Final Results

Thomson Intermedia PLC 31 March 2003 THOMSON INTERMEDIA PLC Preliminary results for the year ended 31 January 2003 Thomson Intermedia, a leading provider of Media Information, today announces extremely positive preliminary results demonstrating significant gains in market share and continued dominance in the provision of sophisticated technical solutions. Highlights * Gross contracts increased by 68% to £3.5m (2002: £2.1m) * Turnover up 37% to £3.1m (2002: £2.2m) * New business increased by 140% to £1.7m * 90% of client revenue renewed * Gross profit substantially increased to £1.5m (2002: £0.2m) * Gross margin increased from 7% to 48% * Total costs reduced by £1.2m from £5.5m * Loss before tax reduced from £3.2m to £1.2m * Net cash funds of £1.0m with net cash outflow cut to £0.2m, down 93% * Average contract value increased by 34% * Preliminary discussions with a number of international parties to capitalise on our intellectual property in other markets Sarah Jane Thomson, Joint Chief Executive, commented: 'Last year was extremely pleasing. We maintained a strong focus which led to rapid growth and an outstanding retention rate. This performance highlights the true value of our products even in difficult market conditions. This year will see a concentration on maximising our scale and presence in key targeted sectors and exploitation of our technology in international markets. In addition our core product development will remain as strong as ever, as we continue to innovate in the market.' 31 March 2003 Enquiries: Thomson Intermedia Tel: 0208 466 2906 Sarah Jane Thomson, Joint CEO David Trendle, Finance Director College Hill Tel: 0207 457 2020 Kate Pope Adrian Duffield THOMSON INTERMEDIA PLC Chairman's Statement I am pleased to report that in our second full year of trading since flotation, Thomson Intermedia has won considerable market share and continues to improve its multimedia monitoring systems. The substantial improvement in our trading in the first half has been more than sustained in the second half. During the year the business has made good progress in all operating metrics, in a challenging economic environment. Cash burn and costs have been driven down while our development programme has been maintained, ensuring that our technology retains its leading position. Results The total value of contracts signed in the period rose by 68% to £3.5 million up from £2.1 million in 2002. However contract values are amortised over each contract's life span, resulting in a recognized sales figure of £3.1 million (2002: £2.2 million.) with a significant increase in the deferred income balance, representing the value of contracts yet to be released . Of equal importance are the value of new contracts compared to existing contract renewals. These increased by 140% to £1.7 million. The increase in new business wins is a result of further product development with a large number of blue chip companies switching to Thomson Intermedia during the year. Our 90% contract renewal rate by value of existing clients indicates the quality of our systems and both measures are a clear endorsement of our technology's competitive advantage. We are therefore delighted that we enter the new financial year in a notably stronger position as the total contracts due for renewal in 2003 are in excess of £3.3 million. The increase in sales, with a high proportion of fixed costs, has led to a substantial increase in the level of gross margin to 48% up from 7%. Strict control of overheads has reduced the costs against contracts signed from £1.63 to £0.76 per £ of revenue booked. With a syndicated business we expect further improvements to gross margin and cost per £ of revenue booked as more volume is achieved. The increase in gross margin and the reduction in the average cost of overheads is extremely encouraging, especially in current difficult market conditions. The improved margin and reduction in our cost base have resulted in a 62% decline in loss before tax to £1.2 million, down from £3.2 million. Cash The net outflow of cash in the period has been substantially reduced to £0.2 million, a considerable decrease from the net outflow of £3.3 million last year. Cash balance at year-end was £1.0 million. We will continue to actively manage cash and working capital in order to maintain a healthy financial position. Acquisition In order to strengthen and complete our product range we purchased Radio Monitor in September 2002. It has contributed profitably to the Group's performance as well as to the overall product offering. A well-established business, Radio Monitor provides information on advertising to the major radio sales houses. We are currently enhancing its offering with our proprietary audio matching technology. Outlook Trading for the new financial year has started well and is in line with the Board's expectations. The combination of economic uncertainty and geopolitical risk makes it very difficult to give any firm guidance on the outcome of the new financial year. Our focus remains on increasing market share, continued product development and increased volume and margin growth, which the Directors believe will result in a positive operating profit for 2003/04. The continued importance also placed on tight cost controls and working capital management will ensure we continue the trend towards profitability and positive operating cash flow. We are also in preliminary discussions with a number of international parties to capitalise on our intellectual property in other markets. We expect these discussions to progress in the coming months. John Napier Non Executive Chairman THOMSON INTERMEDIA PLC Joint Chief Executive's Review Business Performance This year has seen the business turn the corner with much improved results setting the trend to achieve positive operating cash flow and profitability. With a much stronger revenue base and market leading products, Thomson Intermedia is now in an