TIDMDIGI
RNS Number : 1388V
Digital Marketing Group PLC
06 July 2009
Date: 6 July 2009
On behalf of: Digital Marketing Group plc ("DMG", "the Company" or "the
Group")
Embargoed: 0700hrs
Digital Marketing Group plc
Preliminary Results 2009
Digital Marketing Group plc (AIM: DIGI), the UK's largest digital marketing
specialists, today announced its preliminary results for the year ended 31 March
2009.
Performance Highlights
* Revenues GBP56.65m +11% yr/yr (2008: GBP50.97m)
* Gross Profit GBP41.55m +26% yr/yr (2008: GBP33.08m)
* EBITDA GBP9.29m (before charges for share options) +25% (2008: GBP7.43m)
* Profit before tax before charges for share options and amortisation GBP8.01m
+27% yr/yr (2008: GBP6.31m)
* Profit before tax GBP3.11m +45% yr/yr (2008:GBP2.15m)
* Adjusted basic EPS (profit after tax, before amortisation and charges for share
options) 8.76p +20% growth year on year (2008: 7.30p)
* Basic EPS 2.15p (2008: 1.79p)
* Group cross referrals generated GBP3.9m GP (9% of total GP)
* Net cashflow generated from operations GBP5.7m
* Year end net debt GBP5.9m
Operational Highlights
* Completion of acquisition of Cybercom Group UK Ltd, Gasbox Ltd and Prodant Ltd
in October 2008
* Recognised as the UKs biggest digital marketing agency by Campaign Magazine in
January 2009
Commenting on the results, Stephen Davidson, Chairman of Digital Marketing Group
plc, said: "In an extremely difficult economic environment I am proud to be able
to report an excellent set of results. This is a truly exceptional achievement
in the worst market for decades and is testimony to our strategy, the skills of
our people, and to the leadership of our business.
Ben Langdon, Chief Executive, added: "We believe that our integration of digital
marketing and data analysis skills makes our business unique, and at the heart
of the move by marketers to seek greater access to the information generated by
consumers through online channels. The long term strategic vision for Digital
Marketing Group remains extremely exciting as marketing spend continues to shift
towards online media channels and we remain confident about the future, despite
the challenge the current economic climate poses."
Enquiries:
+--------------------------------------------+--------------------------------------+
| Digital Marketing Group plc | www.digitalmarketinggroup.co.uk |
+--------------------------------------------+--------------------------------------+
| Ben Langdon, Chief Executive | via Redleaf Communications |
+--------------------------------------------+--------------------------------------+
| | |
+--------------------------------------------+--------------------------------------+
| Redleaf Communications | DMG@redleafpr.com |
+--------------------------------------------+--------------------------------------+
| Paul Dulieu/Kathryn Hurford | Tel: 0207 566 6700 |
+--------------------------------------------+--------------------------------------+
| | |
+--------------------------------------------+--------------------------------------+
| Cenkos Securities | |
+--------------------------------------------+--------------------------------------+
| Ivonne Cantu/Julian Morse | Tel: 0207 397 8900 |
+--------------------------------------------+--------------------------------------+
Notes to Editors:
* Digital Marketing Group (AIM: DIGI) listed on AIM in October 2006, employs over
600 people.
* Digital Marketing Group is the UKs biggest digital marketing agency (Campaign
Magazine Jan 2009).
* At the heart of the company is Digital Brain - a process which enables the real
time integration of "digital, direct and data". This helps create unique contact
strategies for each individual based on their historical data and real time
interactions regardless of channel.
Digital Marketing Group's development strategy consists of three key elements:
* "organic growth" - driven by growth within the individual businesses and the
application of a group business development programme;
* "buy and build" - through the selective acquisition of a number of well run and
profitable businesses with complementary skills in digital direct marketing; and
* the creation of new revenue streams from within the existing talents and
resources of the group.
Publication quality photographs are available via Redleaf Communications.
CHAIRMAN'S STATEMENT
In an extremely difficult economic environment I am proud to be able to report
an excellent set of results for 2008/9.
We posted revenues of GBP56.65m up 11% yr/yr (2008: GBP50.97m) and gross profit
which represents revenue less direct cost of sales of GBP41.55m which is up 26 %
yr/yr (2008: GBP33.08m).
EBITDA before charges for share options of GBP9.29m is +25% yr/yr (2008:
GBP7.43m) and profit before tax before amortisation and charges for share
options of GBP8.01m is up 27% year on year (2008: GBP6.31m).
This is a truly exceptional achievement in the worst market for decades and is
testimony to our strategy, the skills of our people, and to the leadership of
our business. Importantly we maintained our reputation for always meeting market
expectations. Despite this, our share price declined more significantly than our
business grew! I am acutely aware of the frustration felt by shareholders. That
feeling is shared throughout your company.
These results represent post acquisition figures to 31 March 2009 and comprise 6
months for Cyber DMG Limited (CyberDMG), Gasbox Limited (Gasbox) and Prodant
Limited (Prodant). These three acquisitions added important skills to our group.
Cyber DMG has strong ecommerce credentials. Gasbox complemented our existing
voice offering, HSM, and allowed us to merge these two businesses together under
new management. Prodant was merged into Jaywing, our data services business. All
three businesses have been successfully integrated into our group.
We are in a strong position financially. In October 2008 we secured additional
bank facilities of GBP4.0m. Our net debt is GBP5.9m at 31 March 2009. At the
year end the Group had GBP7.1m of undrawn borrowing facilities.
Despite this, the last few months of our financial year proved very difficult.
Cancellation and delay in client projects made planning and visibility of
revenue challenging. Client-side decision making has also slowed down
considerably. Our businesses with clients in the financial services sector were
particularly affected but the recent downturn has not been limited to this
sector.
For 2009/10 the Group has therefore planned on the assumption that these recent
declines in client revenues may continue. Recovery in client confidence will
probably come in 2010. Management's focus at a Group level is therefore on
micro-managing our businesses to ensure that we balance staff costs and
headcount against expected revenue to protect profitability. The first half of
2009/10 will be difficult, with the second half likely to improve. At the same
time we will continue to develop new products to enhance our position in the
market.
By the end of 2009/10 we expect online advertising to have grown its share of
all advertising spend to over 20%. It is our view that this will be the point at
which digital marketing becomes the lead medium for many clients, and given our
position as the UK's largest digital marketing agency we expect to benefit
significantly from the recovery in marketing spend.
I would like to thank fellow Board members for their support, and our employees
and managers under the exceptional leadership of Ben Langdon for these excellent
results and their commitment to our Group vision.
In particular I would also like to thank the clients of Digital Marketing Group
for their continued loyalty and support.
Finally, I would like to welcome Keith Sadler to the Board. Keith joined Digital
Marketing Group in June 2009. Keith replaced Greg Minns who joined the company
in January 2009 and performed the role of Finance Director and Company Secretary
during the interim period. Having worked with Keith before, I know his
capabilities first hand and am delighted that he is joining DMG. He has
exceptional experience as a plc board director and financial and operating
executive in the media sector.
Stephen Davidson
Chairman
3 July 2009
CHIEF EXECUTIVE'S REVIEW
Key Performance Indicators
At the beginning of 2008/9 we set ourselves the following KPIs:
* Each business is expected to achieve sufficient growth in gross profits to
enable us to deliver our EPS performance targets without having to overly rely
on cutting costs.
* The Group is expected to continue to deliver strong levels of incremental gross
profits through cross referrals and coordinated new business pitches.
* We will continue to measure the performance of our business through "softer"
measures such as client satisfaction and employee loyalty.
* We will continue to rationalise the cost base as part of our integration plan
but will remain focused on areas that do not impact on the Group's delivery of
product and service to its clients.
* The Group will continue to seek Industry recognition for the quality of its
product as a means of attracting new clients to the business.
* The Group will look for new and incremental 'routes to market' either through
the creation of new products and services or through the acquisition of
additional skills.
I am therefore extremely pleased to report the following:
* We generated gross profits of GBP3.9m through the existing client cross
referrals programme. This represented approximately 9% of our total annual gross
profits and delivered higher margin returns to the Group relative to new
business generated from new clients.
* We generated over GBP13m in gross profits from new business, either in the form
of new work from existing clients (GBP8m) or from clients not previously working
with DMG (GBP5m).
* Adjusted basic EPS (profit after tax, before amortisation and charges for share
options) is 8.76p as at 31 March 2009 (2008: 7.30p) showing 20% growth year on
year.
* We made good strides in terms of cost rationalisation with decisions taken
achieving over GBP150,000 of annualised savings through co-location of London
based offices, downsizing of office space for Group Finance and sharing of
finance resource.
* We launched eSP, an online sales promotion service that uses digital campaigns,
viral, buzz and e-CRM to distribute promotional offers, supported by
industry-leading couponing mechanisms including secure vouchers and mobile
couponing.
* We recently also launched Digital Brain: Search and Demograph:DMG. Digital
Brain: Search is a unique product which combines our search marketing and data
analysis skills to produce more effective results for clients. Demograph:DMG is
a digital research business geared up to provide a wide range of services that
include:
* Web usability and accessibility
* Digital pre-testing and concept testing
* Online qualitative and quantitative research
* Online Brand Health benchmarking and tracking
* We have achieved the following industry recognition:
* New Media Age - 3rd in the top 50 Digital Marketing Agencies in the 100
Interactive Agencies Guide (September 2008)
* Marketing - 3rd in the Digital league (December 2008)
* Campaign - 1st in the UK Digital Agencies League, independently compiled by
Kingston Smith W1 (January 2009)
* Marketing - 3rd in the Direct Marketing and Sales Promotion league (March 2009)
Budgetary constraints and the changed economic environment meant that it was
decided to postpone the repeat analysis of 'softer' measures until financial
year 2010/11.
Financial Performance
At the beginning of October 2008 three businesses, CyberDMG, Gasbox and Prodant,
joined the Group, and our results therefore include post acquisition figures to
31 March 2009 and comprise six months for these businesses. The Segmental
Performance and Review of Recent Acquisitions section below shows this in
greater detail.
On this basis the Group achieved:
* Revenues GBP56.65m +11% yr/yr (2008: GBP50.97m)
* Gross Profit GBP41.55m +26% yr/yr (2008: GBP33.08m)
* EBITDA GBP9.29m (before charges for share options) +25% (2008: GBP7.43m)
* Profit before tax before charges for share options and amortisation GBP8.01m
+27% yr/yr (2008: GBP6.31m)
* Profit before tax GBP3.11m +45% yr/yr (2008:GBP2.15m)
* Adjusted basic EPS (profit after tax, before amortisation and charges for share
options) 8.76p +20% growth year on year (2008: 7.30p)
* Basic EPS 2.15p
* Group cross referrals generated GBP3.9m GP (9% of total GP)
* Net cashflow generated from operations GBP5.7m
* Year end net debt GBP5.9m
The table below shows the performance of the Group with illustrative
comparatives for the previous year.
