RNS Number:8405H
Datamonitor PLC
24 February 2003
24 February 2003
Datamonitor plc
The premium business information company
Preliminary Results for the 12 months ended 31 December 2002
"Positive EBITDA achieved in second half of the year, ahead of expectations"
HIGHLIGHTS
* Revenue was #31.4m (2001: #35.4m)
* EBITDA* positive at #0.2m in second half of the year, ahead of
expectations. EBITDA loss for the year was #2.1m
* Cost reduction programme delivered annual savings in excess of #4m,
exceeding our initial estimates
* Operating cash flow in the second half was an inflow of #1.1m,
compared to an outflow of #4.3m in the first half. Strong balance sheet
with year end cash of #13.1m
* Sales accelerated in the second half producing an increase in deferred
revenue from #8.1m at the half year to #10.2m (2001: #9.3m) at the year
end.
* Acquisition of ComputerWire in October 2002 and successful turn around
in trading
* Management action has resulted in a reduction in operating losses from
#3.6m in the first half to #1.4m pre exceptional for the second half. The
full year operating loss was #7.2m (2001:#3.7m)
Commenting on the results, Mike Danson, Chief Executive of Datamonitor, said:
"I am pleased by the progress Datamonitor achieved in 2002. A new management
team was appointed in the second half of the year. In spite of tough trading
conditions Datamonitor was EBITDA positive and cash flow positive (before
acquisition) in the second half of the year, ahead of expectations. We have made
a satisfactory start to the current year although there is considerable
uncertainty in the global economy and therefore visibility is limited."
Enquiries
Datamonitor Plc
Tel: 020 7796 4133 on the morning of 24 February
Tel: 020 7675 7000 thereafter
Mike Danson, Chief Executive Officer
Andrew Gilchrist, Finance Director
Hudson Sandler
Tel: 020 7796 4133
Nick Lyon
Noemie de Andia
*EBITDA is defined on page 7 and reconciled on pages 6 and 7.
CHIEF EXECUTIVE'S STATEMENT
I am pleased to report that Datamonitor made further progress to profitability
during the year. A new management team was appointed in the second half of the
year and in spite of tough trading conditions Datamonitor was EBITDA positive
and cash flow positive (before acquisition) in the second half of the year,
ahead of expectations. We also completed the acquisition of ComputerWire which,
as a consequence of our actions taken immediately post acquisition, is now on
track to breakeven following loss making under previous ownership.
OPERATIONAL REVIEW
Market conditions in the industries we serve continued to be challenging in the
second half of the year. As a result we implemented a series of initiatives
designed to support sales including new product launches, continued brand
development and the strengthening of our client relationships. We also
maintained our focus on tight cost control and have taken a series of measures
to reduce general and administrative costs and improve our sales operations
across the Group. These initiatives have had a positive impact on the business.
Premium Services
Premium services revenues comprise subscription products and custom solutions
which are characterized by high renewal rates and deeply embedded customer
relationships. These revenues are therefore a predictable, high-quality revenue
stream with a substantial deferred revenue bank.
Our long term goal has been for premium services revenue to represent 75% of
total revenue. Premium services revenues now total #23.1m (2001: #24.6m)
representing 73.7% (2001: 69.5%) of our revenue. Excluding the acquisition, 2002
Premium services revenue was #22.5m (2001: #24.6m). The reduction in revenues
was due primarily to the tightening of customer budgets which resulted in a
reduction in discretionary spend, and to action taken to cut out uneconomic
product. We have taken measures to address this environment and sales growth has
improved in the second half leading to an increase in deferred revenue.
Subscription products remain our largest selling product with 2002 revenue of
#17.7m.
Excluding the acquisition, revenue from subscription products was #17.2m (2001:
#18.2m).
Subscriptions with a contract value exceeding #7,500 had a total value of #14.1m
(2001: #15.7m). The number of customers was 416 (2001:440) and the average
customer value #34,000 (2001: #36,000). Subscription revenue was reduced because
the average contract value was reduced and the number of customers decreased.
We have taken immediate action to strengthen our sales and marketing areas. Our
renewal rate was 60% (31 December 2001: 61% ). Subscriptions with a contract
value under #7,500 was #3.1m (2001: #2.5m).
Custom solutions revenue was #5.4m including a #0.1m contribution from the
acquisition of ComputerWire (2001: #6.4m).
