RNS Number:6797D
Charterhouse Communications PLC
12 September 2007
CHARTERHOUSE COMMUNICATIONS PLC
12 SEPTEMBER 2007
CHARTERHOUSE COMMUNICATIONS PLC ("Charterhouse" or the "Company")
PRELIMINARY RESULTS FOR THE YEAR TO 31 MAY 2007
CHAIRMAN'S STATEMENT
Overview
The strategic review of the company undertaken during the year has been brought
to a successful conclusion and a number of asset sales were completed in the
second half. These actions, together with a strong operating profits into cash
ratio and the post year-end placing of 171m shares, have significantly reduced
the level of debt in the Group.
Your company has continued to make progress online and in events. Our main
mortgage magazines have achieved significant growth in revenue and contribution
in print, online and through the event activities. The new contract with the
London Stock Exchange as data provider for Company Refs and the consequent
online revenue stream has improved revenues too.
In the light of the recent disposals, and of leasing of certain assets, an
exceptional goodwill write off of #2.76m has been taken in the year to reflect
the remaining value of previously acquired assets and titles.
The ratio of operating profits into cash for the year was an exceptional 216%,
due in part to management of the timing of some payments to keep within our
banking facility at the time.
Results
Pre tax loss for the Group for the year to 31st May 2007 was #3.12m (2006
#0.80m). Turnover was #9.89m (2006 #9.57m).
Loss per share was 2.57p (2006 0.62p). No dividend is recommended.
Excluding amortisation of goodwill and intangible assets and also excluding
exceptional items, profit before tax was #212k (2006 #83k). This is an increase
of 155%.
Turnover of continuing operations grew by over #1m (13.2%) to #8.85m. Excluding
amortisation of goodwill and intangible assets and adjusting for the costs of
refinancing and restructuring, operating profit before tax of these continuing
operations grew by 66% to #660k.
There was emphasis on cost control, in addition to restructuring. Cash flow from
operating activities was strong at #1.36m (2006 #0.41m).
Following the exceptional write off of goodwill this year, in future, in line
with the relevant new international accounting standards (and subject to
impairment review), there will be no automatic goodwill amortisation charge.
In addition, our internally developed assets (which include our major weekly
publication Mortgage Introducer) have never appeared in the balance sheet.
Though having no value on the balance sheet, these assets continue to be a major
contributor to the Group's profits and are not subject to any amortisation
charge.
Highlights - Operations
A detailed report follows from our Finance Director Anthony Peters, who was
appointed Chief Operating Officer from the beginning of June 2007. We have made
good progress during the year in pursuit of our objective to broaden the scope
of our activities in our chosen markets.
The decision taken a year ago to consolidate our online activities into a
dedicated division has generated growth, and online revenues for the year
reached 14% of our total continuing revenues excluding the Brand & Co book
distribution revenues.
Events too are showing the benefit of greater focus from within as we expand our
existing activities and plan new ones.
At Brand & Co, new contracts plus a move to new premises in February helped to
raise the profile of the business in the area of both book distribution to
professional organisations and subscription management. This is at a time when
increasing fragmentation of media is increasing the desire of such organisations
to exploit our expertise.
Following the successful switch to the London Stock Exchange as data supplier
for Company Refs and our ability to sell data online, the revenue we derive from
this stream doubled, albeit from a low base. This has been at some expense to
the more expensive to produce paper version and thus more efficient.
Highlights - Reduction of debt and refinancing
The Group sold three non-core parts of the business during the year -
Independent Research Services, What Investment magazine and website, and a
freehold property previously used by its subsidiary Brand & Co - for a net total
of #0.9m.
There were cost savings in key areas, including staff reductions and switching
to the London Stock Exchange for the data to power the Group's directories.
Along with exceptional cash management, this meant that debt was further
reduced.
At 31st May 2007 net debt stood at #4.1m, compared with #5.8m at the end of the
previous financial year. Furthermore, the Group's debt was substantially
decreased again after the year-end, with the placing of shares in July 2007
raising a further #2.5m.