extremely strong position to further increase market share and establish growth opportunities. We have developed our own sophisticated sales management systems and this, together with a greater focus and enhanced products, has led to over a hundred new client subscriptions during the year and an extremely pleasing renewal rate of 90%. Thomson Intermedia has attracted major blue chip companies with its impressive offering. Examples of client wins include: • Merrill Lynch • E-Sure • Diageo • Porsche • Friends Provident • BT Openworld • McCann-Erickson • John Lewis Partnership Financial Management During the year we introduced a new credit control system. This, together with aggressive management of working capital particularly in the second half, resulted in a positive cash movement in this period and a 93% decline in net cash outflow for the year compared to the previous year. Product Developments We have made significant advances in our front end and back office technology and place huge emphasis on the continued enhancements and evolution of our product range. The most significant development during the year was the completion of our own audio matching software, which has provided three key benefits to us. Firstly, it has reduced our on-going costs; secondly it has provided us with the fastest, highest quality and most accurate picture of broadcast monitoring in the UK; and thirdly provides us with the opportunity of utilising our own software in other markets. We have continued the development of our online systems and in particular the functionality available to clients, enabling clients to customise their own system and provide empowering new features. We have launched a new product in conjunction with our existing Direct Mail system, which monitors the effectiveness of client's Direct Mail campaigns and the importance to them of their CRM operations. This is a unique proposition and has lead to revenues of £150,000 in its six-month trial period. National News Index (NNI), the UK's news evaluation currency has continued to gain momentum with further development of the currency and improved technology. We aim to make significant growth in this area during the coming year. The NNI, the UK's daily news currency is now quoted by a number of key marketing and national publications raising its profile as the evaluation measurement tool for the PR market. The company has continued with its prudent policy of not capitalising development costs. It has therefore expensed a further £0.5 million of development costs during the year. Management Team Our senior management team has been strengthened this year with the addition of a Business Development Director and an Operations Director. These appointments further enable us to look at opportunities for expansion into other products and technologies. Marketing Thomson Intermedia has become a growing force in the UK market and has established strong business relationships with a number of key industry players. Our data is now increasingly recognised as a UK currency and is quoted widely in the industry. Creative Club Our Adhoc creative purchasing site, Creative Club, targeted at smaller advertisers and individuals has amassed a membership in excess of 1,000 members. In order to maximise its exposure to these markets we have recently secured its presence in the UK and US on key media related websites. We have seen a steady growth in income from this area. Production We have continued to increase the level of automation technology in operations to improve processes and achieve efficiency gains. A number of performance related incentive schemes have also been introduced in order to reward staff. Whilst the volume of publications and data has dramatically increased during the year, numbers of operational staff have decreased by 25%. We would like to take this opportunity to thank all of our staff, whose dedication and commitment made the achievement of these results possible. Sarah Jane Thomson Stephen Thomson Joint Chief Executives THOMSON INTERMEDIA Consolidated Profit and Loss Account for the year ended 31st January 2003 As restated Note 2003 2002 £'000 £'000 Turnover 1 3,066 2,245 Cost of sales 6 (1,599) (2,079) Gross profit 1,467 166 Operating Expenses 6 (2,708) (3,450) Operating loss (1,241) (3,284) Interest receivable 27 125 Interest payable (1) (2) Loss on ordinary activities before and after taxation (1,215) (3,161) Loss per share 2 Loss per share, pence - basic and diluted (4.2) (11.0) All amounts relate to continuing activities. All recognised gains and losses are included in the profit and loss account. THOMSON INTERMEDIA Consolidated Balance Sheet as at 31st January 2003 As restated As restated 2003 2003 2002 2002 £'000 £'000 £'000 £'000 Fixed assets Intangible fixed assets 55 - Tangible fixed assets 483 486 538 486 Current assets Debtors 995 861 Cash at bank and in hand 1,005 1,233 2,000 2,094 Creditors: amounts falling due within one year (536) (375) Net current assets 1,464 1,719 Total assets less current liabilities 2,002 2,205 Creditors: amount falling due after more than one year - (6) Accruals and deferred income (2,012) (994) (10) 1,205 Capital and reserves Share capital 7,155 7,155 Share premium 5,064 5,064 Share scheme reserve - 13 Merger reserve (5,250) (5,250) Profit and loss account (6,979) (5,777) Equity shareholders' funds (10) 1,205 THOMSON INTERMEDIA Consolidated Cash Flow Statement for the year ended 31st January 2003 As restated As restated Note 2003 2003 2002 2002 £'000 £'000 £'000 £'000 Net cash outflow from operating activities 3 (22) (3,266) Returns on investments and servicing of finance Interest received 24 119 Interest element of finance lease rental repayments - (1) Net cash inflow from returns on investments and servicing of finance 24 118 Capital expenditure Purchase of tangible fixed assets (167) (183) Sale of tangible fixed assets - 4 Net cash outflow from capital expenditure (167) (179) Acquisitions and disposals