Stratmin Global Resources Regulatory News (STGR)

15 Apr 2008 07:01

Interactive Prospect TargetingHdgs15 April 2008 Press Release 15 April 2008 Interactive Prospect Targeting Holdings Plc ("IPT" or the "Company") and its subsidiaries (together the "Group") Final Results for the year ended 31 December 2007 Interactive Prospect Targeting Holdings Plc (AIM:IPH), one of Europe's largestdirect online marketing group, today announces its Annual Results for the yearended 31 December 2007. Key Points • Group revenues increased from £24.1m in 2006 to £33.2m in 2007, an overall growth of 38% • Operating profit of £0.6 million (2006: £4.2 million) • Our French businesses, Directinet and NP6, have continued to exceed expectations with particularly strong demand from Directinet's blue chip client base. Commenting on the results Lionel Thain, Chief Executive Officer, said: "2007 wasa challenging year for IPT Group. The Group faced a number of technologyrelated issues that were compounded by stiff competition in certain markets anda weakening of the broader economic conditions. However, the Company's Frenchoperations, including its newly acquired companies, performed above expectationsand the core UK business is undergoing a strategic re-alignment that will helprecapture profitability in 2008." - Ends - For further information: IPT Holdings plcLionel Thain, Chief Executive Tel: +44 (0) 20 7932 4101 Canaccord AdamsMark Williams, Corporate Finance Tel: +44 (0) 20 7050 6500mark.williams@canaccordadams.com www.canaccordadams.com Media enquiries:AbchurchCharlie Jack / Jack Ballantyne Tel: +44 (0) 20 7398 7700jack.ballantyne@abchurch-group.com www.abchurch-group.com CHAIRMAN'S STATEMENT The financial year to 31 December 2007 was a difficult one for InteractiveProspect Targeting Holdings plc ("IPT" or the "Company") and its subsidiaries(together the "Group"). While revenues grew 38% to £33.2m (2006: £24.1m), thiswas mainly due to the continued growth of our businesses in France and theimpact of a number of acquisitions made during the last 2 years. Our core UKbusiness has faced a number of challenges. On 27 March 2007, we announced that the UK operations had been impactedadversely by a problem in sales execution which was causing a shortfall inrevenue in our customer acquisition division. As I reported at the time of ourinterim results this problem was resolved, however, it was not possible torecover the losses that had been incurred. The interim results showed thatrecovery was underway and the second half of the year began on a positive note.The last quarter of the year has traditionally been our most important quarterwith a disproportionate level of revenue and operating profit being achieved. In2007, UK revenues in this quarter fell well below our expectations. The level ofoperating costs remained constant and therefore the shortfall in revenueimpacted almost directly on operating profit. The problems described above resulted in a decline in revenue in our core UKbusiness, yet revenue in the UK business overall was similar to 2006 as a resultof the impact of acquisitions in market research and affiliate marketing in 2006and 2007. However, the lower gross profit margins(1) attributable to marketresearch and affiliate businesses, together with the shortfall in revenuesmentioned above on a largely fixed cost base, significantly impacted the overallUK gross profit margin. This resulted in the UK business reporting a reductionin Adjusted EBITDA(2) for the year to £1.3m compared to £5.5m in 2006. On a positive note, our businesses in France have continued to strengthen. In2007, revenues in our French segment increased to £14.0m (2006: £4.8m(3)) andAdjusted EBITDA increased to £2.7m (2006: £1.2m). This growth also reflects theaddition of NP6, a leading email broadcast business in France acquired in June2007, which contributed £1.6m in revenues and £0.7m of Adjusted EBITDA for theyear. Our largest French business, Directinet, continues to demonstrate itsleading position in French email marketing with strong revenue growth in 2007. Group loss before tax was £1.0m compared to a profit of £4.0m in 2006. Inaddition to the UK trading matters, Group loss before tax was negativelyimpacted by £1.0m foreign exchange movements on deferred consideration andforeign currency loans and a further £0.6m on non-cash interest accretion ondeferred consideration. The reported current slowdown in the world economy is predicted to have animpact on certain aspects of the European media sector and, in recognition ofthis, we do not expect substantial growth in the more challenging environment of2008. We have revised the Group's expectations for the coming year accordingly.In the view of the results for 2007 and the prospective trading environment,your Board recognises the requirement to focus on the core product areas of theUK business and create the appropriate operating cost to revenue ratios to bringthe business back to operating profitability. To this end much has already beenachieved in 2008. On 22 August 2007, we reported that we were in discussions with parties that mayor may not lead to an offer for the Group. Whilst certain discussions have nowceased, a new approach has been received which your Board is considering whetherit may or may not lead to an offer for the Group. In conclusion, I should like to thank the IPT management team and all IPTemployees for