Embargoed Release: 07:00hrs Wednesday 26 September 2007
TOUCH GROUP PLC
(`Touch' or `the Group')
Unaudited Interim Report for the Six Months Ended 30 June 2007
Touch Group plc, the international business-to-business publishing group, today
announces its unaudited interim results for the six-month period ended 30 June
2007.
Highlights
* Establishment of new Medical Communications Team
* Signed agreement with the British Medical Journal Publishing Group
* Reduced operating loss �263,000 (2006: �1,982,000)
* Sales contracts up 38% for the comparable period
* Orders carried forward - at the reporting date �1,187,000 (2006: �246,000)
Chairman's Statement
It is with pleasure that I report on our continuing progress during the first
half of the year, which has seen a number of important steps towards achieving
our goal of becoming a market leading business-to-business publishing company,
highly accredited within our specialised fields and capable of producing world
class journals.
Core Business Development
Working towards these goals the story of the first half of 2007 has been one of
continuing improvement and refinement of our publishing product mix. By working
in partnership with major advertisers as well as professional and governing
bodies, we have been successful in establishing our newly implemented
long-term, large-scale and robust business model.
We are now working with our clients from the point at which they allocate their
spending budgets, which sees us receive far greater commitments from them, as
well as giving us greater assurances and visibility of our sales revenues. In
order to leverage these opportunities and to ensure we maximise the spend per
customer we receive, we carefully aligned our product mix with our sales
campaign management team, and it is now upon this secure publishing platform
that we are able to capitalise on our position.
This realignment has resulted in most of our contracts having longer
lead-times. As a result we have already established a strong and growing
forward order book. Our forward contracted orders at the reporting date total �
1,187,000 whilst at the same time last year the figure was �246,000.
All domestic issues have been settled relating to property, people and shared
services with Touch Local. By the end of October 2007 we will have reconfigured
our accommodation and personnel servicing obligations, completely disengaging
Touch Group plc from Touch Local. This will result in further �165,000 of
savings on an annualised basis going forward.
Central to our business proposition is the quality of our journals and in line
with our intentions laid out at the time of the Group restructuring, we have
continued to focus on the pharmaceutical, healthcare and energy sectors. As a
result of our continuing attention to these sectors we are building up an
enviable reputation for a highly motivated in-house editorial team endowed with
excellent product knowledge and a highly competitive level of accumulated
experience in the application of Best Practice publishing processes.
From a branding perspective a redesign across all our 2007 titles has succeeded
in elevating our `Touch Briefings' brand and, coupled with our superior
content, has given us a significant competitive advantage over other print
publishers. The market response to this has been overwhelming and customer
feedback has demonstrated to us the success of this exercise.
We have continued to develop our newly established online products transforming
their content, design and technical underpinning. Consequently we are receiving
the attention of a number of the major pharmaceutical companies interested in
site sponsorship, which we service through our Key Account Team.
Elsewhere in the business our growing portfolio of bespoke publications
continues to be embraced by major blue chip companies and to date all our
existing clients have agreed to new and bigger bespoke productions for 2008.
Accordingly during the period we have been successful in continuing the
development of Touch Briefings into a recognised advertising channel, which our
clients increasingly contract for ahead of time. Whilst this new business model
has a greater appetite for capital to support longer lead times this move from
one-off sales to long-term relationship account management across the business
and its product mix has contributed significantly to securing the future
business potential of Touch Briefings and gives us great confidence in both its
stability and growth potential for the future.
Medical Communications Team
During the period we were successful in establishing a new Medical
Communications Team in the Group to support the activities of our core
editorial team. In doing this we have now established an in-house team of
researchers and medical writers capable of delivering leading-edge content
across all our publishing products for both print and online. Already in the
period we have seen that the standard of quality that is resulting from this
has emanated in a marked increase of our reprints business and the advent of
inbound sales.
British Medical Journal (`BMJ') Publishing Group Ltd Distribution Agreement
As an example of our fast increasing status within our industry, we were
successful in the period in entering into an agreement with the BMJ Publishing
Group Ltd (wholly owned subsidiary of the British Medical Association), which
involves an exchange of links, shared distribution channels and mutual
promotion. This is a good indication of our professionalism and integrity.
