Stratmin Global Resources Regulatory News (STGR)

14 Mar 2006 07:03

Interactive Prospect TargetingHdgs14 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, todayannounces record preliminary results for the year ended 31 December 2005, itsfirst full year of trading as a listed company on AIM. Said Lionel Thain, Chief Executive: "Each of our operating divisions hasperformed to our expectations and continued to lead the market in its respectivesector. 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 commencedin line with our expectations." Said CEO Lionel Thain: "Our aim for 2006 is to continue to expand our corebusinesses and to develop new opportunities within the rapidly expanding marketplace in which we operate. The beginning of this year has seen our businesscontinue to expand and develop, and this together with the continued growth inonline marketing is reason for management, employees and shareholders to beoptimistic." - ENDS - Enquiries: INTERACTIVE PROSPECT TARGETING HOLDINGS PLC Tel: 020 7932 4100Lionel Thain, CEOEoin Ryan, Finance DirectorIvan Southall, Directorwww.ipt-ltd.co.uk BINNS & CO PR LTD Tel: 020 7786 9600Peter Binns Mob: 07768 392 582Ben Knowles Mob: 07900 346 978Chris Steele Mob: 07979 604 687 Canaccord Capital (Europe) LtdMark 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 itsprize-draw websites, and leases those out to over 400 Blue Chip corporateclients for direct marketing campaign. IPT is benefiting from a fundamental shift in direct marketing towards e-mailmarketing. E-mail marketing spend in the UK has grown from nothing to £120million in just five years as marketing directors have been attracted by its lowcost (sub a penny per mail shot versus over 50p for direct mail), speed ofdelivery and high response rates. CHAIRMAN'S STATEMENT On 9 December 2004 the shares of the company were listed on the AlternativeInvestment Market (AIM). In our first year of trading as a public company, I amdelighted to be able to report that turnover for the year was £13.6m, anincrease of 61% over 2004 and this was reflected in a 229% increase in profit onordinary activities after tax to over £2.3m. Included in this, the group alsoreports £0.5m of exceptional profits (£0.7m before tax), the detail of which isexplained later in the Chief Executive's report. Together these profits haveproduced basic earnings per share of 7.2 pence (2004: 3.0 pence). In August of 2005, your group completed the acquisition of the Postal PreferenceService, a leading "permission" database company. I am pleased to report thatthis acquisition has been integrated into the group in a most positive wayproducing earnings of £0.2ma before goodwill amortisation, and, as equallypleasing, of the staff that joined us from the Postal Preference Service, over68% remain with the group. The success of this, our first acquisition,encourages me to believe that the group can implement a successful acquisitionstrategy in tandem with the continued expansion of core products. IPT continues to assist digital marketers by providing exceptional directmarketing solutions. In the year we provided data or services to over 750clients and each of our divisions consolidated its position as a market leaderin its core area. IPT is proud to have spearheaded the UK direct marketing industry's adoption ofthe opt-in email marketing medium, and we aim to remain at the forefront of thisdynamic industry. In conclusion, I am pleased to confirm that the new-year has commenced in linewith our expectations and I should particularly like to thank the ChiefExecutive, his management team and all IPT employees for their efforts to date. Colin LloydNon-executive Chairman CHIEF EXECUTIVE'S REVIEW Overall, IPT has expanded its turnover from £8.4m in 2004 to £13.6m in 2005 - agrowth of 61%. This expansion has not only been fuelled by the growth in ourclient numbers from over 400 to over 750, but I am pleased to report thatexisting clients have increased their expenditure with IPT. Each of our divisions has performed to our expectations and continued to leadthe 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 existingclients with the level of service they demand in a fast and dynamic market. Wecontinue to expand our client base by demonstrating to prospects the quality ofour 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 ofwhich expands the depth and size of our core asset, our consumer database. Theprogress made this year will help us to achieve the ambitious targets we haveset for ourselves in 2006, as we make new data available to a market hungry toexpand 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 andthe experienced and skilled personnel that worked with this data. I am pleasedthat the integration of this data and