+-----------------------------------------------+------------+------------+--------------+
| | 2009 | 2008 |Yr/Yr Growth |
+-----------------------------------------------+------------+------------+--------------+
| |GBPmillion |GBPmillion | % |
+-----------------------------------------------+------------+------------+--------------+
| Revenue | 56.65 | 50.97 | 11% |
+-----------------------------------------------+------------+------------+--------------+
| Direct costs | (15.10) | (17.89) | (16)% |
+-----------------------------------------------+------------+------------+--------------+
| Gross profit | 41.55 | 33.08 | 26% |
+-----------------------------------------------+------------+------------+--------------+
| Operating expenses, excluding central costs, | (30.69) | (24.52) | 25% |
| interest, depreciation, amortisation and | | | |
| charges for share options | | | |
+-----------------------------------------------+------------+------------+--------------+
| EBITDA before central costs and charges for | 10.86 | 8.56 | 27% |
| share options | | | |
+-----------------------------------------------+------------+------------+--------------+
| Central costs | (1.57) | (1.13) | 39% |
+-----------------------------------------------+------------+------------+--------------+
| EBITDA before charges for share options | 9.29 | 7.43 | 25% |
+-----------------------------------------------+------------+------------+--------------+
| Depreciation | (0.67) | (0.59) | 14% |
+-----------------------------------------------+------------+------------+--------------+
| EBITA before charges for share options | 8.62 | 6.84 | 26% |
+-----------------------------------------------+------------+------------+--------------+
| Net interest expense | (0.61) | (0.53) | 15% |
+-----------------------------------------------+------------+------------+--------------+
| Profit before tax, amortisation and charges | 8.01 | 6.31 | 27% |
| for share options | | | |
+-----------------------------------------------+------------+------------+--------------+
The figures above exclude amortisation of GBP1.86m (2008: GBP1.4m) and charges
in respect of group share options GBP3.04m (2008: GBP2.76m).
Liquidity Review
In October 2008 the Group secured GBP4m of additional banking facilities through
a GBP2m increase in the existing revolving credit facility and an additional
GBP2m term loan repayable over three years. This allowed the Group to complete
the acquisitions of CyberDMG, Gasbox and Prodant.
Full details of the financial structure of the acquisitions are given in Note 13
to the financial statements and the Group's borrowings in Note 19. At the year
end the Group had available GBP7.1m undrawn borrowing facilities taking into
account credit cash balances.
The consolidated cash flow statement shows the Group to be cash generative with
net cash inflow from operating activities of GBP5.7m.
As at 31March 2009, the Group had net debt of GBP5.9m.
Outlook and Objectives for 2009/10
The Internet Advertising Bureau (IAB) in conjunction with PricewaterhouseCoopers
(PwC) produces an annual tracking study which represents the official internet
advertising industry's growth figures (2008 UK Online Adspend Study). It
therefore acts as the barometer for the health of the market. It recently
confirmed the continued growth in importance of online marketing and advertising
and said that:
* Online adspend during 2008 reached GBP3,349.7m
* Spending on internet advertising grew by 17% (on a like-for-like basis) when
compared with 2007
* Online's share has grown to 19.2% for 2008, 15.5% for 2007.
New figures from Nielsen Online (5 June 2009) also revealed that online display
ad activity in the UK is up by 21% compared with last year.
These figures cover the measurable parts of online advertising i.e. where online
media is bought (display, search etc) and are therefore not necessarily an
accurate assessment of the scale nor the growth of the entire online marketing
industry.
One of the chief reasons for the continued growth in online advertising and
marketing is that digital interactivity gives marketing clients much greater and
more identifiable returns on their investment which we believe will continue to
support the growth in digital direct marketing despite a worsening economic
climate.
We believe that digital direct marketing will continue to grow and steal share
from traditional marketing tools such as television, press, poster and radio
advertising for the following key reasons:
* Measurement: using technology, brands can now better measure the effectiveness
of marketing campaigns by tracking online behaviour and transactions often in
real-time;
* Data capture: brands can develop direct and cost-effective communications with
customers and gain a greater degree of consumer data than through traditional
advertising channels, many of which contain no data capture opportunities;
* Flexibility of medium: online campaigns can be adapted at very short notice (in
some cases in real-time) as a result of information gleaned from previous
marketing, which can increase the levels of personalisation and enhance ROI in
the short-term at low cost.
It has, however, been impossible to escape the realities of worldwide economic
recession and, not surprisingly, the last few months of our financial year
proved very difficult.
Cancellation and delay in client projects made planning and visibility of
revenue challenging and this has continued into the first quarter of 2009/10.
Client-side decision making has also slowed down considerably.
Our businesses with clients in the financial services sector have been
particularly affected but the recent downturn has not been limited to this
sector.
WPP recently (28 April 2009) announced like for like revenues down 6% for the
first quarter of 2009 reflecting cuts in client spending in reaction to the
global financial and economic crisis. Our experience has been similar.
For 2009/10 the Group has therefore planned on the assumption that these recent
declines in client revenues will continue. The first half of 2009/10 will be
difficult, with the second half likely to improve. Sustainable recovery in
client confidence is anticipated to come in 2010/11.
By the end of 2009/10 we expect online advertising to have grown its share of
all advertising spend to over 20%. It is our view that this will be the point at
which digital marketing becomes the lead medium for many clients, and given our
position as the UKs largest digital marketing agency we expect to benefit
significantly from any recovery in marketing spend.
Our key performance indicators for 2009/10 are as follows:
* Each business is to focus on balancing costs against lower levels of gross
profits than previously anticipated to ensure we continue to meet market
expectations.
* We will look to increase centralisation of non client-facing functions as part
of our ongoing integration plan.
* The Group will continue to seek industry recognition as the UK's leading digital
agency, and for the quality of its product as a means of attracting new clients.
* The Group will roll out Digital Brain:Search and will create other Digital
Brain-inspired products. We will also launch DemographDMG, a new online research
agency using skills already existent within the Group.
* The Group will create new and incremental 'routes to market' through the hiring
of people with specific client sector knowledge or expertise, or through
selective acquisition.
Long Term Strategic Vision
The long term strategic vision for Digital Marketing Group remains extremely
exciting as marketing spend continues to shift towards online media channels.
We believe that our integration of digital marketing and data analysis skills
makes our business unique, and at the heart of the move by marketers to seek
greater access to the information generated by consumers through online
channels.
We have the management team and experience that will continue to deliver market
expectations.
We have delivered organic and cross-referred growth across all our acquired
businesses and will continue to do so despite extremely challenging economic
conditions.
In this context, recent industry recognition adds further credibility to our
business and aids our new business programme.
The long term development plan for the business therefore has two separate and
parallel elements to it:
* We will continue to execute the existing and successful strategy of the Group,
namely to grow the business organically through new business wins, cross
referrals and integration
* We will acquire businesses only if they deliver against one of three criteria
1. Enable us to enter new market sectors
2. Enable us to develop new 'routes to market'
3. Increase the success and profitability of our existing products/services.
Summary
Since our admission to AIM in October 2006 Digital Marketing Group has:
* Met all the financial commitments made to our shareholders to date
* Built an integrated platform to deliver digital direct marketing to our clients
* Secured new accounts and generated incremental revenue to the Group
* Broadened our shareholder base to include new blue chip institutions
* Demonstrated our ability to secure and pay down bank debt consistently,
increasing our financial flexibility
Economic conditions mean that we are currently less optimistic than we have been
since admission about the short term performance of our business. However we
believe the medium and long term future of the Group remains extremely positive
as the recession accelerates the shift towards online marketing and media.
Segmental Performance and Review of Recent Acquisitions
In order to aid shareholders in reviewing our business we use the following
three segments:
A/ Online Marketing & Media
B/ Direct Marketing Services
C/ Data Services
The table below shows the performance of the three segments with comparatives
for the previous year.
+------------------+------------+------------+------------+------------+----------+----------+
| | 2009 | 2008 | Yr/Yr Growth |
+------------------+-------------------------+-------------------------+---------------------+
| | Gross | EBITDA * | Gross | EBITDA * | Gross |EBITDA * |
| | Profit | | Profit | | Profit | |
+------------------+------------+------------+------------+------------+----------+----------+
| |GBPmillion |GBPmillion |GBPmillion |GBPmillion | % | % |
+------------------+------------+------------+------------+------------+----------+----------+
| Online Marketing | 16.03 | 4.24 | 10.03 | 2.73 | 60% | 55% |
| & Media | | | | | | |
+------------------+------------+------------+------------+------------+----------+----------+
| Direct Marketing | 12.61 | 2.70 | 11.04 | 2.37 | 14% | 14% |
| Services | | | | | | |
+------------------+------------+------------+------------+------------+----------+----------+
| Data Services | 12.91 | 3.92 | 12.01 | 3.46 | 8% | 13% |
+------------------+------------+------------+------------+------------+----------+----------+
| | 41.55 | 10.86 | 33.08 | 8.56 | 26% | 27% |
+------------------+------------+------------+------------+------------+----------+----------+
| Central costs | 0.00 | (1.57) | 0.00 | (1.13) | - | 39% |
+------------------+------------+------------+------------+------------+----------+----------+
| Total | 41.55 | 9.29 | 33.08 | 7.43 | 26% | 25% |
+------------------+------------+------------+------------+------------+----------+----------+
* EBITDA before charges for share options
A/ Online Marketing & Media
In the year ended 31 March 2009 this segment achieved gross profit of GBP16.03m
and EBITDA before charges for share options of GBP4.24m.
This represents growth in gross profits of 60% year on year and growth in EBITDA
before charges for share options of 55% year on year.
+---------------------------+------------+------------+---------------+
| | Online Marketing & Media |
+---------------------------+-----------------------------------------+
| | 2009 | 2008 | Yr/Yr Growth |
+---------------------------+------------+------------+---------------+
| |GBPmillion |GBPmillion | % |
+---------------------------+------------+------------+---------------+
| Gross profit | 16.03 | 10.03 | 60% |
+---------------------------+------------+------------+---------------+
| EBITDA before charges for | 4.24 | 2.73 | 55% |
| share options | | | |
+---------------------------+------------+------------+---------------+
Within the online marketing & media segment CyberDMG joined Digital Marketing
Group during the 2008/9 financial year. The following section reviews the
financial performance of that Company during 2008/9.
The following table shows the financial contribution of CyberDMG to the Group's
results, representing six months' post acquisition trading, together with an
indicative summary of what the contribution would have been on a pro forma basis
for the year to 31 March 2009 and the previous year.
+------------------------------------------+------------+------------+------------+-------------+
| | CYBER DMG |
+------------------------------------------+----------------------------------------------------+
| | 2009 | 2009 | 2008 | Pro forma |
| | | Pro forma | Pro forma | Yr/Yr |
| | | | | Growth |
+------------------------------------------+------------+------------+------------+-------------+
| |GBPmillion |GBPmillion |GBPmillion | % |
+------------------------------------------+------------+------------+------------+-------------+
| Revenue | 3.24 | 6.84 | 5.17 | 32% |
+------------------------------------------+------------+------------+------------+-------------+
| Direct costs | (0.25) | (0.37) | (0.13) | 185% |
+------------------------------------------+------------+------------+------------+-------------+
| Gross profit | 2.99 | 6.47 | 5.04 | 28% |
+------------------------------------------+------------+------------+------------+-------------+
| Operating expenses, excluding interest, | (2.42) | (5.40) | (4.18) | 29% |
| depreciation, amortisation and charges | | | | |
| for share options | | | | |
+------------------------------------------+------------+------------+------------+-------------+
| EBITDA before charges for share options | 0.57 | 1.07 | 0.86 | 24% |
+------------------------------------------+------------+------------+------------+-------------+
| Depreciation | (0.02) | (0.03) | (0.03) | - |
+------------------------------------------+------------+------------+------------+-------------+
| Operating profit before interest, | 0.55 | 1.04 | 0.83 | 25% |
| amortisation and charges for share | | | | |
| options | | | | |
+------------------------------------------+------------+------------+------------+-------------+
| Note | 1 | 2 | 2 | |
+------------------------------------------+------------+------------+------------+-------------+
+--------------+
| 1. The |
| 2009 |
| column |
| shows |
| the |
| financial |
| contribution |
| of CyberDMG |
| to the |
| Group's |
| results for |
| the year |
| ended 31 |
| March 2009 |
| representing |
| the period |
| from |
| acquisition |
| on 2 October |
| 2008 to 31 |
| March 2009. |
+--------------+
| 2. The |
| pro |
| forma |
| 2009 and |
| 2008 |
| columns |
| are |
| shown |
| for |
| illustrative |
| purposes |
| only. The |
| information |
| is based on |
| the audited |
| accounts of |
| CyberDMG. |
+--------------+
B/ Direct Marketing Services
In the year ended 31 March 2009 this segment achieved gross profit of GBP12.61m
and EBITDA before charges for share options of GBP2.70m
This represents growth in gross profits of 14% year on year and growth in EBITDA
before charges for share options of 14% year on year.
