RNS Number:0015O
Hemscott PLC
28 July 2003
HEMSCOTT PLC
Interim Results for the six months ended 30 June 2003
Hemscott, a leading supplier of high quality business and investment
information, today announces interim results for the six months ended
30 June 2003.
Highlights
Financial
* Revenues in the half year increased by 29% to #3.2 million (2002: #2.5
million)
* EBITDA losses* reduced significantly to #0.3 million (2002: loss #1.2
million)
* Losses before tax more than halved to #0.6 million (2002: loss #1.4
million)
* Loss per share 1.9p (2002: loss 4.5p)
Operational
* Business Information, driven by quality and depth of data and the
supply of bespoke information services, increased turnover by 37%
compared to the same period last year, the sixth consecutive half year
of double digit turnover growth
o Database to be extended with information from Directory of
Directors
o Hemscott Premium service exceeding our expectations
o Continued success and growth of client base for investor
relations website services
* Media revenues stabilised: early signs of a revival in the retail
market were in evidence towards the end of the period and focused
internet advertising is beginning to feature in campaign management
Michael Grade, Chairman of Hemscott, commented:
"Hemscott has demonstrated its strengths through tough market conditions by
continuing to grow its diverse revenue streams and accelerate towards
profitability. We will continue our strategy of growing revenue and product
innovation with tight cost control. It is through these disciplines that
Hemscott continually performs.
We are seeing signs of a recovery in business and investor confidence and
Hemscott is well placed to take advantage of the positive trend."
* EBITDA losses are calculated as operating loss of #755,000 (2002: loss
#1,644,000) adding back depreciation of #326,000 (2002: #297,000) and goodwill
amortisation of #134,000 (2002: #121,000)
28 July 2003
ENQUIRIES
Hemscott plc Tel: 020 7496 0055
Rosalyn Wilton, Chief Executive
College Hill Tel: 020 7457 2020
Matthew Smallwood
CHAIRMAN'S STATEMENT
Introduction
I am delighted to report that the Company has made an excellent start to the
year and has continued to make progress in growing its diverse revenues across
all parts of the business. Losses have reduced by 57% half-year on half-year,
due in part also to tight cost control.
Despite facing the most testing market conditions, the Company is progressing
towards profitability. The company's clear strategy and excellent product base
are at the heart of the valuable Hemscott brand. Hemscott remains financially
strong.
During the period, the Company received an unsolicited offer from Dairy Brands
New Zealand Limited (Dairy Brands), who ultimately acquired a controlling
interest of 50.01% as a result of their bid. The Board understands from Dairy
Brands that they have no current plans to delist Hemscott.
Results
Turnover increased by 29% to #3.2 million (six months to 30 June 2002: #2.5
million) driven by growing revenues in both Business Information and Media. Cost
reductions played their part in the improvement in EBITDA losses down by 76% to
#0.3 million from #1.2 million in the same period last year.
Losses before tax more than halved down to #0.6 million (six months to 30 June
2002: #1.4 million). Gross profit margin improved to 52% from 42% as we
continue to grow revenues without significant increases in costs. Loss per
share was 1.9 pence (six months to 30 June 2002: loss 4.5 pence).
The net cash outflow in the period of #0.9 million, including the #0.35 million
cost of acquiring the Directory of Directors, compares to #1.1 million in the
first half of 2002. Capital expenditure of #0.2 million principally relates to
the software development costs of supporting specific products. Our balance
sheet remains strong with #6.3 million of cash at the half year end which is
equivalent to 19.6p per share.
Business Information
Business Information comprises the sale of Data and Corporate Investor Relations
Websites. Turnover grew 37% to #2.6 million in the six months to 30 June 2003
compared to the same period last year, the sixth consecutive half year period of
double digit revenue growth, a significant achievement.
The key driver behind the success of the business information division has been
the quality and accuracy of our proprietary data, the depth of our database and
our ability to supply bespoke information services. This is a high value,
long-term business. New product launches in the period include Guru Academic, a
customised version of Hemscott Company Guru designed for business schools and
universities.
