Final Results

RNS Number : 6705Z

Thomson Intermedia PLC

23 July 2008

 



Thomson Intermedia plc

Preliminary results for the year ended 30 April 2008 

Change delivering results  

Thomson Intermedia plc ('Thomson Intermedia' or the 'Group', AIM: THN), a leading provider of media intelligence and data, today announces its preliminary results for the year ended 30 April 2008.

Highlights

• Total revenue of £17.2m, up 8% on the previous 12 month period

• Consultancy services up 18% to £11.3m, representing 66% of total revenue

• 92% renewal of recurring revenues on Technology and Data Services

• 106% renewal of repeat revenues in Consultancy Services

• Group underlying* operating profit of £2.0m, down 10% on the previous 12 month period

• Group underlying* core operating profit up 27% to £2.0m (2007 - 12m: £1.6m)

• Reported operating loss of £1.1m due to non cash write-down of capitalised development costs (2007 - 12m: £0.2m profit)

• Group underlying* profit before tax was £1.8m (2007 - 12m: £1.8m)

• Reported loss before tax was £1.4m (2007 - 12m: £0.2m loss)

• Strong working capital management with a 32% improvement in debtor days and a 30% improvement in net debt position

• Management team strengthened across a number of levels

• Strong focus on:

• Introducing greater financial discipline

• Eliminating dependency on 'one off' projects

* before Highlighted Items (see note 2)

Michael Greenlees, Chief Executive of Thomson Intermedia plc, said: 

' 2007/8 has been a period of extraordinary change and I am confident that we have now set the company on course to prosper in the years ahead.

As a marketing and media analytics business we focus on helping our clients create greater value from their marketing investment - a proposition that should have even greater resonance given the uncertain economic environment'

  23 July 2008 

Enquiries:

Thomson Intermedia
Michael Greenlees, Chief Executive	Today 0207 650 9601
Andrew Beach, Finance Director	Thereafter 0207 650 9800
Landsbanki
Shaun Dobson
College Hill
Matthew Smallwood	0207 457 2020

  Chairman's statement

The financial period that ended on 30 April 2008 was one of substantial change for the company and we have ended the period in a stronger position than we started.

The financial performance for this period must be viewed as one that reflects the transitional nature of the year. The handing over by our company founders of the executive leadership of the company to Michael Greenlees has enabled a fresh perspective to be brought to the business that will facilitate the next exciting phase of our Company growth.

Last summer we celebrated the 10th anniversary of Thomson Intermedia; a company that started life with the passion of a small group of individuals and now counts a significant proportion of the UK's largest advertisers amongst its clients.

The Board was very fortunate to be able to attract Michael Greenlees to join the Board initially as a non-executive and then to step up into the Chief Executive role. His experience and exacting management disciplines are being felt throughout the business. The appointment of Nick Manning, with his vast experience of the media industry, now means that we have one of the most experienced executive teams in the sector.

The need to implement changes to the portfolio of products, and to focus the group's resources, has resulted in a write-down of some of the Company's previous investments in development projects. In addition, some one-off costs have been incurred in order to ensure that we have the best people in key positions. We have also moved into new offices as leases ran out and we sought to maximize the benefit of having all elements of the business in fewer locations.

We are now in a strong position to move forward. We have an executive management team that would be the envy of many larger companies. We have a business that has been reviewed from top to bottom, and we have a platform that is both robust and unique, with a clearly defined growth plan.

I want to thank Steve and Sarah Jane Thomson for the 10 years of their lives they devoted to the creation of Thomson Intermedia. I must also, on behalf of the Board, thank all the employees for their support through this transitional, and we believe transformational, period.

Michael Higgins

Chairman

23 July 2008

  Chief Executive's Review

Financial Overview

Total revenue for the year to 30 April 2008 was up 8% to £17.2 million compared to the 12 months to 30 April 2007. Underlying operating profit was £2.0 million, and although this was down 10% on the previous year, it nevertheless represented an underlying growth of 27% discounting for one-off 'development' revenue. Following the non cash write-down of capitalise development costs (£1.5m), the Group reported an operating loss of £1.1m, down from £0.2m operating profit for the previous 12 months.