+------------------------------+------------+------------+----------------------+
| | Direct Marketing Services |
+------------------------------+------------------------------------------------+
| | 2009 | 2008 | Yr/Yr Growth |
+------------------------------+------------+------------+----------------------+
| |GBPmillion |GBPmillion | % |
+------------------------------+------------+------------+----------------------+
| Gross profit | 12.61 | 11.04 | 14% |
+------------------------------+------------+------------+----------------------+
| EBITDA before charges for | 2.70 | 2.37 | 14% |
| share options | | | |
+------------------------------+------------+------------+----------------------+
Within the direct marketing services segment GasboxDMG joined Digital Marketing
Group in October 2008. The following section reviews the financial performance
of that Company during 2008/9.
The following table shows the financial contribution of GasboxDMG to the Group's
results, representing six months' post acquisition trading, together with an
indicative summary of what the contribution would have been on a pro forma basis
for the year to March 2009 and the previous year.
+------------------------------------------+------------+------------+------------+------------+
| | GASBOX DMG |
+------------------------------------------+---------------------------------------------------+
| | 2009 | 2009 | 2008 | Pro forma |
| | | Pro forma | Pro forma | Yr/Yr |
| | | | | Growth |
+------------------------------------------+------------+------------+------------+------------+
| |GBPmillion |GBPmillion |GBPmillion | % |
+------------------------------------------+------------+------------+------------+------------+
| Revenue | 1.75 | 3.34 | 1.33 | 151% |
+------------------------------------------+------------+------------+------------+------------+
| Direct Costs | (0.10) | (0.10) | 0.00 | - |
+------------------------------------------+------------+------------+------------+------------+
| Gross Profit | 1.65 | 3.24 | 1.33 | 144% |
+------------------------------------------+------------+------------+------------+------------+
| Operating expenses, excluding interest, | (1.33) | (2.50) | (1.37) | 83% |
| depreciation, amortisation and charges | | | | |
| for share options | | | | |
+------------------------------------------+------------+------------+------------+------------+
| EBITDA before charges for share options | 0.32 | 0.74 | (0.04) | - |
+------------------------------------------+------------+------------+------------+------------+
| Depreciation | (0.04) | (0.09) | (0.07) | 29% |
+------------------------------------------+------------+------------+------------+------------+
| Operating profit before interest, | 0.28 | 0.65 | (0.11) | - |
| amortisation and charges for share | | | | |
| options | | | | |
+------------------------------------------+------------+------------+------------+------------+
| Note | 1 | 2 | 2 | |
+------------------------------------------+------------+------------+------------+------------+
+---------------+
| 1. The |
| 2009 |
| column |
| shows |
| the |
| financial |
| contribution |
| of GasboxDMG |
| to the |
| Group's |
| results for |
| the year |
| ended 31 |
| March 2009 |
| before |
| representing |
| the period |
| from |
| acquisition |
| on 2 October |
| 2008 to 31 |
| March 2009. |
| |
+---------------+
| 2. The |
| pro |
| forma |
| 2009 and |
| 2008 |
| columns |
| are |
| shown |
| for |
| illustrative |
| purposes |
| only. The |
| information |
| is based on |
| the |
| unaudited |
| management |
| accounts of |
| GasboxDMG |
| and has been |
| adjusted for |
| items which |
| the |
| Directors |
| consider to |
| be non |
| recurring, |
| for example, |
| excess |
| management |
| remuneration. |
+---------------+
C/ Data Services
In the year ended 31 March 2009 this segment achieved gross profit of GBP12.91m
and EBITDA before charges for share options of GBP3.92m
This represents growth in gross profits of 8% year on year and growth in EBITDA
before charges for share options of 13% year on year.
+--------------------------+------------+------------+------------+
| | Data Services |
+--------------------------+--------------------------------------+
| | 2009 | 2008 | Yr/Yr |
| | | | Growth |
+--------------------------+------------+------------+------------+
| |GBPmillion |GBPmillion | % |
+--------------------------+------------+------------+------------+
| Gross profit | 12.91 | 12.01 | 8% |
+--------------------------+------------+------------+------------+
| EBITDA before charges | 3.92 | 3.46 | 13% |
| for share options | | | |
+--------------------------+------------+------------+------------+
The data services table above includes the results of Prodant which represents
six months' post acquisition trading. The acquisition of Prodant is not
considered to be significant to the Group in financial terms and hence no
separate review of its financial performance in the period is given.
+------------------------------------------+--------+-----+----------+----+-----+----------+
| Consolidated Income Statement | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| | | Year ended | | Year ended |
+------------------------------------------+--------+----------------+----+----------------+
| | Note | 31 March 2009 | | 31 March |
| | | | | 2008 |
+------------------------------------------+--------+----------------+----+----------------+
| | | | GBP'000 | | | GBP'000 |
| | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| Continuing operations | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| Revenue | 2 | | 56,654 | | | 50,971 |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| Direct costs | | | (15,101) | | | (17,892) |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| Gross profit | | | 41,553 | | | 33,079 |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| Other operating income | | | 192 | | | 212 |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| Amortisation | | | (1,863) | | | (1,407) |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| Operating expenses | | | (36,161) | | | (29,204) |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| Operating profit | | | 3,721 | | | 2,680 |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| Finance income | | | 97 | | | 252 |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| Finance costs | | | (704) | | | (783) |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| Net financing costs | | | (607) | | | (531) |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| Profit before tax | | | 3,114 | | | 2,149 |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| Taxation | 3 | | (1,674) | | | (1,013) |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| Profit for the year attributable to | | | 1,440 | | | 1,136 |
| shareholders | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| Earnings per share | 4 | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| From continuing operations | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| - basic | | | 2.15p | | | 1.79p |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| - diluted | | | 1.92p | | | 1.57p |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+----------+
| | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+----------+
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Consolidated Balance Sheet | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| | Note | 31 March 2009 | | 31 March |
| | | | | 2008 |
+------------------------------------------+--------+----------------+----+---------------+
| | | | GBP'000 | | | GBP'000 |
| | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Non-current assets | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Property, plant and equipment | | | 2,057 | | | 2,215 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Goodwill | | | 47,051 | | | 39,449 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Other intangible assets | | | 16,116 | | | 13,324 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| | | | 65,224 | | | 54,988 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Current assets | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Inventories | | | 196 | | | 790 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Trade and other receivables | | | 10,683 | | | 9,582 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Cash and cash equivalents | | | 12,227 | | | 12,004 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| | | | 23,106 | | | 22,376 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Total assets | | | 88,330 | | | 77,364 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Current liabilities | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Bank overdraft | 6 | | 8,806 | | | 6,901 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Other interest-bearing loans and | 6 | | 1,691 | | | 1,122 |
| borrowings | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Financial derivatives | | | 481 | | | 195 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Trade and other payables | | | 15,678 | | | 17,168 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Tax payable | | | 1,475 | | | 1,242 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Provisions | | | 147 | | | 133 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| | | | 28,278 | | | 26,761 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Non-current liabilities | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Other interest-bearing loans and | 6 | | 7,612 | | | 3,797 |
| borrowings | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Provisions | | | - | | | 225 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Deferred tax liabilities | | | 4,661 | | | 3,882 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| | | | 12,273 | | | 7,904 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Total liabilities | | | 40,551 | | | 34,665 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Net assets | | | 47,779 | | | 42,699 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Equity attributable to shareholders | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Share capital | | | 33,689 | | | 32,655 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Share premium account | | | 6,608 | | | 5,954 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Hedging reserve | | | (481) | | | (195) |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Shares to be issued | | | - | | | 536 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Capital redemption | | | 125 | | | - |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Share option reserve | | | 5,810 | | | - |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Retained earnings | | | 2,028 | | | 3,749 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| Total equity | | | 47,779 | | | 42,699 |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| |
+-----------------------------------------------------------------------------------------+
| | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+---------+
| | | | | | | |
+------------------------------------------+--------+-----+----------+----+-----+---------+
+---------------------------------------------+------+-----+----------+---+------+---------+
| Consolidated Cash Flow Statement | | | | | | |
+---------------------------------------------+------+-----+----------+---+------+---------+
| | | Year ended | | Year ended |
+---------------------------------------------+------+----------------+---+----------------+
| |Note | 31 March 2009 | | 31 March 2008 |
+---------------------------------------------+------+----------------+---+----------------+
| | | | GBP'000 | | | GBP'000 |
| | | | | | | |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Cash flow from operating activities | | | | | | |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Profit for the year | | | 1,440 | | | 1,136 |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Adjustments for: | | | | | | |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Depreciation, amortisation and impairment | | | 2,531 | | | 1,994 |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Financial income | | | (97) | | | (252) |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Financial expenses | | | 704 | | | 783 |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Share-based payment expense | | | 2,814 | | | 2,357 |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Taxation | | | 1,674 | | | 1,013 |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Operating cash flow before changes in | | | 9,066 | | | 7,031 |
| working capital and provisions | | | | | | |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Decrease/(increase) in trade and other | | | 1,631 | | | (1,672) |
| receivables | | | | | | |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Decrease/(increase) in inventories | | | 594 | | | (334) |
+---------------------------------------------+------+-----+----------+---+------+---------+
| (Decrease)/increase in trade and other | | | (2,929) | | | 4,021 |
| payables | | | | | | |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Cash generated from operations | | | 8,362 | | | 9,046 |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Interest received | | | 97 | | | 252 |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Interest paid | | | (530) | | | (717) |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Tax paid | | | (2,207) | | | (1,194) |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Net cash flow from operating activities | | | 5,722 | | | 7,387 |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Cash flows from investing activities | | | | | | |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Proceeds from sale of property, plant and | | | 6 | | | 10 |
| equipment | | | | | | |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Acquisitions of subsidiaries, net of cash | 5 | | (7,610) | | | (8,021) |
| acquired | | | | | | |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Payment of contingent consideration for prior year | | (3,566) | | | - |
| acquisitions | | | | | |
+----------------------------------------------------+-----+----------+---+------+---------+
| Acquisition of intangible assets | | | (105) | | | - |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Acquisition of property, plant and | | | (283) | | | (747) |
| equipment | | | | | | |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Net cash outflow from investing activities | | | (11,558) | | | (8,758) |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Cash flows from financing activities | | | | | | |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Proceeds from new loan and draw down of | | | 6,600 | | | - |
| bank facilities | | | | | | |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Proceeds from the issue of new share | | | - | | | 9,463 |
| capital | | | | | | |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Repayment of borrowings | | | (2,268) | | | (5,894) |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Payments to redeem share capital | | | (178) | | | - |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Net cash inflow from financing activities | | | 4,154 | | | 3,569 |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Net (decrease)/increase in cash and cash | | | (1,682) | | | 2,198 |