Other repeat media partnerships with leading professional organisations have
been negotiated during the period, securing stability of distribution for our
clients. Better processes for the tracking and reporting of responses are
resulting in growing retention for our printed and electronic titles.
Overall
In the first half of 2007 we have continued to hone our business model. From an
operational stand point, our publication schedule is now fixed, recurring and
unchanging into 2008 which enables us to better plan content, increase forward
sales bookings and enhance supply stability both internally and in our markets.
Overall this gives us greater control of our business enabling us to better
allocate resources and more efficiently deliver our products.
We are continuing to invest in our people, our content, and our IT
infrastructure.
We now have a coordinated and highly motivated management team with real depth
leading the way towards growth, expansion and profitability.
VINCENT ISAACS
EXECUTIVE CHAIRMAN
26 September 2007
For further information please contact:
Touch Group PLC
Vincent Isaacs
Executive Chairman Tel: 020 7452 5222
Hansard Group
Andrew Tan
www.hansardgroup.co.uk Tel: 020 7245 1100
Shore Capital and Corporate Limited
Nominated advisor to the company
Dru Danford Tel: 020 7452 5222
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Unaudited
Six months Six months Year ended
ended ended
31
30 June 30 June December
2007 2006 2006
(Restated) (Restated)
Note � 000s � 000s � 000s
REVENUE 3
Continuing operations 2,551 2,800 5,824
Discontinued operations - 1,811 3,280
2,551 4,611 9,104
Cost of sales (1,533) (2,846) (5,725)
GROSS PROFIT 1,018 1,765 3,379
Administrative expenses (1,160) (3,046) (5,782)
Administrative expenses - investment (121) (701) (2,774)
impairment
(1,281) (3,747) (8,556)
OPERATING LOSS 3
Continuing operations (263) (1,499) (4,267)
Discontinued operations - (483) (910)
(263) (1,982) (5,177)
Profit on part disposal of subsidiary 4 - - 4,378
LOSS ON ORDINARY ACTIVITIES BEFORE (263) (1,982) (799)
FINANCE CHARGES
Finance income 26 12 42
Finance costs (40) (4) (33)
LOSS BEFORE TAXATION (277) (1,974) (790)
Income tax expense - - -
LOSS AFTER TAXATION (277) (1,974) (790)
Continuing operations (277) (1,491) (4,258)
Discontinued operations - (483) 3,468
LOSS FOR THE PERIOD (277) (1,974) (790)
LOSS PER SHARE 5 Pence Pence Pence
From continuing operations:
Basic (0.25) (2.13) (5.77)
Diluted (0.25) (2.13) (5.77)
From continued and discontinued
operations:
Basic (0.25) (2.81) (1.07)
Diluted (0.25) (2.81) (1.07)
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Unaudited
As at As at As at 31
December
30 June 30 June 2006
2007 2006
(Restated)
Note � 000s � 000s � 000s
NON-CURRENT ASSETS
Goodwill - 498 -
Other intangible assets 306 794 313
Property, plant and equipment 492 558 536
Investments 3,721 540 3,842
4,519 2,390 4,691
CURRENT ASSETS
Inventories 194 79 100
Trade and other receivables 2,790 3,879 2,849
Cash and cash equivalents 568 298 1,695
3,552 4,256 4,644
CURRENT LIABILITIES
Trade and other payables (2,027) (3,722) (2,637)
NET CURRENT ASSETS 1,525 534 2,007
NON-CURRENT LIABILITIES (500) (6) (650)
NET ASSETS 3 5,544 2,918 6,048
EQUITY
Issued share capital 1,112 752 1,112
Share premium account 3,922 2,539 3,922
Other reserve 300 6,536 300
Own shares held by ESOT - (20) -
Retained earnings / (loss) 210 (6,889) 714
TOTAL EQUITY 5,544 2,918 6,048
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Unaudited
Six months Six months Year ended
ended ended
31
30 June 30 June December
2007 2006 2006
(Restated) (Restated)
� 000s � 000s � 000s
Net cash outflow from operating
activities
Operating loss for the period (263) (1,982) (5,177)
Depreciation of property, plant and 49 129 110
equipment
Amortisation of intangible assets 7 20 178
Investment impairment 121 701 2,774
Share based payments (229) 79 (62)
Net cash outflow from operating (315) (1,053) (2,177)
activities before movements in
working capital
Change in inventories (94) 88 68
Change in receivables 59 (488) (743)
Change in payables (718) 30 441
Cash used by operations (1,068) (1,423) (2,411)
Interest received 26 12 42
Interest and similar expenses paid (40) (4) (33)