their efforts during this challenging year. Comments on current trading and the outlook for 2008 are included in the ChiefExecutive's Review. Colin LloydChairman14 April 2008 Chief Executive's Statement Overview 2007 was a challenging year for the Group and, in particular, our UK operationsfaced a number of difficulties. UK revenue in the first half was affected by sales execution difficulties in ourcustomer acquisition business and the continuing downturn in demand for postaldirect marketing. Although we overcame the sales execution issue, our datarental division experienced a shortfall in revenues, particularly in the secondhalf which has traditionally been our strongest trading period. Our emailbroadcasting division was significantly impacted in the second half by thedeparture of key members of staff. Our French businesses have continued to perform above expectations withparticularly strong demand from Directinet's blue chip client base. Directinet'sfull-year revenue growth(4) was in excess of 50% in 2007. NP6, an emailbroadcast business based in Bordeaux, was acquired in June 2007. This businesshas also traded strongly during the year. During 2007, we acquired Tpoll, a market research business, in order to exploitthe demand within this rapidly growing sector of online marketing. As part ofthe integration of Tpoll, we ceased our existing online market research businessresulting in a reduction in organic revenues(5) in this division. Financial highlights Group revenues increased from £24.1m in 2006 to £33.2m in 2007 - an overallgrowth of 38%. France revenues grew from £4.8m in 2006 to £14.0m in 2007. Excluding the impactof the NP6 acquisition in 2007, full-year revenues4 in France grew by over 50%in 2007 due to the continued growth in our Directinet business. This growth inorganic revenues, and the operating profit contribution of £0.7m from theacquisition of NP6, drove a significant increase in profitability. AdjustedEBITDA in France increased by 125% to £2.7m (2006: £1.2m) while reportedoperating profits grew from £0.9m in 2006 to £2.2m in 2007. In 2007, UK revenues were £19.2m (2006: £19.3m) although this included thecontribution from the Tpoll acquisition of £1.9m and the full-year impact of UKAcquisitions made in 2006. The reduction in organic revenue was primarily drivenby the impact of the sales execution issue on our customer acquisition revenues,the impact of email delivery issues on our data rental businesses and thedeparture of key staff in the email broadcasting division. UK gross profit margins fell to 67% in 2007 (2006: 82%) arising from a change inrevenue mix with lower revenues in higher margin products such as customeracquisition and list rental being replaced by revenues from the lower marginbusinesses of market research and affiliate marketing. UK administrationexpenses grew from £10.3m in 2006 to £11.6m in 2007 including £0.8m relating toacquired businesses as we increased investment in headcount and infrastructurerequired to generate expected higher revenues. As a result of the challengingissues experienced in the first half, we implemented a number of cost savingmeasures in the second half, including headcount reduction. The UK business wasalso impacted by relocation of its business to new premises in December 2007. Group Adjusted EBITDA decreased 48% to £3.3m (2006: £6.3m) due to the shortfallin margins mentioned above on a higher cost base. Non allocated costs were alsoimpacted by costs incurred in relation to the ongoing discussions on the futureof the Group. Depreciation and amortisation costs increased in 2007 to £2.5m (2006: £1.8m)largely due to the compound effect of higher levels of investment in data andequipment in prior years. UK operating profit fell from £3.8m in 2006 to an operating loss of £0.7m in2007, while Group operating profit decreased to £0.6m (2006: £4.2m) due to theunderperformance of its UK business. The Group experienced a significant increase in finance costs in 2007. Financecosts increased to £1.7m (2006: £0.4m) due to translation adjustments andinterest costs on contingent consideration and loans. Group loss before tax was £1.0m compared to a profit of £4.0m in the prior year. Operational highlights Our UK customer acquisition division, which includes myoffers.co.uk andwebbrands.co.uk, allows IPT to maintain its position as the UK's leading builderof online prospect databases. In the first half-year, a change in the method ofoperations of major Internet Service Providers (ISPs) resulted in a salesexecution issue whereby our email newsletters inviting existing users to returnto our sites were not being delivered. Although we were able to overcome thisproblem and we returned to normal operations in the second half, the negativeeffect on revenue in the first half could not be recovered. Additionally, ashort term impact of resolving this issue was a reduction of investment in newregistrations being collected. During the second half year we resumed normalactivities and an average of 206,000 new registrations were collected eachmonth. Revenues from our UK data rental business were disappointing in 2007. Whilstdemand for email data rental remained strong in most market sectors, the effectof delivery rules adopted by ISPs reduced our ability to maximise revenues fromour core databases. 