30th Apr 2007 07:03
Thomson Intermedia PLC30 April 2007 30 April 2007 Thomson Intermedia plc Core business gaining momentum with revenues up 22% Thomson Intermedia plc ("Thomson Intermedia" or the 'Group', AIM: THN), aleading provider of media intelligence, today announces its second interimresults for the six months ended 31 January 2007. Highlights • Core business revenue increased by 22% to £7.7m (2006: £6.3m) • International revenue up 50% to £1.7m (2006: £1.1m) • Development revenue lower, in line with expectations • Core underlying operating profit* up 75% to £1.4m (2006: £0.8m) • Group underlying profit before tax* was £1.1m (2006: £1.7m) • Sales pipeline remains strong - several projects expected to close this calendar year • Group is on track to meet the Board's expectations for 15 months to 30 April 2007 * before Highlighted Items Sarah Jane Thomson, Joint Chief Executive Officer of Thomson Intermedia plc,said: "Our Core business continued to perform strongly particularly as the benefits ofthe enlarged integrated group begin to materialise. We are confident that thispart of business will continue to strengthen as our new combined offering gainsmomentum and we strengthen our routes to market. "The Group is still working on a significant pipeline of projects and remainsconfident that a high proportion will be closed during the current calendar yearand should therefore benefit the next financial year." Enquiries: Thomson IntermediaSarah Jane Thomson, Joint Chief Executive Today 020 7457 2020Michael Uzielli, Finance Director Thereafter 020 7321 4000 BridgewellShaun Dobson/Fred Ward 020 7003 3000 College HillAdrian Duffield/Ben Way 020 7457 2815/2055 Overview Thomson Intermedia had a good underlying performance during the second sixmonths of the financial year. On a headline basis, revenue from the Corebusiness increased 22% to £7.7m and the pipeline of development projects remainsstrong. The Group is on track to deliver against the revised expectationsissued in the trading update in January 2007. The Board remains confident about the Group's opportunities and prospects as itstarts to realise the benefits of having two integrated and complementarybusinesses, combining the UK's premier online data capture and analysisoperation with media consultancy expertise. The Group has two types of business, Core and Development: Core business, which encompasses Subscriptions, Consultancy and International,has continued to grow strongly as it benefited from the combination of the twobusinesses, the launch of new and enhanced products and strong internationalrevenues. The Core business will be strengthened further with the planned roll-out of the new combined offering and the imminent new agency/client productwhich will enable the Group to benefit from the GroupM partnership. Development business, as highlighted in the trading update in January 2007, hadlower revenues than originally anticipated. The majority of this revenue relatesto projects which directly or indirectly lead to longer term core revenuestreams. The Group is still working on a significant pipeline of projects andremains confident that a high proportion will be closed during the currentcalendar year and should therefore benefit the next financial year. Financial Performance Following the extension of the Group's accounting reference date to 30 April2007, Thomson Intermedia is publishing its second interim results for the sixmonth period ended 31 January 2007 and reporting the twelve month period endedon the same date. All figures are unaudited. Revenue 6 months ended 6 months ended 12 months ended 12 months ended 31 January 2007 31 January 2006 31 January 2007 31 January 2006 £'000s £'000s £'000s £'000sCore 7,672 6,306 15,582 8,918Development 343 1,373 861 2,218Total Revenue 8,015 7,679 16,443 11,136 Total Group revenue increased by 5% to £8.0m (2006: £7.7m) for the second sixmonths with Core revenue up 22% to £7.7m (2006: £6.3m). Total future contractedrevenue as at 31 January 2007 was £6.7m. Development revenue was £0.3m (2006:£1.4m) reflecting the previously announced delays in project income and the highlevel of income in 2006 from retrospective vouching and developing the PublisherPlatform. Gross Profit Gross profit was flat at £4.5m, yielding a gross margin of 56.6% (2006: 58.9%),as the Group continued to invest in new products and recruited additionalconsultancy, sales and commercial expertise to support the growth of thebusiness. In total, cost of sales and administrative expenses before highlighted itemsincreased by 3% on a pro forma basis (adjusting 2006 to include billetts for sixrather than five months). The Group is currently reviewing its propertyportfolio with a view to consolidating from two London offices into one whichwill reduce cost over the medium term. Operating Profit 6 months ended 6 months ended 12 months ended 12 months ended 31 January 2007 31 January 2006 31 January 2007 31 January 2006 £'000s £'000s £'000s £'000sCore 1,404 802 3,196 1,076Development (124) 902 (90) 1,300Underlying Operating Profit 1,280 1,704 3,106 2,376Highlighted Items (862) (318) (1,464) (443)Reported Operating Profit 418 1,386 1,642 1,933 Underlying operating profit for the second six months was £1.3m (2006: £1.7m).The Core business increased operating profit by 75% to £1.4m (2006: £0.8m). TheDevelopment business recorded a loss of £0.1m (2006: £0.9m profit). Reportedoperating profit was £0.4m (2006: £1.4m). For the 12 months to 31 January 2007, underlying operating profit increased by30% to £3.1m (2006: £2.4m) whilst operating profit from the Core businessincreased by £2.1m to £3.2m (2006: £1.1m). Reported operating profit was £1.6m(2006: £1.9m). Adjusting 2006 to include billetts on a like for like basis, underlyingoperating profit from Core business for the last twelve months more than doubledfrom £1.5m to £3.2m. Highlighted Items Highlighted items comprise recurring and non-recurring items and have beenhighlighted to help the understanding of the underlying performance of thebusiness. 