The Company continued to be cash generative at an operating level and this, combined with a more disciplined approach to cash management, saw significant improvements in net debt, which fell from £3.0 million to £2.1 million over the year. 

Background

Since my appointment as Chief Executive Officer in October 2007, the Company has undergone a major transformation. Nothing has gone unchallenged and little has remained unchanged. As a result it has been a period of extra-ordinary change, and I want to thank everyone who has been involved for their support, dedication and enthusiasm in helping to grasp the opportunities that surely lie ahead for this outstanding Company.

This has been a year during which we have focused upon introducing greater financial discipline, eliminated our dependency on 'one-off' projects and returned to our core strengths by rebuilding a strong recurring revenue stream, based upon providing an increasing range of services to our large and growing client base. 

We have carefully reviewed every aspect of the business in order to evaluate our strengths and to understand our weaknesses. This has formed the basis of our strategic thinking for the future, and the fruits of this exercise should begin to emerge in the year ahead.

Specifically, we have reviewed in detail:

-         Our management structure, with the aim of strengthening our depth of senior talent and     encouraging a culture of accountability

-         Our systems and processes for managing the business effectively and efficiently, with special emphasis on ensuring clarity of collective and individual responsibility

-          Our sales strategy, structure and pricing across our diverse product base

-         Our financial practices, with particular emphasis on business planning, performance management, accountability and treasury efficiency

-          Our data capture and quality control to ensure the best possible data output to the market

-          Our IT practices, structures and processes, in order to create maximum efficiencies with the minimum down-time, and to ensure timely market delivery of both upgrades and new products

-         Our ‘go to market’ strategy and branding in order to present the most powerful and relevant face to our client audiences

-         Our international capabilities, to address the need for a wider footprint for business expansion

-         Our Human Resources practices, in order to improve the way we reward, retain, motivate and   incentivise our people

-         Our property portfolio, aiming at an improvement in cross-company operations and working conditions

As a result of this review the Board believe that our company is stronger, more focused and ready to deliver strong growth in the years ahead.

Market Data: the currency of the media industry

We operate in a worldwide advertising market worth over $360 billion and a UK market worth almost £8.5 billion. 

As the media landscape diversifies and fragments, driven by emerging digital technologies, there is a greater need for marketing professionals to have accurate, timely (and crucially) independent information, insight and advice. The growth of the Internet (fuelled by Broadband distribution) has transformed the communications market and brought about a radical change in the way that people lead their lives and an equally big shift in their use of communications media.

Digital communications services, led by the Internet, have conspired with converging technologies to offer a massive range of choice to today's consumers. Social Networking on mobile devices is a daily reality and user-generated content is already a permanent feature of the media landscape. 

The explosion of media choice is rapidly re-distributing the time, attention and disposable income of the audiences, and advertisers face an enormous challenge in the way they connect with their consumers. What is sure is that this proliferation of media channels, and the wide range of devices on which they are received, means that increasingly, media menus are becoming personalised and that this has significantly disrupted the traditional 'media consumption' stereotype upon which so much traditional media planning relies.

Data, which allows us to track and respond to consumer behaviour, is the hot new currency and although it is in plentiful supply, its sheer volume creates its own problems, challenging marketers to transform information into actionable insights. This represents an enormous opportunity for Thomson Intermedia. Advertisers increasingly need integrated and independent ways of navigating a clear path through the new media jungle and we are well positioned to help them. 

I believe that no other company offers our unique mix of capabilities. We have one of the largest - perhaps the largest - media databases in the UK; we work with over 300 advertisers, we already deliver valuable insights direct to our clients' desktops in near real time, and we measure and benchmark over £3 billion of media spend, trade and consumer promotional investment each year. This gives us a unique perspective, and I believe an unrivalled ability, to provide our clients with powerful market insights that can drive their businesses success. 