We augmented our database with the acquisition of the Directory of Directors
completed in January of this year. The 124th edition of the Directory was
published by Hemscott in May and we intend to integrate the information into our
powerful online research tool, Hemscott Company Guru, later this year. Revenue
in the first half of the year has benefited from the seasonal nature of sales of
the Directory around the publication date. Hemscott Premium, our subscription
website has exceeded our expectations in attracting subscribers and it continues
to expand, demonstrating the growing value of the data and the Hemscott brand.
We remain the leader in the supply of corporate investor relations website
services to FTSE 100 and FTSE 250 companies and our emphasis on innovation has
enabled us to increase sales to existing and new customers. We have added two
new graphing solutions to our suite of services; Total Shareholder Return, a
graphing mechanism allowing companies to show their total return on investment,
and Events on Graphs, a share price graph showing regulatory news announcements
by category.
Media
Media comprises revenues from advertising on our website, Hemscott.com, and
Online Publishing. Turnover grew 7% in the period to #0.65 million from #0.6
million in the same period last year. The downturn in stock markets and the
advertising squeeze we experienced in 2002 appears to have stabilised with a
revival of the retail market towards the end of the period. Hemscott's high
quality, sophisticated user base has attracted a wide range of new advertisers
to the site as the Internet is becoming an established means of effective
advertising.
Hemscott Analyst, whose record of investment recommendations on companies has
consistently performed better than the markets, has had an increasing level of
subscriber support in recent months as the market has begun to pick up.
Dairy Brands
During the period Dairy Brands, a company acting by agreement with its
associates Co-operation Retirement Benefit Fund (L) Ltd, Kanawa Ltd, Special
Utilities Investment Trust Plc and Mr Charles Jillings, a Non-Executive Director
of the Company, entered into various transactions leading to Dairy Brands being
required to make a mandatory offer for the entire issued share capital of
Hemscott plc. The independent directors of Hemscott, being all those all those
directors other than Charles Jillings, advised shareholders to take no action
since we believed that the offer of 15 pence per share did not recognise the
full value of the Company. The offer closed on 30 May 2003 and resulted in
Dairy Brands owning 50.01% of the Company (55.08% with its associates).
Prospects
Hemscott has demonstrated its strengths through tough market conditions by
continuing to grow its diverse revenue streams and accelerate towards
profitability. We will continue our strategy of growing revenue and product
innovation with tight cost control. It is through these disciplines that
Hemscott continually performs. We are seeing signs of a recovery in business
and investor confidence and Hemscott is well placed to take advantage of the
positive trend.
Michael Grade
Chairman
28 July 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Period ended Period ended Year ended 31
30 June 2003 30 June 2002 December 2002
(unaudited) (unaudited) (audited)
Note #'000 #'000 #'000
Turnover 2 3,235 2,499 5,157
Cost of sales (1,538) (1,445) (2,809)
Gross profit 1,697 1,054 2,348
Operating expenses inc. goodwill (2,452) (2,698) (5,115)
amortisation
Operating loss (755) (1,644) (2,767)
Interest receivable 139 206 363
Loss on ordinary activities before taxation (616) (1,438) (2,404)
Taxation on ordinary activities - - -
Retained loss for the period (616) (1,438) (2,404)
Loss per ordinary share - basic and diluted 3 (1.9p) (4.5p) (7.5p)
Loss per ordinary share - adjusted 3 (1.5p) (4.1p) (6.7p)
The group's results are derived from continuing operations and acquisitions.
There are no recognised gains or losses other than those shown above.
