TIDMRNOW
RNS Number : 5975M
Research Now plc
02 February 2009
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| Date: | Embargoed until 07.00am, Monday 2 February 2009 |
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| Contact: | Chris Havemann (Chief Executive Officer) |
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| | Nathan Runnicles (Chief Financial Officer) |
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| | Research Now |
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| | Tel: +44 (0)20 7921 2400 |
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| | Corporate Website: www.researchnow.co.uk |
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| | Alistair Mackinnon-Musson | Mark Williams |
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| | Nathan Field | Henry Fitzgerald-O'Connor |
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| | Hudson Sandler | Canaccord Adams |
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| | Tel: +44 (0)20 7796 4133 | Tel: + 44 (0)20 7050 6500 |
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| | Email: rn@hspr.com | |
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Research Now plc
Preliminary Results
The Board of Research Now, the international online fieldwork and panel
specialist, is pleased to announce its audited Preliminary Results for the year
ended 31 October 2008.
Highlights
* Group revenues of GBP41.2m, up 60% (2007: GBP25.8m)
* Underlying revenue growth of 40%
* Repeat business generated 83% of revenues
* Client numbers grew from 750 in 2007 to over 1,000 in 2008
* Operating profit of GBP6.3m (2007: GBP2.3m), with margins increased to 15.3%
* Profit before tax of GBP5.7m, up from GBP0.3m in 2007
* Basic EPS of 21.8p (2007: 3.2p loss per share)
* Adjusted basic EPS of 23.9p, an increase of 100.8% (2007: 11.9p)*
* Strong free cash flow of GBP6.5 million after 2007's GBP0.4m outflow
* Debt free with year end cash of GBP7.8m (2007: GBP2.5m net debt)
* Panels operating across 36 countries and 411 staff in 7 countries
* Good start to 2009
Commenting, Chris Havemann, Chief Executive said:
"This past year has been hugely successful for Research Now. During 2008, we
achieved financial results significantly ahead of expectations and consolidated
our position as one of the leading global players in the online survey fieldwork
industry.
We have had a good start to trading in the new financial year but, like most
companies today, are naturally cautious about extrapolating these positive
results. We remain focused on managing our operations to achieve profitable
growth in 2009."
* Adjusted for 2007's non-recurring item, and the interest accretion and foreign
currency translation adjustment on contingent consideration in both 2007 and
2008.
Chairman's Statement
I am delighted to report on a year of significant achievement for Research Now.
The financial year which ended on 31 October 2008 was one in which our three
strategic objectives - establishing the company as a major global player in our
market, investing in the best people and delivering first class client service -
came together to deliver an outstanding set of financial results.
Group turnover for the year increased by 59.5% to GBP41.2m, compared to GBP25.8m
in the previous year. This revenue growth represents not only the benefits of
the continuing trend for researchers to use online fieldwork solutions but also,
we believe, an increasing market share for Research Now. Indeed, during 2008, we
consolidated our leadership position in Europe and Canada, became the leading
provider in Australia and continued to see strong growth in the USA.
Our financial performance in the year was particularly impressive in terms of
both profit and cash generation. Operating profit was up 123.2% at GBP6.3m,
representing an operating profit margin of 15.3% against last year's adjusted
operating profit of GBP2.8m and 10.9% margin. Cash flow was very encouraging:
operating cash flow after spending on our proprietary panel network and fixed
assets was GBP6.5m. These results reflect the benefit of the investments made in
the four key areas of people, systems, products and panels, and I am confident
represent a sound base for further growth.
Thanks to our strong operating cash flow and a share placing in January 2008
that raised GBP7.0m (before expenses), we repaid the debt facility taken out to
part-finance the acquisition of OpenVenue in February 2007 and we ended the 2008
financial year with cash of GBP7.8m.
We continued to see substantial growth in our client base across all the sectors
in which we operate, with a 33% increase in our client base to over 1,000. There
are many positive statistics set out in Chris Havemann's CEO report which attest
to our success in this area, but I would particularly like to pick out the fact
that 83% of our turnover this year came from existing clients, a testimony to
our philosophy of providing outstanding service.
As we announced in our Interim Statement, we introduced a new management
structure on 1 November 2008 whereby three regional Managing Directors now
report to Chris Havemann, with full profit responsibility for results in their
respective geographies. Also reporting to Chris are a number of senior managers
with responsibility for functions that need to be integrated globally such as
panel management, key account management, IT and marketing. We have made good
progress introducing this new approach and I believe that it will be an
important tool in enabling us to achieve the next stage of our growth.
The earn-out for the acquisition of OpenVenue finished on 31 October 2008 and I
am delighted that the founders, Jeff Karry and John Visser, are both staying
with the Group and have stepped up to major roles in our new management
structure.
As we also announced in our Interim Statement, our co-founder, Andrew Cooper,
left the business on 31 October 2008. I would like to take this opportunity to
thank him for his outstanding contribution to the Group. His drive and
determination have been a key factor in getting us to where we are today and he
leaves behind a strong team well equipped to take the company forward.
As I say every year, our most important asset is our people. We have continued
to build our resources and, at the time of writing, have over 400 staff across
our 17 offices in seven countries worldwide. We are committed to ensuring that
each employee lives and breathes the company's values and that wherever our
clients engage with Research Now across the world, they have a similar
experience. We have a great team of people and I should like to thank them for
their enthusiasm, dedication and client service during the last year.
Despite the depressing macro-economic picture, there are grounds for optimism
for the prospects for the online research sector as a whole. The wider market
research industry has historically shown relative resilience during previous
economic downturns, as clients have tended to continue commissioning market
research in order to aid their decision-making. Over and above this, the
research industry continues to transition away from traditional 'offline'
face-to-face and telephone data collection techniques, in favour of more
cost-effective, faster and higher quality 'online' data collection - such as
that provided by Research Now. We anticipate this trend will continue for some
years to come, not least in Europe and Asia Pacific, where the online share of
the survey research marketplace is still well below levels now reached in the
USA. Research Now should therefore continue benefitting from this substitution
effect in the medium to longer term and grow its market share, even if
visibility in the short term is limited.
Finally given the current state of the worldwide economy, we are not complacent
about remaining immune to global events and will continue to manage the business
accordingly.
Geoff Westmore
Chairman
Chief Executive Officer's Statement
Overview
This past year has been hugely successful for Research Now. During 2008, we
achieved financial results significantly ahead of expectations and consolidated
our position as one of the leading global players in the online survey fieldwork
industry.