As a result, the Group has now refinanced with its bank, securing a new loan of
#2.75m payable over six years and an overdraft facility of #0.5m.
The effect of the placing of shares in July 2007 and the refinancing in August
2007, had they been applied to the audited May 2007 balance sheet, would have
turned the Group's net liabilities into a net assets balance sheet as below:
Placing Pro-forma
Group And Group
2007 Refinancing 2007
#'000 #'000 #'000
FIXED ASSETS
Intangible assets 3,243 - 3,243
Tangible assets 122 - 122
------- ------- -------
3,365 - 3,365
======= ======= =======
CURRENT ASSETS
Stocks 59 - 59
Debtors: amounts due within one year 2,252 - 2,252
Debtors: amounts due after one year:
Deferred taxation 156 - 156
Cash at bank and in hand 98 1,395 1,493
------- ------- -------
2,565 1,395 3,960
CREDITORS: amounts due within one year (7,308) 2,469 (4,839)
------- ------- -------
NET CURRENT LIABILITIES (4,743) 3,864 (879)
------- ------- -------
TOTAL ASSETS LESS CURRENT LIABILITIES (1,378) 3,864 2,486
CREDITORS: amounts due after more than one year (928) (1,364) (2,292)
-------- -------- --------
NET (LIABILITIES)/ASSETS (2,306) 2,500 194
======== ======== ========
CAPITAL AND RESERVES
Called up share capital 1,233 1,715 2,948
Share premium - 785 785
Profit and loss account (3,539) - (3,539)
------- ------- -------
EQUITY SHAREHOLDERS' (DEFICIT)/FUNDS (2,306) 2,500 194
======== ======== ========
Now that the Group has been able to reduce its debt so significantly and to
refinance on a firmer footing, the board would like to take this opportunity to
offer its gratitude to its bank, Lloyds TSB Bank plc, for its support over the
years and through the refinancing process. Our thanks are due also to our
suppliers who have played an important role in assisting us through this time.
People and Board
It has once again been a year of considerable change for our people and they
have responded with commitment and application to the challenges they have
faced. We are grateful to them for their continuing drive. The Board intends
during the year to initiate a new share option scheme to incentivise senior
management.
Anthony Peters, the company's Finance Director for the past 3 years, has been
appointed Chief Operating Officer, responsible for the day-to-day operations of
the company.
Geoff Gamble, Managing Director of Charterhouse since 1999, and a founding
partner of the business, indicated at the time of the placing that he wishes to
step down from the Board. Accordingly, the Board is seeking a suitable
replacement for the position of Managing Director. In the meantime he retains
his role as MD.
Outlook
We are now focussed on the elements of the business identified to have the most
potential for future growth. With the benefits of the cost savings and
restructuring achieved throughout last year, plus the recent refinancing, the
outlook for your company is better than it has been for some time.
It would be surprising if we did not feel some effect on revenues from the
present economic climate after so long a period of sustained growth in our main
mortgage market. However, we believe we are in a good position to minimise this
and to maximise our ability to offset any change through our own initiatives and
development of our skills - in print, online and through events.
PETER STRONG
Chairman
12 September 2007
FINANCIAL REVIEW
For the year to 31st May 2007, the divisional trading performance was as
follows:
Mortgage
Comprising our titles in the broker, lender and consumer arenas, the mortgage
division's turnover grew by 16% year on year. The primary driver behind this
growth was our market leading weekly broker magazine Mortgage Introducer and its
associated supplements, whose revenues grew 32% against last year. Contribution
made by Mortgage Introducer also rose by 41% year on year.
Conditions were tougher in the consumer sector, where What Mortgage magazine's
turnover fell against last year, but as some advertisers wished to move
exclusively online we did experience growth in that medium instead.
There was revenue growth of 30% in our mortgage events business, as we continued
to attract interest in our portfolio of events such as the annual Mortgage
Introducer, What Mortgage and Mortgage Finance Gazette awards, as well as our
various roundtable panels and forums amongst others.
