RNS Number:9206J
Internet Business Group
14 December 2007
For release: 14 December 2007
Internet Business Group plc
("IBG", the "Company" or the "Group")
PRELIMINARY RESULTS FOR THE
YEAR ENDED 31 OCTOBER 2007
Internet Business Group plc, the AIM listed performance advertising and media
company, is pleased to announce preliminary results for the financial year ended
31 October 2007.
Highlights:
* AffiliateFuture sales increased by 30.8% to �14.293m (2006: �10.928m)
* IBG Media sales increased by 61.8% to �0.660m (2006: �0.408m)
* Net assets increased by 29.2% to �4.401m (2006: �3.407m), including cash
of �1.691m
* Good progress in International divisions
* Recommended offer by TMN Group plc
Maziar Darvish, Chairman of IBG, commented: "IBG remains a growing, profitable
business with a strong balance sheet. Our focus continues to be on growing the
online advertising and media operations both in the UK and international
markets."
"We are pleased to announce the recommended offer by TMN Group plc. As this
offer is equity based, shareholders have the opportunity to gain from the
potential upside offered by IBG, as part of a larger Media and Marketing
services organisation."
On outlook, he added: "Trading since year-end has been in line with management
expectations and we look forward to the deployment of our new technologies and
platforms to support continued growth."
For further information please contact:
Internet Business Group plc Tavistock Communication Limited
Maziar Darvish, Chairman Matt Ridsdale
020 7927 8102 / 07967 039 693 020 7920 3150
Strand Partners Limited St Helen's Capital plc
James Harris Ruari McGirr
020 7409 3494 020 7628 5582
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report IBG's results for the financial year ended 31 October
2007.
Financial Review
Turnover for the period increased by 23% to �16.44m (2006: �13.40m). This
resulted in an increase of 29% in profit before share based charges,
depreciation, interest, tax, amortisation and movement in investments to �1.560m
(2006: �1.208m). During the period under review IBG's net asset value increased
to �4.40m (2006: �3.41m). An overview of the financial performance of the Group
is provided below.
Year
Year ended
ended 31 October 2006
31 October 2007 (Restatement of
(Audited) audited accounts)
�'000 �'000
Turnover 16,442 13,404
Profit before interest,
tax, depreciation and
amortisation 1,560 1,208
Normalised Profit1 1,402 1,103
Share based payments2 (105) (25)
Impairment / amortisation
of intangible assets 3 (258) (97)
Investments4 (117) 110
Profit before tax 922 1091
Basic earnings per share 1.17p 1.49p
Fully diluted earnings per 1.16p 1.47p
share
Normalised Earnings per
share5 1.84p 1.52p
1 Normalised profit excludes IFRS share based charges, movements in the
Company's investments and IFRS amortisation of acquired intangible assets.
2 These figures represent the IFRS share based payment charges to the profit &
loss account.
3 These figures represent the amortisation of acquired intangible assets over a
5 year period. These charges are in line with a new accounting policy adopted
by the Group in line with IFRS requirements.
4 These figures represent the movement in the value of the Company's investments
during a given period. The investments comprise of a holding of 0.2% in Ten
Alps plc (value as at 31 October 2007 of �65,681) as well as a historic loan
to the Company's employee benefit trust, which holds 750,000 ordinary shares
of Internet Business Group plc.
5 Calculated by dividing the Normalised profit (which excludes IFRS share based
charges, movements in the Company's investments and IFRS amortisation of
acquired intangible assets) by the weighted average number of shares in the
period of 76,201,896 (2006: 72,565,151)
A segmental breakdown of the Group's financial performance is provided below:
Divisional Breakdown
Hosting & Central Inter
Advertising E-Commerce Media Services Overheads Company Total
�'000 �'000 �'000 �'000 �'000 �'000 �'000
Turnover 14,293 1,695 660 270 - (476) 16,442
Percentage of
total turnover 87% 10% 4% 2% - (3%) 100%
Earnings before
interest, tax,
depreciation,
amortisation and
central overheads 2,183 22 434 112 (1,191) - 1,560
Amortisation of
intangible assets 12 - 246 - - 258
Profit/(loss)
before taxation 2,176 11 131 105 (1,501) - 922
Analysis of Financial Performance by Division
In addition to restatements relating to IFRS compliance, the 2006 comparative
figures (below) have been amended to reflect a small (under �40,000)
inter-divisional re-allocation attributable to operations in Spain.