All our business units performed well in 2008, with all delivering significant
and profitable growth. European sales grew strongly, up 44% to GBP21.0m (2007:
GBP14.6m) on the back of continued rapid growth in the UK market, combined with
a tremendous performance from our younger French and German businesses, both of
which have exciting growth prospects in the years ahead, as markets in
Continental Europe continue to transition online. European revenues accounted
for only 51% of the Group in 2008 - down from 57% in 2007, reflecting the
increasingly global nature of our business today.
With the acquisition of OpenVenue in February 2007, the Group strengthened its
position in North America, by some way the largest marketplace for online survey
data collection in the world. I am therefore delighted to report a very strong
performance in North America during 2008, with reported revenues up 80% to
GBP16.9m (2007: GBP9.4m). On an underlying basis, adjusting for the OpenVenue
acquisition and at constant exchange rates, growth was 34%, reflecting market
share gains in the US and continued success in Canada where OpenVenue
(re-branded Research Now) remains the market leader. In total, North America
represented 41% (2007: 36%) of Group revenues in the year.
In 2008, revenues in Asia Pacific nearly doubled to GBP3.2m (2007: GBP1.8m)
fuelled primarily by the continued success of our market-leading Australian
business, together with entry into other markets in the region late in the
financial year. Asia Pacific revenues made up the remaining 8% (2007: 7%) of the
Group's total sales of GBP41.2m for the year.
Client Focus
Research Now serves market researchers. Our role is to provide this industry
with high quality, timely and accurate data which allows them to solve their
research problems, in turn helping their clients make better business decisions.
During 2008, we served over 1,000 clients across the globe, up significantly
from around 750 in 2007, with significant new business wins in all of our core
sales territories. We also won new clients in geographic markets where we own
online research panels but had no established local sales presence, namely
Spain, Italy, Republic of Ireland, the Netherlands, Denmark, Switzerland, Korea,
Singapore, Japan and New Zealand. Many of these markets offer growth prospects
for the future, building on initial wins this past year.
As mentioned in the Chairman's statement, repeat business remains a prime engine
of our continued growth and a bellwether of the success of our focus on client
service. To this end, 83% of our revenues in 2008 were derived from clients
served by the Group prior to the year, reflecting our success in retaining
clients, many of whom are choosing to do more of their fieldwork online than
ever before, taking advantage of the speed, cost-effectiveness and quality
advantages increasingly accessible. Approximately 23% of total Group revenues
were from multi-wave or tracking studies, with the balance of 77% being custom
ad hoc projects, a split consistent with prior periods.
Research Now serves four key market segments, each of which continued to grow
last year. The single largest segment is small and medium market research
agencies, which represented 51% of Group revenues in 2008. These agencies
typically lack their own online fieldwork capabilities and partner with Research
Now in order to meet their online data needs. The Group also provides outsourced
data collection capabilities to large, vertically integrated market research
agencies, collectively making up 28% of Group revenues. Other types of
intermediary, including media, advertising and PR agencies and management
consulting firms continue to be a source of growth, contributing 15% of Group
revenues in 2008. Finally, direct fieldwork business with corporate clients,
leveraging their own research capabilities, made up the remaining 6% of Group
sales.
Client concentration remains low. Our largest single client accounted for only
7% of revenue in 2008, while our top 10 clients contributed 39%.
Investment
The Group continued to invest in a number of key areas during 2008, providing a
platform for future growth which should also help us emerge from the recession
in the strongest possible competitive position.
Firstly, we continued to strengthen our senior management team in all regions of
the world. In London, we appointed Phil Rance, who joined us from the AA and is
now our Managing Director, Europe. Our French business is now led by Sebastien
Croizard, formerly at Frost and Sullivan. In our North American business, we
made a number of senior appointments including Adam Portner and David Bilicic,
who joined as Senior Vice Presidents, Client Development along with Steve Rosen
and Lynn Crawford, our new Finance and HR Directors for North America
respectively. In Sydney, Peter Blansjaar, our new Operations Director,
Asia Pacific, joined from Nielsen.
Our new management structure, with three regional managing directors responsible
for Europe, North America and Asia Pacific, became effective at the beginning of
the new financial year and is bedding down well. Since the year end, we have
also appointed Miles Worne, who will join us from Cadbury in March 2009, in the
newly created role of Managing Director, Business Development. Miles will take
on worldwide responsibility for our panel network, corporate marketing and new
proposition development, supporting our regional teams.
The Group also continued to invest heavily across the year in new systems. As
reported in our Interim statement, our new intranet workflow management system,
"PRISM", was rolled out in both Europe and North America during the first half.
It has already delivered considerable benefits in terms of managing more
effective project workload allocation across our operations teams and also
providing enhanced management information. Future developments of PRISM will see
further software automation within our key operational processes, driving
greater efficiencies across the business.
We have also invested in a new IBM DB2 database platform to support our online
panels, with the first of our panels successfully migrated to it in November,
just after year end. The new DB2-based infrastructure will support continued
growth in the volume of panel interviews we are able to deliver, along with
future development initiatives including enhanced panellist profiling and
experience.
Our proprietary global panel network, "Valued Opinions", was expanded still
further during 2008, with eight new Asian panels launched in the second half.
Our Asian expansion includes a new panel in China, launched following our
announcement in September of an agreement to form a joint venture with local
Chinese partners. Research Now will hold 75% of this venture, providing us with
entry into one of the world's fastest growing research markets.
Spanning 36 countries, Valued Opinions is now more geographically extensive than
any of the proprietary networks of our key competitors, providing us with a
strong platform in all key regions of the world. Over the year, the Group
delivered 567 projects that involved three or more countries (2007: 305
projects) reflecting the strength of our operational capabilities in delivering
complex multi-country projects. During 2008, the Group also made its first foray
into the area of specialty panels, announcing a partnership with Reed Business
Information to develop panels for the business-to-business research sector. This
is a new dimension of opportunity and one we expect to contribute positively to
our results in 2010 and beyond.
Innovation through technology remains a key area of differentiation for the
Group. While retaining our day-to-day focus on delivering high quality data on
time, we continued to enhance our data collection tools during 2008, leveraging
our understanding of research client needs and development resources across the
business.
In the first, half we rolled out a new suite of media tools, based on
technologies including Flash. This enables us to enhance our data collection
offer and also improve panel respondent experience. With around 86 full-time
staff dedicated to survey programming across our four main operational hubs
(London, Toronto, San Francisco and Sydney), full-service data collection
remains a particular strength of Research Now and one of the reasons for our
relative strength in serving smaller agencies, non-traditional and corporate
clients (who tend to lack their own survey programming capabilities).
"Full-service" fieldwork revenues represented 61% of total Group revenues in
2008, with the remaining 39% derived from "sample-only" projects (where our
clients retain responsibility for their own survey programming and hosting).