| equivalents | | | | | | |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Cash and cash equivalents at beginning of | | | 5,103 | | | 2,905 |
| year | | | | | | |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Cash and cash equivalents at end of year | | | 3,421 | | | 5,103 |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Cash and cash equivalents comprise: | | | | | | |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Cash at bank and in hand | | | 12,227 | | | 12,004 |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Bank overdrafts | 6 | | (8,806) | | | (6,901) |
+---------------------------------------------+------+-----+----------+---+------+---------+
| Cash and cash equivalents at end of year | | | 3,421 | | | 5,103 |
+---------------------------------------------+------+-----+----------+---+------+---------+
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| Consolidated Statement of Changes in Equity | | | | | | | | |
| | | | | | | | | |
+--------------------------------------------------------------------+--+------------+--+---------+--+----------+--+---------+
| | Share | | Share | | Hedging | | Shares | | Capital | | Share | | Retained | | Total |
| | capital | | premium | | reserve | | to be | | redemption | | option | | earnings | | |
| | | | account | | | | issued | | reserve | | reserve | | | | |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | | | | | | | | | |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| At 1 April 2007 | 25,063 | | 2,986 | | - | | 500 | | - | | - | | 291 | | 28,840 |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| Retained earnings | - | | - | | - | | - | | - | | - | | 1,136 | | 1,136 |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| Cash flow hedges | - | | - | | (195) | | - | | - | | - | | - | | (195) |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| Total recognised | - | | - | | (195) | | - | | - | | - | | 1,136 | | 941 |
| income and | | | | | | | | | | | | | | | |
| expense | | | | | | | | | | | | | | | |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| Allotment of 50p | 7,592 | | 2,968 | | - | | - | | - | | - | | - | | 10,560 |
| ordinary shares | | | | | | | | | | | | | | | |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| Credit in respect | - | | - | | - | | - | | - | | - | | 2,322 | | 2,322 |
| of share- | | | | | | | | | | | | | | | |
| based payments | | | | | | | | | | | | | | | |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| Shares to be | - | | - | | - | | 36 | | - | | - | | - | | 36 |
| issued | | | | | | | | | | | | | | | |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| At 31 March 2008 | 32,655 | | 5,954 | | (195) | | 536 | | - | | - | | 3,749 | | 42,699 |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| Retained earnings | - | | - | | - | | - | | - | | - | | 1,440 | | 1,440 |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| Cash flow hedges | - | | - | | (286) | | - | | - | | - | | - | | (286) |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| Total recognised | - | | - | | (286) | | - | | - | | - | | 1,440 | | 1,154 |
| income and | | | | | | | | | | | | | | | |
| expense | | | | | | | | | | | | | | | |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| Allotment of 50p | 1,159 | | 667 | | - | | - | | - | | - | | - | | 1,826 |
| ordinary shares | | | | | | | | | | | | | | | |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| Transfer | - | | (13) | | - | | - | | - | | - | | 13 | | - |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| Credit in respect | - | | - | | - | | - | | - | | - | | 2,814 | | 2,814 |
| of share- | | | | | | | | | | | | | | | |
| based payments | | | | | | | | | | | | | | | |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| Transfer to share | - | | - | | - | | - | | - | | 5,810 | | (5,810) | | - |
| option reserve | | | | | | | | | | | | | | | |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| Share buy back | (125) | | - | | - | | - | | - | | - | | (53) | | (178) |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| Capital | - | | - | | - | | - | | 125 | | - | | (125) | | - |
| redemption | | | | | | | | | | | | | | | |
| reserve | | | | | | | | | | | | | | | |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| Release of | - | | - | | - | | (536) | | - | | - | | - | | (536) |
| reserve | | | | | | | | | | | | | | | |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
| At 31 March 2009 | 33,689 | | 6,608 | | (481) | | - | | 125 | | 5,810 | | 2,028 | | 47,779 |
+-------------------+---------+--+---------+--+---------+--+---------+--+------------+--+---------+--+----------+--+---------+
Notes to the Consolidated Financial Statements
1 Accounting policies
Digital Marketing Group plc is a Company incorporated in the UK.
The consolidated financial statements consolidate those of the Company and its
subsidiaries (together referred to as the "Group").
The consolidated financial statements have been prepared and approved by the
Directors in accordance with International Financial Reporting Standards as
adopted by the EU ("Adopted IFRSs"). The consolidated financial statements have
been prepared under the historical cost convention.
The accounting policies set out below have, unless otherwise stated, been
applied consistently to all periods presented in these consolidated financial
statements.
Judgements made by the Directors in the application of these accounting policies
that have a significant effect on the consolidated financial statements together
with estimates with a significant risk of material adjustment in the next year
are discussed in note 8.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control exists when the Group
has the power, directly or indirectly, to govern the financial and operating
policies of an entity so as to obtain benefits from its activities. In assessing
control, potential voting rights that are currently exercisable or convertible
are taken into account. The financial statements of subsidiaries are included in
the consolidated financial statements from the date that control commences until
the date that control ceases. Transactions between Group companies are
eliminated on consolidation.
Revenue
Revenue for all business segments other than media planning and buying comprises
income earned in respect of amounts billed, and is stated exclusive of VAT,
sales tax and trade discounts. Revenue is recognised on long-term contracts if
their final outcome can be assessed with reasonable certainty, by including in
the income statement revenue and related costs as contract activity progresses.
Media planning and buying
Revenue comprises gross billings to customers relating to media placements and
fees for advertising services. Revenue may consist of various arrangements
involving commissions, fees, incentive-based revenue or a combination of the
three, as agreed upon with each client.
Revenue is recognised when the service is performed, in accordance with the
terms of the contractual arrangement. Incentive-based revenue typically
comprises both quantitative and qualitative elements; on the element related to
quantitative targets, revenue is recognised when the quantitative targets have
been achieved; on elements related to qualitative targets, revenue is recognised
when the incentive is receivable.
Foreign currency
Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated at
the foreign exchange rate ruling at that date. Foreign exchange differences
arising on translation are recognised in the income statement.
Going concern
The Directors have reviewed the forecasts for 2009/10 and 2010/11 which have
been adjusted to take account of the current trading environment. The Directors
consider the forecasts to be prudent and have assessed the impact of them on the
Group's cash flow, facilities and headroom within its banking covenants.
Further, the Directors have assessed the future funding requirements of the
Group and compared them with the level of available borrowing facilities. Based
on this work, the Directors are satisfied that the Group has adequate resources
to continue in operational existence for the foreseeable future. For this reason
they continue to adopt the going concern basis in preparing the financial
statements.
Classification of financial instruments issued by the Group
Financial instruments issued by the Group are treated as equity (i.e. forming
part of shareholders' funds) only to the extent that they meet the following two
conditions:
* they include no contractual obligations upon the Company (or Group as the case
may be) to deliver cash or other financial assets or to exchange financial
assets or financial liabilities with another party under conditions that are
potentially unfavourable to the Company (or Group); and
* where the instrument will or may be settled in the Company's own equity
instruments, it is either a non-derivative that includes no obligation to
deliver a variable number of the Company's own equity instruments or is a
derivative that will be settled by the Company's exchanging a fixed amount of
cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the items are classified as a
financial liability. Where the instrument so classified takes the legal form of
the Company's own shares, the amounts presented in these financial statements
for called up share capital and share premium account exclude amounts in
relation to those shares.
Finance payments associated with financial liabilities are dealt with as part of
finance expenses. Finance payments associated with financial instruments that
are classified in equity are dividends and are recorded directly in equity.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation.
Where parts of an item of property, plant and equipment have different useful
lives they are accounted for as separate items of property, plant and equipment.
Depreciation is charged to the income statement on a straight-line basis over
the estimated useful lives of each part of an item of property, plant and
equipment. Land is not depreciated. Assets are considered to have GBPnil
residual value. The estimated useful lives are as follows:
* Freehold buildings 40 years
* Leasehold improvements over period of lease
* Motor vehicles 4 years
* Office equipment 3 - 5 years
It has been assumed that all assets will be used until the end of their economic
life.
Intangible assets and goodwill
All business combinations are accounted for by applying the purchase method.
Goodwill represents the difference between the cost of the acquisition and the
fair value of the identifiable assets acquired. Identifiable intangibles are
those which can be sold separately or which arise from legal or contractual
rights regardless of whether those rights are separable, and are initially
recognised at fair value.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is
allocated to cash-generating units and is not amortised but is tested annually
for impairment.
Other intangible assets that are acquired by the Group are stated at cost less
accumulated amortisation and accumulated impairment losses.
Amortisation is charged to the income statement on a straight-line basis over
the estimated useful lives of intangible assets unless such lives are
indefinite. Intangible assets with an indefinite useful life and goodwill are
systematically tested for impairment at each balance sheet date. Other
intangible assets are amortised from the date they are available for use. The
estimated useful lives are as follows:
* Customer relationships8 to 12 years
* Order backlog 0.5 years
Impairment
For goodwill that has an indefinite useful life, the recoverable amount is
estimated annually. For other assets the recoverable amount is only estimated
when there is an indication that an impairment may have occurred. The
recoverable amount is the fair value in use.
An impairment loss is recognised whenever the carrying amount of an asset or its
cash-generating unit exceeds its recoverable amount. Impairment losses are
recognised in the income statement.
Impairment losses recognised in respect of cash-generating units are allocated
first to reduce the carrying amount of any goodwill allocated to the
cash-generating unit and then to reduce the carrying amount of the other assets
in the unit on a pro rata basis. A cash generating unit is the smallest
identifiable group of assets that generates cash inflows that are largely
independent of the cash inflows from other assets or groups of assets.
Inventories
Work in progress is valued on the basis of direct costs plus attributable
overheads based on normal level of activity on a first in first out basis.
Provision is made for any foreseeable losses where appropriate. No element of
profit is included in the valuation of work in progress.
Employee benefits
Defined contribution plans
Obligations for contributions to defined contribution pension plans are
recognised as an expense in the income statement as incurred.
Share-based payment transactions
The fair value at the date of grant of share based remuneration is calculated
using a trinomial pricing model and charged to the income statement on a
straight line basis over the vesting period of the award. The charge to the
income statement takes account of the estimated number of shares that will vest.
All share based remuneration is equity settled. Provision is made for national
insurance when the Group is committed to settle this liability. The charge to
the income statement takes account of the options expected to vest, is deemed to
arise over the vesting period and is discounted.
Provisions
A provision is recognised in the balance sheet when the Group has a present
legal or constructive obligation as a result of a past event, and it is probable
that an outflow of economic benefits will be required to settle the obligation.
If the effect is material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market assessments of
the time value of money and, where appropriate, the risks specific to the
liability.
Expenses
Operating lease payments
Operating leases are leases in which substantially not all the risks and rewards
of ownership related to the asset are transferred to the Group.
Payments made under operating leases are recognised in the income statement on a
straight-line basis over the term of the lease. Lease incentives received are
recognised in the income statement as an integral part of the total lease
expense.
Net financing costs
Net financing costs comprise interest payable and interest receivable on funds
invested. Interest income and interest payable are recognised in the
consolidated income statement as they accrue using the effective interest
method.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax
is recognised in the income statement except to the extent that it relates to
items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the balance sheet date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used
for taxation purposes. The following temporary differences are not provided for:
* the initial recognition of goodwill;
* the initial recognition of assets or liabilities that affect neither accounting
nor taxable profit other than in a business combination;
* differences relating to investments in subsidiaries to the extent that they will
probably not reverse in the foreseeable future;
The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised.