Net cash used by operations (1,082) (1,415) (2,402)
Cash flow from investing activities
Disposal of discontinued operation - - 71
Acquisition of plant, property and (3) (84) (65)
equipment
Acquisition of intangible assets - (36) (161)
Net cash used in investing activities (3) (120) (155)
Financing activities
Proceeds from issue of share capital - 674 2,473
Payment of transaction costs - (10) (65)
Repayment of borrowings (25) - -
New loans acquired - - 700
Capital lease repayments (17) - (25)
Net cash from financing activities (42) 664 3,083
Net (decrease) / increase in cash and (1,127) (871) 526
cash equivalents
Cash and cash equivalents at 1,695 1,169 1,169
beginning of period
Cash and cash equivalents at period 568 298 1,695
end
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below, have, unless otherwise stated, been
applied consistently to all periods presented in these Group financial
statements and in preparing an opening IFRS balance sheet as at 1 January 2006.
Basis of accounting
The consolidated financial statements of Touch Group plc have been prepared in
accordance with International Financial Reporting Standards as adopted by the
EU ('adopted IFRS').
The unaudited financial information presented in this document has been
prepared on the basis of the expected accounting policies which the Group will
comply with in the accounts to 31 December 2007 and on the basis of all
International Financial Reporting Standards ('IFRS'), including International
Accounting Standards ('IAS') and interpretations issued by the International
Accounting Standards Board ('IASB') and its committees, as adopted by the EU.
These are subject to ongoing amendment by the IASB and subsequent endorsement
by the European Commission and are therefore subject to possible change. As a
result, information contained within this document will require updating for
any subsequent amendment to IFRS required for first time adoption or those new
standards that the Group may elect to adopt early.
The financial statements have been prepared in accordance with applicable
accounting standards, and under the historical cost accounting rules.
IFRS 1 exemptions
IFRS 1 'First time adoption of International Financial Reporting Standards'
sets out procedures that the Group must follow when IFRS is adopted for the
first time as the basis for preparing Group consolidated financial statements.
It provides a number of exemptions that are available on first time adoption to
assist companies in the transition to reporting under adopted IFRS. The
following exemptions have been taken:
* Business combinations prior to 1 January 2006 have not been restated to
comply with IFRS 3 `Business Combinations'
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the group controlled by Touch Group plc and its subsidiaries (the 'Group').
Control is achieved where the Group has the power to govern the financial and
operating policies of an investee entity so as to obtain benefits from its
activities.
The results of subsidiaries acquired or sold are included in the consolidated
financial statements from the date control commences to the date control
ceases, as appropriate.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring their accounting policies used into line with those used
by the Group.
All intra-group transactions, balances, income and expenditure are eliminated
on consolidation.
Goodwill
Goodwill arising on consolidation represents the excess of cost of acquisition
over the group's interest in the fair value of identifiable assets and
liabilities acquired. Goodwill is stated at cost less any accumulated
impairment losses. Goodwill, which is recognised as an asset is reviewed for
impairment annually. Any impairment is recognised immediately in profit or loss
and is not subsequently reversed.
On disposal of a subsidiary, the attributable amount of goodwill is included in
the determination of the profit or loss on disposal.
Goodwill arising on acquisitions before the date of transition to IFRSs has
been retained at the previous UK GAAP amounts subject to being tested for
impairment at that date.
Revenue Recognition - sales of goods
Revenue in respect of advertising services and editorial sponsorship is
recognised on publication.