We also developed our mobile data collection capabilities in 2008, using both
SMS and Java ME technologies to take advantage of the "any time, any place, any
where" possibilities for data collection, via mobile and smart-phone devices. A
number of clients ran exploratory mobile projects with us during 2008, and we
anticipate further growth as we develop these products in 2009. Finally, we
began to leverage the online behavioural data collection possibilities within
our panel during 2008 and are currently exploring opportunities in areas such as
advertising effectiveness testing.
Leading on Quality
At the core of our servicing model is the ability to respond promptly to client
requests with accurate feasibility assessment and pricing, worldwide. Once
projects are won, our Operations teams have the experience, training and tools
to ensure successful and on-time delivery. We follow each and every project with
a client satisfaction survey, track key metrics carefully and seek to address
any issue that might surface. In general, our entire orientation and philosophy
is to never let the client down and always do whatever we can to make them
successful. We believe this approach secured market share gains for us during
2008.
We also aim to provide a higher quality panel product than our competitors. This
advantage has primarily stemmed from investing sufficiently in panel recruitment
to ensure our panels remain responsive and fresh, extensively profiling our
panellists in order to be able to target survey invitations for which they are
likely to qualify, offering flexible direct incentives so that our panel members
feel valued and using technology such as rich media wherever possible to improve
the survey experience itself.
Our People
At year end on 31 October 2008, the Group had 411 employees based in seven
countries, up from 321 employees 12 months earlier. I would like to thank all of
our staff for their hard work and dedication during 2008, serving clients and
delivering another year of terrific success for Research Now. I am highly
fortunate to lead such a talented and committed team.
Outlook
Our strategy in the last three years has been to invest in people, panels and
technology to build a market leading business with a global reach. As already
noted, we have seen the benefits of these investments in our financial results
in 2008. The nature of our business is such that most of our investments have an
immediate impact on our profits. We are aware of the importance of managing the
Group for the future and not just for the near term, and we intend to continue
to make the investments needed in areas such as management information systems,
panel infrastructure, senior management and new products, that are necessary to
take us to the next stage of our growth.
However, we are mindful that our sector is unlikely to be immune to the effects
of the global recession. We continue to monitor our sales pipeline closely and
in the event that we begin to experience a prolonged shortfall in our expected
rate of sales growth, will make the necessary reductions in our cost base. We
will also continue our focus on working capital management to build on the
progress in 2008.
We have had a good start to trading in the new financial year but, like most
companies today, are naturally cautious about extrapolating these positive
results. We remain focused on managing our operations to achieve profitable
growth in 2009.
Chris Havemann
Chief Executive Officer
CFO's statement
Reporting basis
The Group's financial statements for the year ended 31 October 2008 have been
prepared in accordance with International Financial Reporting Standards
("IFRS").
Revenue
On a regional basis, the Group's revenue was split as follows:
+---------------------------------------------+---------------+---------------+
| | Year ended 31 October |
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| | 2008 | 2007 |
+---------------------------------------------+---------------+---------------+
| | GBP'000 | GBP'000 |
+---------------------------------------------+---------------+---------------+
| Europe | 21,048 | 14,635 |
+---------------------------------------------+---------------+---------------+
| The Americas | 16,899 | 9,379 |
+---------------------------------------------+---------------+---------------+
| Asia Pacific | 3,216 | 1,793 |
+---------------------------------------------+---------------+---------------+
| | 41,163 | 25,807 |
+---------------------------------------------+---------------+---------------+
Reported revenue increased by 59.5% to GBP41.2 million. Underlying revenue
growth was 40.0%.
Each of the European operations achieved significant growth as revenues
increased by 43.8% and 41.9% on a reported and underlying basis respectively.
The UK had a strong year achieving 30.3% growth fuelled by new client wins, in
particular from non-traditional buyers of fieldwork and growth in key accounts.
Continental Europe more than doubled its revenues as the operations became more
established in their markets and were better positioned to benefit from the
continuing substitution to online fieldwork from the traditional offline
methods, coupled with new client wins.
The Americas' reported revenues were up 80.2% in the period to GBP16.9 million.
On an underlying basis, the Americas' revenues increased by 34.2% with strong
performances from both the Canadian and US operations, with US sales in
particular benefitting from the Group's investment in a larger US domestic panel
and the expansion of the Group's key client relationships into the US. Asia
Pacific had another excellent year with revenues up 62.4% on an underlying basis
to GBP3.2 million led by Australian sales and the Group's first inroads into
other markets in the region.
Underlying revenue growth is calculated by taking the increase in 2008 over 2007
proforma revenue at constant exchange rates. The 2007 proforma revenue is
calculated on the basis that any operations acquired during 2007 were owned for
the full year.
Gross margin
The gross margin increased by 62.8% to GBP31.3 million. The gross margin
percentage increased to 76.0% (2007: 74.5%) reflecting the benefit of the
Group's continued investment in its proprietary panel network. During the year,
eight new country panels were launched and investment increased in markets such
as the US and Canada to mitigate the cost of buying in sample from third party
suppliers, which Group wide amounted to GBP4.8 million during the year.
The Group's panel investment plans for 2009 will focus not only on maintaining
the proprietary panel network in 36 countries but on extending the scale and
breadth of panel coverage in those markets that best support the Group's growth
opportunities and provide scope to improve gross margins, for example the USA
and Germany.
Adjusted results
To assist the understanding of the underlying performance of the Group,
operating profit, profit before tax and earnings per share are also disclosed
prior to the impact of non-recurring items costs associated with the disaster
recovery operation actioned in the prior year, which includes incremental
property costs, additional staff costs and other associated costs (2008: GBPnil/
2007: GBP0.5 million), and the accounting treatment for contingent consideration
liabilities (2008: GBP0.4 million/ 2007: GBP1.6 million).
Operating profit and margin
Operating profit more than doubled to GBP6.3 million (2007 adjusted: GBP2.8
million). The operating margin increased to 15.3% (2007 adjusted: 10.9%)
reflecting management control over the rate of investment in the Group's
operations and the operational gearing in the Group's business model.
Staff costs as a percentage of revenue decreased to 42.0% (2007: 45.2%) as
headcount additions became more closely aligned to revenue growth. Average
headcount in the year was up 35.6% to 351 (2007: 259) and the Group ended the
year with 411 employees (2007: 321). Variable staff costs, defined as
performance-linked compensation and contractors, amounted to 24.0% of staff
costs. The cost under IFRS2 for employee share option schemes was GBP0.2 million
(2007: GBP0.1 million).