2007 has seen the concept of "permission based" emailmarketing change from an acceptance that "opting-in" to receive marketingcommunication by email was sufficient to ensure delivery to an email address tothe need to comply with a complex and ever changing system of filters imposed byindividual ISPs to maintain delivery. During the year, IPT acquired NP6 whichhas a team of highly technical experts and the systems required to understandand react to the ISP filtering mechanisms. The use of NP6's proprietarytechnology, "MailPerformance", is allowing IPT to improve levels ofdeliverability in its core businesses. Data rental revenues in the UK have also been under pressure from increasedcompetition in the market place particularly from cost per acquisition models.We have reacted to increasing competition by encouraging clients to enter longerterm contracts on more preferential terms. Data rental revenues were alsoimpacted by the decline in demand for postal data. Our market research division has undergone a period of change in 2007. InFebruary we acquired Tpoll to spearhead our market research business. A periodof integration and reorganisation followed which involved the closure of ourexisting online market research panel with a resultant impact on organicrevenues in the year. Tpoll is now actively developing its own consumer panelsunder the "Mindmover" brand using the Group's resources and experience in datacollection. Direct Excellence, now re-branded as Integra Insight, hassuccessfully moved its product range from traditional call centre activity,which was loss-making, to a combination of online and consumer generated datadelivering new insight into the markets it serves. Directinet has continued to grow its business in France and has exceeded ourexpectations. Its core products consistently produce highly responsive prospectsfor clients and in 2007 average spend per client increased to £40,000 (2006:£27,000). It is apparent that the delivery issues currently experienced in theUK are not prevalent to the same degree in France. The development of "Butineo", the Group's French version of our MyOffersproduct, has proceeded rapidly during 2007. It is now collecting over onemillion completed surveys per month from an ever increasing number ofregistrations, currently 70,000 per month. This product is building our ownproprietary database of French consumers which will improve our operating profitmargins(6) in France. NP6, acquired in June 2007, continues to grow in what is a vibrant market foremail broadcasting in France, whereas the market for email services in the UKhas proved much more difficult with increased competitive threat andcommoditisation of pricing. During 2008 we will continue the introduction of thebroadcasting engine "MailPerformance" into the UK market and the experience ofthe NP6 team will enable us to offer market leading technology anddeliverability expertise in the UK. Employees At 31 December 2007, our number of employees had increased to 285 (2006: 244),with 108 (2006: 50) now located in our French businesses. I would like to thankall our employees, particularly in the UK, for their determination throughout amost difficult year. We have an exceptionally strong team in France and I amdelighted with the positive support they have given to the UK operations. I amparticularly pleased to welcome the staff that joined us as a result of ouracquisitions during 2007 and I am happy that they have integrated so positively. Current trading In the light of a disappointing performance in 2007, and with signs of weaknessin both the UK and French economies, management has revised its expectations for2008. Revenue and profits are currently in line with these revised targets. Outlook Our aim for 2008 is to continue to restore the profitability of the UK businessand we are currently undertaking a review of all operations with this goal inmind. We expect our customer acquisition products will continue to lead the provisionof database building services both in the UK and France in 2008. Although our UKbusiness was adversely impacted by issues in the first half of 2007, ourperformance in the second half of the year restored revenues to previous levels.We believe we can continue to progress in 2008 through the introduction of newrevenue initiatives, exploring wider traffic acquisition sources and theimplementation of website operational improvements. Our key focus in the UK list rental business will be to continue improving thelevels of email deliverability through greater use of targeting and data mining.We also aim to improve our positioning with key clients to focus list rentalrevenues where they are most profitable, although we are mindful of theincreasing competition from cost per acquisition models in this market. Weexpect the decline in traditional postal data sales to continue. In 2008 we expect Directinet to maintain on a growth path but in a morechallenging economic environment in France. During 2008 we expect the market for email broadcast services to remain verycompetitive in both the UK and France. We believe we are well positioned to facethis challenge as the experience of the NP6 team will enable us to offer marketleading technology and deliverability expertise. We will continue the promotionof the "MailPerformance" broadcasting engine into the UK market and explore theexpansion into other European countries. As I mentioned previously, our market research division has undergone a periodof change in 2007. 