Revenue is measured at the fair value of consideration received or receivable
and represents amounts receivable for goods and services provided in the normal
course of business, net of discounts, VAT and other sales-related taxes.
Revenue Recognition - sales of services
Revenue in respect of online advertising and subscriptions is recognised on a
straight-line basis over the period of subscription. Any unrecognised
constituent is carried within current liabilities as deferred revenue.
Barter transactions
Turnover and costs in respect of barter transactions for advertising are
recognised only where there is persuasive evidence of the value at which, if it
had not been exchanged, the advertising would have been sold for cash in a
similar transaction.
Leasing
Leases are classified as finance leases whenever the terms of the lease
transfer substantially all the risks of ownership to the lessee. All other
leases are classified as operating leases and are charged to the income
statement on a straight-line basis over the period of the lease.
Taxation
Current tax, including UK corporation tax and foreign tax, is provided at
amounts expected to be paid (or recovered) using the tax rates and laws that
have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right to
pay less tax in the future have occurred at the balance sheet date. Timing
differences are differences between the Group's taxable profits and its results
as stated in the financial statements that arise from the inclusion of gains
and losses in tax assessments in periods different from those in which they are
recognised in the financial statements.
A net deferred tax asset is regarded as recoverable and therefore recognised
only when, on the basis of all available evidence, it can be regarded as more
likely than not that there will be suitable taxable profits from which the
future reversal of the underlying timing differences can be deducted.
Deferred tax is measured at the average tax rates that are expected to apply in
the periods in which the timing differences are expected to reverse based on
tax rates and laws that have been enacted or substantively enacted by the
balance sheet date. Deferred tax is measured on a non-discounted basis.
Intangible assets
Intangible assets acquired by the Group are stated at cost less accumulated
amortisation and impairment losses. Intangible assets are amortised on a
straight-line basis over their useful lives in accordance with IAS 38
'Intangible Assets'. Assets are amortised over their estimated useful lives or
20 years, whichever is the shorter. A review is carried out at each financial
year end and with changes in accordance with IAS 8 'Accounting Policies,
Changes in Accounting Estimates and Errors' considered if necessary.
Property, plant and equipment
Depreciation is provided to write off the cost less estimated residual value of
tangible fixed assets by equal instalments over their estimated useful economic
lives as follows:
Leasehold improvements over the remaining life of the lease
Plant, vehicles and equipment 3-7 years
Assets held under finance leases are depreciated over their expected useful
lives on the same basis as owned assets, or where shorter, the term of the
relevant lease.
Inventories - work in progress
Inventories are stated at the lower of cost and net realisable value. Work in
progress consists of costs incurred relating to unpublished material and
deferred revenue at the period end.
Financial instruments
Financial assets and liabilities are recognised on the Group's balance sheet
when the Group becomes a party to the contractual provisions of the instrument.
Bank borrowings:
Interest bearing loans and overdrafts are recorded at the proceeds received,
net of direct issue costs. Finance charges, including premiums payable on
settlement or redemption and incremental costs directly attributable to the
issue, are accounted for on an accruals basis as part of finance expenses in
the income statement using the effective interest rate method and are added to
the carrying amount of the instrument to the extent that they are not settled
in the period that they arise.
Share based payment
The Group issues equity-settled share-based payments to certain employees. The
fair value of the employee services received in exchange for the grant of the
options is recognised as an expense with a corresponding increase in equity.
The total amount to be expensed over the vesting period is determined by
reference to the fair value of the options granted, excluding the impact of any
non-market vesting conditions. Non-market vesting conditions are included in
assumptions about the number of options that are expected to vest. At each
balance sheet date, the Group revises its estimates of the number of options
that are expected to vest. It recognises the impact of the revision to original
estimates, if any, in the income statement, with a corresponding adjustment to
equity.
Fair value is measured using the Black Scholes model.
Investments
Fixed asset investments are shown at cost less provision for impairment.
2. NATURE OF INFORMATION
The interim accounts for the six months ended 30 June 2007 and the comparative
figures for the six months ended 30 June 2006 are not audited by the Company's
auditors. The comparative figures for the twelve months ended 31 December 2006
are not the Company's statutory accounts within the meaning of Section 240 of
the Companies Act 1985 but are abridged from such accounts and then restated
under IFRS.