6 months 6 months 12 months Year ended ended ended ended 31 January 31 January 31 January 31 January 2007 2006 2007 2006 £'000s £'000s £'000s £'000s Share based expenses (151) (124) (275) (249)Amortisation of purchased intangible assets (194) (162) (388) (162)Acquisition related expenses (83) - (360) -Provision for specific doubtful debts relatingto a line of business which is no longer pursued (301) - (301) -Other (133) (32) (140) (32) (862) (318) (1,464) (443) Note 2 to this statement sets out more detail on the Highlighted Items. Profit Before Tax and EPS Underlying profit before tax for the second six months was £1.1m (2005: £1.7m)reflecting higher interest charges due to vendor loan notes which were issued inAugust 2006. Reported profit before tax was £0.2m (2006: £1.4m). Underlying earnings per share for the second six months was 2.72p (2005: 5.06p).Reported earnings per share was 1.18p (2006: 4.57p). The Board are not recommending the payment of a dividend, reflecting the highgrowth nature of the Group and the numerous opportunities available for furtherdevelopment. However, given the cash generative nature of the Group's businessmodel this policy will be reviewed on an ongoing basis. Cash and Debt Cash balances increased during the second six months by £0.9m to £2.7m as aresult of an improvement in working capital. The Group's net debt positionincreased from £0.9m to £3.7m due to the issuance, on 8 August 2006, of vendorloan notes to the value of £3.7m related to the billetts acquisition. Operational Highlights Subscriptions This area of the business is characterised by high operational gearing, highrenewal rates, significant barriers to entry and international scalability. Itcomprises advertiser monitoring, news monitoring, e-vouching and audit services,although these products are aligned in new interfaces going forward and can besold as a package. This business currently has 360 clients, including 74 of the top 100 UKadvertisers. Strong performance in this period has led to over 30 new contractsincluding Renault, Standard Life and Bird's Eye. The recently announced partnership with GroupM removes a major sales barrier forThomson Intermedia's monitoring products by facilitating access to a customerbase of more than 650 of the UK's top advertisers. It also highlights thegrowing importance of the Group's systems in the media landscape. The Group isnearing completion of dedicated and tailored online systems and is dedicatingadditional sales resource to this partnership. The dedicated online unit has seen revenues more than double since last year andnow advises 13 of the top 25 online display advertisers in the UK. Consultancy This area of the business focuses on bespoke consultancy projects assistingadvertisers in achieving their maximum return on investment by optimisingpayback and allocation of marketing spend across geographies, brands andmarketing methods. The unit draws on advanced analytical techniques, marketingexperience, benchmarks and proprietary tools to deliver improved and fact basedmarketing strategies. Given the growing interest in marketing ROI, furthergrowth is expected in this area. International The Group's products and services have international appeal and are scaleable.International revenues now comprise 21% of Group revenue having increased by 50%over the same period last year. The Group currently has businesses in the USAand Germany and generates growing revenues from working with key partners inother territories. USA: The Group owns 80% of MPMA, the US Auditing division which was establishedin 2003. It has continued to make excellent progress with an additional ninenew clients, increasing the client base to 25. Its earn-out from the billettsacquisition ends today and, looking forward, the Group intends to extend itsrange of products and services beyond audit. Germany: The Group owns 50% of Thomson Media Control which currently offersmedia monitoring services in Germany. It has grown well with a current clientbase of over 35 of which 15 were signed in the past year. The Group iscurrently exploring opportunities to extend products and services in Germany. Partners: The Group has partnerships with 16 companies in 25 countries to securelocal data, benchmarks and media training insight in order to provide aninternational audit service. Whilst the Group has excellent relations withthese international partners, the Group believes there is an opportunity toestablish or acquire wholly-owned operations in certain larger key markets.This will improve margins but also put the Group in a stronger position to drivefuture growth and additional products and services in these local markets. Development Income Development income is characterised by one-off income which often leads toadditional ongoing revenue sources. In the past, development income has beenderived from areas such as retrospective vouching, licence fee income fromGermany and the Publisher Platform. The Publisher Platform has secured exclusive long term contracts with 10regional media owners which account for more than 90% of regional publications.The platform provides the media owner with significant cost savings by removingthe need to send out voucher copies. Discussions are ongoing with a number ofother regional and national owners to sell more voucher technology and to expandthe platform further. The Group has been developing new services, using thesame data, which will enable media owners to save costs and improve efficienciesin other areas. The Publisher Platform as well as opportunities which stem from the technologyare currently in the pipeline for additional development income. The Group isconfident that during the calendar year it will secure a number of thesecontracts. Current Trading and Outlook On 25 January 2007, the Group