2008 will see Tpoll launch a new consumer panel under the "Mindmover" brand, giving it greater presence in the fast growing market foronline consumer panels. Our Integra Insight business has successfully convertedits loss-making offline model to online and is now profitably exploiting thismedium for the markets it serves. Our wider UK business has experienced a challenging year in 2007 and as a resulta number of cost saving measures, including headcount reduction, have alreadybeen implemented in the second half. We expect to continue our strategy ofachieving a lower cost base appropriate to our revenues, whilst ensuring that wecan deliver the best results for our clients both on price and service. Lionel ThainChief Executive Officer14 April 2008 Financial Review Year ended 31 December 2007 2007 performance 2007 was a year of disappointing results for IPT. Whilst the Group's Frenchoperations exceeded expectations, its UK business faced a number of challenges.Primarily it experienced difficulties in delivering email which led to salesexecution issues in its customer acquisition products and hampered growth indata rental division. The Group completed two acquisitions in 2007. The acquisition of Tpoll inFebruary 2007 for £2.5m including acquisition costs bolstered the Group's marketresearch focus. The Group also expanded further in Europe with the acquisitionof NP6, a French email broadcasting business, for £6.7m including acquisitioncosts. NP6 provides expertise in email delivery and has natural synergies withthe existing UK broadcasting business. Revenues Revenues increased to £33.2m in 2007 from £24.1m in 2006, an increase of 38%.Excluding the impact of acquisitions made during 2007, revenues increased from£24.1m in 2006 to £29.7m in 2007, an increase of 23%. UK revenues were static at£19.2m (2006: £19.3m) although this included the contribution from Tpoll of£1.9m and the full-year impact of UK 2006 acquisitions. The reduction in organicrevenue was as a result of the sales execution and email delivery issuesmentioned above and the departure of key staff in its email broadcastingdivision. The existing online market research business was also closed down aspart of the reorganisation of this division after the acquisition of Tpoll. France revenues grew from £4.8m in 2006 to £14.0m in 2007. This growth includesa contribution of £1.6m from NP6 and the full-year impact of Directinet whichwas acquired in May 2006. Directinet, the largest French business, had aparticularly strong year with full-year growth in excess of 50%. The Frenchbusiness continued to benefit from its leading position in email marketing andthe growth of online advertising. Gross profit and gross margin Gross profit increased to £21.8m (2006: £18.8m), an increase of 16%. However,gross profit margins declined significantly to 66% (2006: 78%). The reduction ingross profit margin relates to reduced margins in IPT's UK operations and thefull-year impact of Directinet which operates on lower margins. Unlike IPT inthe UK, Directinet sources its data from third parties and therefore incursroyalty expenses on its data revenues. Gross profit margin on IPT's UKoperations was impacted by a change in revenue mix with lower revenues in highermargin products such as customer acquisition and list rental being replaced byrevenues from the lower margin businesses of market research and affiliatemarketing. Adjusted results To assist the understanding of the underlying performance of the Group in theyear, EBITDA is disclosed prior to the impact of share-based payment charges,adjustment to goodwill on recognition of tax assets and amortisation ofacquisition related intangible assets (see note 4). Earnings per share is alsodisclosed prior to the impact of the above items, foreign currency translationadjustments on contingent consideration, interest accretion on contingentconsideration and their tax effects (see note 7). Expenses, Adjusted EBITDA and operating profit 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 £21.2m (2006: £14.6m), an increase of 45%. Excluding 2006 and 2007 acquisitions and amortisation of intangible assets, administration expense grewby 10% to £12.9m in 2007 (2006: £11.7m) as a result of the increased investmentin headcount and infrastructure to generate expected higher revenues. Adjusted EBITDA decreased from £6.3m in 2006 to £3.3m in 2007. In the UK,Adjusted EBITDA decreased to £1.3m (2006: £5.5m) due to the impact of lowergross margins and the increased administration cost mentioned above. In France,Adjusted EBITDA increased to £2.7m (2006: £1.2m) reflecting both strong revenuegrowth in and the full-year impact of Directinet and the £0.7m positive impactof the NP6 acquisition. Depreciation increased from £0.4m in 2006 to £0.5m in 2007. Amortisation ofnon-acquisition related intangible assets increased to £1.5m (2006: £1.1m) dueto the compound effect of higher levels of investment in data in prior years. Share-based payment expense, adjustment to goodwill on recognition of tax assetsand amortisation of acquisition related intangible assets increased to £0.7m(2006: £0.6m). Operating profit decreased from £4.2m in 2006 to £0.6m in 2007 primarily due thereduced profitability of the UK business. Finance costs The Group's finance costs amounted to £1.7m (2006: £0.4m) reflecting the costsassociated with the acquisitions of Directinet, Tpoll and