The financial statements for the twelve months ended 31 December 2006 as
previously stated (under UK GAAP) have been reported on by the Company's
auditors and delivered to the Registrar of Companies. The report of the
auditors on such accounts was unqualified and did not contain any statement
under Sections 237(2) or 237(3) of the Companies Act 1985.
3. BUSINESS AND GEOGRAPHICAL SEGMENTS
The revenue and operating loss of the Group are analysed between continuing and
discontinued operations. The directors consider that the business operates
within one business segment, that of multimedia marketing.
Continuing and discontinued Unaudited Unaudited Unaudited
operations
Six Six months Year ended
months ended
ended 31
30 June December
30 June 2006 2006
2007
(Restated) (Restated)
Note � 000s � 000s � 000s
Continuing Operations
Turnover 2,551 2,800 5,824
Cost of sales (1,533) (1,821) (3,777)
Gross profit 1,018 979 2,047
Administrative expenses (1,281) (2,478) (6,314)
Operating loss (263) (1,499) (4,267)
Discontinued Operations
Turnover - 1,811 3,280
Cost of sales - (1,025) (1,948)
Gross profit - 786 1,332
Administrative expenses - (1,269) (2,242)
Operating loss - (483) (910)
Included within administrative expenses is an investment impairment charge of �
121,000 (2006 - �701,000). This impairment is to write down the book value of
the investment in MediaZest plc shares to the price as at 30th June 2007.
In the year ended 31 December 2006, the continuing administrative expenses
include an investment impairment of �899,000 for the write down in book value
of the MediaZest plc shares and �1,875,000 for the impairment relating to the
Group's investment in Touch Local.
Geographical segments Unaudited Unaudited Unaudited
Six Six months Year ended
months ended
ended 31
30 June December
30 June 2006 2006
2007
(Restated) (Restated)
� 000s � 000s � 000s
Turnover by destination
United Kingdom a 352 1,975 3,843
Rest of Europe 718 756 1,754
US 1,333 1,810 3,269
Rest of World 148 70 238
2,551 4,611 9,104
Turnover by origin - all United 2,551 4,611 9,104
Kingdom
Operating loss by origin - all (263) (1,982) (5,177)
United Kingdom
Net assets by origin - all United 5,544 2,918 6,048
Kingdom
(a) All comparative discontinued turnover is derived in the United Kingdom.
4. PROFIT ON DISPOSAL OF SUBSIDIARIES
There were no exceptional items in the six months to 30 June 2007, nor the six
months to 30 June 2006. The profit on part disposal of the Touch Local business
is reflected in the full year results to 31 December 2006.
5. LOSS PER SHARE
The calculation of the basic and diluted earnings per share is based on the
following data:
Unaudited Unaudited Unaudited
Six months Six months Year ended
ended ended
31
30 June 30 June December
2007 2006 2006
(Restated) (Restated)
� 000s � 000s � 000s
Loss from continuing and
discontinued operations:
Loss for the purposes of basic and (277) (1,974) (790)
diluted earnings per share
Loss from continuing operations:
Loss for the purposes of basic and (277) (1,491) (4,258)
diluted earnings per share
Number of shares: Number Number Number
Weighted average number of shares 111,191,921 70,132,546 73,782,537
for the purposes of basic earnings
per share
Effect of dilutive potential - - -
ordinary shares - share options
Weighted average number of shares 111,191,921 70,132,546 73,782,537
for the purposes of diluted
earnings per share
The denominators used are the same as those detailed above for both basic
and diluted earnings per share from continued and discontinued operations
6. RECONCILIATION OF COMPARATIVE TO PREVIOUSLY REPORTED INFORMATION
Touch Group plc reported under UK GAAP in its previously published financial
statements for the year ended 31 December 2006 and the six months ended 30 June
2006. The following analysis provides a reconciliation of the loss as reported
under UK GAAP during the year ended 31 December 2006 and the loss reported
under IFRS in these statements; there is no change to net assets. There is also
a reconciliation of the loss and net assets under UK GAAP to IFRS at the
comparative interim date, being 30 June 2006.