Advertising Year ended 31 % change
Year ended 31 October 2006
October 2007 (restated)
�'000 �'000
Turnover (including
inter-company sales) 14,293 10,928 31%
Gross profit margin 22% 21%
Earnings before interest, tax,
depreciation and amortisation
and central overheads 2,183 1,622 35%
Amortisation of intangible
assets (12) (7)
Divisional profit before
central overheads 2,176 1,631 33%
Media Year ended 31 % change
Year ended 31 October 2006
October 2007 (restated)
�'000 �'000
Turnover (including 660 408 62%
inter-company sales)
Gross profit margin 77% 56%
Earnings before interest, tax,
depreciation, amortisation &
central overheads 434 129 236%
Amortisation of intangible
assets (246) (76)
Divisional profit before
central overheads 131 51 157%
E-commerce Year ended 31 % change
Year ended 31 October 2006
October 2007 (restated)
�'000 �'000
Turnover 1,695 2,133 (21%)
Gross profit margin 22% 23%
Earnings before interest, tax,
depreciation and amortisation
and central overheads 22 143 (85%)
Divisional profit before
central overheads 11 106 (90%)
Analysis of Financial Performance by Region
A segmental breakdown of the trading performance for the year ended 31 of
October 2007 by geography is given below:
Inter
UK Americas Europe company Total
�'000 �'000 �'000 �'000 �'000
Turnover 15,935 802 181 (476) 16,442
Percentage of
total turnover 97% 5% 1% (3%) 100%
Profit before
interest,
tax, depreciation
and
amortisation 1,533 21 6 1,560
Amortisation of
intangible assets (246) (12) - (258)
Profit before
taxation 908 8 6 922
Business Review
Performance Advertising - AffiliateFuture (http://www.AffiliateFuture.com)
The Board believes that the 2007 financial year has been a transitional period
for AffiliateFuture and despite recording significant sales growth of 31% to
�14.293m (2006:10.928m), the result was below our initial expectations. The
planned technical recruitment, investment in the development of new user
interfaces as well as an upgraded platform were brought forward from the 2008
financial year to the late stages of the 2007 financial year. These new
developments remain at a beta-test stage, but their availability to a much wider
range of clients and publishers is expected shortly.
The improved platform, coupled with continuing advances being made in our
portfolio of travel-related affiliate offerings and further functionality,
planned for the 2008 financial year, is expected to underpin the continued
growth in the AffiliateFuture division.
IBG Media
The year to 31 October 2007 represents the first full financial year of
operations for IBG Media in its current form, with its own website assets.
During this time, significant progress has been made, with sales during the
period up 62% to �0.66m (2006: �0.41m). Gross margins were 77% (2006: 56%)
CheapHolidayDeals.co.uk, IBG Media's flagship website, has continued to expand
the range of destinations covered and saw the launch of a dedicated Ski Holidays
channel. In addition, the last minute holidays section of the site was
significantly improved. Reviews.CheapHolidayDeals.co.uk was also launched in the
period and represents the Company's first foray into the area of user generated
content.
Henoo.com, originally a proof of concept site for AffiliateFuture's travel
services, has undergone further development during the period with the launch of
a new hotel search beta in the first week of the new financial year.
Additionally, work is currently underway to launch new flight search
functionality on the site. This has taken place in tandem with the development
and testing of the new functionality within the AffiliateFuture travel web
services. IBG Media has also completed the first phase of commercial testing for
the Henoo.com Handpicked offering, which is broadcast to a quarter of a million
consumers and is planning to launch a revised offering in the first quarter of
the 2008 financial year.