Wealth
We sold our consumer title What Investment in February 2007. Excluding that
magazine and also excluding the UKFIRD directory which was published in 2006 but
not this year, turnover in the Wealth division was 6% below last year, somewhat
as a result of lower levels of sponsorship for the remaining directories in the
division.
There was a marked regeneration and growth in Company REFS, however, whose
turnover and contribution increased by 3% and 12% respectively, and this growth
was particularly marked in our REFS online offering. This encourages us to
continue to invest in all of the directories and to offer them both as paper and
online products.
After the cost savings from the new data feed that powers these directories,
contribution from the wealth division was flat. This would have been higher but
for additional maintenance costs associated with the data feed compared to last
year.
Online
The online division's turnover and contribution grew markedly against last year
by 81% and 143% respectively.
The online business growth was dominated by the mortgage websites. The
investment made by the Group in the online infrastructure, both editorially
(with the content management system in particular) and in the sales team drove
growth still further.
Brand & Co
Revenues in our bookselling subsidiary grew 35% from the previous year,
following organic growth and most markedly the effect of two substantial
customer contracts in the legal sector in a joint venture with Prenax, who
specialise in subscription management in the corporate sector. Contribution from
Brand was up 32% year on year. As a result of its expansion, Brand moved to
bigger premises in Hertford in February 2007 and the Group was able to sell the
freehold property held at Enfield for #0.3m.
Treasury
On 1 March 2007 the Group entered into an agreement to lease its treasury
publications to P4 Publishing Limited, a company run by Robin Page who
previously was head of the Group's Treasury division. Turnover in the division
for the 9 months to 28 February 2007 was up 3% against the equivalent period
last year but contribution was below that equivalent period.
Independent Research Services
The IRS operation was wound down in 2006, and was eventually sold in January
2007 for #0.2m.
Across the Group, administrative expenses were held firm at #2.0m.
Financing
Cash inflow from operating activities was #1.4m, up from #0.4m last year. As
well as an increase in the Group's operating profit before amortisation, this
cash inflow was a reflection of exceptional cash management in the period.
The Group continued to repay its old term loan and interest on its debt, making
total payments on these of #1.3m in the year. After these debt-related payments
and the Group's tax liabilities, cash rose by #0.8m in the year compared to a
fall of #1.0m last year. This increase is therefore as a result of the Group's
operating activities and the proceeds from the disposals.
ANTHONY PETERS
Finance Director and Chief Operating Officer
12 September 2007
Contacts:
For Charterhouse Communications PLC:
Anthony Peters, Finance Director and Chief Operating Officer - 020 7827 5454
For Landsbanki Securities (UK) Limited, NOMAD and Broker to Charterhouse Communications PLC:
Simon Brown - 020 7426 9000
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 May 2007
2007 2006
#'000 #'000
TURNOVER
Continuing operations 8,854 7,824
Discontinued operations 1,037 1,746
--------- ---------
9,891 9,570
Cost of sales (7,269) (7,116)
--------- ---------
GROSS PROFIT 2,622 2,454
ADMINISTRATIVE EXPENSES
Amortisation of goodwill and intangible assets (789) (880)
Exceptional amortisation (2,758) -
Other administrative expenses (1,994) (1,975)
--------- ---------
(5,541) (2,855)
OPERATING (LOSS)/PROFIT
Continuing operations (3,007) (484)
Discontinued operations 88 83
--------- ---------
(2,919) (401)
Profit on disposal of assets 216 -
Interest receivable 8 4
Interest payable (424) (400)
--------- ---------
(LOSS)ON ORDINARY ACTIVITIES BEFORE TAXATION (3,119) (797)
Taxation (51) 28
--------- ---------
(LOSS) FOR THE FINANCIAL YEAR (3,170) (769)
========= =========