our new employees has been completed in aseamless manner, which has allowed the enlarged group to achieve its targets for2005. Previously I have described our trading divisions: Customer Acquisition, Directand Services, through which we conduct our business, and below I will outlinethe progress these divisions have made during the year. Customer Acquisition Our flagship online data collection site MyOffers.co.uk is now one of the mostvisited websites in the UK, frequently appearing in the top thirty by volume ofunique users in the industry tables. Notably, Nielsen Net Ratings (Oct. '05)reported MyOffers as the third fastest growing website in terms of broadbandusers. With over 200,000 unique new registrations each month, our CustomerAcquisition division is able to guarantee clients consistently high volumes offresh data to meet their needs. To date, our Customer Acquisition division has delivered over 1,000 opt-inprospect databases to well-known consumer brands. We are also recognised as oneof the UK's most reliable sources of fresh leads, particularly for clientsrequiring opt-in telephone numbers for outbound call centres. The MyOffers site is constantly evolving to meet the demands of our dedicatedonline member base and to attract the many thousands of new members that jointhe site each week. We continually develop new promotions and content toensure increased repeat visits, which translate into greater numbers ofquestionnaire completions. Members continue to return regularly to the site toenjoy our online quizzes, daily prize draws, interactive games and daily polls. Last year IPT introduced WebBrands, a co-operative online promotion tool givingnon-competing companies the opportunity to co-operate in a shared registrationprogram. When WebBrands was launched IPT predicted that each client would gain1million new registrations within 18 months. Now the timescale to reach thatlevel has reduced to just 12 months. This year IPT has launched DailyDietTracker, a simple and highly attractiveproposition to its users. Appealing to the health-conscious consumer,DailyDietTracker enables its members to monitor and plan their daily nutritionalintake alongside their exercise routines. The data collected throughDailyDietTracker allows IPT to build a unique database of health-consciousconsumers and their consumption habits, appealing especially to FMCG and foodretailing clients. IPT's consumer prospect data continues to be equally responsive, whether usedfor email marketing, telesales, SMS or direct mail. IPT Direct With in-house databases of over 5.9 million email and 9 million individualpostal prospects (IPT Lifestyle incorporating the Postal Preference Service),IPT Direct provides a fast, low cost and effective method of targeting consumersfor acquisition and brand-building campaigns. Across these files 3.6 millionrecords have both postal and email contacts and 1.2 million have mobilecontacts, providing access to true multi-channel marketing. Importantly, our robust data collection programmes, which are expected to add1.2 million records to our databases in 2006, place IPT in the forefront of theUK 'Lifestyle' data industry in terms of data recency. For clients wishing to target prospects who share the same characteristics astheir best customers, IPT has recently relaunched its Profiling service whichemploys proven analytical techniques in order to deliver insight and selectivetargeting. IPT Direct provides a measurable, predictable and scaleable channel for ourbroad blue chip client base. IPT Services IPT Services continues to offer clients a range of email marketing and databasemanagement solutions using the most innovative technology available. EmailBureau provides a fast and effective campaign management solution, built onthe most advanced hardware and database technology platforms in the UK. Theflagship IronPort C300D broadcast platform is now complimented by eBizmailer, alicensed software solution which allows our clients to enjoy optimum deliveryperformance and the most efficient email service on the market. We currentlybroadcast in excess of 100 million emails per month on behalf of our clients. Through Internet Market Research Services (IMRS) we offer a wealth of expertisein market research, both online and in the real world. IMRS conductsInternet-based surveys and focus groups, and we also offer mixed-model surveyscombining telephone, postal or face-to-face surveys with Internet interviews.Our expertise extends to the latest innovations in market research, allowingIMRS to offer marketers an ever-growing range of services to help to gatherintelligence 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 provenresponsive lists, both for mail and email. This means that the highest qualitydata