During the period under review, IBG Media made its first non-travel related
acquisition, Net Free Stuff. The name has been used to launch initial offerings
in the US, Spanish and Australian markets. Whilst these sites are at a very
early stage of commercial development, they do provide IBG with experience of
operating media websites outside of the UK.
IBG Media has now established itself as a core part of the Group and the Board
looks forward to its continuing development over the coming years.
E-commerce
In the Group's 2006 preliminary results statement, the Board highlighted its
expectation that the contribution of IBG's E-commerce business was expected to
decline in the 2007 financial year. This decline is largely attributable to
focusing Group resources towards its Advertising and Media operations. Whilst
the new management and processes put in place in the first half of the 2007
financial year have started to have a positive effect on the performance of the
division, sales for the period under review declined 21% to �1.695m (2006:
�2.133m).
The key objectives during the year for the E-Commerce division were to introduce
a separate management team and re-locate operations in order to separate the
division from the Advertising and Media divisions. I am pleased to report that
these objectives have been achieved and with restructuring now complete, the
focus within this division has returned to sales and marketing.
Given the growing divergence between our E-commerce activities and our
Advertising and Media operations, the Board will be evaluating strategic options
for the E-Commerce business during the 2008 financial year.
International
I am very pleased to report that, in our International Division, the Board's
objectives for the 2007 financial year have all been met.
Our AffiliateFuture business in the US demonstrated strong growth and remains
profitable. Sales for the period grew an impressive 102.6% to �0.758m. This
progress is particularly pleasing as we achieved this growth despite the
negative impact of weakness in the US Dollar.
In Spain, the AffiliateFuture network is now operational and attracting both
advertisers and publishers.
Also during the period, IBG Media has made its first launches in the Australian,
US and Spanish markets utilising the Net Free Stuff brand and the progress to
date has been pleasing.
The Board expects further significant progress to be made in IBG's international
offerings during the course of the 2008 financial year.
Recommended Offer
The Company today announced that the boards of IBG and TMN Group plc had reached
agreement on the terms of a recommended offer by TMN Group plc to acquire the
entire issued and to be issued share capital of IBG to be effected by way of a
Court approved scheme of arrangement under section 425 of the Companies Act 1985
(the "Offer"). A separate announcement containing details of the Offer has been
issued today.
Outlook
Current trading remains in line with management expectations. I would like to
take this opportunity to thank all staff who have worked so hard to deliver
another solid year of progress for the Group.
Maziar Darvish
Chairman
14 December 2007
AUDITED CONSOLIDATED INCOME STATEMENT
Year
Ended 31
October 2006
Year (Restatement of
Ended 31 audited
October 2007 accounts)
�'000 �'000
Turnover 16,442 13,404
Cost of sales (12,287) (10,433)
--------------------------------
Gross profit 4,155 2,971
Administration expenses (3,012) (1,819)
Amortisation of intangible assets (258) (97)
--------------------------------
Operating profit 885 1,055
Interest receivable (net) 37 36
--------------------------------
Profit on ordinary activities before
taxation 922 1,091
Taxation (34) (13)
--------------------------------
Profit on ordinary activities after
taxation 888 1,078
--------------------------------
Retained profit for the period 888 1,078
================================
Basic earnings per share 1.17p 1.49p
Fully diluted earnings per share 1.16p 1.47p
AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Other Retained Total
Capital Premium Reserves Earnings Equity
�'000 �'000 �'000 �'000 �'000
Balance at 1
November 2005 721 4,597 81 (3,909) 1,490
Profit for the
year ended 31
October 2006 - - - 1,078 1,078
Share based
payments - - 25 - 25
Shares issued 46 766 - - 812
Transfer of
revaluation
reserve - - (75) 75 -
Foreign currency
reserve - - 2 - 2
Balance at 31