Marketing Investment Management: 

strategic realignment of our core capabilities

In June 2008, I announced that our media monitoring platform would take the Billetts' name to become Billetts Media Monitoring (BMM) and be aligned with our two other advertising services divisions: Billetts Media Consulting and Billetts Marketing Sciences. At the same time BMM was significantly upgraded to provide advertisers with a dedicated and unique monitoring platform that is specific to their marketing sector. The depth, accuracy and usability of this data platform is without equal, and our ability to tailor it to the marketing and media needs of our clients is, I believe, unrivalled.

Whilst each of the three Billetts business units is an authority in its own right, together they create what we believe will increasingly become recognised as the best practice approach for advertisers. We call it Marketing Investment Management and it is designed to ensure transparency, insight and value throughout the media planning and buying process, as well as to provide advertisers with the strategic tools they need to help them build effective media and marketing plans and gain a demonstrable return on their investment. 

In this cluttered and complex market, Billetts' mission is to become the clear source of independent and integrated advice for our clients - to sit at their shoulder throughout the communications and planning process in order to help them:

-         Understand the competitive environment and in the process fine-tune their own activity and react quickly to competitive threats

-          Keep track of marketing campaigns in terms of advertising appearance, compliance and transparency

-          Grow their business by providing unique insights into the key metrics that drive their particular market

-          Benchmark their media activity and measure both the economy and effectiveness of their media planning and  buying

-          Understand their overall return-on-investment from their total communications and promotional activity

-         Manage their data sources and ensure they feed back into better communication planning and greater efficiencies across all media and marketing choices

We believe that no other company in our sector has access to so much data and yet can genuinely claim to be entirely independent of the buying process. 

Leveraging our core assets into growing markets 

In the coming months we intend to focus on improving and developing the services we provide to our other two market audiences: Public Relations and Publishers.

Our editorial monitoring products aimed at the Public Relations market - Newslive and Newsmetrics - are a growing and important part of our business. Today, most major corporations are concerned to properly manage their image; put more correctly perhaps, their reputation. In the world of business, reputation is key and in today's busy and complex media environment, in which blogging is increasingly dictating the pace of public opinion, tracking what people say about you - good or bad - is a crucial business tool.

Both Newslive and Newsmetrics are specialist providers of high-speed news monitoring and evaluation services delivered on-line in near real time. They provide intelligently selected media coverage and evaluation that helps inform strategic planning. 

In addition we plan to further develop our 'publisher services' business by building upon our successful electronic vouching business. Electronic vouching allows publishers to provide advertisers with proof of insertion via a purpose built web based platform helping them to create significant efficiencies and cost savings. We have recently introduced this product in Holland where it has already met with significant success.

International development

Approximately 19% (2007: 13%) of our revenue in 2007/8 was derived directly or indirectly from international client assignments. Of this, 75% are for contracts conducted in 10 countries or more. We currently work with over 30 companies across Europe and Asia to provide our international media audit service and in the coming year we intend to take steps to strengthen our country representation to more closely match the needs of our clients. 

Last month we entered into exclusive discussions with Media Value, Spain's newest and most dynamic Media Consulting and Auditing Company, with a view to acquiring an initial 25% interest and by so doing, strengthen our existing presence in this important market. Media Value was formed last year by senior professionals from Accenture/Media Audits, and has already built up a significant client list in its own right. Billetts' Spanish and Portuguese accounts will join Media Value's existing business, jointly creating a powerful data pool for the Spanish media market. 

Outlook

We have taken the first steps necessary to ensure a strong foundation for growth but there will be more to do in the coming year. We will continue to invest in growth opportunities designed to build upon our strengths as a leader in marketing analytics. 