The Group has taken a prudent approach in light of the current economic
environment to ensure it has fully provided for bad debt risk in the debtor
book. At 31 October 2008, the debtor provision was GBP0.5 million (2007: GBP0.1
million). The Group's charge in relation to the amortisation of its panel
investment was GBP2.1 million (2007: GBP1.3 million). The amortisation charge
includes the remaining GBP0.1 million in respect of the Canadian panel
capitalised upon the acquisition of OpenVenue in February 2007. The restatement
under IAS 21 of foreign currency denominated intercompany loans led to an
exchange gain in the year of GBP0.3 million (2007: GBP21,000 loss).
Finance costs
The Group's finance costs amounted to GBP0.8 million (2007: GBP2.0 million)
reflecting the costs associated with the acquisition in February 2007 of
OpenVenue.
Finance costs comprise interest on the Group's debt arrangements totalling
GBP0.2 million (2007: GBP0.3 million), debt fee amortisation of GBP0.2 million
(2007: GBP0.1 million), a GBP0.4 million (2007: GBP0.4 million) charge in
respect of the interest accretion on the contingent consideration and a
GBP28,000 gain attributable to the foreign currency translation adjustment on
contingent consideration (2007: GBP1.3 million loss). Interest income was GBP0.1
million.
Profit before tax
Adjusted profit before tax increased 144.2% to GBP6.0 million (2007: GBP2.5
million). Reported profit before tax was GBP5.7 million (2007: GBP0.3 million).
Taxation
The reported tax charge for the year was GBP2.0 million (2007: GBP0.8 million)
representing an effective tax rate of 34.7% (2007: 40.0%) on reported profits
pre-interest accretion and the translation adjustment. The increase in the
charge arose due to the growth in profitability of the international operations,
in particular Canada where tax rates are higher than the UK's 28.0% rate. The
decrease in the effective rate is attributable to the proportion of taxable
profits earned in the UK compared with the prior financial year, when the Group
was able to use brought forward tax losses to offset UK profit.
Earnings per share
On a weighted average basis of 16.9 million shares, adjusted earnings per share
were up 100.8% to 23.9 pence (2007: 11.9 pence). On a fully diluted weighted
average basis of 18.4 million shares, adjusted fully diluted earnings per share
increased by 102.8% to 21.9 pence (2007: 10.8 pence).
The basic earnings per share was 21.8 pence (2007 basic loss per share: 3.2
pence).
Cash flow and liquidity risk
Net cash inflow from operating activities was strong at GBP9.9 million (2007:
GBP2.1 million) as the Group's profit growth and focus on working capital
management led to a GBP0.6 million working capital inflow in the year, despite
the Group's increase in sales. The Group is unlikely to achieve an inflow in the
current year as the 2008 result incorporated a non-recurring inflow of
approximately GBP1.0 million arising from an improvement in the rate at which
clients are invoiced.
Capital expenditure was GBP0.6 million (2007: GBP0.7 million) during the year.
Planned investments to develop the Group's IT infrastructure and management
information systems are expected to lead to capital expenditure increasing in
the year ending 31 October 2009 to approximately GBP1.2 million. The Group's
expenditure on maintaining and growing its existing panels and developing and
launching new ones increased by GBP0.6 million to GBP2.4 million (2007: GBP1.8
million). A similar increase in spend is planned for the coming year to support
the Group's growth objectives.
Free cash flow for the year was GBP6.5 million (2007: GBP0.4 million outflow),
being net cash flow from operating activities, less capital expenditure and
payments to acquire intangible assets.
In February 2008, the Group paid CAN$8.7 million in respect of the interim
contingent consideration payment due to the vendors of OpenVenue. The
consideration was satisfied by a cash payment of GBP2.2 million and the issuance
of 868,139 ordinary shares. The final contingent consideration payment of
CAN$9.8 million, of which at least half must be paid in cash, will be made in
February 2009. The Group has part-hedged the cash element of the final
contingent consideration through the purchase of CAN$3.9 million at an average
exchange rate of CAN$1.93:UKGBP1.
Treasury, funding and exchange risk
Net cash, defined as cash and cash equivalents less bank borrowings (net of
arrangement fees), other debt arrangements and obligations under finance leases,
was GBP7.6 million at 31 October 2008 (2007: GBP2.5 million net debt).
In December 2007, the Group raised GBP7.0 million before expenses through the
issuance of 2,333,334 ordinary shares to institutional investors. The net
proceeds from the share placing were used to strengthen the balance sheet with
the Group pre-paying its revolving credit facility (2007: GBP3.5 million), to
repay and cancel the invoice discounting facility (2007: GBP0.6 million) and to
fund the GBP2.2 million interim earn-out payment. The Group has retained its
revolving credit facility which, at 31 October 2008, had a drawdown limit of up
to GBP2.5 million available.
The majority of the Group's trade is denominated in the functional currencies of
the jurisdiction in which trade is conducted. As the central overhead that
supports the Group's operations and its panel network is incurred in the UK, the
Group's reported earnings are exposed to currency fluctuations, in particular
the US dollar. The Group has appointed external consultants to assist in the
implementation of appropriate treasury policies and procedures, and to assess
the need to enter into hedging contracts to manage the Group's foreign currency
exposures in the year ending 31st October 2009.
Impairment review
The Group has carried out an annual impairment review of its investment of Open
Venue and determined that no impairment is required.
Key Performance Indicators
The Key Performance Indicators (KPI's) of the Group are outlined in various
sections of this review. Whilst there are many financial and operating measures
regularly monitored by the Group, the primary financial metrics are:
* Underlying revenue growth: 40.0% (2007: 67.6%)
* Gross margin percentage: 76.0% (2007: 74.5%)
* Operating margin: 15.3% (2007 adjusted: 10.9%)
* Adjusted profit before tax: GBP6.0 million (2007: GBP2.5 million)
* Adjusted earnings per share: 23.9 pence (2007: 11.9 pence)
* Free cash flow: GBP6.5 million (2007: GBP0.4 million outflow)
* Cash conversion of profits: 108.3% (2007: 5.8%)
Dividend
As in prior periods, the Board has not declared a dividend for the year,
believing it best to ensure the Group has a strong balance sheet to support the
growth that the Directors expect to continue.
Annual General Meeting
The Group's Annual General Meeting will be held on 26 March 2009 at 9am at 3
Noble Street, London, EC2V 7EE.