We have taken steps to correct these trends in revenue by replacing senior staff
and strengthening the team. We have also put in place lead referral programmes
and incentive schemes to better motivate our sales force.
Other Information Products - non subscription products
Revenue from other information products was #8.3m (2001: #10.8m) representing
26.3% (2001: 30.5%) of Group revenue. Other information product revenues
represent revenue from single copy report sales and revenue derived through
distribution agreements with third parties. These revenues were lower than 2001
levels due to the same two factors noted above, namely some product
rationalisation and a tightening of customer budgets.
Continued Brand Development
We have continued to invest in the development of the Datamonitor brand as we
believe that having a strong brand, synonymous with quality data and insightful
analysis, will prove a significant advantage for the development of the business
going forward.
Datamonitor appeared in the press over 10,000 times during 2002. Throughout
Europe alone, the Datamonitor name currently appears on average 30 times a day
across all media and the brand name is in front of a minimum of 3% of the UK
adult population on a daily basis. Appearing with such regularity, and across
prestigious broadcast channels such as CNN, BBC and Sky, means that the brand
has high visibility and has built a reputation for leading research among both
the business and journalist communities. In the US we regularly feature in the
Wall Street Journal and New York Times. Particular achievements in 2002 included
Datamonitor's first appearances on two of the UK's leading news and current
affairs programming strands - Panorama and Channel 4 News.
Operational initiatives
Datamonitor recognises that strong cost control is key especially in the current
difficult market. As a result we have continued to identify areas across the
business where costs can be managed more tightly. Having reduced headcount in
most areas in the first half we have focussed on cutting general and
administrative costs in the second half of the year. As a consequence we have
delivered annual savings in excess of #4m, ahead of expectations.
Further cost reduction programmes and revenue initiatives are in place. In
January 2003 we centralised our sales and marketing teams to optimise sales,
provide better control and to enable us to impose more uniform standards and
targets. The benefits of this reorganisation will start to come through as cross
business unit sales and team based selling increase. We expect efficiency gains
to be achieved through reducing administration duties for our sales staff and
centralising administration activities. Motivation within the sales team has
already improved.
Expanding International Presence
We have opened new offices in Tokyo and San Francisco in the second half of the
year. We now have 20 agreements in place with overseas distributors against 2 in
2001. We have also set up partnerships with key countries including India, China
and Korea, thereby increasing Datamonitor's presence in these markets.
Acquisition of ComputerWire
Datamonitor acquired ComputerWire in October 2002 for #0.7m. ComputerWire
specialises in providing business news and analysis on the technology sector
through a variety of publications, including the monthly magazine Computer
Business Review, as well as research and advisory services. The business has a
very strong product with a good mix of subscription and database revenues and
well-respected brand. ComputerWire's strong databases and sector coverage makes
it a good strategic fit with our Technology business.
We are encouraged by the performance of ComputerWire in its first full quarter
as part of the Datamonitor Group. The business was turned around from its
loss-making position under previous ownership and is now trading close to break
even as our cost reduction programme and our renewed focus on sales are starting
to bear fruit.
PEOPLE
The turnaround in our trading performance in the second half of the year is due
to the tremendous effort put in by our colleagues across the business and the
Board would like to thank them for their contribution during the year.
Datamonitor will continue to recruit and retain colleagues and management of the
highest calibre. To this end we have put in place a number of incentive plans,
ranging from bonuses through to equity plans, designed to reward outstanding
performance. Further share options were issued to senior colleagues and
management during the year to incentivise and tie them into the Company. A total
of 1,387,000 Datamonitor shares were acquired by senior colleagues in 2002 and
we are pleased to confirm that Geoffrey Cullinan, a non-executive director,
acquired 200,000 shares in the period.
BOARD CHANGES
Bernard Cragg was appointed non-executive Chairman with effect from 10 February
2003. Bernard was Group Finance Director of Carlton Communications PLC from 1987
to 2002 having joined the company in 1985 as Group Financial Controller. He was
fully involved in the development of the company as well as leading its City and
investor relations activities. He is currently a non-executive director of Bank
of Ireland UK Financial Services Ltd, Bristol and West plc and was a
non-executive director of Arcadia Group until its successful sale in September
2002. The Board is delighted to welcome Bernard and believes that he will play
an important role in the development of Datamonitor.