NP6. Finance costsinclude the foreign currency translation adjustment on contingent considerationof £0.5m (2006: (£0.1m)), the interest accretion on contingent consideration of£0.6m (2006: £0.5m), the foreign currency translation on the Group's loanarrangement of £0.4m (2006: £nil) and interest attributable to the loan of £0.1m(2006: £nil). The loan arrangement was entered into to fund the purchase of NP6. (Loss)/ profit before tax The loss before tax was £1.0m (2006: £4.0m profit). Taxation The reported tax charge for the year was £0.7m representing an effective taxrate of (72%) (2006: 27%) pre-interest accretion and the translation adjustment.This is primarily due to the inability to fully recognise the deferred taximpact of losses in the UK business and the impact of higher rates of tax inFrance. The Group has recognised a deferred tax asset of £0.4m in respect of tax lossescarried forward (2006: £0.3m). The Group has not recognised a deferred tax assetin respect of £1.8m of unrecognised tax losses (2006: £1.6m). An asset will berecognised if there is certainty over the future profit streams required toutilise these losses. Earnings per share Basic earnings per share decreased from 7.4p in 2006 to a loss per share of 3.7pin 2007, while diluted earnings per share also decreased to a loss of 3.5p (2006earnings: 7.1p). Adjusted earnings per share(7) decreased to 1.0p (2006: 9.6p). Balance sheet and cash flow In 2007, net assets increased to £33.8m (2006:£32.4m). The balance of cash and cash equivalents decreased to £4.7m (2006: £7.5m) during the year. This includes the generation of £0.6m (2006: £4.8m) in net cash from operating activities. Cash flows in 2007 included £5.6m (2006: £11.4m) in cash outflows for the acquisition of subsidiaries. In February 2007, the Group acquired Tpoll, for a consideration of £2.6mincluding other costs of acquisition incurred. The consideration is payable asan initial consideration and costs of £1.2m and estimated deferred considerationof £1.4m. Tpoll's net assets were provisionally fair valued at £0.4m includingadjustments relating to the valuation of existing unfulfilled orders,non-contractual customer relationships and trade names of £0.2m. This resultedin goodwill of £2.2m. In June 2007, the Group acquired NP6, for a consideration of £6.8m includingother costs of acquisition incurred. The consideration is payable as an initialconsideration including costs of £4.0m and estimated deferred consideration of£2.8m. NP6's net assets were provisionally fair valued at £1.8m includingadjustments relating to the valuation of existing unfulfilled orders,non-contractual customer relationships, software and trade names of £0.9m. Thisresulted in goodwill of £5.0m. Data acquisition costs of £1.2m were capitalised in the year (2006: £1.2m). These data costs will be written off over three years. Intangible assets of £1.6m were recognised in 2007 upon acquisition of Tpoll and NP6 and will be amortised over the useful life of the respective assets. Capital expenditure on tangible fixed assets and software increased to £0.9m(2006: £0.8m) reflecting continued investment in leading technology and due tothe impact of the acquisition of NP6, which is a technology-intensive business. Trade debtors increased to £12.7m (2006:£7.1m) due to the increase in turnover,the impact of acquisitions and extended payment terms offered to some keyclients in the UK. Extended payment terms are offered by the Group to encouragekey clients to enter into larger, long-term contracts in areas of the businesswhere competitive pressures are strong. Trade creditors increased to £3.5m(2006: £2.2m) due to the increase in activity and the impact of acquisitions. In July 2007, IPT purchased £0.15m of its own shares in an on-the-market sharebuy back. Prior year amendment Evolution of the application of IFRS 3 Business Combinations has caused us toreconsider the treatment of adjustments to movements in deferred consideration.As a result, the Group's 2006 results have been amended for the appropriatetreatment of foreign currency translation adjustments on contingentconsideration and interest accretion on contingent consideration in accordancewith IFRS 3 Business Combinations. The resulting amendment increases 2006finance costs by £0.4m (see note 9). Summary IPT has experienced a challenging year in 2007. In 2008 the Group will refocusits efforts to maximise the profitability of its core activities byconcentrating on higher margin revenue streams while continuing to implementcost saving measures it began in the second half of 2007. Eoin RyanFinance Director Consolidated Income Statement Year ended 31 December 2007 Note Amended (see note 9) 2007 2006 £'000 £'000Revenue 33,244 24,066Cost of sales (11,456) (5,220)Gross profit 21,788 18,846Administrative expenses Share-based payment charge (145) (73)Adjustment to goodwill on recognition of tax assets (30) (189)Amortisation of acquisition related intangible assets (506) (347)Other administrative expenses (20,480) (14,025) (21,161) (14,634) Operating Profit 627 4,212 Investment revenue 142 177Finance costs 5- Interest on bank overdraft and loans (145) -- Foreign exchange loss on loan payable (439) -- Amendments to deferred consideration payable (1,151) (400) (Loss)/profit before tax (966) 3,989 Tax 6 (695) (1,073) (Loss)/profit for the year 3 (1,661) 2,916 (Loss)/profit attributable to equity holders