Nathan Runnicles
Chief Financial Officer
Group Income Statement
for the year ended 31 October 2008
+-----------------------------------------------+-------+----------+----------+
| | | 2008 | 2007 |
+-----------------------------------------------+-------+----------+----------+
| |Notes | GBP'000 | GBP'000 |
+-----------------------------------------------+-------+----------+----------+
| Revenue | 2 | 41,163 | 25,807 |
+-----------------------------------------------+-------+----------+----------+
| Cost of sales | | (9,867) | (6,580) |
+-----------------------------------------------+-------+----------+----------+
| Gross profit | | 31,296 | 19,227 |
+-----------------------------------------------+-------+----------+----------+
| Administrative expenses | | (24,993) | (16,903) |
+-----------------------------------------------+-------+----------+----------+
| Operating profit | 2 | 6,303 | 2,324 |
+-----------------------------------------------+-------+----------+----------+
| Finance revenue | | 156 | 24 |
+-----------------------------------------------+-------+----------+----------+
| Finance costs | 3 | (771) | (2,005) |
+-----------------------------------------------+-------+----------+----------+
| Profit before taxation | | 5,688 | 343 |
+-----------------------------------------------+-------+----------+----------+
| Tax expense | | (2,000) | (788) |
+-----------------------------------------------+-------+----------+----------+
| Profit/ (loss) for the year attributable to | | 3,688 | (445) |
| equity holders of the parent | | | |
+-----------------------------------------------+-------+----------+----------+
| | | | |
+-----------------------------------------------+-------+----------+----------+
| Earnings per share (pence) | | | |
+-----------------------------------------------+-------+----------+----------+
| Basic earnings/ (loss) per ordinary share | 4 | 21.8p | (3.2)p |
+-----------------------------------------------+-------+----------+----------+
| Diluted earnings/ (loss) per ordinary share | 4 | 20.0p | (3.2)p |
+-----------------------------------------------+-------+----------+----------+
| | | | |
+-----------------------------------------------+-------+----------+----------+
| Adjusted Earnings per share* (pence) | | | |
+-----------------------------------------------+-------+----------+----------+
| Basic earnings per ordinary share | 4 | 23.9p | 11.9p |
+-----------------------------------------------+-------+----------+----------+
| Diluted earnings per ordinary share | 4 | 21.9p | 10.8p |
+-----------------------------------------------+-------+----------+----------+
All income and expenses relate to continuing activities.
* Adjusted for 2007's non-recurring item, as defined in the CFO report on page 9
and the interest accretion and foreign currency translation adjustment on
contingent consideration in both 2007 and 2008.
Group Statement of Recognised Income and Expense
for the year ended 31 October 2008
+--------------------------------------------------+-------+----------+---------+
| | | 2008 | 2007 |
+--------------------------------------------------+-------+----------+---------+
| |Notes | GBP'000 | GBP'000 |
+--------------------------------------------------+-------+----------+---------+
| Income and expense recognised directly in equity | | | |
+--------------------------------------------------+-------+----------+---------+
| Deferred tax on share options | | (144) | 245 |
+--------------------------------------------------+-------+----------+---------+
| Current tax relief on items not charged to | | 77 | 247 |
| income statement | | | |
+--------------------------------------------------+-------+----------+---------+
| Gain on cash flow hedge taken to equity | | - | 2 |
+--------------------------------------------------+-------+----------+---------+
| Transfer to income statement on cash flow hedge | | (2) | - |
| - Administrative expenses | | | |
+--------------------------------------------------+-------+----------+---------+
| Exchange differences on retranslation of foreign | | (5) | 182 |
| operations | | | |
+--------------------------------------------------+-------+----------+---------+
| Exchange differences on retranslation of | | (149) | 2,822 |
| goodwill | | | |
+--------------------------------------------------+-------+----------+---------+
| Profit/ (loss) for the year | | 3,688 | (445) |
+--------------------------------------------------+-------+----------+---------+
| Total recognised income and expense for the year | | 3,465 | 3,053 |
+--------------------------------------------------+-------+----------+---------+
Group Balance Sheet
at 31 October 2008
+------------------------------------------------+-------+----------+----------+
| | | 2008 | 2007 |
+------------------------------------------------+-------+----------+----------+
| |Notes | GBP'000 | GBP'000 |
+------------------------------------------------+-------+----------+----------+
| Non-current assets | | | |
+------------------------------------------------+-------+----------+----------+
| Property, plant and equipment | | 1,510 | 953 |
+------------------------------------------------+-------+----------+----------+
| Intangible assets | | 20,875 | 20,214 |
+------------------------------------------------+-------+----------+----------+
| Deferred tax assets | | 261 | 482 |
+------------------------------------------------+-------+----------+----------+
| | | 22,646 | 21,649 |
+------------------------------------------------+-------+----------+----------+
| Current assets | | | |
+------------------------------------------------+-------+----------+----------+
| Trade and other receivables | 5 | 11,310 | 8,910 |
+------------------------------------------------+-------+----------+----------+
| Inventories | | 329 | 60 |
+------------------------------------------------+-------+----------+----------+
| Financial assets | | 35 | 40 |
+------------------------------------------------+-------+----------+----------+
| Cash and cash equivalents | | 7,773 | 1,246 |
+------------------------------------------------+-------+----------+----------+
| | | 19,447 | 10,256 |
+------------------------------------------------+-------+----------+----------+
| Total assets | | 42,093 | 31,905 |
+------------------------------------------------+-------+----------+----------+
| | | | |
+------------------------------------------------+-------+----------+----------+
| Current liabilities | | | |
+------------------------------------------------+-------+----------+----------+
| Trade and other payables | | (9,096) | (6,021) |
+------------------------------------------------+-------+----------+----------+
| Other financial liabilities | 7 | (331) | (1,530) |
+------------------------------------------------+-------+----------+----------+
| Income tax payable | | (1,684) | (166) |
+------------------------------------------------+-------+----------+----------+
| Provisions | | (6,172) | (5,299) |
+------------------------------------------------+-------+----------+----------+
| | | (17,283) | (13,016) |
+------------------------------------------------+-------+----------+----------+
| | | | |
+------------------------------------------------+-------+----------+----------+
| Long term liabilities | | | |
+------------------------------------------------+-------+----------+----------+
| Other financial liabilities | 7 | - | (2,243) |
+------------------------------------------------+-------+----------+----------+
| Provisions | | - | (4,312) |
+------------------------------------------------+-------+----------+----------+
| | | - | (6,555) |
+------------------------------------------------+-------+----------+----------+
| Total liabilities | | (17,283) | (19,571) |
+------------------------------------------------+-------+----------+----------+
| Net assets | | 24,810 | 12,334 |
+------------------------------------------------+-------+----------+----------+
| | | | |
+------------------------------------------------+-------+----------+----------+
| Capital and reserves | | | |
+------------------------------------------------+-------+----------+----------+
| Equity share capital | 9 | 351 | 286 |
+------------------------------------------------+-------+----------+----------+
| Share premium account | 9 | 8,612 | 2,005 |
+------------------------------------------------+-------+----------+----------+
| Merger reserve | 9 | 6,970 | 4,802 |
+------------------------------------------------+-------+----------+----------+
| Exchange reserve | 9 | 2,792 | 2,946 |
+------------------------------------------------+-------+----------+----------+
| Other reserves | 9 | (65) | (65) |
+------------------------------------------------+-------+----------+----------+
| Retained earnings | 9 | 6,150 | 2,360 |
+------------------------------------------------+-------+----------+----------+
| Equity attributable to shareholders of the | | 24,810 | 12,334 |
