Final Results
Thomson Intermedia PLC
12 April 2005
Thomson Intermedia plc
('Thomson Intermedia' or 'the Company')
Preliminary results for the year ended 31 January 2005
Thomson Intermedia, a leading provider of media information, today announces
record preliminary results for the year ended 31 January 2005
• Turnover up 46% to £5.92m (2004: £4.05m)
• Underlying Profit before tax of £0.62m (2004: loss of £0.65m)
• Underlying eps of 2.56p (2004: loss per share of 1.1p)
• Gross sales contracts increased by £1.55m to £6.29m (2004: £4.74m)
• New contracts increased by 25% to £2.44m (2004: £1.95m), with 104 new
annual contracts won, including Sony music, House of Fraser & Comet
and 14 Vouching contracts
• Sustained high client renewal rate of 83%, by value
• Future contracted revenue of £2.79m already secured for next financial
year
• Net cash of £1.60m: continued and increasing cash generation
• Upgrade and finalisation of German contract to include all media
Sarah Jane Thomson, Joint Chief Executive Officer of Thomson Intermedia, said:
'This year has been extremely rewarding with continued growth and increasing
market appetite for our core products. The market-leading strength of our
product combined with a strengthening sales team will enable us to further drive
market penetration both in the UK and internationally. This should result in
continuing increased profitability.
In addition, our innovation and development continues at pace: the newly
launched advertising verification, together with our developing effectiveness
systems, are meeting considerable demand in an advertising market which
increasingly requires transparency and measurement.'
12 April 2005
Enquiries:
Thomson Intermedia
Sarah Jane Thomson, Chief Executive
David Trendle, Finance Director 020 8466 2906
College Hill
Kate Pope 020 7457 2006
Adrian Duffield 020 7457 2815
Thomson Intermedia is delighted to announce record preliminary results. The
year has been one of considerable progress with the full integration of all
media and considerable progress made in international expansion, vouching and
Return on Investment (ROI) products.
Thomson Intermedia provides competitive advertising evaluation and solutions
through the provision of comprehensive market data. Technology has always been
at the heart of the Company, allowing it to deliver its unique proposition of
real time, integrated and tailored systems. We not only continue to focus on
client requirements and capture efficiencies, but also on driving the future
opportunities of our market.
Our primary focus remains to empower UK companies with independent media
intelligence. Increasing fragmentation in the market and requirements for
greater governance put us in a unique and market-leading position, offering
integrated channel coverage and transparent data.
Financial Results
Revenue for the period was up 46% to £5.92m (2004: £4.05m) compared to an
increase in direct costs of only 5%, despite continued developments and new
product launches. This high level of operational gearing has resulted in an
improved gross margin of 68.4% (2004: 56.1%), as well as the Company's first
positive underlying operating margin of 9.8%.
The total value of sales contracts signed in the year rose by 33% to £6.29m
(2004: £4.74m) and exceeds total expenditure incurred of £5.35m in the financial
year. It also results in future contracted revenues of £2.79m being already
secured for the next financial year
New contracts signed in the year increased 25% to total £2.44m (2004: £1.95m).
Existing clients have been keen to extend and upgrade their contracts into new
media and products, with an 83% renewal rate and accounting for almost £1m of
the new contract value. The average value of all contracts rose by 16% from
£19,000 to £22,000, with average contract rates for new business continuing to
rise to £25,000.
Profit before taxation and long term incentives improved to £618,000 (2004: Loss
of £647,000). As previously advised the Company has expensed £258,000 in
relation to long term incentives, with revisions to the schemes, as fully
disclosed in note 2. The Company has a tax credit of £588,000 including deferred
tax and a research & development tax credit, as disclosed in note 3.
Basic earnings per share significantly improved to 3.29p this year compared to a
loss per share of 1.1p in the previous year. Adjusted earnings per share was
2.56p (2004: loss per share 1.1p) after extracting the effects of deferred tax,
long term incentives and amortisation. This is provided as a more meaningful
year on year measure for the performance of the Group.