issued a trading update in which it indicated thatit expected - for the 15 months to 30 April 2007 - revenue to be in the regionof £20.6m and underlying operating profit of £3.3m. The Group confirms that itis on track to meet these expectations. The Group acquired billetts in August 2005. The final earn-out period from thetransaction ends today and John Billett is leaving the Group at this juncture. billetts has proved to have been a very successful acquisition for the Group andit is now a key part of the portfolio of services that the Group makes availableto all participants in the marketing industry. The Board is grateful to Johnfor all he has done in creating the billetts brand and for entrusting it to theGroup. Over the past twelve months, the Group has built a much stronger position in themarketplace as a result of the integration of billetts, the enhancement of datasets and products and the investment in relationships. As a result, there is a significant pipeline of development projects which whenconcluded will deliver both immediate revenues and new recurring revenues forthe future of the core business. At the same time, underlying growth in theexisting Core business continues to be robust supported by market-leadingproducts, increased presence in interactive media and more internationalcontracts. The Board remains confident that the progress made and platforms being builtwill continue to drive and exploit the Group's significant opportunities. Consolidated Income Statement for the six months ended 31 January 2007 Unaudited Unaudited Proforma *Year ended 6 months ended 6 months ended unaudited 31 January 31 January 31 January 2006 12 months 2006 2007 ended 31 January 2007 Note £'000s £'000s £'000s £'000sRevenue 8,015 7,679 16,443 11,136Cost of Sales (3,475) (3,153) (7,007) (4,129)Gross Profit 4,540 4,526 9,436 7,007Administrative expenses - excluding highlighted items (3,260) (2,822) (6,330) (4,631)Administrative expenses - highlighted items 2 (862) (318) (1,464) (443)Total administrative expenses (4,122) (3,140) (7,794) (5,074) Operating profit 418 1,386 1,642 1,933Finance income 28 27 58 49Finance expenses (216) (55) (379) (55)Net finance costs (188) (28) (321) (6) Profit before taxation 230 1,358 1,321 1,927 Corporation tax 3 (176) (126) (366) (126)Deferred tax 3 361 165 514 396 Tax income 185 39 148 270 Profit for the period 415 1,397 1,469 2,197 Attributable to:Equity holders of the parent 386 1,407 1,432 2,207Minority interests 29 (10) 37 (10) 415 1,397 1,469 2,197 Earnings per shareBasic 5 1.23p 4.79p 4.58p 7.51pDiluted 5 1.18p 4.57p 4.40p 7.16p *UK GAAP Figures were audited/extracted from the audited financial statement for31 January 2006 prepared under UK GAAP, and converted to IFRS as disclosed inour statement of transition to IFRS with a subsequent amendment to deferred taxas disclosed in the Interim report for the six months ended 31 July 2006. Consolidated Balance Sheet as at 31 January 2007 Unaudited *As at as at 31 January 31 January 2006 2007 Note £'000s £'000sNon current assetsGoodwill** 8,924 8,924Other intangible assets 6 4,869 5,096Property, plant & equipment 670 706Investment in joint ventures 115 122Deferred tax asset 683 351 15,261 15,199 Current assetsTrade & other receivables: Due within one year 7 6,619 5,452Trade & other receivables: Due after one year 7 93 -Cash & cash equivalents 2,702 2,774 9,414 8,226 Total Assets 24,675 23,425 Current liabilitiesBank overdrafts - (62)Other financial liabilities (3,962) (250)Trade & other payables (1,753) (2,041)Current tax liabilities (130) (126)Provisions (299) (3,850)Accruals & deferred income (3,936) (3,644) (10,080) (9,973) Non current liabilitiesOther financial liabilities (2,438) (2,687)Provisions - (269)Deferred tax liability (854) (1,019) (3,292) (3,975) Total liabilities (13,372) (13,948) Net assets 11,303 9,477 Capital & ReservesShare capital 7,828 7,823Share premium 8,896 8,869Merger reserve (4,504) (4,504)Retained earnings (846) (2,603)Capital and reserves attributable to the equityholder of the parent 11,374 9,585Minority interest (71) (108)Total Equity 11,303 9,477 *UK GAAP Figures were audited/extracted from the audited financial statement for31 January 2006 prepared under UK GAAP, and converted to IFRS as disclosed inour statement of transition to IFRS with a subsequent amendment to deferred taxas disclosed in the Interim report for the six months ended 31 July 2006 and tothe presentation of accrued and deferred income **Adjusted to reflect revised accounting for deferred tax as part of thebilletts acquisition as set out in note 1. Consolidated Cashflow Statement for the six months ended 31 January 2007 Proforma unaudited 12 Unaudited Unaudited months ended 6 months 6 months 31 January 2007 ended ended *Year ended 31 January 31 January 31 January 2007 2006 2006 £'000s £'000s £'000s £'000sCashflows from operating activitiesProfit before taxation 230 1,358 1,321 1,927Adjustments for:Depreciation 156 157 322 276Amortisation 498 428 996 694Foreign exchange differences on operating 86 32 93 32activitiesInvestment - 36 - -Share option charges 151 124 275 249Finance income (28) (27) (58) (49)Finance expense 216 55 379 55 1,309 2,163 3,328 3,184 Decrease/(Increase) in trade receivables 1,682 240 (1,251) (945)(Decrease)/Increase in trade payables (1,076) (862) (182) (324) Cash generated from operations 1,915 1,541 1,895 1,915Finance expense (196) (71) (379) (71)Income taxes paid (217) (6) (343) (6) Net cash from operating activities 1,502 1,464 1,173 1,838 Cashflows from investing activitiesPurchase of subsidiary, net of cash acquired - (7,012) - (7,012)Purchase of property, plant & equipment (188) (47) (286) (264)Purchase of intangible assets (409) (322) (769) (644)Purchase of investments - (87) - (87)Finance income 28 21 58 43 Net cash used in investing activities (569) (7,447) (997) (7,964) Cashflows from financing activitiesProceeds from issue of share capital - 4,343 - 4,343Proceeds from long term borrowings - 3,000 - 3,000Repayment of bank loans (125) (63) (249) (63) Net cashflow used in financing activities (125) 7,280 (249) 7,280 Net increase in cash, cash equivalents and bank 808 1,297 (73) 1,154overdraftsEffect of foreign exchange rate changes 73 (40) 63 (40)Cash, cash equivalents and bank overdrafts atbeginning of period 1,821 1,455 2,712 1,598Cash, cash equivalents and bank overdrafts at endof period 2,702 2,712 2,702 2,712 *UK GAAP Figures were audited/extracted from the audited financial statement for31 January 2006 prepared under UK GAAP, and converted to IFRS as disclosed inour statement of transition to IFRS, with a subsequent amendment to deferred taxas disclosed in the Interim report for the six months ended 31 July 2006. 