of 9 (1,661) 2,916the parent (Loss)/earnings per share 7Basic (pence) (3.7) 7.4 Diluted (pence) (3.5) 7.1 The results for the current and prior years are derived from continuingoperations. Consolidated statement of recognised income and expense Year ended 31 December 2007 Amended Consolidated statement of recognised income and expenses Note (see note 9) 2007 2006 £'000 £'000Tax taken directly to equity - current tax 6 43 705Tax taken directly to equity - deferred tax (153) (412)Exchange differences on translation of foreign operations 2,307 - Net income recognised directly in equity 2,197 293 (Loss)/profit for the period 9 (1,661) 2,916 Total recognised income and expense for the year 536 3,209 Prior year amendment - deferred consideration 9 (400) - Total recognised income and expense since last report 136 3,209 The total recognised income and expense in the year is attributable to:Equity holders of the parent 536 3,209 Consolidated Balance Sheet At 31 December 2007Consolidated balance sheet Note Amended (see note 9) 2007 2006 £'000 £'000Non-current assetsGoodwill 31,006 22,624Other intangible assets 5,951 4,915Property, plant and equipment 949 797Deferred tax asset 679 759 38,585 29,095 Current assetsTrade and other receivables 14,198 8,499Cash and cash equivalents 4,710 7,454 18,908 15,953 Total assets 57,493 45,048 Current liabilitiesTrade and other payables (9,467) (5,825)Current tax liabilities (440) (491)Bank loans and overdrafts (800) (242)Deferred consideration payable (4,254) (2,060) (14,961) (8,618)Non-current liabilitiesDeferred tax liability (1,223) (866)Bank loans (3,997) -Deferred consideration payable (3,546) (3,205) (8,766) (4,071) Total liabilities (23,727) (12,689) Net assets 33,766 32,359 EquityShare capital 8 179 177Share premium account 9 24,475 23,437Own shares 9 (529) (215)Share option reserve 9 279 134Other reserves 9 2,372 2,372Retained earnings 9 6,990 6,454 Total equity 9 33,766 32,359 Consolidated Cash Flow Year ended 31 December 2007Consolidated cash flow statement 2007 2006 Note £'000 £'000Net cash from operating activities 10 588 4,779 Investing activitiesInterest received 142 177Proceeds on disposal of property, plant and equipment 21 -Purchases of plant, property and equipment (602) (583)Purchases of intangible fixed assets (1,464) (1,646)Acquisition of subsidiaries (4,566) (11,361)Deferred consideration paid in relation to prior year acquisitions (1,033) - Net cash used in investing activities (7,502) (13,413) Financing activitiesRepayment of loans and overdrafts on acquisitions - (169)Proceeds on issue of shares 9 - 11,028Purchase of own shares 9 (294) (143)Repayment of obligations under finance leases - (5)Interest paid (145) -New bank loans 4,357 - Net cash from financing activities 3,918 10,711 Net (decrease)/increase in cash and cash equivalents (2,996) 2,077 Cash and cash equivalents at the beginning of the period 7,454 5,414 Effect of foreign exchange rate changes 252 (37) Cash and cash equivalents at the end of the period 4,710 7,454 Notes to the consolidated financial statements 1. General information The preliminary results for the year to 31 December 2006 and 31 December 2007have been prepared in accordance with the recognition and measurement criteriaof International Financial Reporting Standards ("IFRS") as adopted by theEuropean Union and applied in accordance with Companies Act 1985. However, thisannouncement does not contain sufficient information to comply with IFRS. TheGroup expects to publish full financial statements that comply with IFRS inApril 2008 which will be delivered before the Company's Annual General Meetingin May 2008. This Preliminary Announcement does not constitute the group's statutory accountsfor the years ended 31 December 2006 or 31 December 2007, but is derived fromthose accounts. Statutory accounts for the year to 31 December 2006 have beendelivered to the Registrar of Companies and those for 31 December 2007 will bedelivered in May 2008 following the Company's Annual General Meeting. Theauditors have reported on both of these accounts; their reports were unqualifiedand did not contain statements under s237(2) or (3) Companies Act 1985. The preliminary announcement was approved by the Board of Directors on 14 April2008 2. Segmental information Business segments Segmental information is presented in respect of the Group's primary businesssegments. Segmental results, assets and liabilities include items directly attributable toa segment as well as those that can be allocated on a reasonable basis.Unallocated costs comprise mainly head office expenses. Segmental capital expenditure is the total cost incurred during the year toacquire property, plant and equipment, and intangible assets other than goodwilland those arising on business combinations. The Group comprises two main business segments, based on geographical location -the United Kingdom and France. These divisions are the basis on which the Groupreports its primary management information. There are no sales betweensegments. Results - year ended 31 December 2007 UK France Unallocated Consolidated £'000 £'000 £'000 £'000Revenue 19,204 14,040 - 33,244 Adjusted EBITDA (note 4) 1,308 2,700 (716) 3,292 Share-based payment charge - - (145) (145)Adjustment to goodwill on recognition of tax assets (30) - - (30)Amortisation of acquisition related intangible assets (145) (361) - (506)Depreciation on