| parent | | | |
+------------------------------------------------+-------+----------+----------+
Group Cash Flow Statement
for the year ended 31 October 2008
+--------------------------------------------------+-------+---------+---------+
| | | 2008 | 2007 |
+--------------------------------------------------+-------+---------+---------+
| |Notes | GBP'000 | GBP'000 |
+--------------------------------------------------+-------+---------+---------+
| Cash generated from operations | 8 | 10,209 | 2,686 |
+--------------------------------------------------+-------+---------+---------+
| Taxation paid | | (329) | (538) |
+--------------------------------------------------+-------+---------+---------+
| Net cash flow from operating activities | | 9,880 | 2,148 |
+--------------------------------------------------+-------+---------+---------+
| | | | |
+--------------------------------------------------+-------+---------+---------+
| Investing activities | | | |
+--------------------------------------------------+-------+---------+---------+
| Interest received | | 156 | 24 |
+--------------------------------------------------+-------+---------+---------+
| Payments to acquire property, plant and | | (598) | (723) |
| equipment | | | |
+--------------------------------------------------+-------+---------+---------+
| Cash inflow on subsidiary acquisition | | - | 687 |
+--------------------------------------------------+-------+---------+---------+
| Payments to acquire subsidiary | | (2,178) | (4,891) |
+--------------------------------------------------+-------+---------+---------+
| Payments to acquire intangible assets | | (2,784) | (1,828) |
+--------------------------------------------------+-------+---------+---------+
| Net cash flow from investing activities | | (5,404) | (6,731) |
+--------------------------------------------------+-------+---------+---------+
| | | | |
+--------------------------------------------------+-------+---------+---------+
| Financing activities | | | |
+--------------------------------------------------+-------+---------+---------+
| Interest paid | | (167) | (294) |
+--------------------------------------------------+-------+---------+---------+
| Repayment of capital element of finance leases | | (232) | - |
| and hire purchase contracts | | | |
+--------------------------------------------------+-------+---------+---------+
| Proceeds from share issues | | 7,049 | 114 |
+--------------------------------------------------+-------+---------+---------+
| Share issue costs | | (394) | |
+--------------------------------------------------+-------+---------+---------+
| New borrowings | | - | 4,643 |
+--------------------------------------------------+-------+---------+---------+
| Repayment of borrowings | | (4,143) | (500) |
+--------------------------------------------------+-------+---------+---------+
| Fees on borrowings | | (50) | (452) |
+--------------------------------------------------+-------+---------+---------+
| Net cash flow from financing activities | | 2,063 | 3,511 |
+--------------------------------------------------+-------+---------+---------+
| | | | |
+--------------------------------------------------+-------+---------+---------+
| Increase/ (decrease) in cash and cash | | 6,539 | (1,072) |
| equivalents | | | |
+--------------------------------------------------+-------+---------+---------+
| Effect of exchange rates on cash and cash | | (12) | (63) |
| equivalents | | | |
+--------------------------------------------------+-------+---------+---------+
| Cash and cash equivalents at the beginning of | | 1,246 | 2,381 |
| the year | | | |
+--------------------------------------------------+-------+---------+---------+
| Cash and cash equivalents at the end of the year | 7 | 7,773 | 1,246 |
+--------------------------------------------------+-------+---------+---------+
Notes
1. Basis of preparation
The Group's financial statements, from which the preliminary announcement has
been extracted, have been prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union as they apply to the
financial statements of the Group for the year ended 31 October 2008 and applied
in accordance with the Companies Act 1985. The accounting policies which follow
set out those policies which apply in preparing the financial statements for the
year ended 31 October 2008.
The financial information set out in this preliminary announcement is audited.
The annual report and accounts for 2007, prepared under IFRS, have been
delivered to the Registrar of Companies and the annual report and accounts for
the year ended 31 October 2008 will be delivered to the Registrar following the
Group's forthcoming Annual General Meeting.
This financial information was approved by the Board of Research Now plc on 30
January 2009. The annual report and accounts for the year ended 31 October 2008
will be circulated in due course to all shareholders and copies will be
available from the registered office of the Group at Elizabeth House, 39 York
Road, London, SE1 7NQ and will also be accessible from the Investor section of
the Group's website at www.researchnow.co.uk.
2. Segment revenue and segment result
The primary segment reporting format is determined to be geographical segments
as the Group's risk and rates of return are affected predominantly by
differences in the economic environment in the countries in which the Group
operates. For management purposes the Group is organised into geographical
operating divisions Europe, The Americas (North and South America) and Asia
Pacific. These divisions are the basis on which the Group reports its primary
segment information. The secondary segment is determined to be business segment.
As the Group operates in only one business segment, the provision of on-line
fieldwork services, no further analysis is provided.
+--------------------------------------------+---------+---------+---------+---------+
| | Segment revenue | Segment result |
+--------------------------------------------+-------------------+-------------------+
| | 2008 | 2007 | 2008 | 2007 |
+--------------------------------------------+---------+---------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------------------+---------+---------+---------+---------+
| Continuing operations | | | | |
+--------------------------------------------+---------+---------+---------+---------+
| Europe | 21,048 | 14,635 | 2,994 | 1,347 |
+--------------------------------------------+---------+---------+---------+---------+
| The Americas | 16,899 | 9,379 | 2,837 | 534 |
+--------------------------------------------+---------+---------+---------+---------+
| Asia Pacific | 3,216 | 1,793 | 472 | 443 |
+--------------------------------------------+---------+---------+---------+---------+
| | 41,163 | 25,807 | 6,303 | 2,324 |
+--------------------------------------------+---------+---------+---------+---------+
| Net finance costs | | | (615) | (1,981) |
+--------------------------------------------+---------+---------+---------+---------+
| Profit before tax | | | 5,688 | 343 |
+--------------------------------------------+---------+---------+---------+---------+
| Income tax expense | | | (2,000) | (788) |
+--------------------------------------------+---------+---------+---------+---------+
| Profit/ (loss) for the year from | | | 3,688 | (445) |
| continuing operations | | | | |
+--------------------------------------------+---------+---------+---------+---------+
3. Finance costs
+----------------------------------------------------------+---------+---------+
| | 2008 | 2007 |
+----------------------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+----------------------------------------------------------+---------+---------+
| Bank loans and overdrafts | | |
+----------------------------------------------------------+---------+---------+
| - interest | 196 | 294 |
+----------------------------------------------------------+---------+---------+
| - amortisation of debt fees | 225 | 82 |
+----------------------------------------------------------+---------+---------+
| Total finance costs calculated using the effective | 421 | 376 |
| interest rate method | | |
+----------------------------------------------------------+---------+---------+
| Foreign currency translation adjustment on contingent | (28) | 1,260 |
| consideration | | |
+----------------------------------------------------------+---------+---------+
| Interest accretion on contingent consideration | 378 | 369 |
+----------------------------------------------------------+---------+---------+
| | 771 | 2,005 |
+----------------------------------------------------------+---------+---------+
4. Earnings per ordinary share (EPS)
Basic earnings per share amounts are calculated by dividing profit for the year
attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the year excluding any shares held
by the Research Now Share incentive plan trust.