Our primary purpose is to advise our clients on how best to create media value - more specifically, how best to ensure maximum return on their marketing and media investment. At no time is this more relevant or more important than at a time of growing concerns about recession. Already a significant proportion of our clients are either Finance Directors or Heads of Procurement seeking to set benchmarks or interrogate value. Many are Sales Directors who look to create greater efficiencies from their growing trade promotion budget. And many are Marketing Directors who need to make their marketing budgets work harder. Billetts Marketing Investment Management speaks directly to these concerns. Overall, therefore, the Board remains cautiously optimistic about the year ahead.

Michael Greenlees 

Chief Executive Officer

23 July 2008

  Financial Review

Thomson Intermedia plc is publishing its final results for the 12 months ended 30 April 2008. Since the comparative period is a 15 month period, this review also contains unaudited proforma figures for the 12 months ended 30 April 2007.

Revenue

	12 months ended 30 April 2008 (audited)	12 months ended 30 April 2007 (restated, unaudited proforma)		15 months ended 30 April 2007 (restated, audited)
	£'000s	£'000s		£'000s
Consultancy Services	11,310	9,604		12,168
Technology & Data	5,910	5,716		7,126
Core	17,220	15,320		19,294
Development (one off)	-	661		896
Total Revenue	17,220	15,981		20,190

Total Group revenue increased by 8% to £17.2 million (2007 - 12 months: £16.0 million) with Core revenue, excluding one-off development projects, up by 12% to £17.2 million (2007 - 12 months: £15.3 million). This growth was driven by Consultancy Services where revenue increased by 18% to £11.3 million. Within this segment, revenue from international audit assignments and marketing sciences projects both grew strongly, up by 62% and 30% respectively.  

Despite an encouraging 92% renewal rate (by value), revenue from Technology & Data Services was up only 3% year on year due to a disappointing new business performance. Following contract wins in Holland and in UK magazine publishing, revenue from e-vouching services for publishers was up 28% year on year.

The Board made the decision to focus on recurring and renewable revenue streams based on our core product and service offerings rather than one off software development projects. This explains the lack of Development revenue in the current year. 

Gross Profit

Gross profit for the period was £9.0m, yielding a gross margin of 52% (2007 - 15 months: 56%) which has been consistent throughout the period. The margin decrease reflects the lack of one off development income, and the larger percentage of revenue being attributable to Consultancy Services - and in particular international contracts - which has lower margins than Technology & Data.

  Operating Profit

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.  

	12 months ended  30 April 2008 (audited)	12 months ended 30 April 2007 (restated, unaudited proforma)		15 months ended  30 April 2007 (restated, audited)
	£'000s	£'000s		£'000s
Consultancy Services	1,993	1,463		2,088
Technology & Data	145	220		300
Central costs	(121)	(92)		(85)
Underlying core business operating profit	2,017	1,590		2,304
Development (one off)	-	642		877
Underlying operating profit	2,017	2,233		3,181
Highlighted Items	(3,140)	(2,055)		(2,230)
Reported operating (loss)/profit	(1,123)	178		951

Consultancy Services has performed well with increased revenues from a well managed cost base.

Additional costs incurred in Technology & Data did not result in the desired uplift in revenues. As explained in the Chief Executive's review, this part of the business is subject to a detailed strategic review.

Underlying core business operating profit was £2.0m (2007 - 12 months: £1.6m), representing a 27% increase over the prior 12 month period.

  Highlighted Items

	12 months ended  30 April 2008			15 months ended  30 April 2007
	Cash	Non-cash	Total	Cash	Non-cash	Total
	£'000	£'000	£'000	£'000	£'000s	£'000
Recurring:
Share based expenses	-	99	99	-	347	347
Amortisation of purchased intangible assets	-	369	369	-	484	484
	-	468	468	-	831	831
Non recurring:
Acquisition related (Billetts)			-	361	-	361
Development costs write off	-	1,457	1,457			-
Provision for doubtful debts	-	-	-	-	474	474
Property costs	548	(90)	458	-	218	218
Management restructuring costs	521	-	521	193	-	193
Other costs	236	-	236	47	106	153
	1,305	1,367	2,672	601	798	1,399
Total highlighted items	1,305	1,835	3,140	601	1,629	2,230

Following a comprehensive review of the Company's priorities in respect of development projects, the Group has taken a write-down of £1.5 million in respect of capitalised development costs relating to projects that we no longer pursue. This is an accounting charge, which has no impact on the Group's cash flow, now or in the future. 