property, plant and equipment (405) (74) - (479)Amortisation of non-acquisition related intangible (1,441) (64) - (1,505)assets Operating (loss)/profit from continuing operations (713) 2,201 (861) 627 Investment revenue 142Finance costs (note 5) (1,735) Loss for the year before taxation (966) Taxation (695) Loss for the year (1,661) Results - year ended 31 December 2006 Amended (see note 9) UK France Unallocated Consolidated £'000 £'000 £'000 £'000Revenue 19,262 4,804 - 24,066 Adjusted EBITDA (note 4) 5,527 1,211 (433) 6,305 Share based payment charge - - (73) (73)Adjustment to goodwill on recognition of tax assets (189) - - (189)Amortisation of acquired intangible assets (118) (229) - (347)Depreciation on property, plant and equipment (325) (25) - (350)Amortisation of non-acquired intangible assets (1,104) (30) - (1,134) Operating profit/(loss) from continuing operations 3,791 927 (506) 4,212 Investment revenue 177Finance costs (note 5) (400) Profit for the year before taxation 3,989 Taxation (1,073) Profit for the year 2,916 Other information - year ended 31 December 2007 UK France Unallocated Consolidated £'000 £'000 £'000 £'000Capital additions 1,835 231 - 2,066 Depreciation and amortisationDepreciation on property, plant and equipment 405 74 - 479Amortisation of non-acquired intangible assets 1,441 64 - 1,505Amortisation of acquired intangible assets 145 361 - 506 1,991 499 - 2,490 Other information - year ended 31 December 2006 UK France Unallocated Consolidated £'000 £'000 £'000 £'000Capital additions 2,201 30 - 2,231 Depreciation and amortisationDepreciation on property, plant and equipment 325 25 - 350Amortisation of non-acquired intangible assets 1,104 30 - 1,134Amortisation of acquired intangible assets 118 229 - 347 1,547 284 - 1,831 Balance sheet at 31 December 2007 UK France Unallocated Consolidated £'000 £'000 £'000 £'000Segment assets 14,882 42,403 208 57,493Segment liabilities 16,791 6,782 154 23,727 Balance sheet at 31 December 2006 UK France Unallocated Consolidated £'000 £'000 £'000 £'000Segment assets 15,484 29,116 448 45,048Segment liabilities 10,855 1,744 90 12,689 3. (Loss)/profit for the year (Loss)/Profit for the year has been arrived at after charging: 2007 2006 £'000 £'000Foreign exchange losses 4 3 Loss on disposal of tangible assets 20 -Depreciation on property, plant and equipment 479 350 Amortisation of internally generated intangible assets 97 39Amortisation of other intangible assets 1,408 1,095Amortisation of acquisition related intangible assets 506 347Impairment of acquisition related intangible assets 68 - Adjustment to goodwill on recognition of tax assets 30 189 Staff costs 13,500 10,628 The adjustment to goodwill on recognition of tax assets results from therecognition of an additional deferred tax asset relating to previouslyunrecognised losses in the Postal Preference Service Limited and Tpoll MarketIntelligence Limited, subsidiary companies. 4. Adjusted operating profit and Adjusted EBITDA 2007 2006 £'000 £'000Reported operating profit 627 4,212 Add back:- share-based payment charge 145 73- adjustment to goodwill on recognition of tax assets 30 189- amortisation of acquisition related intangible assets 506 347 Adjusted operating profit 1,308 4,821 Add back:- depreciation on property, plant and equipment 479 350- amortisation of non-acquisition related intangible assets 1,505 1,134 Adjusted EBITDA 3,292 6,305 5. Finance costs Amended (see note 9) 2007 2006 £'000 £'000Interest on bank overdrafts and loans 145 -Foreign exchange loss on loan payable 439 -Foreign exchange loss/(gain) on deferred consideration payable 527 (100)Interest accretion on deferred consideration payable 624 500 1,735 400 6. Taxation Amended (see note 9) Year End Year End 2007 2006 £'000 £'000The tax charge comprises: Current taxCorporation tax (931) (478)Adjustment in respect of prior years - 88Foreign tax credit 50 -Released through equity (43) (705) (924) (1,095) Deferred taxIncrease of deferred tax asset 48 (98)Origination and reversal of timing differences 181 120 229 22 Total tax on (loss)/ profit on ordinary activities (695) (1,073) Corporation tax is calculated at 30 per cent (2006: 30 per cent) of theestimated assessable profit for the year. Taxation for France is calculated atthe rates prevailing in France. Reconciliation of tax charge: Amended (see note 9) 2007 2007 2006 2006 £'000 % £'000 %(Loss)/ profit on ordinary activities before tax (966) 3,989 Tax at the UK corporation tax rate of 30% 290 30% (1,197) 30% Effects of:Adjustment in respect of prior years - - 88 (2%)Tax effect of expenses that are not deductible in (913) (95%) (155) 4%determining taxable profitTax effect of utilisation of tax losses not previously - - 216 (5%)recognisedEffect of different tax rates in subsidiary operating in (72) (7%) (25) 1%other jurisdictions Tax charge for period (695) (72%) (1,073) 27% In addition to the amount charged to the income statement, deferred tax relatingto share-based payments and employee benefits amounting to £0.1m (2006: £0.4m)has been charged directly to equity. 