Diluted earnings per share are calculated by dividing the profit attributable to
ordinary equity holders of the parent by the weighted average number of ordinary
shares outstanding during the year, plus the weighted average number of ordinary
shares that would be issued on the conversion of all the dilutive potential
ordinary shares into ordinary shares and contingent consideration shares.
In order to facilitate a comparison between the current and the prior period's
basic and diluted earnings per share, they are also presented using earnings
before non-recurring items (see the Chief Financial Officer's report under
"Adjusted results" section) and before interest accretion and foreign currency
translation adjustment on contingent consideration.
The amounts for earnings per share from continuing operations on a reported and
on an adjusted basis are as follows:
+----------------------------------------------------------+---------+--------+
| Basic and Diluted earnings per share | 2008 | 2007 |
| | | |
+----------------------------------------------------------+---------+--------+
| Reported earnings (GBP'000) | 3,688 | (445) |
+----------------------------------------------------------+---------+--------+
| Weighted average shares used in Basic EPS calculation | 16,907 | 13,883 |
| ('000) | | |
+----------------------------------------------------------+---------+--------+
| Basic EPS (pence) | 21.8p | (3.2)p |
+----------------------------------------------------------+---------+--------+
| Weighted average shares used in Diluted EPS calculation | 18,468 | 13,883 |
| ('000) | | |
+----------------------------------------------------------+---------+--------+
| Diluted EPS (pence) | 20.0p | (3.2)p |
+----------------------------------------------------------+---------+--------+
For the year ended 31 October 2007 the weighted average number of shares used
for Diluted EPS was the same as that used in the Basic EPS calculation, as the
effect of increasing the weighted average number of shares would have been
anti-dilutive.
+----------------------------------------------------------+---------+--------+
| Adjusted earnings per share | 2008 | 2007 |
| | | |
+----------------------------------------------------------+---------+--------+
| Reported earnings (GBP'000) | 3,688 | (445) |
+----------------------------------------------------------+---------+--------+
| Non-recurring items net of tax | - | 465 |
+----------------------------------------------------------+---------+--------+
| Interest accretion on contingent consideration | 378 | 369 |
+----------------------------------------------------------+---------+--------+
| Foreign currency translation adjustment on contingent | (28) | 1,260 |
| consideration | | |
+----------------------------------------------------------+---------+--------+
| Adjusted earnings | 4,038 | 1,649 |
+----------------------------------------------------------+---------+--------+
| Adjusted Basic EPS (pence) | 23.9p | 11.9p |
+----------------------------------------------------------+---------+--------+
| Adjusted Diluted EPS (pence) | 21.9p | 10.8p |
+----------------------------------------------------------+---------+--------+
A reconciliation between the shares used in calculating Adjusted Basic and
Diluted earnings per share is as follows:
+----------------------------------------------------------+---------+--------+
| | 2008 | 2007 |
+----------------------------------------------------------+---------+--------+
| | '000 | '000 |
+----------------------------------------------------------+---------+--------+
| Weighted average shares used in Basic EPS calculation | 16,907 | 13,883 |
+----------------------------------------------------------+---------+--------+
| Dilutive share options outstanding | 701 | 822 |
+----------------------------------------------------------+---------+--------+
| Potential share issue for contingent consideration on | 860 | 618 |
| acquisition | | |
+----------------------------------------------------------+---------+--------+
| Weighted average shares used in Adjusted Diluted EPS | 18,468 | 15,323 |
| calculation | | |
+----------------------------------------------------------+---------+--------+
Adjusted Diluted EPS excludes those share options that have an exercise price in
excess of the average share price for the year ended 31 October 2008.
5. Trade and other receivables
+----------------------------------------------------------+---------+---------+
| | 2008 | 2007 |
+----------------------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+----------------------------------------------------------+---------+---------+
| Trade receivables | 9,588 | 6,396 |
+----------------------------------------------------------+---------+---------+
| Prepayments and accrued income | 1,722 | 2,514 |
+----------------------------------------------------------+---------+---------+
| | 11,310 | 8,910 |
+----------------------------------------------------------+---------+---------+
Trade receivables are non-interest bearing and are generally on 30 days' terms
and are shown net of a provision for impairment. As at 31 October 2008, trade
receivables at nominal value of GBP523,000 (2007: GBP64,000) were impaired and
fully provided for. Movements in the provision for impairment of receivables
were as follows:
+----------+---------+---------+
| | 2008 | 2007 |
+----------+---------+---------+
| | GBP'000 | GBP'000 |
+----------+---------+---------+
| At 1 | 64 | 10 |
| November | | |
| 2007 | | |
+----------+---------+---------+
| Charge | 492 | 54 |
| for | | |
| the | | |
| year | | |
+----------+---------+---------+
| Amounts | (33) | - |
| written | | |
| off | | |
+----------+---------+---------+
| Unused | - | - |
| amounts | | |
| reversed | | |
+----------+---------+---------+
| At 31 | 523 | 64 |
| October | | |
| 2008 | | |
+----------+---------+---------+
As at 31 October 2008 the analysis of trade receivables are:
+-------------+---------+----------+---------+---------+---------+
| | | Neither | Past due or impaired |
| | | past | |
| | | due nor | |
| | | impaired | |
+-------------+---------+ +-----------------------------+
| | Total | | 31 - | 61 - | 90 - |
| | | | 60 | 90 | 230 |
+-------------+---------+----------+---------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------+---------+----------+---------+---------+---------+
| Trade | 10,111 | 6,849 | 1,895 | 671 | 696 |
| receivables | | | | | |
+-------------+---------+----------+---------+---------+---------+
| Provision | (523) | - | - | - | (523) |
+-------------+---------+----------+---------+---------+---------+
| | 9,588 | 6,849 | 1,895 | 671 | 173 |
+-------------+---------+----------+---------+---------+---------+
6. Bank loans
+---------------------------------------------------------+---------+---------+
| | 2008 | 2007 |
+---------------------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+---------------------------------------------------------+---------+---------+
| | | |
+---------------------------------------------------------+---------+---------+
| GBP3,500,000 revolving credit facility | - | 3,500 |
+---------------------------------------------------------+---------+---------+
| Debt Fees | - | (370) |
+---------------------------------------------------------+---------+---------+
| | - | 3,130 |
+---------------------------------------------------------+---------+---------+
| | | |
+---------------------------------------------------------+---------+---------+
| Analysed as | | |
+---------------------------------------------------------+---------+---------+
| Current instalments due on revolving credit facility | - | 887 |
| (net of fees) | | |
+---------------------------------------------------------+---------+---------+
| Non-current obligations due on revolving credit | - | 2,243 |
| facility (net of fees) | | |
+---------------------------------------------------------+---------+---------+
| | - | 3,130 |
+---------------------------------------------------------+---------+---------+
For presentational purposes, unamortised debt fees have been disclosed within
financial assets for the year ended 31 October 2008 (2008: GBP194,000). For the
year ended 31 October 2007, unamortised debt fees were GBP370,000.