Financial assets
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank
borrowings that are repayable on demand and form an integral part of the Group's
cash management are included as a component of cash and cash equivalents for the
purpose only of the statement of cash flows.
Trade and other receivables
Trade and other receivables are initially recorded at fair value and thereafter
are measured at amortised cost using the effective interest rate method. A
provision for impairment is made where there is objective evidence (including
customers with financial difficulties or in default on payments) that amounts
will not be recovered in accordance with the original terms of the agreement. A
provision for impairment is established when the carrying value of the
receivable exceeds the present value of the future cash flow discounted using
the original effective interest rate. The carrying value of the receivable is
reduced through the use of an allowance account and any impairment loss is
recognised in the income statement.
Financial derivatives
The Group uses derivative financial instruments to hedge its exposure to risks
arising from operational, financing and investment activities. Derivative
financial instruments are recognised at fair value. The only hedge at 31 March
2009 was an interest rate swap in respect of certain bank borrowings. In
accordance with treasury policy, the Group does not hold or issue derivative
financial instruments for trading purposes.
To qualify for hedge accounting, the hedging relationship must meet several
strict conditions with respect to documentation, probability of occurrence,
hedge effectiveness and reliability of measurement. To the extent that the
hedge is effective the gain or loss on re-measurement to fair value is reflected
in equity within the hedging reserve. At the time the hedged item affects the
profit or loss, any gain previously recognised in equity is released to the
income statement.If the hedging becomes ineffective, any related gain or loss
recognised in equity is immediately transferred to the income statement. Any
ineffectiveness in the hedge relationship is charged immediately to the income
statement.
Financial liabilities
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost with any difference
between cost and redemption value being recognised in the income statement over
the period of the borrowings on an effective interest basis.
Trade and other payables
Trade payables are initially recorded at fair value and thereafter at amortised
cost using the effective interest rate method.
Segmental reporting
The Group's primary reporting format is business segments and its secondary
format is geographical segments.
Future changes in accounting policies - standards issued but not yet effective
A revised IAS 1 "Presentation of Financial Statements" was issued in September
2007 and becomes effective for financial years beginning on or after 1 January
2009. The revision is aimed at improving users' ability to analyse and compare
the information given in the financial statements, and will mean a significant
change to the format of the primary statements.
A revised IAS 23 "Borrowing Costs" was issued in March 2007 and becomes
effective for financial years beginning on or after 1 January 2009. The standard
has been revised to require capitalisation of borrowing costs when such costs
relate to a qualifying asset. A qualifying asset is an asset that necessarily
takes a substantial period of time to get ready for its intended use or sale.
The Group expects that this interpretation will have no effect on the financial
position or performance of the Group.
Amendment to IAS 32 "Financial Instruments: Presentation" and IAS 1
"Presentation of Financial Statements - Puttable Financial Instruments and
Obligations Arising on Liquidation" becomes effective 1 January 2009. This will
not impact the Group's financial statements.
A revision to IAS 27 "Consolidated and Separate Financial Statements" was issued
in 2008 and becomes effective 1 July 2009. It deals with partial disposal of
subsidiaries and will not impact the Group's financial statements.
An amendment to IFRS 2 "Share-Based Payment" becomes effective for accounting
periods beginning on or after 1 July 2009. It aims to bring definition to the
term 'vesting conditions' and 'cancellations', and is not expected to impact the
Group's financial statements.
Amendments to IFRS 1 "First-time Adoption of International Financial Reporting
Standards" and IAS 27 "Consolidated and Separate Financial Statements - Costs of
Investment in a Subsidiary, Jointly Controlled Entity or Associate" become
effective 1 January 2009. This will not impact the Group's financial statements.
Amendment to IAS 39 Financial Instruments: Recognition and Measurement -
Eligible Hedged Items (effective 1 July 2009). IAS 39 establishes the principles
for recognising and measuring financial assets, financial liabilities and some
contracts to buy or sell non-financial items. IAS 39 includes provisions about
the classification of financial instruments, their ongoing measurement
(including when impairment is required), when financial instruments should be
recognised and derecognised and hedge accounting requirements. This will not
impact the Group's financial statements.
Amendment to IFRS 7 Financial Instruments: Disclosures - Improving Disclosures
About Financial Instruments (effective 1 January 2009) will require an entity to
state in tabular form the fair value, amortised cost and amount at which the
investments are actually carried in the financial statements. The amendments
will also require an entity to disclose the effect on profit or loss and equity
if all debt instruments had been accounted for at fair value or at amortised
cost. This will not impact the Group's financial statements.
Embedded Derivatives - Amendments to IAS 39 and IFRIC 9 (effective for annual
periods ending on or after 30 June 2009). This will not impact the Group's
financial statements.
The January 2008 revision to IFRS 3 "Business Combination" will come into effect
from 1 July 2009. Costs of issuing debt or equity instruments are accounted for
under IAS 39. All other costs associated with an acquisition must be expensed
including reimbursements to the acquirer for bearing some of the acquisition
costs. Examples of costs to be expensed include finder's fees; advisory, legal,
accounting, valuations and other professional or consulting fees; and general
administrative costs, including the costs of maintaining an internal
acquisitions department.
IFRS 8 "Operating Segments" becomes effective 1 January 2009. This IFRS requires
entities to disclose information to enable users of its financial statements to
evaluate the nature and financial effects of the business activities in which it
engages. This may result in additional disclosure for the Group but not
materially impact the results of the Group.
IFRIC Interpretation 13 (effective 1 July 2008) deals with customer loyalty. The
interpretation will have no effect on the financial performance of the Group.
IFRIC 15 Agreements for the construction of real estate (effective 1 January
2009). This will not impact the Group's financial statements.
IFRIC 16 Hedges of a net investment in a foreign operation (effective 1 October
2008). This will not impact the Group's financial statements.
IFRIC 17 Distributions of non cash assets to owners (effective 1 July 2009).
This will not impact the Group's financial statements.
IFRIC 18 Transfers of assets from customers (effective prospectively for
transfers on or after 1 July 2009). This will not impact the Group's financial
statements.
2 Segmental reporting
The Group's primary reporting format is business segments and its secondary
format is geographical segments.
The primary reporting segments have changed since the previous year to include
the acquisitions of Cybercom Group UK Limited (CyberDMG) and Gasbox Limited
(GasboxDMG).
The new reporting segments are as follows:
1. 'Online Marketing & Media' (GraphicoDMG, HyperlaunchDMG, InboxDMG, CheezeDMG,
CyberDMG)
2. 'Direct Marketing Services' (DigForFireDMG, GasboxDMG)
3. 'Data Services' (JaywingDMG)
+--------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Continuing operations | | Year ended 31 March 2009 |
+--------------------------+--+----------------------------------------------------------------------------+
| | Online | | Direct | | Data | | Unallocated | | Group |
| | marketing | | marketing | | services | | | | total |
| | & media | | services | | | | | | |
+--------------------------+-------------+--+-------------+--+------------+--+---------------+--+----------+
| | | GBP'000 | | | GBP'000 | | | GBP'000 | | | GBP'000 | | | GBP'000 |
| | | | | | | | | | | | | | | |
+--------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Revenue | | 28,228 | | | 15,022 | | | 15,032 | | | (1,628) | | | 56,654 |
+--------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Direct costs | | (12,194) | | | (2,415) | | | (2,120) | | | 1,628 | | | (15,101) |
+--------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Gross profit | | 16,034 | | | 12,607 | | | 12,912 | | | - | | | 41,553 |
+--------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Other operating income | | 192 | | | - | | | - | | | - | | | 192 |
+--------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Operating expenses | (11,984) | | | (9,907) | | | (8,992) | | | (1,574) | | | (32,457) |
| excluding depreciation, | | | | | | | | | | | | | |
| amortisation and charges | | | | | | | | | | | | | |
| for share options | | | | | | | | | | | | | |
+-----------------------------+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Operating profit before | 4,242 | | | 2,700 | | | 3,920 | | | (1,574) | | | 9,288 |
| depreciation, amortisation | | | | | | | | | | | | | |
| and charges for share | | | | | | | | | | | | | |
| options | | | | | | | | | | | | | |
+-----------------------------+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Depreciation | | (255) | | | (277) | | | (114) | | | (22) | | | (668) |
+--------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Operating profit before | 3,987 | | | 2,423 | | | 3,806 | | | (1,596) | | | 8,620 |
| amortisation and charges | | | | | | | | | | | | | |
| for share options | | | | | | | | | | | | | |
+-----------------------------+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Amortisation | | (990) | | | (334) | | | (539) | | | - | | | (1,863) |
+--------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Charges for share | | (132) | | | (209) | | | (883) | | | (1,812) | | | (3,036) |
| options | | | | | | | | | | | | | | |
+--------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Operating profit | | 2,865 | | | 1,880 | | | 2,384 | | | (3,408) | | | 3,721 |
+--------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Finance income | | | | | | | | | | | | | | 97 |
+--------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Finance costs | | | | | | | | | | | | | | (704) |
+--------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Profit before tax | | | | | | | | | | | | | | 3,114 |
+--------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Taxation | | | | | | | | | | | | | | (1,674) |
+--------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Profit for year from | | | | | | | | | | | | | | 1,440 |
| continuing operations | | | | | | | | | | | | | | |
+--------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| | | | | | | | | | | | | | | |
+--------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
+----------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Continuing operations | | Year ended 31 March 2008 |
+----------------------------+--+----------------------------------------------------------------------------+
| | Online | | Direct | | Data | | Unallocated | | Group |
| | marketing | | marketing | | services | | | | total |
| | & media | | services | | | | | | |
+----------------------------+-------------+--+-------------+--+------------+--+---------------+--+----------+
| | | GBP'000 | | | GBP'000 | | | GBP'000 | | | GBP'000 | | | GBP'000 |
| | | | | | | | | | | | | | | |
+----------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Revenue | | 22,236 | | | 14,758 | | | 15,855 | | | (1,878) | | | 50,971 |
+----------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Direct costs | | (12,209) | | | (3,713) | | | (3,848) | | | 1,878 | | | (17,892) |
+----------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Gross profit | | 10,027 | | | 11,045 | | | 12,007 | | | - | | | 33,079 |
+----------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Other operating income | | 212 | | | - | | | - | | | - | | | 212 |
+----------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Operating expenses excluding | (7,512) | | | (8,676) | | | (8,543) | | | (1,129) | | | (25,860) |
| depreciation, amortisation | | | | | | | | | | | | | |
| and charges for share options | | | | | | | | | | | | | |
+-------------------------------+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Operating profit before | 2,727 | | | 2,369 | | | 3,464 | | | (1,129) | | | 7,431 |
| depreciation, amortisation | | | | | | | | | | | | | |
| and charges for share options | | | | | | | | | | | | | |
+-------------------------------+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Depreciation | | (229) | | | (209) | | | (146) | | | (2) | | | (586) |
+----------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Operating profit before | 2,498 | | | 2,160 | | | 3,318 | | | (1,131) | | | 6,845 |
| amortisation and charges for | | | | | | | | | | | | | |
| share options | | | | | | | | | | | | | |
+-------------------------------+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Amortisation | | (534) | | | (334) | | | (539) | | | - | | | (1,407) |
+----------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Charges for share options | | (94) | | | (412) | | | (671) | | | (1,581) | | | (2,758) |
+----------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Operating profit | | 1,870 | | | 1,414 | | | 2,108 | | | (2,712) | | | 2,680 |
+----------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Finance income | | | | | | | | | | | | | | 252 |
+----------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Finance costs | | | | | | | | | | | | | | (783) |
+----------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Profit before tax | | | | | | | | | | | | | | 2,149 |
+----------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Taxation | | | | | | | | | | | | | | (1,013) |
+----------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| Profit for year from | | | | | | | | | | | | | | 1,136 |
| continuing operations | | | | | | | | | | | | | | |