The property costs of £458,000 relate to the consolidation of the Company's London operations into one location at Tower Hill and includes the cost of exiting our two other London properties in Charing Cross and Farringdon. 

The management restructuring costs of £521,000 relate to Board changes implemented in October 2007 together with further restructuring following a strategic review.

Other costs relate primarily to liabilities of Billetts that arose from the period prior to its acquisition in August 2005 together with legal costs in pursuit of a possible warranty claim. The Board has decided that it would be an unnecessary deflection of resources to pursue this matter at this time.

Profit before tax and EPS

Net finance costs were £250,000 (2007 - 12 months: £353,000) which reflects a decrease in the Group's borrowings over the past twelve months.

Underlying profit before tax for the twelve months was flat at £1.8m. Reported loss before tax was £1.4m (2007 - 12 months: £0.2m loss).

Underlying diluted earnings per share for the twelve months was 4.34p (2007 - 12 months: 5.00p). Reported diluted loss per share was 4.00p (2007 - 12 months: 0.55p).

The Board is not recommending the payment of a dividend, reflecting the high growth nature of the Group and the opportunities for further development, particularly internationally. 

Cash and Debt

	As at  30 April 2008 (audited)  £'000s	As at 30 April 2007 (audited)   £'000s
Cash	1,687	2,105
Debt	(3,751)	(5,057)
Net Debt	(2,064)	(2,952)

Net cash from operating activities for the twelve months was £1.8m (2007 - 15 months: £2.0m), reflecting an improved working capital performance on an annualised basis.  

During the 12 months, the Group invested £335,000 in intangible assets (development work), £797,000 in relation to the property move, and incurred £521,000 in relation to management restructuring.  

There has been a strong focus over the last year on improving the processes for cash and working capital management, including debt collection, invoicing and supplier payments. These initiatives have had a significant impact with debtor days down from 95 days as at 30 April 2007 to 65 days as at 30 April 2008. The profile of the debtor balances has also improved: as at 30 April 2008, 19% of debtors had been outstanding for more than 60 days compared with 32% as at 30 April 2007.

The net debt position as at 30 April 2008 was £2.1 million (2007: £3.0 million), the reduction being due to positive operating cash flow over the past twelve months despite significant investment in property and management restructuring. Gross debt was reduced by £1.3 million to £3.8 million as £0.9 million was repaid to the bank, and £0.4 million of vendor loan notes were redeemed.

As at 30 April 2008, the Group had unutilised banking facilities of £4.1m.

Andrew Beach

Group Finance Director

23 July 2008

  Consolidated Income Statement

for the twelve months ended 30 April 2008

		12 months  ended  30 April 2008	15 months ended 30 April 2007 (Restated -Note 1)
	Note	£'000	£'000
Revenue		17,220	20,190
Cost of Sales		(8,261)	(8,758)
Gross Profit		8,959	11,432
Administrative expenses - excluding highlighted items		(6,942)	(8,251)
Administrative expenses - highlighted items		(3,140)	(2,230)
Total administrative expenses		(10,082)	(10,481)
Operating profit before highlighted items		2,017	3,181
Administrative expenses - highlighted items		(3,140)	(2,230)
Operating (loss)/profit		(1,123)	951
Finance income		62	80
Finance expenses		(312)	(473)
Net finance costs		(250)	(393)
(Loss)/profit before taxation		(1,373)	558
Tax income	3	97	263
(Loss)/profit for the period		(1,276)	821
Attributable to:
Equity holders of the parent		(1,276)	770
Minority interests		-	51
		(1,276)	821
(Loss)/earnings per share
Basic	4	(4.00)p	2.46p
Diluted	4	(4.00)p	2.37p