Andrew Gilchrist was appointed Finance Director and joined the Board on 21
October 2002. The Board is very pleased to welcome Andrew and believes that his
previous experience as finance director of Columbus Group plc, a fully listed
publishing group, will be particularly useful for the future developments of the
Company. Andrew replaced Ian Pratt who left the Company after a short handover
period. The Board would like to thank Ian for his significant contribution
during his time with the Company.
Graham Albutt was appointed non-executive director to the Board by Reuters Group
PLC, on 23 July 2002. Graham Albutt replaces Bradley Hanson, a non-executive
director appointed by Reuters Group PLC in 1998, who has resigned from the
Board. Graham is currently President of the Business Technology Group at
Reuters. Graham's broad experience of the business information industry, gained
over 15 years at Reuters, has already proved of considerable benefit to
Datamonitor. Graham has joined the audit and remuneration committees.
After 8 years service as a non-executive director Geoffrey Cullinan has decided
to retire with effect from the date of the AGM. On behalf of the board and my
colleagues I thank Geoffrey for his dedicated service to Datamonitor and for the
invaluable contribution he has made to the business.
PROSPECTS
The Company continues to make progress and the year has started satisfactorily
although there is considerable uncertainty in the global economy and therefore
visibility is limited. We are investing in our products and industry portfolio
to take advantage of the continuing demand for insightful, relevant and
objective advice.
Mike Danson,
Chief Executive Officer
24 February 2003
FINANCE AND OPERATIONS REPORT
The results for the year can be summarised as follows:
Statement of Operations - unaudited
6 months to 6 months to 6 months to 6 months to 12 months to
June December December December December
2002 2002 2002 2002 2002 2001
Unaudited Unaudited Unaudited audited audited
Existing Existing Acquisition Total Total %
#000s #000s #000s #000s #000s #000s
Premium 11,843 10,665 591 11,256 23,099 73.7% 24,578 69.5%
Services
Non-subscription 3,547 4,391 315 4,706 8,253 26.3% 10,784 30.5%
information
Products
Total revenue 15,390 15,056 906 15,962 31,352 100.0% 35,362 100.0%
Cost of (6,151) (5,387) (284) (5,671) (11,822) 37.7% (13,075) 37.0%
Services
Gross profit 9,239 9,669 622 10,291 19,530 62.3% 22,287 63.0%
Sales & (5,952) (5,065) (420) (5,485) (11,437) 36.5% (12,931) 36.6%
Marketing costs
General & Admin (5,555) (4,394) (217) (4,611) (10,166) 32.4% (10,891) 30.8%
expenses
EBITDA* (2,268) 210 (15) 195 (2,073) 6.6% (1,535) 4.3%
Depreciation & (1,374) (1,501) (42) (1,543) (2,917) 9.3% (1,752) 5.0%
amortisation
(3,642) (1,291) (57) (1,348) (4,990) 15.9% (3,287) 9.3%
Exceptional - (2,183) - (2,183) (2,183) 7.0% (402) 1.1%
items:
Depreciation
and Impairment
charges
2001:
Redundancy
costs
Operating loss (3,642) (3,474) (57) (3,531) (7,173) 22.9% (3,689) 10.4%
Net interest 282 260 - 260 542 1.7% 999 2.8%
received
Loss before (3,360) (3,214) (57) (3,271) (6,631) 21.2% (2,690) 7.6%
taxation
Gross profit in the statement of operations can be reconciled to gross profit
in the financial statements as follows:
2002 2001
#000s #000s
19,530 22,287
Gross profit shown in the statement of
operations
Exceptional costs included in Cost of
Services in the financial statements - (183)
Gross profit per financial statements 19,530 22,104
Exceptional items arose as follows:
Cost of services - 183
Sales and marketing costs - 140
General and administrative expenditure 2,183 79
Total exceptional items 2,183 402
*EBITDA is defined as earnings before interest, tax, depreciation and
amortisation
Summary
Revenue was #31.4m (2001: #35.4m). Sales for the year were #31.6m which included
#0.9m from the ComputerWire acquisition. Excluding the acquisition, first half
sales were #14.4m followed by second half sales of #16.3m. This stronger second
half performance was #1.2m ahead of revenue recognised in the profit and loss
account and led to the recovery in deferred revenue to a balance of #10.2m by
the year end.