1. Accounting policies Basis of preparation Following the extension of the Group's accounting reference date to 30 April2007, the Group presents its second interim results for the 6 month period ended31 January 2007, as required by the AiM rules. Proforma results for the 12months ended 31 January 2007 have also been presented in order to showshareholders the current position for the period since the last audited annualreport and accounts. The financial information presented in this documentation has been prepared inaccordance with International Financial Reporting Standards (IFRS) andInternational Financial Reporting Interpretations Committee (IFRIC)interpretations that are expected to be applicable for the period ended 30 April2007 (the Group's new period end). These are subject to ongoing review andendorsement by the European Commission, or possible amendment by theInternational Accounting Standards Board (IASB), and are therefore subject topossible change. Further standards or interpretations may also be issued thatcould be applicable for the period ended 30 April 2007. These potential changescould result in the need to change the basis of accounting or presentation ofcertain financial information from that presented in this document. We have reviewed the deferred tax accounting in relation to certain intangibleassets recognised on the acquisition of billetts, and in light of IFRS 3 anddeveloping accounting practice we have increased Goodwill by £1,019,000 andcreated a deferred tax liability for a corresponding amount. The deferred taxliability is subsequently utilised in line with the amortisation of thepurchased intangible fixed assets resulting in a tax credit in the incomestatement for the six months ended 31 January of £165,000, with the deferred taxliability reducing by the same amount. The Group may need to further review some accounting treatments used for thepurpose of this document as a result of emerging industry consensus on practicalapplication of IFRS and further technical opinions. This could mean that thefinancial information in this document may require modification until the Groupprepares its first complete set of IFRS financial statement for the period ended30 April 2007. The comparative figures for the year ended 31 January 2006 do not amount to fullstatutory accounts within the meaning of S240 of the Companies Act 1985. Thoseaccounts which were prepared under UK GAAP have been reported on by the Group'sauditors and delivered to the registrar of companies. Those accounts receivedan unqualified audit report which did not contain statements under sections 237(2) or (3) (accounting record or returns inadequate, accounts not agreeing withrecords and returns or failure to obtain necessary information and explanations)of the Companies Act 1985. The Group has revised how it presents accrued and deferred income in the balancesheet in respect of future unearned contracted income. As a result, the balancesheet at 31 January 2006 has been restated to bring accounting treatments inline with this revised presentation. The effect of the adjustment on the 31January 2006 balance sheet is to adjust both accrued and deferred revenue by thesame amounts. This adjustment has no impact on the income statement or netassets of the Group. As permitted, the group has not applied IAS 34 'Interim Reporting' in preparingthis interim report. Basis of accounting The financial statements have been prepared in accordance with all adoptedInternational Financial Reporting Standards (IFRSs) for the first time. Thedisclosures required by IFRS 1 concerning the transition from UK GAAP to IFRSsare given above. The financial statements have also been prepared in accordancewith IFRSs adopted for use in the European Union. IFRS1: First time adoption of International Financial Reporting Standards The rules for first-time adoption of IFRS are set out in IFRS 1, which requiresthat the Group establishes its IFRS accounting policies at its date oftransition, 1 February 2005, and apply these prospectively. The standard allowsa number of optional exemptions on transition to help companies simplify themove to IFRS. The exemptions selected by Thomson Intermedia Plc are set outbelow: Business Combinations The Group has elected to apply IFRS 3 prospectively from the date of transitionto IFRS rather than to restate previous business combinations. Share based payments The Group has adopted the exemption to apply IFRS 2 'Share based payments' onlyto awards made after 7 November 2002 that had not vested by 1 January 2005. Financial instruments The Group has adopted the exemption not to restate comparatives for IAS 32 andIAS 39 and therefore the comparative information in the 2007 financialstatements will be presented on the existing UK GAAP basis and will not berestated in line with IAS 32 and IAS 39. Cumulative translation differences Cumulative translation differences in respect of foreign operations have beendeemed to be nil at the date of the transition. Presentation of financial information The layout of the primary financial information has been amended in accordancewith