Consolidated Statement of Recognised Income and Expense

for the twelve months ended 30 April 2008

		12 months ended  30 April 2008	15 months ended 30 April 2007 (Restated - Note 1)
		£'000	£'000
(Loss)/profit for the period		(1,276)	821
Exchange differences on translation of overseas subsidiary		13	56
Deferred tax movement on share based expenses		(80)	(101)
Total income and expense recognised directly in equity		(67)	(45)
Total recognised income and expense for the period		(1,343)	776
Attributable to:
Equity holders of the company		(1,343)	725
Minority interest		-	51
		(1,343)	776

Consolidated Balance Sheet

as at 30 April 2008

		30 April 2008	30 April 2007 (Restated- Note 1)
		£'000	£'000
Non current assets
Goodwill		8,754	8,625
Other intangible assets		2,876	4,432
Property, plant & equipment		882	610
Investment in joint ventures		115	115
Deferred tax asset		979	895
Total non current assets		13,606	14,677
Current assets
Trade & other receivables		5,753	5,715
Current tax assets		-	105
Cash & cash equivalents		1,687	2,105
Total current assets		7,440	7,925
Total assets		21,046	22,602
Current liabilities
Other financial liabilities		(1,951)	(2,857)
Trade & other payables		(2,273)	(2,132)
Current tax liabilities		(226)	-
Provisions		(156)	(59)
Accruals & deferred income		(4,703)	(3,995)
Total current liabilities		(9,309)	(9,043)
Non current liabilities
Other financial liabilities		(1,800)	(2,200)
Provisions		(65)	(159)
Deferred tax liability		(667)	(825)
Total non current liabilities		(2,532)	(3,184)
Total liabilities		(11,841)	(12,227)
Total net assets		9,205	10,375
Capital & reserves
Share capital		8,035	7,828
Share premium		1,846	1,840
Merger reserve		(4,504)	(4,504)
Translation reserve		63	50
Retained earnings		3,765	5,161
Capital and reserves attributable to the equity holder of the parent		9,205	10,375
Minority interest		-	-
Total equity		9,205	10,375

Consolidated Cashflow Statement 

for the twelve months ended 30 April 2008

	12 months  ended  30 April 2008	15 months  ended 30 April 2007 (Restated - Note 1)
	£'000	£'000
Cashflows from operating activities
(Loss)/profit before taxation	(1,373)	558
Adjustments for:
Depreciation	333	414
Amortisation	434	1,120
Capitalised development costs write off	1,457	-
Share option charges	99	307
Finance income	(62)	(80)
Finance expenses	312	473
	1,200	2,792
Increase in trade receivables	(41)	(225)
Increase in trade payables	849	112
Increase in provisions	3	110
Cash generated from operations	2,011	2,789
Finance expenses	(312)	(473)
Income taxes paid	107	(308)
Net cash from operating activities	1,806	2,008
Cashflows from investing activities
Purchase of property, plant & equipment	(610)	(317)
Purchase of intangible assets	(335)	(793)
Purchase of investments	(128)	-
Finance income	62	80
Net cash used in investing activities	(1,011)	(1,030)
Cashflows from financing activities
Proceeds from issue of share capital	104	32
Proceeds from long term borrowings	-	2,000
Repayment of bank loans	(863)	(375)
Loan note settlement	(443)	(3,218)
Net cashflow used in financing activities	(1,202)	(1,561)
Net decrease in cash, cash equivalents and bank overdrafts	(407)	(583)
Effect of foreign exchange rate changes	(11)	(24)
Cash, cash equivalents and bank overdraft at beginning of period	2,105	2,712
Cash, cash equivalents and bank overdraft at end of period	1,687	2,105

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 1985 applicable to companies preparing their financial statements under Adopted IFRSs.

Change in year end

In the prior year, the Group changed its year-end from 31 January to 30 April in order to better accommodate the commercial needs of the Group. In consequence, whereas the current period covers the 12 months to 30 April 2008, the comparatives are for the 15 months to 30 April 2007.