The EBITDA loss for the year was #2.1m. Following a first half EBITDA loss of
#2.3m we acted quickly to reduce costs in every area of the business. As a
result of these actions, on-going monthly running costs have been significantly
reduced and the Group was #0.2m EBITDA positive in the second half of the year.
We will continue to take further initiatives to re-engineer the business and
reduce costs further.
The loss before taxation was #6.6m in 2002. This includes depreciation and
amortisation charges of #2.9m and a one-off depreciation and impairment charge
of #2.2m. For 2003 the depreciation should be closer to #1m.
Cost of services and gross profit
Cost of services represents the costs incurred in researching, analysing and
assembling our products and services. The majority of the cost is staff costs
representing the cost of research staff, analysts and consultants. We also
employ temporary staff and contractors and we buy in information.
Gross profit for the year was #19.5m. Excluding the acquisition, gross profit
was #18.9m (2001: #22.3m) and the gross margin (excluding the acquisition)
reduced slightly from 63.0% to 62.1%. The reduction in gross profit and margin
results mainly from the reduction in revenue as cost of services is relatively
fixed in the immediate term. We reduced cost of services selectively, including
eliminating uneconomic products, without affecting the level of client service.
Sales and marketing expenses
Sales and marketing costs were #11.4m in 2002. Excluding the acquisition, sales
and marketing costs were significantly lower at #11.0m (2001: #12.9m). Cost
reductions were achieved through reduced headcount in the first half and through
the reduction of non-essential marketing activity in the second half.
General and administrative expenses
General and administrative expenses were #10.2m. Excluding the acquisition,
general and administrative expenses were significantly lower in 2002 at #9.9m
(2001: #10.9m). We implemented cost reduction programmes to reduce headcount and
other areas of expenditure including property costs. The cost review process is
still ongoing.
Depreciation and amortisation
The profit and loss account carries exceptionally high depreciation and
amortisation of #2.9m and a one-off depreciation and impairment charge of #2.2m
in 2002. After a thorough review of the Group's depreciation policies, the Board
has decided to write down certain fixed assets to reflect a reduction in their
estimated useful economic lives. The assets concerned are application software
and websites purchased and developed in prior years, which were originally
considered to have a three-year estimated useful life. However, following the
reduction in headcount this year and as a result of over engineering occurring
during the development of the technology platform, some of these assets have
become redundant and will be discontinued in 2003. Following the write down, the
2003 depreciation charge will be closer to #1.0m and future years' depreciation
should continue at much lower levels.
Taxation
As a result of the losses incurred in the year, there is no tax charge. The
Group has tax losses of #16.5m carried forward at 31st December 2002 which can
be set against future trading profits. These tax losses are not carried at a
value on our balance sheet.
Balance Sheet
Datamonitor has a strong balance sheet with net assets of #12.6m supported by a
cash balance of #13.1m. The balance sheet is debt free with no loans or
borrowings. It is prepared on a conservative basis, as we expense all product
development costs as they are incurred and recognise revenue on a straight line
basis over the contracted term.
Deferred revenue represents sales made but not yet released to revenue in the
profit and loss account and can therefore be viewed as our forward sales.
Deferred revenue at 31 December 2002 was #10.2m (2001: #9.3m), the highest level
ever achieved by the Group. This balance includes #0.9m of deferred revenue from
ComputerWire, our recent acquisition. Deferred revenue has increased
significantly on the half year balance of #8.1m, following the second half sales
growth, and, excluding the ComputerWire acquisition, the deferred revenue
balance has recovered to the level as at 31 December 2001.
Cash flow and cash balances
The operating cash outflow for the year was #3.2m (2001: cash outflow #1.7m).
Cash balances at 31 December 2002 were #13.1m (31 December 2001: #18.8m).
During the first half of the year cash balances reduced from #18.8m to #13.3m to
fund the operating losses and capital expenditure in the period. Following the
Board changes and the reorganisation that took place in the summer, a new
financial plan and tighter cost controls were introduced. Datamonitor was cash
positive (excluding the ComputerWire acquisition for #0.7m and the purchase of
company shares by the employee share ownership trust for #0.6m) in the second
half of the year. Had we not made these two investments the cash balance would
have grown from #13.3m at the half year to #14.4m at the year end. The improved
cash flow is attributable to the improved trading performance in the second half
of the year and to stricter and more rigorous controls over cash collection and
expenditure. Capital expenditure, excluding the acquisition, was #1.8m (2001:
#4.7m) for the full year but was limited to #0.2m in the second half.