Basic and diluted (loss) per share (2.57p) (0.62p)
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 31 May 2007
2007 2006
#'000 #'000
(LOSS) FOR THE FINANCIAL YEAR (3,170) (769)
Recognition of revaluation of building on disposal 177 -
Unrealised surplus on revaluation of land and buildings - 177
--------- ---------
TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR (2,993) (592)
========= =========
CONSOLIDATED BALANCE SHEET
As at 31 May 2007
Group Group
2007 2006
#'000 #'000
FIXED ASSETS
Intangible assets 3,243 7,237
Tangible assets 122 353
------- -------
3,365 7,590
======= =======
CURRENT ASSETS
Stocks 59 50
Debtors: amounts due within one year 2,252 2,386
Debtors: amounts due after one year:
Deferred taxation 156 217
Cash at bank and in hand 98 313
------- -------
2,565 2,966
CREDITORS: amounts due within one year (7,308) (7,924)
------- -------
NET CURRENT LIABILITIES (4,743) (4,958)
------- -------
TOTAL ASSETS LESS CURRENT LIABILITIES (1,378) 2,632
CREDITORS: amounts due after more than one year (928) (1,768)
-------- --------
NET (LIABILITIES)/ASSETS (2,306) 864
======== ========
CAPITAL AND RESERVES
Called up share capital 1,233 1,233
Revaluation reserve - 177
Profit and loss account (3,539) (546)
------- -------
EQUITY SHAREHOLDERS' (DEFICIT)/FUNDS (2,306) 864
======== ========
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 May 2007
2007 2006
#'000 #'000
Cash flow from operating activities 1,358 414
Returns on investments and servicing of finance (416) (396)
Taxation (183) (38)
Capital expenditure and financial investment 881 (152)
--------- ---------
CASH INFLOW/(OUTFLOW) BEFORE FINANCING 1,640 (172)
Financing (840) (840)
--------- ---------
INCREASE/(DECREASE) IN CASH IN THE YEAR 800 (1,012)
========= =========
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
INCREASE/(DECREASE) IN CASH IN THE YEAR 800 (1,012)
Cash flow from changes in debt 840 740
--------- ---------
MOVEMENT IN NET DEBT IN THE YEAR 1,640 (272)
Net debt at 1 June 2006 (5,779) (5,507)
-------- --------
NET DEBT AT 31 MAY 2007 (4,139) (5,779)
======== ========
NOTES TO THE PRELIMINARY ANNOUNCEMENT
1. Nature Of Financial Information
The financial information contained in this statement does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985.
The summarised balance sheet at 31 May 2007 and the summarised profit and loss
account, summarised cash flow statement and associated notes for the year then
ended have been extracted from the Group's 2007 financial statements. Those
financial statements have not yet been delivered to the Registrar of Companies,
nor have the auditors reported on them. The financial statements will be
delivered to the Registrar after the Annual General Meeting. The financial
information for the year ended 31 May 2006 is an abridged version of the group's
published financial statements for that year which contained an unqualified
audit report, and which have been filed with the Registrar.
2. Additional Information
The following are the results before amortisation of goodwill and intangible
assets, and before exceptional items. This amortisation has no effect on cash
flows or corporation tax payable.
2007 2006
#'000 #'000
Profit before interest, tax ,amortisation and exceptional items
628 479
Profit before tax, amortisation and exceptional items 212 83
Retained profit before amortisation and exceptional items 161 111
Earnings per share before amortisation of goodwill and intangible assets, and
before exceptional items
2007 2006
Basic 0.13p 0.09p
Diluted 0.13p 0.09p
3. Earnings per Share
Basic earnings per share are calculated by dividing the profit after tax for the
year by the weighted average number of shares in issue during the year. In
order to calculate diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to reflect the assumed conversion at the
beginning of the year, or at the date of grant where later, of all dilutive
share options outstanding at the end of the year. An adjusted earnings per share
figure which removes the effect of the amortisation of goodwill and intangible
assets, and the effect of exceptional items, is also shown.