is guaranteed to the list buyer, whilst an exceptional level of service isassured for list owners. By the end of 2006 holistic aims to hold the largestemail list management portfolio in the UK, and to be the first choice for thirdparty email data. Exceptional Items The shortage of investment funds available to Internet-based businesses in therecent past has led to many of these businesses failing or being starved ofgrowth. As part of its business model IPT has assisted selected Internet-basedclients by providing prospect data at market rates but paid for by a mix of cashand equity in these businesses. During 2005 a proportion of the equity acquiredthrough this arrangement was sold, realising an exceptional profit of £727,000pre 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 theemployees of the Postal Preference Service have integrated so positively. Themanagement team and all our employees have shown outstanding commitment toachieving our business development objectives and new product initiatives. Outlook Our aim for 2006 is to continue to expand our core businesses and to develop newopportunities within the rapidly expanding market place in which we operate. Thebeginning of this year has seen our business continue to expand and develop, andthis together with the continued growth in on-line marketing is reason formanagement, employees and shareholders to be optimistic. Lionel ThainChief 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 ofemail marketing services in the UK, and with the acquisition of the PostalPreference Service (PPS) in August 2005, IPT has expanded its offering in moretraditional direct marketing sectors. Results of Operations Revenues increased to £13.6m in 2005 from £8.4m in the prior year, an increaseof 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 revenuegrowth of 62% in our Data divisions to £11.4m (2004: £7.0m). IPT's Servicesdivision also experienced strong growth of 56% to £2.2m (2004: £1.4m) as itsemail delivery and market research services continued to build a wider clientbase. 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 thebusiness, together with the various central overheads of the group, andamortisation 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 relatesto the expansion of the infrastructure of the group due to the increased levelof activity in the business. This includes an increase in average headcount from104 in 2004 to 132 in 2005, an increase of 27%. Operating profit was £1.7m (2004: £0.9m), an increase of 90% over the prioryear. Excluding exceptional restructuring costs within PPS of £0.2m, andgoodwill 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 theprior 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 forthe costs of employee share options exercised in the year. Dividends of £0.1m were paid during 2004 to the holders of preference shares inthe group's principal trading subsidiary. The preference shares were convertedto ordinary shares as part of the flotation process in December 2004. Nodividends were declared or paid in 2005. Basic earnings per share increased from 3.0p to 7.2p in 2005, with diluted EPSincreasing by 158% to 6.7p. Balance Sheet & Cash Flow Net assets increased to £11.7m (2004: £6.6m) during the year. The groupgenerated operating cash of £2.0m compared to £1m in 2004, although, largely dueto the cash outlay of £4.4m on the acquisition of PPS (made up of the £1.1m cashconsideration and £3.3m repayment of PPS debt), overall cash balances onlyincreased 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 PreferenceService (PPS) for a cash consideration of £1.1m, and including net debt atacquisition of £3.3m, a total cash outlay of £4.4m. At the acquisition date, afair value adjustment of £4.6m was booked, mainly to reflect the alignment ofthe accounting policies of PPS to the rest of the group. The group alsorecognised a deferred tax asset of £0.4m in relation to trading losses withinPPS that it believes would reverse in the short term. This adjusted the fairvalue of net liabilities acquired to £1.8m. In total this gave rise to goodwillof £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 bewritten 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 leadingtechnology and improve infrastructures. Trade debtors increased to £4.3m (2004: £2.1m) due to the increased turnover ofthe group in the year. Trade creditors increased to £1.8m (2004: £0.7m) also dueto increased activity in the year. In August 2005, to coincide with the acquisition of PPS, the group successfullyraised £2.8m, net of expenses, in a secondary placing of 2.6 million shares onthe AIM, at a price of £1.15 per share. Eoin RyanFinance Director CONSOLIDATED PROFIT AND LOSS ACCOUNTFor 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 