AGM
The Directors will propose a special resolution at the forthcoming AGM in April
2003 requesting shareholder consent to a capital reconstruction to cancel
accumulated losses against the share premium account. Further details will be
sent to shareholders in due course.
Andrew Gilchrist
Finance Director
24 February 2003
Consolidated profit and loss account
for the year ended 31 December 2002
#000 Note 2002 2001
Restated*
Continuing operations Acquisition Total
Turnover 30,446 906 31,352 35,362
Cost of sales
Before exceptional items (11,538) (284) (11,822) (13,075)
Exceptional item - Redundancy Costs 3 - - - (183)
Total cost of sales (11,538) (284) (11,822) (13,258)
Gross profit 18,908 622 19,530 22,104
Sales and marketing costs
Before exceptional items (11,017) (420) (11,437) (12,931)
Administrative expenses
Before exceptional items (12,824) (259) (13,083) (12,643)
Exceptional item - Redundancy Costs 3 - - - (219)
- Depreciation and
impairment charges 3 (2,183) - (2,183) -
Operating loss 4 (7,116) (57) (7,173) (3,689)
Interest receivable and similar income 544 - 544 1,000
Interest payable and similar charges (2) - (2) (1)
Loss on ordinary activities before (6,574) (57) (6,631) (2,690)
taxation
Tax on loss on ordinary activities 5 - - - -
Retained loss for the financial year (6,574) (57) (6,631) (2,690)
Basic loss per ordinary share 6 (9.72p) (3.82p)
Adjusted loss per ordinary share 6 (9.63p) (3.82p)
*See note 1.
Statement of total recognised gains and losses
for the year ended 31 December 2002
#000 2002 2001
Loss on ordinary activities after taxation (6,631) (2,690)
Exchange difference on retranslation of net liabilities of subsidiary undertaking 2 (39)
Total recognised gains and losses relating to the year (6,629) (2,729)
Consolidated balance sheet
at 31 December 2002
#000 Note 2002 2002 2001 2001
Fixed assets
Intangible assets 7 1,268 -
Tangible assets 2,375 5,667
Investments 1,442 843
5,085 6,510
Current assets
Stocks 32 112
Debtors 9,593 8,929
Cash at bank and in hand 13,146 18,817
22,771 27,858
Creditors: amounts falling due within one year (14,866) (14,912)
Net current assets 7,905 12,946
Total assets less current liabilities 12,990 19,456
Provisions for liabilities and charges (417) (254)
Net assets 12,573 19,202
Capital and reserves
Called up share capital 7,040 7,040
Share premium account 28,287 28,287
Profit and loss account (22,754) (16,125)
Equity shareholders' funds 12,573 19,202
Consolidated cash flow statement
for the year ended 31 December 2002
#000 Note 2002 2001
Cash outflow from operating activities 8 (3,176) (1,732)
Returns on investments and servicing of finance 9 542 999
Taxation - 59
Capital expenditure and financial investment 9 (2,370) (5,568)
Purchase of business 10 (695) -
Cash outflow before financing (5,699) (6,242)
Financing 9 - 367
Decrease in cash in the year (5,699) (5,875)
Reconciliation of net cash flow
to movement in net funds
Decrease in cash in the year (5,699) (5,875)
Exchange difference 28 (39)
Movement in net funds in the year (5,671) (5,914)
Net funds at the start of the year 18,817 24,731
Net funds at the end of the year 13,146 18,817
Notes
1 Accounting policies
The following accounting policies have been applied consistently in dealing with
items which are considered material in relation to the Group's financial
statements.
Basis of preparation
The financial statements have been prepared in accordance with the Companies Act
1985 and applicable accounting standards using the historical cost basis of
accounting.
The comparative profit and loss account for the financial year ended 31 December
2001 has been restated to report gross profit before sales and marketing costs
and to disclose sales and marketing costs separately from cost of sales. This
additional disclosure is intended to improve comprehension of the profit and
loss account.
The following new accounting standards have become effective for the first time
this year and have been adopted by the Group:
FRS 19 Deferred tax: FRS 19 requires deferred tax to be recognised in respect of
all timing differences that result in an obligation to pay more tax, or a right
to pay less tax, in the future as a result of past events. There is no effect
from the adoption of FRS 19, as the Group's deferred tax assets are not deemed
recoverable in the foreseeable future.