+----------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
| | | | | | | | | | | | | | | |
+----------------------------+--+----------+--+---+---------+--+--+---------+--+--+---------+--+--+----------+
+-------------+--------+----------+--------+--------+---------+--------+--------+---------+--------+--------+----------+--------+--------+----------+
| | | | | | | | | | | | | | | 31 |
| | | | | | | | | | | | | | | March |
| | | | | | | | | | | | | | | 2009 |
+-------------+--------+----------+--------+--------+---------+--------+--------+---------+--------+--------+----------+--------+--------+----------+
| | Online | | Direct | | Data services | | Unallocated | | Group |
| | marketing & | | marketing | | | | | | total |
| | media | | services | | | | | | |
+-------------+-------------------+--------+------------------+--------+------------------+--------+----------------------------+--------+----------+
| | | GBP'000 | | | GBP'000 | | | GBP'000 | | | GBP'000 | | | GBP'000 |
| | | | | | | | | | | | | | | |
+-------------+--------+----------+--------+--------+---------+--------+--------+---------+--------+--------+----------+--------+--------+----------+
| Assets | | 11,262 | | | 2,730 | | | 5,889 | | | 68,449 | | | 88,330 |
+-------------+--------+----------+--------+--------+---------+--------+--------+---------+--------+--------+----------+--------+--------+----------+
| Liabilities | | (10,734) | | | (4,328) | | | (3,741) | | | (21,748) | | | (40,551) |
+-------------+--------+----------+--------+--------+---------+--------+--------+---------+--------+--------+----------+--------+--------+----------+
| Capital | | 528 | | | (1,598) | | | 2,148 | | | 46,701 | | | 47,779 |
| employed | | | | | | | | | | | | | | |
+-------------+--------+----------+--------+--------+---------+--------+--------+---------+--------+--------+----------+--------+--------+----------+
| | | | | | | | | | | | | | | |
+-------------+--------+----------+--------+--------+---------+--------+--------+---------+--------+--------+----------+--------+--------+----------+
| | | | | | | | | | | | | | | 31 |
| | | | | | | | | | | | | | | March |
| | | | | | | | | | | | | | | 2008 |
+-------------+--------+----------+--------+--------+---------+--------+--------+---------+--------+--------+----------+--------+--------+----------+
| | Online | | Direct | | Data services | | Unallocated | | Group |
| | marketing & | | marketing | | | | | | total |
| | media | | services | | | | | | |
+-------------+-------------------+--------+------------------+--------+------------------+--------+----------------------------+--------+----------+
| | | GBP'000 | | | GBP'000 | | | GBP'000 | | | GBP'000 | | | GBP'000 |
| | | | | | | | | | | | | | | |
+-------------+--------+----------+--------+--------+---------+--------+--------+---------+--------+--------+----------+--------+--------+----------+
| Assets | | 10,548 | | | 2,388 | | | 8,269 | | | 56,159 | | | 77,364 |
+-------------+--------+----------+--------+--------+---------+--------+--------+---------+--------+--------+----------+--------+--------+----------+
| Liabilities | | (11,006) | | | (5,652) | | | (6,272) | | | (11,735) | | | (34,665) |
+-------------+--------+----------+--------+--------+---------+--------+--------+---------+--------+--------+----------+--------+--------+----------+
| Capital | | (458) | | | (3,264) | | | 1,997 | | | 44,424 | | | 42,699 |
| employed | | | | | | | | | | | | | | |
+-------------+--------+----------+--------+--------+---------+--------+--------+---------+--------+--------+----------+--------+--------+----------+
| | | | | | | | | | | | | | | |
+-------------+--------+----------+--------+--------+---------+--------+--------+---------+--------+--------+----------+--------+--------+----------+
| Unallocated assets and liabilities predominantly consist of intangible assets, cash, external borrowings and deferred tax |
| liabilities on intangible assets which have not been allocated to the business segments. |
+-------------+--------+----------+--------+--------+---------+--------+--------+---------+--------+--------+----------+--------+--------+----------+
+--------------------------+----+---------+--+---+---------+--+--+---------+--+--+---------+--+--+---------+
| Capital additions; | Online | | Direct | | Data | | Unallocated | | Group |
| property, plant and | marketing | | marketing | | services | | | | total |
| equipment | & media | | services | | | | | | |
+--------------------------+--------------+--+-------------+--+------------+--+---------------+--+---------+
| | | GBP'000 | | | GBP'000 | | | GBP'000 | | | GBP'000 | | | GBP'000 |
| | | | | | | | | | | | | | | |
+--------------------------+----+---------+--+---+---------+--+--+---------+--+--+---------+--+--+---------+
| Year ended 31 March 2009 | | 115 | | | 83 | | | 77 | | | 8 | | | 283 |
+--------------------------+----+---------+--+---+---------+--+--+---------+--+--+---------+--+--+---------+
| Year ended 31 March 2008 | | 282 | | | 376 | | | 87 | | | 2 | | | 747 |
+--------------------------+----+---------+--+---+---------+--+--+---------+--+--+---------+--+--+---------+
| | | | | | | | | | | | | | | |
+--------------------------+----+---------+--+---+---------+--+--+---------+--+--+---------+--+--+---------+
| Geographical segments | | | | | | | | | | | | | | |
+--------------------------+----+---------+--+---+---------+--+--+---------+--+--+---------+--+--+---------+
| All revenue is derived from, and all assets and liabilities are located in, the | | | |
| United Kingdom. | | | |
+--------------------------+----+---------+--+---+---------+--+--+---------+--+--+---------+--+--+---------+
3 Taxation
+---------------------------------------------------+------+---------+--+-----+----------+
| | Year ended | | Year ended |
+---------------------------------------------------+----------------+--+----------------+
| | 31 March 2009 | | 31 March 2008 |
+---------------------------------------------------+----------------+--+----------------+
| | | GBP'000 | | | GBP'000 |
| | | | | | |
+---------------------------------------------------+------+---------+--+-----+----------+
| Recognised in the consolidated income statement: | | | | | |
+---------------------------------------------------+------+---------+--+-----+----------+
| Current year tax | | 2,160 | | | 1,670 |
+---------------------------------------------------+------+---------+--+-----+----------+
| Origination and reversal of temporary timing | | (486) | | | (657) |
| differences | | | | | |
+---------------------------------------------------+------+---------+--+-----+----------+
| Total tax charge | | 1,674 | | | 1,013 |
+---------------------------------------------------+------+---------+--+-----+----------+
| | | | | | |
+---------------------------------------------------+------+---------+--+-----+----------+
| Reconciliation of total tax charge: | | | | | |
+---------------------------------------------------+------+---------+--+-----+----------+
| Profit before tax | | 3,114 | | | 2,149 |
+---------------------------------------------------+------+---------+--+-----+----------+
| | | | | | |
+---------------------------------------------------+------+---------+--+-----+----------+
| Taxation using the UK Corporation Tax rate of 28% | | 872 | | | 645 |
| (2008: 30%) | | | | | |
+---------------------------------------------------+------+---------+--+-----+----------+
| Effects of: | | | | | |
+---------------------------------------------------+------+---------+--+-----+----------+
| Non-deductible expenses | | 572 | | | 434 |
+---------------------------------------------------+------+---------+--+-----+----------+
| Share based payment charges | | 788 | | | 580 |
+---------------------------------------------------+------+---------+--+-----+----------+
| Depreciation for period in excess of capital | | 74 | | | 54 |
| allowances | | | | | |
+---------------------------------------------------+------+---------+--+-----+----------+
| Other | | (5) | | | - |
+---------------------------------------------------+------+---------+--+-----+----------+
| Prior year adjustment | | (32) | | | (43) |
+---------------------------------------------------+------+---------+--+-----+----------+
| Utilisation of tax losses | | (109) | | | - |
+---------------------------------------------------+------+---------+--+-----+----------+
| Total tax charge | | 2,160 | | | 1,670 |
+---------------------------------------------------+------+---------+--+-----+----------+
| | | | | | |
+---------------------------------------------------+------+---------+--+-----+----------+
4 Earnings per share
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| | | | | |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| | Year ended | Year ended |
+-----------------------------------------------------------------+------------------------+--------------------------+
| | 31 March 2009 | 31 March 2008 |
+-----------------------------------------------------------------+------------------------+--------------------------+
| | | pence per | | pence per |
| | | share | | share |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Basic | | 2.15p | | 1.79p |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Diluted | | 1.92p | | 1.57p |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| | | | | |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Earnings per share have been calculated by dividing the profit attributable to shareholders by the weighted average |
| number of ordinary shares in issue during the year. The calculations of basic and diluted earnings per share are: |
+---------------------------------------------------------------------------------------------------------------------+
| | Year ended | Year ended |
+-----------------------------------------------------------------+------------------------+--------------------------+
| | 31 March 2009 | 31 March 2008 |
+-----------------------------------------------------------------+------------------------+--------------------------+
| | | GBP'000 | | GBP'000 |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| | | | | |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Profit for the year attributable to shareholders | | 1,440 | | 1,136 |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| | | | | |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Weighted average number of ordinary shares in issue: | | Number '000 | | Number '000 |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Basic | | 66,851 | | 63,653 |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Adjustment for share options | | 7,105 | | 5,992 |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Adjustment for warrants | | 66 | | 145 |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Adjustments for shares to be issued | | 168 | | 670 |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Adjustment for contingent shares | | 625 | | 1,739 |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Diluted | | 74,815 | | 72,199 |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| | | | | |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| The dilution in respect of contingent shares is nil at 31 March 2009 as, in accordance with IAS 33, the performance |
| targets for the consideration to be payable have not been met. |
+---------------------------------------------------------------------------------------------------------------------+
| | | | | |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Adjusted earnings per share | | | | |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| | Year ended | Year ended |
+-----------------------------------------------------------------+------------------------+--------------------------+
| | 31 March 2009 | 31 March 2008 |
+-----------------------------------------------------------------+------------------------+--------------------------+
| | | pence per | | pence per |
| | | share | | share |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Basic adjusted earnings per share | | 8.76p | | 7.30p |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Diluted adjusted earnings per share | | 7.82p | | 6.43p |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| | | | | |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Adjusted earnings per share have been calculated by dividing the profit attributable to shareholders before |
| amortisation and charges for share options by the weighted average number of ordinary shares in issue during the |
| year. The numbers used in calculating the basic and diluted adjusted earnings per share are reconciled below: |
+---------------------------------------------------------------------------------------------------------------------+
| | Year ended | Year ended |
+-----------------------------------------------------------------+------------------------+--------------------------+
| | 31 March 2009 | 31 March 2008 |
+-----------------------------------------------------------------+------------------------+--------------------------+
| | | GBP'000 | | GBP'000 |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Profit before tax | | 3,114 | | 2,149 |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Amortisation | | 1,863 | | 1,407 |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Charges for share options | | 3,036 | | 2,758 |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Adjusted profit before tax before amortisation and charges for | | 8,013 | | 6,314 |
| share options | | | | |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Current year tax charge | | (2,160) | | (1,670) |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
| Adjusted profit attributable to shareholders before | | 5,853 | | 4,644 |
| amortisation and charges for share options | | | | |
+-----------------------------------------------------------------+--------+---------------+-----------+--------------+
5 Acquisition of subsidiaries
+---------------------------------------------+------------+---+---------+-------+---+---------+
| During the year the company made two acquisitions of subsidiary companies. Alphanumeric |
| Limited made one acquisition. The net assets acquired, consideration paid, and goodwill |
| arising on acquisition of these subsidiary undertakings are detailed in the following |
| notes. |
+----------------------------------------------------------------------------------------------+
| | | | | | | |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| A summary of these amounts is shown below. | | | | | | |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| | | | | | | |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| Summary of the three acquisitions: | | | | | | |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| | Acquirees' | Fair value | Notes | Acquisition |