The Company recorded positive operating cash flow of £381,000 despite a negative
working capital movement of £438,000. Net funds increased by £369,000 to £1.60m
(2004: £1.23m).
The high operational gearing of the business is expected to lead to increasing
cash generation.
The strength of the Balance Sheet continues to improve with net current assets
of £3.52m, no debt and shareholder funds of £0.54m. The Company has also built
a significant asset in the data library it has created. This asset is not
recognised on the balance sheet and prudently all development expenditure
continues to be expensed as incurred.
Operational Review
The Company continues to improve the breadth and scope of its core offering
providing further differentiation in competitive monitoring. This has resulted
in an additional 85 competitive monitoring contracts (new clients and upgrades
to existing clients) won across various sectors and across all price points.
Amongst the high spending advertisers we welcome Sony Music, House of Fraser and
Comet as new clients. The completion of an all media integrated solution and
improved front-end systems have resulted in a more than 20% of our client base
upgrading their subscription this year, as well as continuing our good renewal
rate at 83%. The Company continues to drive new and upgrade business in a
substantial market; develop further products leveraging its data; and pursue
vertical expansion opportunities.
Press Vouching
The launch of Press Vouching fulfils the next stage of development from
competitive monitoring to advising clients whether their advertising expenditure
has been placed in accordance with their booking. A survey carried out by ISBA
found that 7% of press advertising either appeared with errors or didn't appear
at all. By providing instant reporting and an audit trail of the status of their
advertising, Vouching represents a significant opportunity for advertisers to
achieve maximum potential returns from their expenditure. Initial trials have
already identified errors running into millions of pounds.
ROI Tools
The Company continues to develop opportunities to leverage its data into new
areas, with particular focus on providing insight into the Return On Investment
of advertising expenditure. We are currently undertaking a trial evaluation with
our joint venture partner dunnhumby, to link our universal advertising
information with sales information from Tesco Clubcard. We are also in talks
with other potential suppliers of consumer purchasing activity.
Sales and Marketing
The Company has appointed a new Sales and Marketing Director during the period.
The remit is to expand the sales and marketing resources and to put concentrated
resources into three areas; new business, upgrades & retention and new
developments. The Company only has a 5% share of the top 5,000 advertisers but
captures all their data and therefore has access to a sizeable new business
opportunity. During the development phase the systems were sold on an individual
media basis; this now provides the Company with a significant upgrade
opportunity.
International expansion
The previously announced partnership with Media Control, one of Germany's
leading media groups, is the Company's first entry into an overseas market.
Initially the partnership was to launch a media monitoring service across TV,
Radio & Internet. However, Media Control has now identified a high level of
demand for press data, which represents 50% of the €17 billion advertising
expenditure in Germany.
The partnership terms have been modified to reflect the considerable additional
investment and the significantly larger scale of the projected opportunity. The
partnership will develop the full media offering with Media Control still
assuming all operational responsibility and costs, which are likely to be in
excess of €10 million in the first three years. Under the revised terms Thomson
Intermedia is guaranteed minimum payments in the first two years of £400,000 per
annum. Any profits before tax will be shared on a 30/70 basis by Thomson
Intermedia and Media Control respectively. The value of the growing venture is
owned 50/50 and Thomson Intermedia retains an option to purchase Media Control's
50% share in the venture should it so wish.
Media Control is a significant and strong partner and we are delighted to have
concluded negotiations and be involved in bringing world leading systems,
integrated channel coverage and transparency to advertisers in Germany.
Outlook
The outlook remains extremely positive for the Company. Increased accountability
in Marketing departments combined with the fragmentation of the market present
further opportunities to the Company. We have strengthened our core proposition
in the UK and continue to drive sales growth. We are also developing products to
appeal to different sectors of the market. Our Vouching product is achieving
significant presence in the market and provides a valuable additional ongoing
service to our clients to complement the competitive monitoring systems. We
continue to make in-roads into ROI products and maintain our position as market
leaders and innovators.
We have now achieved our first expansion into Europe, combining our Intellectual
Property with Media Control's knowledge and distribution capabilities. We have
achieved this expansion with minimal risk but still with a considerable share of
future returns and an equal share in the business. We continue to investigate
opportunities outside the UK.