Goodwill
Goodwill, being the excess of the fair value of the consideration paid over the
fair value attributed to net assets acquired, is capitalised and amortised by
equal instalments through the profit and loss account over its estimated useful
life, which in the case of acquisitions to date is 10 years.
Tangible fixed assets and depreciation
Depreciation is provided to write off the cost less the estimated residual value
of tangible fixed assets by equal instalments over their estimated useful
economic lives as follows:
Leasehold improvements - life of lease
Fixtures, fittings and equipment - 20% per annum
Computer equipment - 33.33% per annum
Impairment
The Group evaluates its fixed assets for impairment where events or
circumstances indicate that the carrying amount of such assets may not be fully
recoverable. When such evaluations indicate that the carrying value of an asset
exceeds its recoverable value, impairment in value is recognised in the profit
and loss account.
Turnover
Turnover represents the amounts earned in the period excluding value added tax
derived from the provision of goods and services to third party customers.
Certain subscription services are invoiced in advance and are provided to
customers over the course of a year or longer period. The resulting deferred
turnover is spread evenly over the remaining contract term.
Dividends and Dividend Policy
We anticipate that we will retain future earnings to fund the development and
growth of the Group's business and, as a result, we do not anticipate paying
cash dividends at present.
2 Segmental information
The Group views its operations and manages its business as principally one
segment, research and analysis. As a result, the financial information
disclosed herein materially represents all of the financial information related
to the Group's principal operating segment.
#000 2002 2001
Turnover
USA 8,435 8,744
Europe 22,917 26,618
31,352 35,362
Operating loss
USA (284) (279)
Europe (6,889) (3,410)
(7,173) (3,689)
Net interest 542 999
Loss on ordinary activities before taxation (6,631) (2,690)
Net assets/(liabilities)
USA (2,125) (1,916)
Europe 14,698 21,118
Total net assets 12,573 19,202
Group turnover is allocated to geographic segments based on the location from
which services are delivered and orders fulfilled. Turnover by destination is
not materially different to turnover by origin. Group operating loss and net
assets/(liabilities) are allocated to the locations which give rise to the
result for the period and net asset/(liability) position.
Net interest arose substantially in Europe.
3 Exceptional items
Redundancy costs
The Group incurred redundancy costs of #402,000 during the last quarter of 2001
as it realigned its cost base in anticipation of reduced revenue growth.
Depreciation and impairment charges
Computer equipment
During 2002 the Company accelerated its depreciation charge in respect of
certain software and hardware costs as those assets were no longer in use and
had been replaced by assets developed internally. The additional charge amounted
to #1,894,000.
Fixtures and fittings
The Group also wrote down the value of certain fixtures and fittings by #158,000
as those assets were of no further use owing to reduced headcount.
Leasehold improvements
The Group incurred an impairment charge of #131,000 in respect of leasehold
improvements to properties that have been vacated.
4 Operating loss
#000 2002 2001
Operating loss is stated after charging
Auditors' remuneration:
Group and company:
- statutory audit 94 89
- interim reviews and non-statutory audits 19 18
- fees paid to the auditor and its associates in respect of other services 9 81
Depreciation and other amounts written off tangible fixed assets:
Owned 4,925 1,762
Leased 1 3
Amortisation of goodwill 32 -
Loss/(profit) on disposal of tangible fixed assets 142 (13)
Exchange losses 281 24
Rentals payable under operating leases 1,682 1,804
Hire of other assets - operating leases 115 70
#000 2002 2001
UK Corporation Tax at 30 % (2001 : 30%) - -
Foreign tax at 35% (2001 : 35%) - -
Tax on loss on ordinary activities - -
#000 2002 2001
Loss on ordinary activities before taxation (6,631) (2,690)
Corporation tax on pre-tax loss at UK nominal rate of 30% (1,989) (807)
Effects of: Expenses not deductible for tax purposes 12 12
Depreciation in excess of capital allowances 978 -
Capital allowances in excess of depreciation - (11)
Amortisation of goodwill 10 -
Loss/(profit) on disposal of fixed assets 34 (4)
Higher rate of tax on overseas losses 11 13
Release of disallowable provision - (12)
Tax losses carried forward 944 809
Current tax for the year - -
There is no UK Corporation tax charge for the year due to the trading losses
incurred. The Group has losses of approximately #16.5 million (Company #14.6
million) available for carry forward against future trading profits at 31
December 2002.