Purchase of business assets (60) - Net cash outflow from acquisitions and disposals (60) - Net cash outflow before management of liquid resources and financing (225) (3,327) Management of liquid resources 6 Money invested in short term deposits 161 2,854 Cash inflow from management of liquid resources 161 2,854 Financing Capital element of finance lease payments (3) (4) Cash outflow from financing (3) (4) Decrease in cash in the year 4 (67) (477) THOMSON INTERMEDIA Notes to the Financial Statements for the year ended 31st January 2003 1. Accounting Policies The financial statements have been prepared in accordance with applicable Accounting Standards under the historical cost convention. The principal accounting policies are: Basis of preparation The accounts have been prepared on a going concern basis taking into account the significant cost cutting exercises carried out during the year, and on the basis of significant sales growth predicted for the future, as outlined in more detail in the Chairman's report and Joint Chief Executive's Report. Accordingly the directors, at the date of approval of these financial statements, consider it appropriate to prepare the financial statements on a going concern basis. Basis of consolidation The consolidated financial statements incorporate the results of Thomson Intermedia Plc and its subsidiary undertaking, as at 31st January 2003, using the merger method of accounting. Merger accounting Where merger accounting is used, the investment is recorded in the Company's balance sheet at the nominal value of the shares issued together with the fair value of any additional consideration paid. In the Group financial statements, merged subsidiary undertakings are treated as if they had always been a member of the Group. The results of the subsidiary are included for the whole period in the year it joins the Group. The corresponding figures for the previous year include its results for that period, the assets and liabilities at the previous balance sheet date and the shares issued by the Company as consideration as if they had always been in issue. Any difference between the nominal value of the share capital acquired and those issued by the Company to acquire them is taken to reserves. 2. Loss per share Basic loss per share, calculated in accordance with FRS 14 'Earnings per share', is based upon the loss on ordinary activities after tax of £1,215,059 (2002: Loss £3,160,827) apportioned over the weighted average number of ordinary shares that were in issue for the period of 28,619,247 (2002: 28,619,247). The calculation of diluted loss per share is the same as basic loss per share as the impact of any potential ordinary shares is antidilutive. THOMSON INTERMEDIA Notes to the Financial Statements (Continued) 3. Net cash outflow from operating activities 2003 2002 £'000 £'000 Operating loss (1,241) (3,284) Depreciation 170 177 Amortisation 5 - (Increase)/decrease in debtors (133) 426 Increase/(decrease) in creditors 159 (517) Increase/(decrease) in accruals and deferred income 1,018 (68) Net cash outflow from operating activities (22) (3,266) 4. Reconciliation of net cash flow to movement in net funds 2003 2002 £'000 £'000 Decrease in cash in the year (67) (477) Cash outflow from decrease in debt and lease financing 3 4 Cash inflow from decrease in liquid resources (161) (2,854) Movement in net fund in the year (225) (3,327) Net funds at start of year 1,224 4,551 Net funds at end of year 999 1,224 5. Analysis of net funds Opening Cash Closing balance flow balance £'000 £'000 £'000 Cash 222 (67) 155 Liquid resources 1,011 (161) 850 Cash at bank and in hand 1,233 (228) 1,005 Finance leases - due within 1 year (9) 3 (6) 1,224 (225) 999 6. Restatement of comparatives Production staff costs have been re-categorised as direct expenses, previously classified as operating expenses, with the comparatives being restated. Deferred income which represents invoiced revenue to be released over the period of the subscription, has been re-categorised in the balance sheet. In the opinion of the Directors, deferred income does not represent a short term creditor on a going concern basis, as these amounts will not be repaid, but released to the profit & loss account during the coming year. Deferred income has therefore been presented in the balance sheet immediately after provisions for liabilities and charges The Directors believe these adjustments portray a truer and fairer representation of the nature of the business. Accruals represent a liability due within one year. In order to comply with the Companies Act 1985 Accruals and Deferred Income are required to be shown as a single category. Accruals have therefore been amalgamated with deferred income and disclosed as described above. In accordance with FRS1 money invested in short term deposits has been separately classified as liquid resources within the cash flow statement. The comparative figures have been restated accordingly. None of the above changes have affected the reported result for the year or net assets of the Group. However, certain measurements, such as gross profit margin and liquidity ratios, would have been affected. 7. The Accounts The preliminary results for the year ended 31 January 2003 does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The full statutory accounts, which will be available to shareholders shortly, have been reported on by the Group's auditors but have not yet been delivered to the Registrar of Companies. Full accounts in respect of the year ended 31 January 2003 will be delivered to the Registrar of Companies and the Audit Report on these accounts is unqualified. 8. The Annual Report and the AGM The Annual Report and Accounts will be posted to shareholders by 18 April 2003, and the Annual General Meeting will be held on 12 June 2003. This information is provided by RNS The company news service from the London Stock Exchange

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