October 2006 767 5,363 33 (2,756) 3,407
Profit for the
year ended 31
October 2007 - - - 888 888
Shares issued 5 10 - - 15
Share based
payments - - 105 - 105
Foreign currency
reserve - - (14) - (14)
Balance at 31
October 2007 772 5,373 124 (1,868) 4,401
AUDITED CONSOLIDATED BALANCE SHEET
Year
ended
Year 31 October 2006
ended (Restatement of
31 October audited
2007 accounts)
�'000 �'000
Non-current assets
Intangible assets 1,242 1,178
Tangible assets 576 415
Investments 234 350
----------------------------
2,052 1,943
Current assets
Stock 415 506
Trade and other receivables 2,388 1,588
Cash at bank 1,691 1,375
----------------------------
4,494 3,469
Current liabilities
Trade and other payables (2,145) (2,005)
----------------------------
Net current assets 2,349 1,464
Net assets 4,401 3,407
============================
Share capital and reserves
Called up share capital 772 767
Share premium account 5,373 5,363
Other reserves 124 33
Profit and loss account (1,868) (2,756)
----------------------------
Total equity 4,401 3,407
============================
AUDITED CONSOLIDATED CASHFLOW STATEMENT
Year
ended
Year 31 October 2006
ended (Restatement of
31 October audited
2007 accounts)
�'000 �'000
Cash generated from operations 943 930
Cash flow from investing activities
Interest received 37 36
Purchase of assets and investments (679) (1,481)
----------------------------
Net cash used in investing activities (642) (1,445)
Cash flows from financing activities
Shares issued 15 813
----------------------------
Net cash from financing activities 15 813
Net increase in cash and cash equivalents 316 298
Cash and cash equivalents at the beginning
of the period 1,375 1,077
Cash and cash equivalents at the end of the ----------------------------
period 1,691 1,375
============================
Reconciliation of operating profit to net cash Inflow from operating activities
Year
ended
Year 31 October 2006
ended (Restatement of
31 October audited
2007 accounts)
�'000 �'000
Profit before taxation 922 1,091
Depreciation charge 138 59
Amortisation of intangible assets 315 180
Share scheme charges 105 26
Write off/back of impairment of investment 117 (110)
Net finance income (37) (36)
Operating cash flow before changes in
working capital 1,560 1,210
Increase in debtors (800) (857)
Decrease/(increase) in stock 91 (153)
Increase in creditors 106 729
Other reserves (14) 1
----------------------------
Cash generated from operations 943 930
============================
NOTES TO THE PRELIMINARY ACCOUNTS
FOR THE YEAR ENDED 31 OCTOBER 2007
1. Nature of financial information
The financial information contained in this document does not constitute
statutory accounts within the meaning of section 240 of the Companies Act 1985.
The financial information for 2006 is derived from the statutory
accounts for 2006 which have been delivered to the registrar of companies,
restated to take into account the adoption of IFRS. A reconciliation of all
changes can be found in note 7. The auditors have reported on the 2006 accounts;
their report was unqualified and did not contain a statement under section 237
(2) or (3) of the Companies Act 1985. The statutory accounts for 2007 will be
finalised on the basis of the financial information presented by the directors
in this preliminary announcement and will be delivered to the registrar of
companies in due course
2. Board approval
The preliminary results for the year end 31 October 2007 were approved by the
board of directors on 13 December 2007.
3. Earnings per share
Basic profit per share is calculated based on the profit on ordinary activities
after tax and minority interests divided by the weighted average number of
shares in issue being 76,201,896 (2006: 72,565,151).
The calculation of diluted profit per share is based on a weighted average
number of shares in issue of 76,344,811 (2006: 73,300,372). This is comprised of
142,915 shares (2006: 735,220 shares) to factor in the dilutive effect arising
from the potential exercise of options under the Company's executive share
option scheme.
4. Gains and losses
The Company had no recognised gains or losses in either the current or preceding
periods other than the profit for the period.
5. Issue of shares
During the period employees exercised 500,000 1p ordinary shares at an exercise
price of 2.875p. At 31 October 2007 the issued number of shares in the Company
was 77,190,800.