The current financial year has started well and the Board is confident that the
Company will continue to achieve sustained growth.
12 April 2005
Consolidated Profit & Loss Account
For the year ended 31 January 2005
2005 2004
Note £'000 £'000
Turnover 5,924 4,047
Cost of sales (1,870) (1,778)
Gross profit 4,054 2,269
Overheads (3,475) (2,934)
Long term incentives 2 (258) -
Administrative expenses (3,733) (2,934)
Operating profit / (loss) 321 (665)
Interest receivable 39 18
Profit / (loss) on ordinary activities before
taxation 360 (647)
Taxation 3 588 325
Profit / (loss) on ordinary activities after
taxation 948 (322)
Earnings / (loss) per share, pence 5
adjusted 2.56 (1.1)
basic 3.29 (1.1)
diluted 3.14 (1.1)
All amounts relate to continuing activities
All recognised gains and losses are included in
the profit and loss account
Consolidated Balance Sheet
as at 31 January 2005
2005 2005 2004 2004
Note £'000 £'000 £'000 £'000
Fixed assets
Intangible fixed assets 31 43
Tangible fixed assets 518 451
549 494
Current assets
Debtors 2,292 1,438
Deferred tax 480 -
Cash at bank and in hand 1,598 1,229
4,370 2,667
Creditors: amounts falling due
within one year (848) (637)
Net current assets 3,522 2,030
Total assets less current
liabilities 4,071 2,524
Accruals and deferred income (3,535) (3,194)
536 (670)
Capital and reserves
Share capital 7,186 7,186
Share premium 5,064 5,064
Merger reserve (5,250) (5,250)
Profit and loss account (6,464) (7,670)
Equity shareholders' funds 536 (670)
Consolidated Cash Flow Statement
for the year ended 31 January 2005
Note 2005 2005 2004 2004
£'000 £'000 £'000 £'000
Net cash inflow from operating
activities 6 381 202
Returns on investments and
servicing of finance
Interest received 32 18
Taxation
Research & Development tax credit
received 251 189
Capital expenditure
Purchase of tangible fixed assets (295) (185)
Sale of tangible fixed assets - 6
Net cash outflow from capital
expenditure (295) (179)
Net cash inflow before management
of liquid resources and financing 369 230
Management of liquid resources
(Increase)/decrease in short term
deposits (91) 91
Financing
Capital element of finance lease
payments - (6)
Increase in cash in the year 7,8 278 315
Notes to the Financial Statements
for the year ended 31 January 2005
1. Basis of preparation
The financial information set out above does not constitute the Group's
statutory accounts, within the meaning of Section 240 of the Companies Act 1985,
for the year ended 31 January 2005 or 2004, but is derived from those accounts.
Statutory accounts for the year ended 31 January 2004 have been filed with the
Registrar of companies. The statutory accounts for 2005 will be delivered to
the Registrar of Companies following the Company's Annual General Meeting. The
auditors have reported on those accounts; their reports were unqualified and did
not contain a statement under Section 237(2) or (3) of the Companies Act 1985.
When published, the Company's Annual Report and Accounts will be sent to
shareholders and will be made available to the public at the Company's
registered office, 1 Westmoreland Road, Bromley, Kent BR2 0TB.
2. Long term incentive plans
2005 2004
£'000 £'000
Included in administrative expenses:
Directors' emoluments - performance bonus 145 84
Included in long term incentives:
Phantom share scheme award 230 -
Issue of share options under UITF 17 28 -
258 -
Due to the significant rise in the Company's share price the phantom shares in
issue (equivalent to 1.8% of the share capital) gave rise to a substantial
liability and cash requirement, which could continue to escalate with a rising
share price, until they were due to vest in 2007. The Company and Directors have
reviewed the incentivisation arrangements of the Company as they pertain to both
the Directors and the Company and as a consequence of this, one action has been
that the Directors have agreed to waive their rights to the Phantom shares in
their entirety.