Change in classification of business segments

The Group has changed the classification of Core revenue into two streams in order to better distinguish between the services that it offers to its clients. This change, which reflects the reality of the business, should provide better transparency for investors and assist the Board in its long term growth strategy. The two new revenue streams are:

-          Technology & Data Services: comprising revenue from competitive advertising monitoring, news monitoring and e-vouching, all of which are delivered via online platforms.

-          Consultancy Services: comprising revenue from audit services and marketing effectiveness consultancy, which are delivered by teams of media professionals using proprietary technology solutions and support services.

The comparative figures have been restated to reflect this change.

Change in accounting policies

a)   Revenue recognition policy

The Group has changed its accounting policy for revenue recognition of e-vouching contracts to recognise revenue evenly over the life of the contract period. Previously, revenue recognition was weighted towards the start of the contract to take account of set up time and costs. This change results in revenue being recognised more in line with the delivery of the service. The prior period comparatives have been restated to reflect this change. 

b)   New standards, amendments to published standards and interpretations to existing standards effective in 2007 adopted 

      by the Group

IFRS 7, Financial Instruments and a complementary amendment to IAS 1 Presentation of Financial Statements - capital disclosure (effective for accounting periods beginning on or after 1 January 2007).  IFRS 7 requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk. Where these risks are deemed material to the group it requires disclosures based on the information used by key management. It replaces the disclosure requirements in IAS 32 'Financial Instruments: disclosure and presentation'. 

The amendment to IAS 1 introduces disclosures about the level and management of an entity's capital.  The Group has applied IFRS 7 and the amendment to IAS 1 to the accounts for the period beginning on 1 May 2007.

IFRIC 8, Scope of IFRS 2 (effective for accounting periods beginning on or after 1 May 2006). IFRIC 8 requires consideration of transactions involving the issue or grant of equity instruments to establish whether or not they fall within the scope of IFRS 2. It applies to situations where the identifiable consideration received is or appears to be less than the fair value of the equity instruments issued. There was no impact on the group's accounts from its adoption.

2.  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.

	12 months ended  30 April 2008			15 months ended  30 April 2007
	Cash	Non-cash	Total	Cash	Non-cash	Total
	£'000	£'000	£'000	£'000	£'000s	£'000
Recurring:
Share based expenses	-	99	99	-	347	347
Amortisation of purchased intangible assets	-	369	369	-	484	484
	-	468	468	-	831	831
Non recurring:
Acquisition related (Billetts)			-	361	-	361
Development costs write off	-	1,457	1,457			-
Provision for doubtful debts	-	-	-	-	474	474
Property costs	548	(90)	458	-	218	218
Management restructuring costs	521	-	521	193	-	193
Other costs	236	-	236	47	106	153
	1,305	1,367	2,672	601	798	1,399
Total highlighted items	1,305	1,835	3,140	601	1,629	2,230

Following a comprehensive review of the Company's priorities in respect of development projects, the Group has taken a write-down of £1.5 million in respect of capitalised development costs relating to projects that we no longer pursue. This is an accounting charge, which has no impact on the Group's cash flow, now or in the future. 

The property costs of £458,000 relate to the consolidation of the Company's London operations into one location at Tower Hill and includes the cost of exiting our two other London properties in Charing Cross and Farringdon. 

The management restructuring costs of £521,000 relate to Board changes implemented in October 2007 together with further restructuring following a strategic review.

Other costs relate primarily to liabilities of Billetts that arose from the period prior to its acquisition in August 2005 together with legal costs in pursuit of a possible warranty claim. The Board has decided that it would be an unnecessary deflection of resources to pursue this matter at this time.