CONSOLIDATED BALANCE SHEET
At 30 June At 30 June At 31
2003 2002 December 2002
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Fixed assets
Goodwill 1,816 1,813 1,692
Tangible assets 1,102 1,356 1,232
2,918 3,169 2,924
Current assets
Stocks 29 - -
Debtors: amounts falling due within one 1,225 1,005 976
year
Debtors : amounts falling due after more
than one year 502 502 502
Cash at bank and in hand 6,295 8,220 7,242
8,051 9,727 8,720
Creditors: amounts falling due within (4,249) (4,594) (4,308)
one year
Net current assets 3,802 5,133 4,412
Net assets 6,720 8,302 7,336
Capital and reserves
Called-up share capital 1,607 1,607 1,607
Share premium account 9,606 9,606 9,606
Capital redemption reserve 186 186 186
Other reserve (2,596) (2,596) (2,596)
Profit and loss account (2,083) (501) (1,467)
Shareholders' funds - equity 6,720 8,302 7,336
CONSOLIDATED CASH FLOW STATEMENT
Period ended Period ended Year ended 31
30 June 2003 30 June 2002 December 2002
(unaudited) (unaudited) (audited)
Note #'000 #'000 #'000
Net cash outflow from operating activities (657) (1,227) (2,154)
Returns on investments and servicing of finance 151 229 369
Capital expenditure and financial investment (190) (238) (429)
Acquisitions and disposals
Acquisition of business 4 (351) - -
Disposal of investments held for resale 100 100 100
Net cash (outflow)/inflow from acquisitions and (251) 100 100
disposals
Net cash outflow before management of liquid resources
and financing
(947) (1,136) (2,114)
Management of liquid resources
Reduction in short term cash deposits 1,319 1,434 3,852
Net cash inflow from management of liquid resources 1,319 1,434 3,852
Increase in cash 372 298 1,738
RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATIONS
Period ended Period ended Year ended
30 June 2003 30 June 2002 31 December
2002
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Operating loss (755) (1,644) (2,767)
Goodwill amortisation 134 121 242
Depreciation 326 297 633
Movement in working capital (362) (1) (262)
Net cash outflow from operating activities (657) (1,227) (2,154)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
Period ended Period ended Year ended
30 June 2002 31 December
2002
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
(See note 5)
Increase in cash 372 298 1,738
Decrease in liquid resources (1,319) (1,434) (3,852)
Decrease in net funds (947) (1,136) (2,114)
Opening net funds 7,242 9,356 9,356
Closing net funds 6,295 8,220 7,242
NOTES TO THE ACCOUNTS
1. Basis of preparation
The interim financial information for the half year ended 30 June 2003 has been
prepared on the basis of the accounting policies set out in the accounts for the
year ended 31 December 2002. The interim financial statements do not constitute
statutory accounts and are unaudited.
The group's results for the financial year ended 31 December 2002 have been
extracted from the statutory accounts filed with the Registrar of Companies
which contained an unqualified audit report and no adverse statement under
Section 237(2) or (3) of the Companies Act 1985.
2. Segment information
Period ended Period ended Year ended
30 June 2003 30 June 2002 31 December 2002
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Turnover
Business Information 2,584 1,893 3,990
Media 651 606 1,167
3,235 2,499 5,157
Business Information turnover in the period ended 30 June 2003 includes #175,000
relating to the Directory of Directors, a business acquired in January 2003 (see
note 4).
In the opinion of the directors it is not practicable to determine the operating
loss and net assets by business class principally because of the significant
amount of costs shared across all areas of the business.
3. Loss per share
The basic loss per share is calculated by dividing the losses attributable to
ordinary shareholders by the weighted average number of ordinary shares in issue
during the period.
The basic loss per share has been calculated on the loss for the period of
#616,000 (period to 30 June 2002: #1,438,000, year to 31 December 2002:
#2,404,000) and on 32,136,419 (period to 30 June 2002: 32,136,419, year to 31
December 2002: 32,136,419) ordinary shares.
The adjusted loss per share excludes the effect of goodwill amortisation and has
been calculated on the adjusted loss for the period of #482,000 (period to 30
June 2002: #1,317,000, year to 31 December 2002: #2,162,000).
4. Acquisition
On 2 January 2003, the group completed the acquisition of the Directory of
Directors from Reed Business Information Limited, a subsidiary of Reed Elsevier
Group plc. The Directory of Directors, which has been published for 135 years,
is a hard copy publication listing details of the directors of both public and
private companies in the UK. The acquisition included the trademark of the
title and a database of over 12,500 companies and over 38,000 directors.
The consideration for the acquisition of the business and certain associated
assets was #351,000, including acquisition fees of #8,000 and #93,000 for work
in progress on the 2003 edition, paid in cash on completion. Goodwill arising
on the acquisition of #258,000 has been capitalised and will be written off over
10 years.
5. Reconciliation of movement in net funds
At 1 January 2003 Cash flow At 30 June 2003
(audited) (unaudited) (unaudited)
#'000 #'000 #'000
Cash at bank and in hand 2,059 372 2,431
Cash on short term deposit 5,183 (1,319) 3,864
Net funds 7,242 (947) 6,295
This information is provided by RNS
The company news service from the London Stock Exchange
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