IAS1 'Presentation of financial information' from that presented under UKGAAP. This format and presentation may require modification as practice andindustry consensus develops. Significant Accounting Policies The principal accounting policies adopted are set out below. Basis of consolidation The consolidated interim financial statements incorporate the financialstatements of the Company and entities controlled by the Company (itssubsidiaries) made up to 31 January 2007. Control is achieved where the Companyhas the power to govern the financial and operating policies of an investeeentity so as to obtain benefits from its activities. Where necessary, adjustments are made to the financial statements ofsubsidiaries to bring the accounting policies used into line with those used bythe Group. All intra-group transactions, balances, income and expenses areeliminated on consolidation. Business combinations Acquisition method of accounting The cost of the acquisition is measured at the aggregate of the fair values, atthe date of exchange, of assets given, liabilities incurred or assumed, andequity instruments issued by the Group in exchange for control of the acquiree,plus any costs directly attributable to the business combination. Theacquiree's identifiable assets, liabilities and contingent liabilities that meetthe conditions for recognition under IFRS 3 are recognised at their fair valueat the acquisition date. The interest of minority shareholders in the acquiree is initially measured atthe minority's proportion of the net fair value of the assets, liabilities andcontingent liabilities recognised. Merger method of accounting Although IFRS 3 outlawed merger accounting, under IFRS 1, the Group is notrequired to re-state acquisitions or business combinations prior to the date oftransition. Therefore the Group is permitted to retain their historical mergeraccounting position in the consolidated accounts. Goodwill Goodwill arising on consolidation represents the excess of the cost ofacquisition over the Group's interest in the fair value of the identifiableassets and liabilities of a subsidiary. Goodwill is initially recognised as anasset at cost and is subsequently measured at cost less any accumulatedimpairment losses. Goodwill which is recognised as an asset is reviewed forimpairment at least annually. Any impairment is recognised immediately inprofit and loss and is not subsequently reversed. For the purpose of impairment testing, goodwill is allocated to each of theGroup's cash-generating units expected to benefit from the synergies of thecombination. Cash-generating units to which goodwill has been allocated aretested for impairment annually, or more frequently when there is an indicationthat the unit may be impaired. If the recoverable amount of the cash-generatingunit is less than the carrying amount of the unit, the impairment loss isallocated first to reduce the carrying amount of any goodwill allocated to theunit and then to the other assets of the unit pro-rata on the basis of thecarrying amount of each asset in the unit. An impairment loss recognised forgoodwill is not reversed in a subsequent period. Goodwill arising on other acquisitions before the date of transition to IFRS hasbeen retained at the previous UK GAAP amounts subject to being tested forimpairment at that date. Revenue recognition Revenue is measured at the fair value of the consideration received orreceivable and represents amounts receivable for services provided in the normalcourse of business, net of discounts, VAT and other sales related taxes. Incomeis recognised evenly over the period of the contract for subscription to systemsand in accordance with the stage of completion of the contract activity forconsultancy income. If the outcome of a contract could not be estimated reliably, the contractrevenue would be recognised to the extent of contract costs incurred that it isprobable would be recoverable. Costs are recognised as an expense in the periodin which they are incurred. Foreign currencies For the purposes of the consolidated financial statements, the results andfinancial position of each Group company are expressed in pounds sterling, whichis the functional currency of the Company, and the presentation currency for theconsolidated financial statements. In preparing the financial statements of the individual companies, transactionsin currencies other than the entity's functional currency (foreign currencies)are recorded at the rates of exchange prevailing on the dates of transactions.At each balance sheet date, monetary assets and liabilities that are denominatedin foreign currencies are retranslated at the rates prevailing on the balancesheet date. For the purpose of presenting consolidated financial statements, the assets andliabilities of the Group's foreign operations are translated at exchange ratesprevailing on the balance sheet date. Income and expense items are translatedat the average exchange rates for the period, approximating to rates applicableat the dates of the transactions. The exchange differences arising from the retranslation of the opening balancesheet amounts of subsidiaries and the difference on translation of the resultsof subsidiaries are dealt with through equity. All other exchange differencesare dealt with through the income statement. Operating profit Operating profit is stated after charging restructuring costs, but beforeinvestment income and finance costs. Taxation The tax expense included in the Consolidated Income Statement comprises currentand deferred tax. Current tax is the expected tax payable on the taxable incomefor the period, using tax rates enacted or substantively enacted by the balancesheet date. Tax is recognised in the Consolidated Income Statement except to the extent thatit relates to items recognised directly in equity, in which case it isrecognised in equity. Using the liability method, deferred