2007 2006
#'000 #'000
(Loss) after tax, after amortisation (3,170) (769)
Amortisation 3,547 880
Exceptional items - profit on disposals (216) -
---------- ----------
Profit after tax, before amortisation and exceptional items 161 111
========== ==========
Million Million
Weighted average number of shares 123.3 123.3
Dilutive options outstanding 3.5 4.7
---------- ----------
Diluted average number of shares 126.8 128.0
========== ==========
2007 2006
Pence Pence
Basic earnings/(loss) per share
Standard (2.57) (0.62)
Adjusted for amortisation and exceptional items 0.13 0.09
Diluted earnings per share
Adjusted for amortisation and exceptional items 0.13 0.09
4. Discontinued Operations
Discontinued operations relate to the sale of two of the Group's assets, as
below:
Operating Operating
Revenue Revenue Profit Profit
Asset Date of 2007 2006 2007 2006
disposal #'000 #'000 #'000 #'000
Independent Research
Services
January 2007 439 850 30 79
What Investment February 2007 598 896 58 4
----- ----- ----- -----
1,037 1,746 88 83
===== ===== ===== =====
The Group also sold a freehold property used by Brand & Co in February 2007, as
below:
Proceeds NBV Profit
Asset of disposal at disposal on disposal
#'000 #'000 #'000
Independent Research
Services 177 166 11
What Investment 449 328 121
Freehold Building 307 223 84
----- ----- -----
933 717 216
===== ===== =====
5. No dividend is being declared (2006: nil)
6. Post Balance Sheet Events
Placing of shares
On 19 July 2007, the Company completed a fundraising of #2.5m via a placing of
171,417,512 ordinary shares at 1.5p each. The proceeds from the placing were
used to reduce the Company's bank debt from #4.9m on 18 July 2007 to #2.4m on 19
July 2007.
Bank refinancing
As a consequence of reducing the Company's debt by the disposal of assets and
the fundraising, the Company was able to seek and receive refinancing from its
bank. The Company obtained a new long term bank loan of #2.75m beginning 1
August 2007 and an overdraft facility of #0.5m for seasonal trading. The loan is
being repaid over a six year period, currently equating to #458k per year, but
the Company does have the ability to pay up to #300,000 of the remaining capital
per year without penalty. The interest payable on the loan and overdraft
facility, when needed, is 2.5% over the Lloyds TSB bank base rate, to be
adjusted from 28 February 2008 depending on the Group's trading performance.
Balance sheet effect of placing of shares and bank refinancing
Following the exceptional goodwill write-offs undertaken at the year-end, the
Group balance sheet showed a net liabilities position of #2,306,000. The effect
of the placing of shares in July 2007 and bank refinancing in August 2007 is to
bring the Group back to a net assets position. By way of illustration, applying
the placing to the 31 May 2007 balance sheet produces the following unaudited
pro forma balance sheet:
Placing Pro-forma
Group And Group
2007 Refinancing 2007
#'000 #'000 #'000
FIXED ASSETS
Intangible assets 3,243 - 3,243
Tangible assets 122 - 122
------- ------- -------
3,365 - 3,365
======= ======= =======
CURRENT ASSETS
Stocks 59 - 59
Debtors: amounts due within one year 2,252 - 2,252
Debtors: amounts due after one year:
Deferred taxation 156 - 156
Cash at bank and in hand 98 1,395 1,493
------- ------- -------
2,565 1,395 3,960
CREDITORS: amounts due within one year (7,308) 2,469 (4,839)
------- ------- -------
NET CURRENT LIABILITIES (4,743) 3,864 (879)
------- ------- -------
TOTAL ASSETS LESS CURRENT LIABILITIES (1,378) 3,864 2,486
CREDITORS: amounts due after more than one year (928) (1,364) (2,292)
-------- -------- --------
NET (LIABILITIES)/ASSETS (2,306) 2,500 194
======== ======== ========
CAPITAL AND RESERVES
Called up share capital 1,233 1,715 2,948
Share premium - 785 785
Profit and loss account (3,539) - (3,539)
------- ------- -------
EQUITY SHAREHOLDERS' (DEFICIT)/FUNDS (2,306) 2,500 194
======== ======== ========
7. The annual report and accounts will be posted to shareholders and will
also be available on request from the Company's registered office at Arnold
House, 36-41 Holywell Lane, London EC2A 3SF.
8. The Annual General Meeting will be held at The Medal Room, The Honourable
Artillery Company, Armoury House, City Road, London, EC1Y 2BQ on Thursday 18
October 2007 at 11am.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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