7. (Loss)/ earnings per share Amended (see note 9) 2007 2006 Profit/ Number Pence Profit/ Number Pence (loss) of shares per share (loss) of shares per share £'000 '000 £'000 '000Adjusted earnings per share* 446 44,739 1.0 3,797 39,399 9.6 Reconciliation to reportedearnings:- share-based payments (145) - (0.3) (73) - (0.2)- adjustment to goodwill on (30) - (0.1) (189) - (0.4) recognition of tax assets- amortisation of acquisition (506) - (1.1) (347) - (0.9) related intangibles- foreign currency translation (1,151) - (2.6) (400) - (1.0) adjustment and interest accretion on contingent consideration- foreign exchange movements on (439) - (1.0) - - - foreign currency loans- tax effect of the above items 165 - 0.4 128 - 0.3 Basic (loss)/earnings per share (1,661) 44,739 (3.7) 2,916 39,399 7.4 Impact of share options - 2,308 0.2 - 1,685 (0.3) Diluted (loss)/earnings per (1,661) 47,047 (3.5) 2,916 41,084 7.1share *Adjusted earnings per share figures are reported before charges for share-basedpayments, adjustment to goodwill on recognition of tax assets, amortisation ofacquisition related intangibles, foreign currency translation adjustment oncontingent consideration, interest accretion on contingent consideration andmovements on foreign currency loans because this is considered to be a moreconsistent measure of underlying performance. 8. Called up share capital 2007 2006 £'000 £'000Authorised:60m ordinary shares of 0.4p each 240 240 Called up, allotted and fully paid44.8m (2006: 44.2m) ordinary shares of 0.4p each 179 177 Share issues in the year ended 31 December 2007 0.6m shares were allotted during the year to satisfy part of the deferredconsideration due in relation to the acquisition of Directinet and in connectionwith the exercise of share options by a Director. These shares have a nominalvalue of £2,000. 9. Total equity Share Share Other Own Share Profit Total capital premium reserve shares options and loss account reserve account £'000 £'000 £'000 £'000 £'000 £'000 £'000Balance at 1 January 2006 143 6,747 2,372 (72) 62 3,282 12,534Shares issued on acquisition 11 5,685 - - - - 5,696Placing of shares 23 11,478 - - - - 11,501Placing costs - (473) - - - - (473)Profit retained for the year - - - - - 3,316 3,316Items taken directly to equity - - - - - 293 293Purchase of own shares - - - (150) - - (150)Share options exercised - - - 7 - - 7Share-based payments transactions - - - - 72 - 72Exchange rate movements - - - - - (37) (37) Balance at 1 January 2007 as previously 177 23,437 2,372 (215) 134 6,854 32,759statedPrior year amendments* - - - - - (400) (400) Balance at 1 January 2007 restated 177 23,437 2,372 (215) 134 6,454 32,359Issue of shares 2 1,018 - - - - 1,020Loss retained for the year - - - - - (1,661) (1,661)Items taken directly to equity - - - - - 2,197 2,196Purchase of own shares - - - (323) - - (323)Share options exercised - 20 - 9 - - 29Share-based payments transactions - - - - 145 - 146 At 31 December 2007 179 24,475 2,372 (529) 279 6,990 33,766 Interactive Prospect Targeting Holdings plc acquired the entire issued sharecapital of Interactive Prospect Targeting Limited pursuant to a share for shareexchange on 1 December 2004. The Other reserve reflects the difference betweenthe nominal value of the shares issued to acquire Interactive Prospect TargetingLimited and the cumulative value of the Company's share capital and sharepremium account at the date of acquisition. *Prior year amendments Evolution of the application of IFRS 3 "Business Combinations" has caused us toreconsider the treatment of adjustments relating to movements in deferredconsideration. As a consequence of this, a prior year amendment has been madecomprising: 2006 £'000Foreign currency gain on deferred consideration payable 100Interest accretion on deferred consideration payable (500) (400) In the financial statements for the year ended 31 December 2006, this movementwas recognised against goodwill. In the amended 2006 results, it has beenrecognised as a finance cost in the income statement. This item is notdeductible for corporation tax purposes, therefore has no impact in the taxcharge of the restated 2006 income statement. 10. Reconciliation of operating profit to operating cash flows 2007 2006 £'000 £'000Operating profit 627 4,212Depreciation and amortisation 2,490 1,831Adjustment to goodwill on recognition of tax assets 30 189Share-based payment charge 145 73 Operating cash flows before movements in working capital 3,292 6,305 (Increase)/ decrease in receivables (4,939) 17Increase/ (decrease) in payables 3,426 (1,343) Cash generated by operations 1,779 4,979 Taxation paid (1,191) (200) Net cash from operating activities 588 4,779 Cash and cash equivalents comprise cash at bank and other short-term highlyliquid investments with a maturity of 3 months or less. -------------------------- (1) Being gross profit as a percentage of revenue.(2) As defined in note 4 and applied consistently hereafter.(3) All 2006 comparative figures in relation to our French segment disclosed hereafter refer to the period from the acquisition of Directinet on 24 May 2006 to 31 December 2006.(4) Full-year 2006 revenue compared to full-year 2007 revenue.(5) Being revenues excluding the impact of acquisitions since 1 January 2006.(6) Being operating profit as a percentage of revenue.(7) Before share-based payments, adjustment to goodwill on recognition of tax assets, amortisation of acquisition related intangible assets, foreign currency translation adjustments on contingent consideration, interest accretion on contingent consideration, foreign exchange movements on foreign currency loans and the tax effect of these items (as defined in note 7). 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