tax is provided on all temporarydifferences between the carrying amounts of assets and liabilities for financialreporting purposes and their tax bases, except for differences arising on: • the initial recognition of goodwill; • goodwill for which amortisation is not tax deductible; • the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and • investments in subsidiaries and jointly controlled entities where the group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future. Recognition of deferred tax assets is restricted to those instances where it isprobable that taxable profit will be available against which the difference canbe utilised. The carrying amount of deferred tax assets is reviewed at eachbalance sheet. The amount of the asset or liability is determined using tax rates that havebeen enacted or substantially enacted by the balance sheet date and are expectedto apply when the deferred tax liabilities/(assets) are settled/(recovered).Deferred tax balances are not discounted. Deferred tax assets and liabilities are offset when the group has a legallyenforceable right to offset current tax assets and liabilities and the deferredtax assets and liabilities relate to taxes levied by the same tax authority oneither: • the same taxable group company; or • different group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered. Internally-generated intangible assets - research and development expenditure An internally-generated intangible asset arising from the Group's developmentexpenditure is recognised only if all of the following conditions are met: • An asset is created that can be identified (such as software); • It is probable that the asset created will generated future economic benefits; and • The development cost of the asset can be measured reliably. Internally-generated intangible assets are amortised on a straight-line basisover their useful lives. Where an internally-generated intangible asset cannotbe recognised, development expenditure is recognised as an expense in the periodin which it is incurred. Purchased intangible assets Externally acquired intangible assets are initially recognised at cost andsubsequently amortised on a straight-line basis over their useful economiclives. The amortisation expense is included within the administrative expensesline in the income statement. Intangible assets are recognised on businesscombinations if they are separable from the acquired entity or give rise toother contractual/legal rights. The amounts ascribed to such intangibles arearrived at by using appropriate valuation techniques. In-process research anddevelopment programmes acquired in such combinations are recognised as an asseteven if subsequent expenditure is written off because the criteria specified inthe policy for research and development costs above are not met. The significantintangibles recognised by the group, their useful economic lives and the methodsused to determine the cost of intangibles acquired in a business combination areas follows: Media Consulting - customer Straight line over 10 years Estimated discounted cash flowrelationships Marketing Sciences - customer Straight line over 5 years Estimated discounted cash flowrelationships MPMA Customer relationships Straight line over 2 years Estimated discounted cash flow Trade name Straight line over 10 years Estimated royalty stream if rights were to be licensed Non-compete agreement Straight line over 1.5 years Estimated discounted cash flow of potentially lost revenue Plant and equipment Fixtures and equipment are stated at cost less accumulated depreciation and anyrecognised impairment loss. Depreciation is charged so as to write off the cost or valuation of assets overtheir estimated useful lives, the rates generally applicable are: Motor vehicles 25% per annum reducing balanceFurniture & fittings 25% per annum reducing balanceComputer equipment & software 25% per annum on costsPlant & equipment Straight line over 3-10 yearsOperating leases Over remaining useful life Impairment Assets that have an indefinite useful life are not subject to amortisation andare tested annually for impairment. Assets that are subject to amortisation ordepreciation are reviewed for impairment whenever events or changes incircumstances indicate that the carrying amount may not be recoverable. If anysuch condition exists, the recoverable amount of the asset is estimated in orderto determine the extent, if any, of the impairment loss. Where the asset doesnot generate cash flows that are independent from other assets, estimates aremade of the cashflows of the cash generating unit to which the asset belongs. Recoverable amount is the higher of fair value, less costs to sell, and value inuse. In assessing value in use, estimated future cashflows are discounted totheir present value using a discount rate appropriate to the specific asset orcash generating unit. If the recoverable amount of an asset or cash generating unit is estimated to beless than its carrying amount, the carrying value of the asset or cashgenerating unit is reduced to its recoverable amount. Impairment losses arerecognised immediately in the income statement. In respect of assets other than goodwill, an impairment loss is reversed ifthere has been a change in the estimates used to determine the recoverableamount. An impairment loss is reversed only to the extent that the asset'scarrying amount does not exceed the carrying amount that would have beendetermined, net of depreciation or amortisation, if not impairment loss had beenrecognised. Impairment losses in respect of goodwill are not reversed. Financial instruments Financial assets The group classifies its financial assets into one of the following categories,depending on the purpose for which the asset was acquired. The group'saccounting policy for each category is as follows: • Loans and receivables: These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (trade