring and e-vouching, all of which are delivered via online platforms.

The Executive Directors assess the performance of the operating segments based on operating profit before highlighted items. This measurement basis excludes the effects of non-recurring expenditure from the operating segments such as restructuring costs and intangible amortisation. The measure also excludes the effects of equity-settled share-based payments. Interest income and expenditure are not allocated to segments, as this type of activity is driven by the central treasury function, which manages the cash position of the Group.

The segment information provided to the Executive Directors for the reportable segments for the year ended 30 April 2012 is as follows:

Year ended 30 April 2012

Year ended 30 April 2011

A reconciliation of segment operating profit before highlighted items to total profit/(loss) before tax is provided below:

Unallocated costs comprise central costs that are not considered attributable to either segment.

A reconciliation of segment total assets to total consolidated assets is provided below:

The table below presents revenue and non-current assets by geographical location:

Non-current assets exclude deferred tax assets.

No single customer (or group of related customers) contributes 10% or more of revenue.

3. 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 relevant in understanding the underlying performance of the business.

Amortisation of purchased intangibles relates to acquisitions made in the current financial year of £299,000 and to acquisitions made in prior years of £1,434,000.

Integration costs relate to certain one-off costs incurred whilst integrating the acquisitions made in the current and prior financial years in to the Group's existing operations.

Severance costs relate to de-duplication and restructure of senior management and support functions following the acquisitions made in the current and previous financial year.

Acquisition costs represent professional fees incurred in relation to acquisitions (£1,375,000) and adjustments to the fair value of deferred consideration liabilities (credit of £125,000), in line with IFRS3 'Business Combinations'. A profit of £50,000 arising on the disposal of Newslive has been netted off against acquisition costs.

Refinancing costs represent professional fees incurred in relation to the refinancing initiative undertaken in March 2012.

Finance costs relate to loan fees that were written off in the year, following the refinancing in March 2012.

As at 30 April 2012, £1,470,000 of the £1,931,000 cash highlighted items had been settled.

Current tax arising on the highlighted items is included as a cash item, while deferred tax on highlighted items is included as a non-cash item.

4. Employee information

The average number of employees of the Group, including Executive Directors, was as follows.

At 30 April 2012, the total number of employees of the Group was 780 (2011: 657).

Staff costs for all employees, including Executive Directors, consist of:

Directors' Remuneration

The totals above are inclusive of performance bonuses, totalling £nil (2011: £228,000), of which £nil was payable to the highest paid Director (2011: £80,000). Directors are eligible for cash bonuses as a percentage of base salary, dependent on individual and company performance against established financial targets.

No Director was a member of a company pension scheme as at 30 April 2012 (2011: nil). Contributions totalling £30,000 (2011: £30,000) were made to Directors' private pension schemes (£nil to the highest paid Director, 2011: £nil) during the year.

No Director exercised any share options during the year (2011: nil). During the year 800,000 share options were granted to Directors under the Group's Executive Incentive Plan, with vesting subject to the achievement of specific performance conditions established and monitored by the Remuneration Committee. These options arose on the cancellation of an equivalent number of existing options.

5. Taxation