| | book value | adjustments | | amounts |
+---------------------------------------------+------------+-------------+-------+-------------+
| | GBP'000 | | GBP'000 | | | GBP'000 |
| | | | | | | |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| Acquirees' net assets at the acquisition | | | | | | |
| date: | | | | | | |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| Other intangible assets | - | | 4,550 | 1 | | 4,550 |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| Property, plant & equipment | 233 | | - | | | 233 |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| Trade and other receivables | 2,590 | | - | | | 2,590 |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| Cash and cash equivalents | 415 | | - | | | 415 |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| Trade and other payables | (1,529) | | - | | | (1,529) |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| Tax payable | (280) | | - | | | (280) |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| Deferred tax | 143 | | (1,274) | 2 | | (1,131) |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| Net identifiable assets and liabilities | 1,572 | | 3,276 | | | 4,848 |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| Goodwill on acquisition | | | | | | 7,602 |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| | | | | | | 12,450 |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| | | | | | | |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| Cash consideration paid (including legal and professional fees of | | | 8,025 |
| GBP470,000) | | | |
+------------------------------------------------------------------------+-------+---+---------+
| Contingent consideration payable in cash or cash and | | | | 4,425 |
| shares | | | | |
+--------------------------------------------------------------+---------+-------+---+---------+
| | | | | | | 12,450 |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| Summary of net cash outflow from | | | | | | |
| acquisitions: | | | | | | |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| Cash paid | | | | | | 8,025 |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| Cash acquired | | | | | | (415) |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| Net cash outflow from acquisitions in the | | | | | | 7,610 |
| year | | | | | | |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| | | | | | | |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| Notes: | | | | | | |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| 1 Valuation of customer relationships. | | | | | | |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| 2 Deferred tax effect of valuation of customer relationships. |
+----------------------------------------------------------------------------------------------+
| | | | | | | |
+---------------------------------------------+------------+---+---------+-------+---+---------+
| All fair values are provisional and will be reviewed within 12 months from the date of |
| acquisition |
+---------------------------------------------+------------+---+---------+-------+---+---------+
+------------------------+--+----------+--+---+----------+--+--+---------+--+----+---------+--+--+----------+
| The results for the Group had the acquisitions during the year been at the beginning of the |
| year can be analysed as follows: |
+-----------------------------------------------------------------------------------------------------------+
| | | | | | | | | | | | | | | |
+------------------------+--+----------+--+---+----------+--+--+---------+--+----+---------+--+--+----------+
| | Online | | Direct | | Data | | Unallocated | | | Group |
| | marketing | | marketing | | services | | and | | | Total |
| | & media | | services | | | | Adjustments | | | |
+------------------------+-------------+--+--------------+--+------------+--+--------------+--+--+----------+
| | | | | | | | | | | | | | | |
+------------------------+--+----------+--+---+----------+--+--+---------+--+----+---------+--+--+----------+
| | | GBP'000 | | | GBP'000 | | | GBP'000 | | | GBP'000 | | | GBP'000 |
| | | | | | | | | | | | | | | |
+------------------------+--+----------+--+---+----------+--+--+---------+--+----+---------+--+--+----------+
| Revenue | | 31,825 | | | 16,610 | | | 15,290 | | | (1,628) | | | 62,097 |
+------------------------+--+----------+--+---+----------+--+--+---------+--+----+---------+--+--+----------+
| Direct costs | | (12,305) | | | (2,415) | | | (2,120) | | | 1,628 | | | (15,212) |
+------------------------+--+----------+--+---+----------+--+--+---------+--+----+---------+--+--+----------+
| Gross profit | | 19,520 | | | 14,195 | | | 13,170 | | | - | | | 46,885 |
+------------------------+--+----------+--+---+----------+--+--+---------+--+----+---------+--+--+----------+
| Operating expenses | (14,771) | | | (11,077) | | | (9,243) | | | (1,573) | | | (36,664) |
| excluding depreciation, | | | | | | | | | | | | | |
| amortisation and charges | | | | | | | | | | | | | |
| for share options | | | | | | | | | | | | | |
+---------------------------+----------+--+---+----------+--+--+---------+--+----+---------+--+--+----------+
| Operating profit before | 4,749 | | | 3,118 | | | 3,927 | | | (1,573) | | | 10,221 |
| depreciation, | | | | | | | | | | | | | |
| amortisation and charges | | | | | | | | | | | | | |
| for share options | | | | | | | | | | | | | |
+---------------------------+----------+--+---+----------+--+--+---------+--+----+---------+--+--+----------+
| | | | | | | | | | | | | | | |
+------------------------+--+----------+--+---+----------+--+--+---------+--+----+---------+--+--+----------+
| | | | | | | | | | | | | | | |
+------------------------+--+----------+--+---+----------+--+--+---------+--+----+---------+--+--+----------+
| Notes | | | | | | | | | | | | | | |
+------------------------+--+----------+--+---+----------+--+--+---------+--+----+---------+--+--+----------+
| This information is based on the management accounts for CyberDMG Limited, Gasbox Limited and |
| Prodant Limited. |
+-----------------------------------------------------------------------------------------------------------+
| | | | | | | | | | | | | | | |
+------------------------+--+----------+--+---+----------+--+--+---------+--+----+---------+--+--+----------+
| | | | | | | | | | | | | | | |
+------------------------+--+----------+--+---+----------+--+--+---------+--+----+---------+--+--+----------+
| | | | | | | | | | | | | | | |
+------------------------+--+----------+--+---+----------+--+--+---------+--+----+---------+--+--+----------+
CyberDMG Limited
On 2 October 2008 the Group acquired all of the ordinary shares in Cybercom
Group UK Limited (CyberDMG) for cash consideration of GBP6,469,000 (including
legal and professional fees of GBP277,000) and contingent consideration payable
in cash or shares of GBP3,000,000. In the period since acquisition, the
subsidiary contributed GBP394,894 to the consolidated profit attributable to
shareholders for the year ended 31 March 2009.
+--------------------------------------------------+------------+---+---------+----+---------+
| The assets and liabilities of CyberDMG acquired were as | | | |
| follows: | | | |
+-------------------------------------------------------------------+---------+----+---------+
| | | | | | |
+--------------------------------------------------+------------+---+---------+----+---------+
| | Acquirees' | Fair value | Acquisition |
| | book value | adjustments | amounts |
+--------------------------------------------------+------------+-------------+--------------+
| | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | |
+--------------------------------------------------+------------+---+---------+----+---------+
| Acquirees' net assets at the acquisition date: | | | | | |
+--------------------------------------------------+------------+---+---------+----+---------+
| Other intangible assets | - | | 4,550 | | 4,550 |
+--------------------------------------------------+------------+---+---------+----+---------+
| Property, plant & equipment | 76 | | - | | 76 |
+--------------------------------------------------+------------+---+---------+----+---------+
| Trade and other receivables | 2,117 | | - | | 2,117 |
+--------------------------------------------------+------------+---+---------+----+---------+
| Cash and cash equivalents | 96 | | - | | 96 |
+--------------------------------------------------+------------+---+---------+----+---------+
| Trade and other payables | (1,093) | | - | | (1,093) |
+--------------------------------------------------+------------+---+---------+----+---------+
| Tax payable | (153) | | - | | (153) |
+--------------------------------------------------+------------+---+---------+----+---------+
| Deferred tax | - | | (1,274) | | (1,274) |
+--------------------------------------------------+------------+---+---------+----+---------+
| Net identifiable assets and liabilities | 1,043 | | 3,276 | | 4,319 |
+--------------------------------------------------+------------+---+---------+----+---------+
| Goodwill on acquisition | | | | | 5,150 |
+--------------------------------------------------+------------+---+---------+----+---------+
| | | | | | 9,469 |
+--------------------------------------------------+------------+---+---------+----+---------+
| | | | | | |
+--------------------------------------------------+------------+---+---------+----+---------+
| Cash consideration paid (including legal and professional | | | | 6,469 |
| fees of GBP227,000) | | | | |
+---------------------------------------------------------------+---+---------+----+---------+
| Contingent consideration payable in cash or | | | | | 3,000 |
| shares | | | | | |
+--------------------------------------------------+------------+---+---------+----+---------+
| | | | | | 9,469 |
+--------------------------------------------------+------------+---+---------+----+---------+
| Summary of net cash outflow from acquisitions: | | | | | |
+--------------------------------------------------+------------+---+---------+----+---------+
| Cash paid | | | | | 6,469 |
+--------------------------------------------------+------------+---+---------+----+---------+
| Cash acquired | | | | | (96) |
+--------------------------------------------------+------------+---+---------+----+---------+
| Net cash outflow | | | | | 6,373 |
+--------------------------------------------------+------------+---+---------+----+---------+
| | | | | | |
+--------------------------------------------------+------------+---+---------+----+---------+
GasboxDMG
On 2 October 2008 the Group acquired all of the ordinary shares in Gasbox
Limited (GasboxDMG) for cash consideration of GBP1,332,000 (including legal and
professional fees of GBP222,000) and contingent consideration payable in cash of
GBP1,325,000. In the period since acquisition, the subsidiary contributed
GBP163,876 to the consolidated profit attributable to shareholders for the year
ended 31 March 2009.
+--------------------------------------------------+------------+---+---------+----+---------+
| The assets and liabilities of GasboxDMG acquired were as follows: | | |
+-----------------------------------------------------------------------------+----+---------+
| | | | | | |
+--------------------------------------------------+------------+---+---------+----+---------+
| | Acquirees' | Fair value | Acquisition |
| | book value | adjustments | amounts |
+--------------------------------------------------+------------+-------------+--------------+
| | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | |
+--------------------------------------------------+------------+---+---------+----+---------+
| Acquirees' net assets at the acquisition date: | | | | | |
+--------------------------------------------------+------------+---+---------+----+---------+
| Property, plant & equipment | 141 | | - | | 141 |
+--------------------------------------------------+------------+---+---------+----+---------+
| Trade and other receivables | 376 | | - | | 376 |
+--------------------------------------------------+------------+---+---------+----+---------+
| Cash and cash equivalents | 309 | | - | | 309 |
+--------------------------------------------------+------------+---+---------+----+---------+
| Trade and other payables | (400) | | - | | (400) |
+--------------------------------------------------+------------+---+---------+----+---------+
| Tax payable | (95) | | - | | (95) |
+--------------------------------------------------+------------+---+---------+----+---------+
| Deferred tax | 144 | | - | | 144 |
+--------------------------------------------------+------------+---+---------+----+---------+
| Net identifiable assets and liabilities | 475 | | - | | 475 |
+--------------------------------------------------+------------+---+---------+----+---------+
| Goodwill on acquisition | | | | | 2,182 |
+--------------------------------------------------+------------+---+---------+----+---------+
| | | | | | 2,657 |
+--------------------------------------------------+------------+---+---------+----+---------+
| | | | | | |
+--------------------------------------------------+------------+---+---------+----+---------+
| Cash consideration paid (including legal and professional | | | | 1,332 |
| fees of GBP222,000) | | | | |
+---------------------------------------------------------------+---+---------+----+---------+
| Contingent consideration payable in cash | | | | | 1,325 |
+--------------------------------------------------+------------+---+---------+----+---------+
| | | | | | 2,657 |
+--------------------------------------------------+------------+---+---------+----+---------+
| Summary of net cash outflow from acquisitions: | | | | | |
+--------------------------------------------------+------------+---+---------+----+---------+
| Cash paid | | | | | 1,332 |
+--------------------------------------------------+------------+---+---------+----+---------+
| Cash acquired | | | | | (309) |
+--------------------------------------------------+------------+---+---------+----+---------+
| Net cash outflow | | | | | 1,023 |
+--------------------------------------------------+------------+---+---------+----+---------+
Prodant Limited
On 2 October 2008 Alphanumeric Limited, a wholly owned subsidiary of the Group,
acquired all of the ordinary shares in Prodant Limited for cash consideration of
GBP224,000 (including legal and professional fees of GBP21,000) and contingent
consideration payable in cash of GBP100,000. In the period since acquisition,
the subsidiary contributed GBP103,305 to the consolidated profit attributable to
shareholders for the year ended 31 March 2009.