debtors), but also incorporate other types of contractual monetary asset. They are carried at cost less any provision for impairment. • Held-to-maturity investments: These assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that the group's management has the positive intention and ability to hold to maturity. These assets are measured at amortised cost, with changes through the income statement. Financial liabilities The group classifies its financial liabilities as 'Other financial liabilities',which includes the following items: • Trade payables and other short-term monetary liabilities, which are recognised at amortised cost. • Bank borrowings, and loan notes issued by the group are initially recognised at the amount advanced net of any transaction costs directly attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the balance sheet. "Interest expense" in this context includes initial transaction costs as well as any interest or coupon payable while the liability is outstanding. Provisions Provisions are recognised when the Group has a present obligation as a result ofa past event, and it is probable that the Group will be required to settle thatobligation. Provisions are measured at the directors' best estimate of theexpenditure required to settle the obligation at the balance sheet date, and arediscounted to present value where the effect is material. Share-based payments The Group has applied the requirements of IFRS 2 'Share-based Payment'. Inaccordance with the transitional provisions, IFRS 2 has been applied to allgrants of options after 7 November 2002 that were unvested at 1 January 2005. The Group issues equity-settled share-based payments only. These are measuredat fair value (excluding the effect of non market-based vesting conditions) atthe date of grant. The fair value determined at the grant date of theequity-settled share-based payments is expensed on a straight-line basis overthe vesting period, with a corresponding credit to equity, based on the Group'sestimate of shares that will eventually vest and adjusted for the effect of nonmarket-based vesting conditions. Fair value is measured by use of the Black-Scholes Model. The expected lifeused in the model has been adjusted, based on management's best estimated, forthe effects of non-transferability, exercise restrictions, and behaviouralconsiderations. Retirement benefits Defined contribution schemes: Contributions to defined contribution pensionschemes are charged to the income statement in the year to which they relate. Leased assets Where substantially all of the risks and rewards incidental to ownership of aleased asset have been transferred to the group (a "finance lease"), the assetis treated as if it had been purchased outright. The amount initially recognisedas an asset is the present value of the minimum lease payments payable over theterm of the lease. The corresponding lease commitment is shown as a liability.Lease payments are analysed between capital and interest. The interest elementis charged to the income statement over the period of the lease and iscalculated so that it represents a constant proportion of the lease liability.The capital element reduces the balance owed to the lessor. Where substantiallyall of the risks and rewards incidental to ownership are retained by the lessor(an "operating lease"), the total rentals payable under the lease are charged tothe income statement on a straight-line basis over the lease term. The land andbuildings elements of property leases are considered separately for the purposesof lease classification. 2. Highlighted items Highlighted items comprise significant non-cash charges and non-recurring itemswhich are highlighted in the income statement because separate disclosure isconsidered helpful in understanding the underlying performance of the business. 6 months 6 months 12 months Year ended ended ended ended 31 January 31 January 31 January 31 January 2006 2007 2006 2007 £'000s £'000s £'000s £'000sRecurring:Share based expenses (151) (124) (275) (249)Amortisation of purchased intangible assets (194) (162) (388) (162)Foreign exchange gains/(losses) (86) (32) (93) (32)Non recurring:Acquisition related - performance bonus (30) - (206) - - restructuring costs (53) - (154) -Provision for doubtful debts (301) - (301) -Professional fees (47) - (47) - (862) (318) (1,464) (443) The performance bonus relates to the acquisition of billetts in August 2005. The restructuring costs relate to the closure of the acquired entity's previoushead office. The provision for doubtful debts relates to specific contracts from a line ofbusiness which the Group no longer pursues. All other provisions for doubtfuldebts are included within Administrative expenses. Professional fees relate to legal and accounting advice in relation to the sharepremium reduction (see Note 8) and IFRS transition. All other professional feesare included within Administrative expenses. 3. Taxation on profit During the period the deferred tax asset has been increased by £103,000 toprovide for the extent that trade losses will be recoverable against futureprofits in the foreseeable future. The tax charge for the period is estimated to be £176,000 on profits notallowable to be offset against losses carried forward. 4. Dividends No interim dividend is being proposed. 