The revolving credit facility is secured by a fixed and floating charge over the
Group's assets. The facility expires on 31 March 2011 and was fully pre-paid
during the year. The loan bears interest at LIBOR +2.25%. At 31 October 2008
the Group had available GBP2.5 million of undrawn borrowing facility.
7. Reconciliation of movements in net (debt)/ funds:
+------------------------+----------+----------+-------------+------------+---------+
| | 1 | Cash | Exchange | Non-cash | 31 |
| | November | flow | differences | move-ments | October |
| | 2007 | | | | 2008 |
+------------------------+----------+----------+-------------+------------+---------+
| Cash and cash | 1,246 | 6,539 | (12) | - | 7,773 |
| equivalents | | | | | |
+------------------------+----------+----------+-------------+------------+---------+
| Finance Lease | - | 232 | - | (563) | (331) |
| obligations | | | | | |
+------------------------+----------+----------+-------------+------------+---------+
| Loans | (3,500) | 3,500 | - | - | - |
+------------------------+----------+----------+-------------+------------+---------+
| Unamortised debt fees | 370 | 50 | - | (225) | 195 |
+------------------------+----------+----------+-------------+------------+---------+
| Invoice Discounting | (643) | 643 | - | - | - |
+------------------------+----------+----------+-------------+------------+---------+
| | (2,527) | 10,964 | (12) | (788) | 7,637 |
+------------------------+----------+----------+-------------+------------+---------+
8. Reconciliation of profit for the year to net cash flow from operating
activities
+---------------------------------------------------------+---------+----------+
| | 2008 | 2007 |
+---------------------------------------------------------+---------+----------+
| Operating activities | GBP'000 | GBP'000 |
+---------------------------------------------------------+---------+----------+
| Adjustments to reconcile profit for the year to net | | |
| cash inflow from operating activities | | |
+---------------------------------------------------------+---------+----------+
| | | |
+---------------------------------------------------------+---------+----------+
| Profit/ (loss) for the year | 3,688 | (445) |
+---------------------------------------------------------+---------+----------+
| Tax expense | 2,000 | 788 |
+---------------------------------------------------------+---------+----------+
| Net finance costs | 615 | 1,981 |
+---------------------------------------------------------+---------+----------+
| Operating profit | 6,303 | 2,324 |
+---------------------------------------------------------+---------+----------+
| | | |
+---------------------------------------------------------+---------+----------+
| Depreciation of property, plant and equipment | 611 | 471 |
+---------------------------------------------------------+---------+----------+
| Amortisation of intangible assets | 2,228 | 1,346 |
+---------------------------------------------------------+---------+----------+
| Share-based payments | 171 | 99 |
+---------------------------------------------------------+---------+----------+
| Increase in inventories | (269) | (17) |
+---------------------------------------------------------+---------+----------+
| Increase in trade and other receivables | (2,202) | (3,971) |
+---------------------------------------------------------+---------+----------+
| Increase in trade and other payables | 3,036 | 1,867 |
+---------------------------------------------------------+---------+----------+
| Movement in provisions | 331 | 567 |
+---------------------------------------------------------+---------+----------+
| Net cash flow from operating activities | 10,209 | 2,686 |
+---------------------------------------------------------+---------+----------+
9. Reconciliation of movements in equity
+---------------+---------+---------+---------+----------+----------+----------+--------------+
| | Equity | Share | Merger |Exchange | Other | Retained | Share-holder |
| | share | premium |Reserve | Reserve | reserves | earnings | equity |
| | capital | | | | | | |
+---------------+---------+---------+---------+----------+----------+----------+--------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+---------+---------+---------+----------+----------+----------+--------------+
| At 31 | 286 | 2,005 | 4,802 | 2,946 | (65) | 2,360 | 12,334 |
| October | | | | | | | |
| 2007 | | | | | | | |
+---------------+---------+---------+---------+----------+----------+----------+--------------+
| Total | - | - | - | (154) | - | 3,619 | 3,465 |
| recognised | | | | | | | |
| income and | | | | | | | |
| expense | | | | | | | |
| for the | | | | | | | |
| year | | | | | | | |
+---------------+---------+---------+---------+----------+----------+----------+--------------+
| Shares | 47 | 6,953 | - | - | - | - | 7,000 |
| issued | | | | | | | |
| during | | | | | | | |
| the | | | | | | | |
| period | | | | | | | |
+---------------+---------+---------+---------+----------+----------+----------+--------------+
| Share | - | (394) | - | - | - | - | (394) |
| issue | | | | | | | |
| costs | | | | | | | |
+---------------+---------+---------+---------+----------+----------+----------+--------------+
| Exercise | 1 | 48 | - | - | - | - | 49 |
| of | | | | | | | |
| options | | | | | | | |
+---------------+---------+---------+---------+----------+----------+----------+--------------+
| Shares | 17 | - | 2,168 | - | - | - | 2,185 |
| issued | | | | | | | |
| for | | | | | | | |
| deferred | | | | | | | |
| consideration | | | | | | | |
+---------------+---------+---------+---------+----------+----------+----------+--------------+
| Share | - | - | - | - | - | 171 | 171 |
| option | | | | | | | |
| reserve | | | | | | | |
+---------------+---------+---------+---------+----------+----------+----------+--------------+
| At 31 | 351 | 8,612 | 6,970 | 2,792 | (65) | 6,150 | 24,810 |
| October | | | | | | | |
| 2008 | | | | | | | |
+---------------+---------+---------+---------+----------+----------+----------+--------------+
- ENDS -
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAEFEDSNNEAE
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