+--------------------------------------------------+------------+---+---------+----+---------+
| The assets and liabilities of Prodant Limited acquired were as follows: | | |
+-----------------------------------------------------------------------------+----+---------+
| | | | | | |
+--------------------------------------------------+------------+---+---------+----+---------+
| | Acquirees' | Fair value | Acquisition |
| | book value | adjustments | amounts |
+--------------------------------------------------+------------+-------------+--------------+
| | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | |
+--------------------------------------------------+------------+---+---------+----+---------+
| Acquirees' net assets at the acquisition date: | | | | | |
+--------------------------------------------------+------------+---+---------+----+---------+
| Property, plant & equipment | 16 | | - | | 16 |
+--------------------------------------------------+------------+---+---------+----+---------+
| Trade and other receivables | 97 | | - | | 97 |
+--------------------------------------------------+------------+---+---------+----+---------+
| Cash and cash equivalents | 10 | | - | | 10 |
+--------------------------------------------------+------------+---+---------+----+---------+
| Trade and other payables | (36) | | - | | (36) |
+--------------------------------------------------+------------+---+---------+----+---------+
| Tax payable | (32) | | - | | (32) |
+--------------------------------------------------+------------+---+---------+----+---------+
| Deferred tax | (1) | | - | | (1) |
+--------------------------------------------------+------------+---+---------+----+---------+
| Net identifiable assets and liabilities | 54 | | - | | 54 |
+--------------------------------------------------+------------+---+---------+----+---------+
| Goodwill on acquisition | | | | | 270 |
+--------------------------------------------------+------------+---+---------+----+---------+
| | | | | | 324 |
+--------------------------------------------------+------------+---+---------+----+---------+
| | | | | | |
+--------------------------------------------------+------------+---+---------+----+---------+
| Cash consideration paid (including legal and professional | | | | 224 |
| fees of GBP21,000) | | | | |
+---------------------------------------------------------------+---+---------+----+---------+
| Contingent consideration payable in cash | | | | | 100 |
+--------------------------------------------------+------------+---+---------+----+---------+
| | | | | | 324 |
+--------------------------------------------------+------------+---+---------+----+---------+
| Summary of net cash outflow from acquisitions: | | | | | |
+--------------------------------------------------+------------+---+---------+----+---------+
| Cash paid | | | | | 224 |
+--------------------------------------------------+------------+---+---------+----+---------+
| Cash acquired | | | | | (10) |
+--------------------------------------------------+------------+---+---------+----+---------+
| Net cash outflow | | | | | 214 |
+--------------------------------------------------+------------+---+---------+----+---------+
6 Bank overdraft, loans and borrowings
+------------------------------------------------+--+------+-----+-+------+-+--+---+-----+-+-+-+-+
| | | 31 March 2009 | 31 March |
| | | | 2008 |
+------------------------------------------------+---------+----------------+----------------+
| | | | GBP'000 | | | GBP'000 |
| | | | | | | |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| Summary | | | | | | |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| Bank overdraft | | | 8,806 | | | 6,901 |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| Borrowings | | | 9,303 | | | 4,919 |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| | | | 18,109 | | | 11,820 |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| Borrowings are repayable as follows: | | | | | | |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| Within 1 year | | | | | | |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| Bank overdraft | | | 8,806 | | | 6,901 |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| Borrowings | | | 1,984 | | | 1,453 |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| Total due within 1 year | | | 10,790 | | | 8,354 |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| Less future interest | | | (293) | | | (331) |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| Total due within 1 year | | | 10,497 | | | 8,023 |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| | | | | | | |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| In more than 1 year but not more than 2 years | | | 1,928 | | | 1,373 |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| In more than 2 years but not more than 3 years | | | 6,021 | | | 1,299 |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| In more than 3 years but not more than 4 years | | | - | | | 952 |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| In more than 4 years but not more than 5 years | | | - | | | 112 |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| Over 5 years | | | - | | | 645 |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| Total due in more than 1 year | | | 7,949 | | | 4,381 |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| Less future interest | | | (337) | | | (584) |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| Total due in more than 1 year | | | 7,612 | | | 3,797 |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| | | | | | | |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| Average interest rates at the balance sheet | GBP'000 | | % | | | % |
| date were: | | | | | | |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| | | | | | | |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| Overdraft | 8,806 | | 5.00 | | | 7.50 |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| Term loan | 3,056 | | 2.96 | | | 7.30 |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| Term loan | 1,667 | | 3.46 | | | - |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| Revolver loan | 4,800 | | 3.46 | | | - |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| Mortgage | nil | | - | | | 7.00 |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| | | | | | | |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| | | | | | | |
+------------------------------------------------+---------+-----+----------+--+---+---------+
| As the loans are at variable market rates their carrying amount is equivalent to | |
| their fair value. | |
+------------------------------------------------------------------------------------------+-----+
| | |
+------------------------------------------------------------------------------------------+-----+
| In 2007 the Group purchased an interest rate swap of 6.19% for the period 2007 to 2012 |
| for GBP4,000,000 of its borrowings. |
+------------------------------------------------------------------------------------------------+
| | |
+------------------------------------------------------------------------------------------+-----+
| The borrowing facilities available to the Group at 31 March 2009 was GBP13.02 million |
| (2008: GBP11.34m) and, taking into account cash balances within the Group companies, |
| there were GBP6.92 million (2008: GBP11.27m) of available borrowing facilities. |
+------------------------------------------------------------------------------------------------+
| | | | | | | |
+---------------------------------------------------+------+-------+------+----+---------+-----+
| A composite accounting system is set up with the Group's bankers, which allows debit |
| balances on overdrafts to be offset across the Group with credit balances. |
+------------------------------------------------+--+------+-----+-+------+-+--+---+-----+-+-+-+-+
Reconciliation of net debt
+----------------------------------+-----------+-----------+-----------+-----------+
| | 1 April | Cash flow | Non-cash | 31 March |
| | 2008 | | Items | 2009 |
+----------------------------------+-----------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+----------------------------------+-----------+-----------+-----------+-----------+
| Cash at bank and in hand | 12,004 | 223 | - | 12,227 |
+----------------------------------+-----------+-----------+-----------+-----------+
| Overdraft | (6,901) | (1,905) | - | (8,806) |
+----------------------------------+-----------+-----------+-----------+-----------+
| | 5,103 | (1,682) | - | 3,421 |
+----------------------------------+-----------+-----------+-----------+-----------+
| Borrowings | (4,919) | (4,332) | (52) | (9,303) |
+----------------------------------+-----------+-----------+-----------+-----------+
| Net cash/(debt) | 184 | (6,014) | (52) | (5,882) |
+----------------------------------+-----------+-----------+-----------+-----------+
7 Contingent liabilities
Acquisitions by the Group may involve an earn-out agreement whereby the
consideration payable includes a deferred element of cash or shares or both
which is contingent on the future financial performance of the acquired entity.
The maximum liability is GBP9,300,000 (2008: GBP1,600,000) and the Directors
have provided GBP4,425,000 (2008: GBP1,600,000), leaving GBP4,675,000 (2008:
GBPnil) as an unprovided liability.
The amounts provided for are payable as follows:
+---------------------------------------------------+--+------------+----+--+-------------+
| | 31 March 2009 | | 31 March 2008 |
+---------------------------------------------------+---------------+----+----------------+
| | | GBP'000 | | | GBP'000 |
+---------------------------------------------------+--+------------+----+--+-------------+
| In one year or less | | 600 | | | 1,600 |
+---------------------------------------------------+--+------------+----+--+-------------+
| In more than one year but less than five years | | 3,825 | | | - |
+---------------------------------------------------+--+------------+----+--+-------------+
| | | 4,425 | | | 1,600 |
+---------------------------------------------------+--+------------+----+--+-------------+
| | | | | | |
+---------------------------------------------------+--+------------+----+--+-------------+
| The amounts provided have not been discounted. | | | | | |
+---------------------------------------------------+--+------------+----+--+-------------+
8 Accounting estimates and judgements
Impairment of goodwill
The carrying amount of goodwill is GBP47,051,000 (2008: GBP39,449,000). The
Directors are confident that the carrying amount of goodwill is fairly stated,
and have carried out an impairment review.
Other intangible assets
The valuation of customer lists is based on key assumptions which the Directors
have assessed, and are satisfied that the carrying value of these assets is
fairly stated.
Share-based payment
The share based payment charge consists of two charges.
A charge for the fair value at the date of grant of the share base remuneration
calculated using a trinomial pricing model. In considering an appropriate
charge, the Directors commissioned an independent valuation from American
Appraisal UK Limited and have fully adopted their findings and accordingly a
charge of GBP2,814,000 has been made in the year (2008: GBP2,357,000).
During the previous year the Group transferred the liability to settle the
Employer's NI from the share option holder to the Group. As a result the Group
has charged GBP222,000 (2008: GBP402,000) in the year as an additional share
based payment charge. The future Employer's NI liability has been discounted
over the three year period using a discount rate of 10%.
Fair values on acquisition
The Directors have assessed the fair value of assets and liabilities on the
acquisition of the subsidiary companies.
Deferred consideration
The Directors have provided an estimate of the amount payable in respect of
deferred contingent consideration. See note 7.
Recognition of revenue as principal or agent
The Directors consider that they act as a principal in transactions where the
Group assumes the credit risk. Where this is via an agency arrangement and the
Group assumes the credit risk for all billings it therefore recognises gross
billings as revenue.
9 Publication of non-statutory accounts
The financial information set out in this preliminary announcement does not
constitute statutory information as defined in section 240 of the Companies Act
1985.
The summarised balance sheet at 31 March 2009 and the summarised income
statement, summarised cash flow statement and associated notes for the year then
ended have been extracted from the Group's 2009 statutory financial statements
upon which the auditor's opinion is unmodified and does not include any
statement under section 237 of the Companies Act 1985.
Those financial statements have not yet been delivered to the registrar of
companies.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SSFSALSUSESW
Diginfraconacc (LSE:DIGI)
Historical Stock Chart
From Jun 2024 to Jul 2024
Diginfraconacc (LSE:DIGI)
Historical Stock Chart
From Jul 2023 to Jul 2024