3. Taxation

	12 months ended 30 April 2008	15 months ended  30 April 2007
	£'000s	£'000s
UK tax
Current year	108	60
Prior year	115	-
	223	60
Foreign tax
Current year	-	19
Total current tax	223	79
Deferred tax
Origination and reversal of temporary differences	(202)	(69)
Rate change	22	-
Prior year	(140)	(273)
	(320)	(342)
Total tax income	(97)	(263)

The difference between tax as charged in the financial statements and tax at the nominal rate is

explained below:

	12 months ended 30 April 2008	15 months ended  30 April 2007 (Restated - Note 1)
	£'000	£'000
(Loss)/profit before tax	(1,373)	558
Corporation tax at 30%	(412)	167
Non deductible taxable expenses	98	14
Previously unrecognised deferred tax asset assessed as recoverable at the end of the period	-	(273)
Overseas tax rate differential	55	(2)
Capital allowances	(26)	20
Additional deduction for R&D expenditure	-	(139)
Prior year amortisation of other intangibles	-	(49)
Effect of rate change	22	-
Under provision of current and prior year tax	(156)	-
Other timing differences	322	(1)
Total tax income	(97)	(263)

4. Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

	12 months ended  30 April 2008	15 months ended 30 April 2007 (Restated- Note 1)
	£'000	£'000
(Loss)/earnings for the purpose of basic earnings per share being net profit attributable to equity holders of the parent	(1,276)	770
Adjustments:
Deferred tax	(320)	(342)
Highlighted items - recurring1	467	831
Highlighted items - non recurring1	2,673	1,399
Earnings for the purpose of underlying earnings per share	1,544	2,658
Number of shares:
Weighted average number of ordinary shares for the purpose of basic earnings per share	31,877,389	31,299,591
Effect of dilutive potential ordinary shares
Share options2	3,671,496	1,185,915
Weighted average number of ordinary shares for the purpose of diluted earnings per share	35,548,885	32,485,507
Basic (loss)/earnings per share	(4.00)p	2.46p
Diluted (loss)/earnings per share2	(4.00)p	2.37p
Underlying basic earnings per share	4.84p	8.49p
Underlying diluted earnings per share	4.34p	8.14p

1 Highlighted items (see note 2).

2 Note that certain share options have been excluded from the calculation of diluted EPS as their exercise price is greater than the weighted average share price during the year (i.e. they are out-of-the-money) and therefore it would not be advantageous for the holders to exercise those options. 1,387,379 (2007: 297,647) share options have not been included within the diluted earnings per share calculation at 30 April 2008 as they are anti-dilutive for the periods presented. These shares could potentially dilute earnings per share in the future. There have been no movement in shares since the balance sheet date.

  5. Other intangible assets

	Capitalised  Development costs	Purchased  intangible assets	Total  intangible assets
	£'000s	£'000s	£'000s
Cost
At 1 February 2006	2,695	3,395	6,090
Additions	793	-	793
At 1 May 2007	3,488	3,395	6,883
Additions	335	-	335
Write off	(3,251)	-	(3,251)
At 30 April 2008	572	3,395	3,967
Amortisation
At 1 February 2006	(1,169)	(162)	(1,331)
Provision for the period	(636)	(484)	(1,120)
At 1 May 2007	(1,805)	(646)	(2,451)
Provision for the year	(66)	(368)	(434)
Write off	1,794	-	1,794
At 30 April 2008	(77)	(1,014)	(1,091)
Net book value
At 30 April 2008	495	2,380	2,876
At 30 April 2007	1,683	2,749	4,432
At 31 January 2006	1,526	3,233	4,759

6. Financial information

The financial information set out above does not constitute the Company's statutory accounts for the twelve months ended 30 April 2008 or the fifteen months ended 30 April 2007, but is derived from those accounts. Statutory accounts for the fifteen months ended 30 April 2007 have been delivered to the Registrar of Companies and those for the twelve months ended 30 April 2008 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and did not contain statements under the Companies Act 1985, s 237(2) or (3).

When published, the Group's Annual Report and Accounts will be sent to shareholders and will be made available to the public at the Group's registered office: The Registry, Royal Mint Court, London EC3N 4QN.

 

END

 

 

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