6. Segmental reporting
The Group's primary segmental breakdown is according to divisions and is set out
in the chairman's statement under the heading divisional breakdown.
7. Basis of preparation: IFRS
The financial information for the year ended 31 October 2007 is audited but does
not constitute statutory accounts. The adoption of IFRS did not result in
substantial changes to the Group's accounting policies under UK GAAP and as set
out in the Group's financial statements for the year ended 31 October 2006. In
summary:
* The adoption of IFRS 2 'Share based payment' has resulted in a change
in accounting policy for share based payment. Under UK GAAP the provision of
share based payments to employees did not result in a charge to the income
statement. Under IFRS, the Group charges the cost of share based payments to
the Income statement over the vesting period.
* The adoption of IFRS 3 'Business Combinations' and IAS36 'Impairment of
Assets' have resulted in a change in the accounting policy for goodwill. Under
UK GAAP, the Group had a policy of amortising goodwill on a straight line
basis over a period of 5 years coupled with a review for possible impairment
at each balance sheet date. In accordance with the provisions of IFRS 3, the
Group amortises acquired intangible assets over 5 years and conducts annual
impairment reviews.
This preliminary results have been prepared according to IFRS and for
comparative purposes the financial information for the year ended 31 October
2006 has been restated.
This restatement to IFRS had the effect of reducing retained earnings as of 31
October 2005 by �6,216, as a result of share based payments for periods before 1
November 2005. For the year ended 31 October 2006, restated profits were reduced
by �24,663 due to share based payments.
As per the accounting policy changes regarding capitalisation of self generated
assets and the acquisitions of consumer database records equated to the
capitalisation of �254,611 of salaries as well as �37,744 relating to
acquisitions of database records in the year ended 31 October 2007.
The reconciliation of the restatement of comparable figures from UK GAAP to IFRS
is provided below.
Reconciliation of Profit
As at end of 31 October 2006
(end of last period presented under UK GAAP)
Transition Under
UK GAAP to IFRS IFRS
�'000 �'000 �'000
Turnover 13,405 13,405
Cost of Sales (10,434) (10,434)
-------------------------------
Gross profit 2,971 2,971
Administration Expenses (1,891) (25) (1,916)
Operating Profit 1,080 1,055
Net Finance income 36 36
Profit before taxation 1,116 1,091
Taxation (13) (13)
Profit for the period 1,103 1,078
EPS 1.52p 0.03p 1.49p
Diluted EPS 1.50p 0.03p 1.47p
Profit UK GAAP 1,103
Share based payments (25)
Profit IFRS 1,078
Reconciliation of Equity
At 31 October 2006
At 1 November 2005 End of last period
period presented under
Date of Transition UK GAAP
Opening Opening
IFRS IFRS
Effect
of Balance Effect Balance
UK GAAP IFRS sheet UK GAAP of IFRS sheet
�'000 �'000 �'000 �'000 �'000 �'000
Fixed Assets
Tangible Assets 333 333 414 414
Intangible Assets 83 83 1,178 1,178
Investments 175 175 351 351
-----------------------------------------------------------
591 0 591 1,943 1,943
Current Assets
Stock 353 353 506 506
Debtors 731 731 1,588 1,588
Cash at bank 1,077 1,077 1,375 1,375
-----------------------------------------------------------
2,161 0 2,161 3,469 3,469
Current
Liabilities (1,262) 0 (1,262) (2,005) (2,005)
Net Assets 1,490 0 1,490 3,407 3,407
Share
Capital 721 721 767 767
Share
premium 4,597 4,597 5,363 5,363
Other
Reserves 75 6 81 2 31 33
Retained
earnings (3,903) (6) (3,909) (2,725) (31) (2,756)
Equity 1,490 0 1,490 3,407 3,407
Total equity
Uk GAAP 1,490 3,407
Total equity
IFRS 1,490 3,407
This information is provided by RNS
The company news service from the London Stock Exchange
END
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