In addition, at 31 December 2002 the Company has an unrecognised gross deferred
tax asset of approximately #1,068,000 arising on the cumulative excess of
depreciation over capital allowances.
6 Loss per share and adjusted loss per share
In order to show results from operating activities on a comparable basis, an
adjusted loss per share has been calculated which excludes amortisation of
goodwill and the retained loss of business acquired.
#000 2002 2001
Loss for the period attributable to shareholders - basic loss per share (6,631) (2,690)
Adjustments:
Amortisation of goodwill 32 -
Retained loss of business acquired 25 -
Adjusted loss (6,574) (2,690)
Weighted average number of shares in issue 70,376,440 70,373,755
Weighted average non-vested shares held by employee share ownership trust (2,126,631) (4,618)
Basic and adjusted loss per share denominator 68,249,809 70,369,137
Basic loss per ordinary share (9.72p) (3.82p)
Adjusted loss per ordinary share (9.63p) (3.82p)
Diluted earnings per share is not disclosed as its computation results in an
anti-dilutive effect.
7 Intangible fixed assets - goodwill
#000
Group and Company
Cost
Additions 1,300
At end of year 1,300
Amortisation
Charge for year 32
At end of year 32
Net book value
At 31 December 2002 1,268
Goodwill arising on acquisition has been capitalised as an intangible asset in
accordance with FRS10 and will be amortised over its estimated useful life which
is 10 years. Details of the acquisition are given in note 10.
8 Reconciliation of operating loss to operating cash flows
#000 2002 2001
Operating loss (7,173) (3,689)
Exceptional item within operating loss 2,183 402
Operating loss before exceptional item (4,990) (3,287)
Depreciation, amortisation and impairment charges 2,775 1,765
Loss/(profit) on disposal of tangible fixed assets 142 (13)
Decrease in stocks 80 47
Increase in debtors (354) (362)
(Decrease) / increase in creditors (992) 266
Increase in provisions for liabilities and charges 163 254
____ ___
(3,176) (1,330)
Outflow related to exceptional item - (402)
Net cash outflow from operating activities (3,176) (1,732)
9 Analysis of cash flows
#000 2002 2001
Returns on investment and servicing of finance
Interest received 544 1,000
Interest paid (2) (1)
Net cash inflow from returns on investment and servicing of finance 542 999
Capital expenditure and financial investment
Purchase of tangible fixed assets (1,771) (4,725)
Purchase of own shares (603) (843)
Sale of own shares 4 -
Net cash outflow from capital expenditure and financial investment (2,370) (5,568)
Financing
Issue of ordinary share capital - 367
Net cash inflow from financing - 367
10 Purchase of business
#000 Book value at Fair value Fair value
acquisition adjustments
Tangible fixed assets 31 - 31
Current assets 350 (40) 310
Deferred revenue (946) - (946)
Net liabilities acquired (565) (40) (605)
Goodwill 1,300
Cash consideration including acquisition costs 695
The acquisition in the year was the purchase of the business of ComputerWire
Group Limited on 11 October. The fair value adjustment was necessary to reduce
the value of trade debt to its recoverable value.
Goodwill arising on the acquisition has been capitalised and is being amortised
by equal instalments through the profit and loss account over its estimated
useful life, which is 10 years.
The last audited published accounts of ComputerWire for the year ended 31 July
2000 reported turnover of #4.7 million and a pre-tax loss of #1.4 million. In
the fourteen months to 30 September 2002 ComputerWire's unaudited management
accounts showed turnover of #4.3 million and a pre-tax loss of #1.2 million.
If ComputerWire's sales intake for the year ended 30 September 2003 exceeds #3.5
million, 50% of the sales intake above #3.5 million will be payable as
additional consideration. Sales intake is not likely to exceed #3.5m. In
addition, if the ComputerWire magazine Computer Business Review is disposed of
before 1 October 2007, Datamonitor will pay 20% of the sale proceeds in excess
of #100,000. There is no present intention to dispose of Computer Business
Review.
The total maximum amount of additional consideration payable is #800,000.
Note to Editors:
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