As a result of the broader review of Directors incentivisation arrangements, the
Board has awarded share options to the Directors to act as an incentive and
lock-in. The main effects of these changes are to negate the significant cash
payment which would have been due under the phantom scheme and to cap the
accounting liability under long term incentives. The accounting treatment of
these transactions effectively spreads the total liability calculated at the
market value on the date the share options were granted over the period from
award to the earliest exercise date. This gives rise to a charge of £258,000 in
this financial year, and a further charge of £229,000 for each of the next two
financial years
3. Taxation on profit / loss on ordinary activities
The tax charge is made up as follows: 2005 2004
£'000 £'000
Corporation tax at 30% 6 -
Research and development tax credit (114) (325)
(108) (325)
Deferred tax at 30% (480) -
(588) (325)
4. Provisions for liabilities and charges
2005 2005 2004 2004
Provided Unprovided Provided Unprovided
£'000 £'000 £'000
Deferred taxation
Accelerated capital allowances - 13 - 18
Other timing differences - (85) - (37)
Losses (480) (1,110) - (1,701)
Provision / (Asset) for the period (480) (1,182) - (1,720)
Assuming future profits are taxable at a rate of 30%, the balance of available
tax losses for offset against future taxable profits amount to £1.66m (2004:
£1.72m), which gives rise to a deferred tax asset. In accordance with Financial
Reporting Standard 19 'Deferred taxation', this asset has been provided to the
extent that trade losses will be recoverable against future profits in the
foreseeable future and is included within current assets.
5. Earnings per share
2005 2004
£'000 Weighted Earnings / £'000 Weighted Earnings /
average (Loss) per average (Loss) per
number of share pence number of share
shares shares pence
Earnings / (Loss)
per share before
deferred tax,
amortisation and
share incentives 738 28,744,247 2.56 (310) 28,640,080 (1.1)
Deferred tax 480 -
Adjustment for
amortisation (12) - (12) -
Adjustment for share
incentives (258) - - -
Basic Earnings /
(Loss) per share 948 28,744,247 3.29 (322) 28,640,080 (1.1)
Effect of options - 1,437,212 - -
Diluted earnings /
(loss) per share 948 30,181,459 3.14 (322) 28,640,080 (1.1)
Earnings per share before deferred tax, amortisation and share incentives are
presented as the Directors consider it a more appropriate measure of the
underlying trend than basic or diluted eps. For diluted earnings per share, the
weighted average number of shares in issue is adjusted to assume conversion of
all dilutive potential ordinary shares: those share options granted to employees
where the exercise price is less than the market price of the Company's ordinary
shares. The impact of any potential ordinary shares in the year ended 31
January 2004 is antidilutive.
6. Net cash inflow from operating activities
2005 2004
£'000 £'000
Operating profit / (loss) 321 (665)
Depreciation 228 211
Amortisation 12 12
Phantom share non-cash movement 230 -
Issue of share options under UITF17 28 -
Other non-cash operating expense - 31
Increase in debtors
(853) (306)
Increase in creditors 211 106
Increase in accruals and deferred income 204 813
Net cash flow from operating activities 381 202
7. Reconciliation of net cash flow to movement in net funds
2005 2004
£'000 £'000
Increase in cash in the year 278 315
Cash outflow from decrease in debt and
lease financing - 6
Cash inflow/(outflow) from decrease in
liquid resources 91 (91)
Movement in net funds in the year 369 230
Net funds at start of year 1,229 999
Net funds at end of year 1,598 1,229
8. Analysis of net funds
Opening Cash Closing
balance flow balance
£'000 £'000 £'000
Cash 470 278 748
Liquid resources 759 91 850
Cash at bank and in hand 1,229 369 1,598
9. Post Balance Sheet Event
We have completed negotiations for Germany, our first investment in Europe.
Thomson Media Control GmbH and Co Kg is an equal partnership between Thomson
Intermedia Plc and Media Control GmbH. Thomson have licenced their technology to
the partnership to launch the media monitoring system in Germany. Our income for
the first two years is guaranteed plus we shall receive a share of the ongoing
profits of the partnership
This information is provided by RNS
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