5. Earnings per share The calculation of the basic and diluted earnings per share is based on thefollowing data: 6 months 6 months 12 months Year ended ended ended ended 31 January 31 January 31 January 31 January 2007 2006 2007 2006 £'000s £'000s £'000s £'000sEarning for the purpose of basic earnings 386 1,407 1,432 2,207per share being net profit attributable toequity holders of the parent Adjustments:Deferred tax (361) (165) (514) (396)Share incentives 151 124 275 249Purchased intangibles amortisation 194 162 388 162Foreign exchange (gain)/loss 86 32 93 32Performance bonus* 30 - 206 -Restructuring costs* 53 - 154 -Provision for doubtful debts* 301 - 301 -Professional fees* 47 - 47 - Earnings for the purpose of underlying 887 1,560 2,382 2,254earnings per share Number of sharesWeighted average number of ordinary shares 31,310,258 29,380,750 31,296,925 29,380,750for the purpose of basic earnings per share Effect of dilutive potential ordinary sharesShare options** 1,272,453 1,432,829 1,272,453 1,432,829 Weighted average number of ordinary shares 32,582,711 30,813,579 32,569,378 30,813,579for the purpose of diluted earnings pershare Basic earnings per share 1.23p 4.79p 4.58p 7.51pDiluted earnings per share** 1.18p 4.57p 4.40p 7.16pUnderlying basic earnings per share 2.83p 5.31p 7.61p 7.67pUnderlying diluted earnings per share 2.72p 5.06p 7.31p 7.31p *Non recurring items (see note 2). **Note that certain share options have been excluded from the calculation ofdiluted EPS as their exercise price is greater than the weighted average shareprice during the year (i.e. they are out-of-the-money) and therefore it wouldnot be advantageous for the holders to exercise those options. 6. Other intangible assets Internally generated Purchased intangible Total intangible intangible assets assets assets £'000s £'000s £'000sCostAt 1 August 2006 3,664 3,395 7,059Additions 409 - 409 At 31 January 2007 4,073 3,395 7,468 Amortisation At 1 August 2006 (1,745) (356) (2,101)Provision for the period (304) (194) (498) At 31 January 2007 (2,049) (550) (2,599) Net book value At 31 January 2007 2,024 2,845 4,869 On 23 August 2005 the Company acquired the entire share capital of BCMG Limited(billetts) for a maximum total consideration of £13.1m. In line with IAS 38intangible assets owned by billetts have been independently valued by anexternal consultant and shown within 'other intangible assets' on the balancesheet. Amortisation is charged so as to write off the cost of the purchased intangibleassets over their estimated useful lives. The assets, initial values and periodsused are as follows: Purchased intangibles Asset value Useful economic life £'000s Years Media Consulting Customer relationships 2,859 10Marketing Sciences Customer relationships 271 5MPMA Customer relationships 43 2Trade name 215 10Non-compete 7 1.5 3,395 7. Debtors 31 January 31 January 2007 2006 £'000s £'000sTrade and other receivables due within one yearTrade receivables 4,111 3,875Other receivables 56 427Prepayments & accrued income 2,452 1,150 6,619 5,452Trade and other receivables due after one yearPrepayments & accrued income 93 - 8. Post balance sheet events During the period the parent company, by way of a special resolution, reducedits share premium account. This was approved by an Order of the High Court ofJustice, Chancery Division on 31 January 2007. The Order was registeredpursuant to section 138 of the Companies Act, 1985 on 10 February 2007 and so noadjustment has been made in this interim report. The impact on the results forthe 15 month period to 30 April 2007 will be to reduce the share premium andreduce the accumulated deficit on retained earnings in the parent company by£7,056,000. Independent Review Report to Thomson Intermedia plc Introduction We have been instructed by the company to review the financial information forthe six months ended 31 January 2007 which comprises the Consolidated IncomeStatement, the Consolidated Balance Sheet, the Consolidated Cashflow Statementand related notes. We have read the other information contained in the interimreport and considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. Our report has been prepared in accordance with the terms of our engagement toassist the company in meeting the requirements of the rules of the London StockExchange for companies trading securities on the Alternative Investment Marketand for no other purpose. No person is entitled to rely on this report unlesssuch a person is a person entitled to rely upon this report by virtue of and forthe purpose of our terms of engagement or has been expressly authorised to do soby our prior written consent. Save as above, we do not accept responsibility forthis report to any other person or for any other purpose and we hereby expresslydisclaim any and all such liability. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the rules of theLondon Stock Exchange for companies trading securities on the AlternativeInvestment Market which require that the half-yearly report be presented andprepared in a form consistent with that which will be adopted in the company'sannual accounts having regard to the accounting standards applicable to suchannual accounts. As disclosed in the basis of preparation section, the next annual financialstatements of the company will be prepared in accordance with accountingstandards adopted for use in the European Union. This interim report has beenprepared in accordance with the basis set out in note 1. The accounting policies are consistent with those that the directors intend touse in the next annual financial statements. As explained in the basis ofpreparation section, there is however, a possibility that the directors maydetermine that some changes are necessary when preparing the full annualfinancial statements for the first time in accordance with accounting standardsadopted for use in the European Union. The IFRS standards and IFRICinterpretations that will be applicable and adopted for use in the EuropeanUnion at 30 April 2007 are not known with certainty at the time of preparingthis interim financial information. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with United Kingdom Auditing Standards and thereforeprovides a lower level of assurance than an audit. Accordingly we do not expressan audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 January 2007. BDO Stoy Hayward LLPChartered Accountants8 Baker StreetLondonW1U 3LL This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Ebiquity