8,441Cost 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 890Profit on disposal of fixed asset investments 3 727 78Interest receivable and similar income 190 34 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 2,609 1,002Tax charge on profit on ordinary activities 4 (297) (299) PROFIT FOR THE FINANCIAL YEAR AFTER TAXATION 2,312 703Minority interest - (2) PROFIT FOR THE FINANCIAL YEAR AFTER TAXATION &MINORITY INTEREST 2,312 701Dividends 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 beenpresented. CONSOLIDATED BALANCE SHEET As at 31 December 2005 Note 2005 2004 £'000 £'000FIXED ASSETSIntangible assets - goodwill 2,855 45Intangible assets - other 1,520 403Tangible fixed assets 756 385Investments - 2 5,131 835 CURRENT ASSETSDebtors 5,553 2,473Current asset investments - 28Cash at bank and in hand 9 5,414 5,204 10,967 7,705CREDITORS: 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 RESERVESCalled up share capital 7 143 133Share premium account 7 6,747 3,926Merger reserve 7 2,354 2,354EBT reserve 7 (72) (2)Other reserve 7 18 18Profit and loss account 7 2,526 214 EQUITY SHAREHOLDERS' FUNDS 7 11,716 6,643 CONSOLIDATED CASHFLOW STATEMENTFor the year ended 31 December 2005 Notes 2005 2004 £'000 £'000 Net cash inflow from operating activities 8 2,011 950Returns 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 liquidresources and financing (942) 348 Financing 1,152 3,952 Increase in cash in the year 9 210 4,300 NOTES TO THE FINANCIAL STATEMENTSYear 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 ofthe group, being the provision of email marketing services. The directorsconsider 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 7,035Services 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 givenbelow: 2005 2004 £'000 £'000 Europe 13,482 8,099North 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 Limitedrealising 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 inthemutual.net, realising a profit of £130,000 (see Note 13). The tax effect ofthis is £39,000. 4. TAX CHARGE ON PROFIT ON ORDINARY ACTIVITIES The tax charge comprises 2005 2004 £'000 £'000 Current taxUK 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 calculatedby applying the standard rate of UK corporation tax to the profit before tax isas follows: 2005 2004 £'000 £'000 Profit on ordinary activities before tax 2,609 1,002 Tax on profit on ordinary activities at standard UKcorporation 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 - 186Other timing differences 185 5Goodwill 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 £'000Non-equity shares Class B-1 (10% cumulative dividend) - 34Class B-2 (10% cumulative dividend) - 36Class C-1 (10% cumulative dividend) - 45 - 115 The preference dividend related to the preference shares held in InteractiveProspect Targeting Limited, a subsidiary undertaking. The holders of the 'B-1', 'B-2' and 'C-1' preference shares in InteractiveProspect Targeting Limited were entitled to a fixed gross cumulative dividend of10% per annum commencing from 11 November 2003. The preference dividend wascalculated on the aggregate of the nominal amount of such preference share, thepremium paid on subscription and any arrears of the dividend for such preferenceshare. The preference shares were converted to ordinary shares on 30 November 2004 at arate of 1 ordinary share per preference share held, and the accumulated dividendoutstanding was paid on that date. On 1 December 2004 Interactive Prospect Targeting Holdings plc acquired all theshare capital of Interactive Prospect Targeting Limited pursuant to a share forshare exchange agreement. 6. EARNINGS PER SHARE Basic earnings per share has been calculated in accordance with FRS 14 bydividing the consolidated profit after tax attributable to ordinary shareholdersby the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share have been calculated on the same basis as aboveexcept the weighted average number of shares that would be issued on theconversion of all dilutive potential ordinary shares into ordinary shares hasbeen added to the denominator. The calculation of earnings per share is based on the following profits andnumber 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 3.0Impact 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 6,643Placing of shares 10 - - - - 2,991 3,001Placing costs (170) (170)Profit retained for the year - 2,312 - - - - 2,312Purchase 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 890Depreciation 350 238Amortisation 594 141Loss on disposal of investment - 1Profit 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 4,300Cash 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 4,299Net 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