In all cases, adjustments relate to the requirement under IFRS 3 "Business
Combinations" that goodwill not be amortised. Given the transitional exemption
adopted (see note 1), there are no adjustments prior to 1 January 2006.
Reconciliation of loss at 31 December Previous Effect of IFRS
2006 IFRS
UK GAAP
� 000s � 000s � 000s
REVENUE
Continuing operations 5,824 - 5,824
Discontinued operations 3,280 - 3,280
9,104 - 9,104
Cost of sales (5,725) - (5,725)
GROSS PROFIT 3,379 - 3,379
Administrative expenses (5,810) 28 (5,782)
Administrative expenses - investment (2,774) - (2,774)
impairment
(8,584) 28 (8,556)
OPERATING LOSS
Continuing operations (4,267) - (4,267)
Discontinued operations (938) 28 (910)
(5,205) 28 (5,177)
Profit on part disposal of subsidiary 4,406 (28) 4,378
LOSS ON ORDINARY ACTIVITIES BEFORE (799) - (799)
FINANCE CHARGES
Finance income 42 - 42
Finance costs (33) - (33)
LOSS BEFORE TAXATION (790) - (790)
Income tax expense - - -
LOSS AFTER TAXATION (790) - (790)
Continuing operations (4,258) - (4,258)
Discontinued operations 3,468 - 3,468
LOSS FOR THE PERIOD (790) - (790)
Reconciliation of loss at 30 June Previous Effect of IFRS
2006 IFRS
UK GAAP
� 000s � 000s � 000s
REVENUE
Continuing operations 2,800 - 2,800
Discontinued operations 1,811 - 1,811
4,611 - 4,611
Cost of sales (2,846) - (2,846)
GROSS PROFIT 1,765 - 1,765
Administrative expenses (3,063) 17 (3,046)
Administrative expenses - investment (701) - (701)
impairment
(3,764) 17 (3,747)
OPERATING LOSS
Continuing operations (1,499) - (1,499)
Discontinued operations (500) 17 (483)
(1,999) 17 (1,982)
Profit on part disposal of subsidiary - - -
LOSS ON ORDINARY ACTIVITIES BEFORE (1,999) 17 (1,982)
FINANCE CHARGES
Finance income 12 - 12
Finance costs (4) - (4)
LOSS BEFORE TAXATION (1,991) 17 (1,974)
Income tax expense - - -
LOSS AFTER TAXATION (1,991) 17 (1,974)
Continuing operations (1,491) - (1,491)
Discontinued operations (500) 17 (483)
LOSS FOR THE PERIOD (1,991) 17 (1,974)
Reconciliation of equity at 30 June Previous Effect of IFRS
2006 IFRS
UK GAAP
� 000s � 000s � 000s
NON-CURRENT ASSETS
Goodwill 481 17 498
Other intangible assets 794 - 794
Property, plant and equipment 558 - 558
Investments 540 - 540
2,373 17 2,390
CURRENT ASSETS
Inventories 79 - 79
Trade and other receivables 3,879 - 3,879
Cash and cash equivalents 298 - 298
TOTAL ASSETS 4,256 - 4,256
CURRENT LIABILITIES
Trade and other payables (3,722) - (3,722)
NET CURRENT ASSETS 534 - 534
NON-CURRENT LIABILITIES (6) - (6)
NET ASSETS 2,901 17 2,918
EQUITY
Issued share capital 752 - 752
Share premium account 2,539 - 2,539
Other reserve 6,536 - 6,536
Own shares held by ESOT (20) - (20)
Retained earnings loss (6,906) 17 (6,889)
TOTAL EQUITY 2,901 17 2,918
7. AVAILABILITY OF ACCOUNTS
Copies of these interim results are available from Touch Group plc, Cardinal
Tower, 12 Farringdon Road, London, EC1M 3NN. Alternatively a downloadable
version is available from the following web address:
www.touchbriefings.com/announcements.htm.
END
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